THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Reportable
Case Number  :  89 / 07

In the matter between

WILMOT MANDLA CHAGI & 29 OTHERS
APPELLANTS

and

SPECIAL INVESTIGATING UNIT
RESPONDENT

Coram :
NAVSA, BRAND, JAFTA, PONNAN et COMBRINCK JJA

Date of hearing :
9 NOVEMBER 2007

Date of delivery : 29 NOVEMBER 2007

SUMMARY

Special Investigating Units established in terms of Act 74 of 1996  - separate juristic entities –
liability for the wrongful acts of the one does not devolve upon the other.
______

Neutral citation:  This judgment may be referred to as :
Chagi v Special Investigating Unit [2007] SCA 159 (RSA)

___________________________________________________________________

PONNAN  JA

[1] On 14 June 1995, the Premier of the Eastern Cape acting pursuant to the
provisions of the Interim Constitution, established a commission under the
chairmanship of Justice Willem Heath, to investigate fraud and corruption in the
government of the Eastern Cape and its constituent parts.1  On 20 November 1996,
the Special Investigating Units and Special Tribunals Act 74 of 1996 (‘the Act’) was
promulgated.  According to the long title of the Act, its purpose is:
‘To provide for the establishment of Special Investigating Units for the purpose of investigating serious
malpractices or maladministration in connection with the administration of State institutions, State
assets and public money as well as any conduct which may seriously harm the interests of the public,
and for the establishment of Special Tribunals so as to adjudicate upon civil matters emanating from
investigations by the Special Investigating Units; and to provide for matters incidental thereto.’

[2] Section 2(1) of the Act empowered the President to establish a Special
Investigating Unit (‘SIU’) for the purposes of investigating allegations of serious mal-
administration or unlawful or improper conduct on any of the grounds specified in s
2(2) of the Act.  Section 14(1) of the Act provides:
‘The President may, in respect of any Commission of Inquiry ─
(a)
appointed by him or her prior to the commencement of this Act;  or
(b)
appointed by any other executive authority prior to the commencement of this Act,
upon the request of such executive authority,
and if the objects of such Commission can in his or her opinion better be achieved by a Special
Investigating Unit and a Special Tribunal, by proclamation in the Gazette dissolve such Commission
and establish a Special Investigating Unit and a Special Tribunal in its place in terms of this Act:...’.

[3] On 14 March 1997 and at the request of the Premier of the Eastern Cape, the
President, acting in terms of s 14(1) of the Act and by virtue of Proclamation R24 of
1997,2 dissolved the Heath Commission and established in its place a Special
Investigating Unit (‘the first SIU’) to be headed, in accordance with s 3(1) of the Act,
by Justice Heath, as well as a Special Tribunal (‘ST’) with Justice GPC Kotze as the
Tribunal President.

1 Appointment of Commission of Inquiry into Matters Relating to State Property and other Property,
EC, PN10, PG72, 14 June 1195.
2 Published in Regulation Gazette 5884, Government Gazette 17854.

[4] On 11 November 1997 and in terms of s 2(4) of the Act, the President, by
Proclamation R72 of 1997,3 amended Proclamation R24 by expanding upon the
terms of reference of the first SIU.  On 30 June 1998 and in terms of Proclamation
R66 of 1998,4 the President referred certain specified matters appertaining to the
former Transkei Agricultural Corporation (‘Tracor’), for investigation by the first SIU
and, if needs be, for adjudication emanating from such investigation, to the ST.

[5] On 28 November 2000, the Constitutional Court declared s 3(1) of the Act as
well as Proclamation R24 of 1997 to be inconsistent with the Constitution and invalid
but suspended its declaration of invalidity for a period of 1 year.5 The Act was
subsequently amended with effect from 31 July 2001 by the Special Investigating
Units and Special Tribunals Amendment Act 2 of 2001 to bring it into line with the
judgment of the Constitutional Court.  By Proclamation R118 of 2001,6 the President
repealed Proclamation R24 and established a new Special Investigating Unit (‘the
second SIU’) with William Andrew Hofmeyr as its head.

[6] Paragraph 6 of Proclamation R118 of 2001 provides:
‘The Special Investigating Unit established under paragraph 2 of this Proclamation [the second SIU]
shall continue to investigate all the matters which were referred to the Special Investigating Unit
established by Proclamation No. R24 of 14 March 1997 [the first SIU], including those matters
referred to it by the said Proclamation and the Proclamations mentioned in the Schedule. Any
reference in paragraph 3 of the Proclamations set out in the Schedule to “Proclamation No. R24 of 14
March 1997”, must be interpreted as a reference to this proclamation.’
Amongst the Proclamations referred to in the Schedule, is Proclamation R66 of
1998, which authorised the investigation into the affairs of Tracor.

[7] Tracor was wound up during 1998. On 15 August 2001, the 30 appellants in
this matter, who were then unemployed but who previously jointly constituted the
management of Tracor, issued summons out of the Grahamstown High Court
against defendants described as the Special Investigating Unit established in terms
of Proclamation R66 of 1998 (the first defendant) and the MEC for the Department of

3 Published in Regulation Gazette 6046, Government Gazette 18431.
4 Published in Regulation Gazette 6223, Government Gazette 19030.
5 South African Association of Personal Injury Lawyers v Heath and Others 2001 (1) SA 883 (CC).
6 Published in Regulation Gazette 7128, Government Gazette 22531.

Agriculture and Land Affairs (Eastern Cape) (the second defendant).7  The summons
comprised four claims, only two of which, namely A and C, are relevant for present
purposes.

[8] Paraphrased these claims read:
CLAIM A:
(a)
During August 1998, the plaintiffs had held banking accounts at various banking institutions;
(b)
On or about 25 August 1998 and in court papers in proceedings instituted by the first and
second defendants against the plaintiffs before the ST in East London, the first and second
defendants stated to the management and staff of the aforementioned banking institutions of
and concerning the plaintiffs that the plaintiffs had:
(i)
stolen and fraudulently misappropriated a sum of R3.3 million from Tracor; and
(ii)
utilised Tracor funds without its permission to settle outstanding balances owed by
them to financial institutions in respect of motor vehicles in their possession held
under various motor vehicle schemes obtaining at Tracor.
(c)
The founding papers in the aforesaid proceedings together with the temporary interdict were
served upon all of the aforementioned banking institutions and a statement to the aforegoing
effect was later published in the Daily Dispatch newspaper.
(d)
The aforementioned statements by the first and second defendant were:
(i)
wrongful and defamatory of the plaintiffs;
(ii)
made with the intention to defame the plaintiffs and to injure them in their dignity and
reputation; and
(iii)
understood by the management and staff at the aforementioned banking institutions
to mean that the plaintiffs were bad and disreputable managers, corrupt and
dishonest individuals and are thieves and frauds.
(e)
As a result of the aforesaid defamation, the plaintiffs have been damaged in their dignity and
reputation and each suffered damages in the estimated sum of R400 000 for which the first
defendant is liable.
CLAIM C:
(a)
On or about 21 August 1999, the first and second defendants wrongfully, unlawfully,
maliciously and intentionally set the law in motion against the plaintiffs by levelling false
accusations against them in an application for an interdict pendente lite before the ST in East
London.
(b)
When launching the aforesaid application the defendants had no reasonable and probable
cause for doing so, nor did they have any reasonable belief in the truth of the information
given to them.

7 A third defendant who was also cited in the summons but whose particulars are not presently
relevant has been omitted.

(c)
As a result of the grant of the temporary interdict, the plaintiffs’ bank accounts were frozen
and the plaintiffs were deprived of access to their funds.
(d)
During on or about March 2000, the first and second defendants withdrew the action that had
been instituted against the plaintiffs which resulted in the aforesaid interdict also falling away.
(e)
The plaintiffs incurred legal costs in defending the aforesaid application and action.
(f)
As a result of the freezing of their bank accounts, the plaintiffs suffered an impairment of their
dignity.
(g)
The aforementioned conduct by the first and second defendants was degrading, insulting,
injurious and humiliating to the plaintiffs.
(h)
The aforesaid conduct by the said defendants was wrongful and perpetrated with animo
iniuriandi.
(i)
As a result of the defendants’ aforesaid conduct, the plaintiffs suffered damages in the sum of
R150 000 each for the impairment of their dignity and the amount of R5 000 each in respect
of attorney and client costs.

[9] The plaintiffs’ claim was met with the following special plea:

(1)
First defendant pleads that it was established on 25 July 2001 by virtue of the
provisions of Proclamation R118 of 2001 (the new unit).
(3)
A Special Investigating Unit had been established in terms of Proclamation R24 of
1997 …( the old unit).
(3)
The plaintiffs’ complaints and claims all relate to the period August 1998 to March
2000 and are all therefore directed against the old unit.
(4)
The old unit was abolished in terms of the provisions of paragraph 1 of Proclamation
R118 and therefore no longer exists.
(6)
The first defendant pleads that it was established as a completely new unit in terms of
the provisions of Proclamation R118, and that it took over no rights, powers,
obligations, or liabilities of the old unit, other than the powers set out in paragraph 6 of
Proclamation R118.  The first defendant therefore has no jurisdiction to deal with the
matters in issue in the plaintiffs’ claims, and therefore has no locus standi to be sued
herein.
(7)
In the premises plaintiffs have no claim against the first defendant and their claims
against the first defendant should be dismissed with costs.’

[10] Dambuza AJ upheld the special plea and dismissed both claims.  The
plaintiffs appeal with leave of this Court. The sole issue for determination in this
appeal is whether liability for the plaintiffs’ claims has devolved upon the second SIU,
(‘the respondent’).  For the reasons that follow the conclusion reached by the court
below on this aspect of the case cannot be faulted.

[11] A unit such as the respondent is similar to a commission of inquiry and, like a
commission, is constrained by the boundaries set by the Act and its founding
proclamation.8 Proclamation R118 of 2001 provides, neither expressly nor by
necessary implication, for the rights and obligations of the first SIU to devolve upon
the second SIU, the respondent. That Proclamation served a dual purpose. First, it
dissolved the first SIU; and, second, it established the respondent. Those purposes
could likewise have been achieved by the promulgation, with an intervening time-
lapse between them, of two separate proclamations, the first, dissolving the first SIU
and the second establishing the respondent. Had that happened it could not, without
more, have been suggested that the respondent was the de jure successor in title of
the first SIU, and thus liable for any wrongful act perpetrated by it. That a single
proclamation achieved both ends did not create a legal nexus between the two units
where none otherwise existed.

[12] Moreover, it was permissible for the President, if he deemed it necessary, to
establish more than one SIU. That, theoretically at any rate, is what the Act
authorised. And each, according to s 13 of the Act, was to be a separate juristic
person.  Had that occurred, liability for the wrongful acts of the one would not have
devolved upon any of the others. So too in this case, for by parity of reasoning, the
consequence of the original actor’s (the first SIU’s) unlawful conduct could not,
absent any legal nexus, be imputed to the respondent.

[13] Finally, if the intention had been for liability of the first SIU to devolve upon the
second, that could have been simply and briefly stated by the Legislature. That
would obviously have been a clearer and more effective, indeed an easier, method
of expression than the implication inherent in mere silence.9  After all, it must be
accepted that the Act and the Proclamation has dealt exhaustively with the subject
matter. To accede to the argument urged upon us on behalf of the appellants would
defeat the purpose of those enactments.

8 S v Naudé 1975 (1) SA 681 (A) at 704B-E; Special Investigating Unit v Nadasen 2002 (1) SA 605
(SCA) para 5.
9 Per Howie J in Muller v Chairman, Ministers’ Council, House of Representatives 1992 (2) SA 508
(C) at 524E.

[14] It should perhaps be added that the appellants were not without remedy. They
could have brought the relevant department of National Government before court by
citing the responsible political head of that department in a representative capacity.
In this case that would have been the Minister of Justice. That is what s 2 of the
State Liability Act 20 of 1957 provides.10 Approached thus, the mishap encountered
here may well have been avoided.

[15] It follows that the appeal must fail. In the result the appeal is dismissed with
costs.

___________________
V M  PONNAN
JUDGE OF APPEAL

CONCUR:

NAVSA  JA
BRAND  JA
JAFTA  JA
COMBRINCK  AJA

10 Jayiya v Member of the Executive Council for Welfare, Eastern Cape 2004 (2) SA 611 (SCA) para
5.
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

29 November 2007

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form
part of the judgment.

WILMOT MANDLA CHAGI & 29 OTHERS v SPECIAL INVESTIGATING UNIT
(Case No 89 / 07)

Media Statement

Today the Supreme Court of Appeal (‘SCA’) dismissed an appeal by Wilmot Chagi and 29
Others.  The 30 appellants jointly constituted the management of the Transkei Agricultural
Corporation (‘Tracor’).  Tracor was wound up in 1998.  During June 1998, the President
referred certain matters relating to Tracor for investigation to the Special Investigating Unit,
commonly referred to as the Heath Commission.  On 28 November 2000, the Constitutional
Court declared provisions of the enabling statute and the regulation in terms of which the
Heath Commission had been established to be unconstitutional.  On 31 July 2001, the
President established a new Special Investigating Unit (the respondent) under the
chairmanship of William Andrew Hofmeyr.

During 2001 the appellants issued summons out of the Grahamstown High Court alleging that
they had been defamed and maliciously prosecuted by the Heath Commission.  They sought
to recover their loss and damage from the respondent.  The respondent raised a special plea
that liability for the wrongful acts of the Heath Commission had not devolved upon it.  The
special plea was upheld by the High Court.  The SCA agreed, holding that in terms of the
regulation dissolving the Heath Commission and establishing the respondent, the latter was
not the de jure successor of the former.  The SCA accordingly dismissed the appeal with
costs.

--- ends ---