TRUSTEES: YOUR RISK OF PERSONAL LIABILITY IN PROPERTY SALES

Firstly, a warning to anyone selling or buying property to/from a trust – have your lawyer check upfront that you are adequately protected by the terms of the sale agreement.

The problem is that contracting with trusts has its own specific set of rules and, as a recent High Court case illustrates, standard sale agreements don’t always provide adequately for them.

A seller sues an unauthorised trustee for R2m – personally

  1. A company sold a “real right of extension” (a right to build additional buildings in a sectional title development) to a trust,
  2. The agreement of sale was signed by only one of two trustees,
  3. The sale agreement was invalid because the trustee who signed had no authority to sign alone,
  4. The seller sued the trustee in an attempt to hold him personally liable for payment of the purchase price of R1,45m (almost R2m with interest),
  5. The seller relied on a clause in the sale agreement – standard in such agreements – in which the trustee “warrants and binds himself in his personal capacity” that he had authority to sign and that the trust would perform in terms of the sale,
  6. A further provision bound any unauthorised signatory as surety and as the purchaser in his/her personal capacity.  The seller’s problem here was that this provision specifically only applied to anyone signing for a company or close corporation yet to be formed.  There was nothing specifically binding an unauthorised trustee to similar personal liability,
  7. The seller tried to persuade the Court that the trustee was nevertheless liable as a surety, or that there was an implied term in the agreement holding him personally liable, but the Court was unimpressed on both counts and dismissed the seller’s claim.

The risk for trustees

As the Court pointed out, the seller could have sued the trustee personally not for the purchase price as such, but rather for damages arising from the trustee’s “breach of warranty”.

There’s a warning there for all trustees – you risk a damages claim in your personal capacity if you don’t make sure that you are fully authorised to sign, that you hold the necessary letter of appointment from the Master of the High Court, that your trust has the power to do whatever you are binding it to do, and that all the terms of the trust deed have been complied with.

And a lesson for property sellers and buyers

On the other hand the seller, to succeed in such a damages claim, would have had to prove the extent of its loss, causation of that loss, mitigation of its damages and so on. Its position would have been much clearer, safer and easier had it, before signing the sale agreement –

  1. Checked for all the necessary signing authorities, compliance with the  trust deed etc (prevention being as always better than cure), and
  2. Inserted a clause giving it clear and strong personal remedies against any unauthorised trust signatory.

The same advice applies of course to anyone buying property from a trust.

Mistakes here will be expensive – take legal advice before you sign anything!

Credit: LawDotNews

DON’T LOSE YOUR CLAIM TO PRESCRIPTION – KNOW THE LAW!

“Ignorantia iuris nocet” (old Roman proverb meaning “Not knowing the law is harmful”)

 

Most of us know how important it is to sue our debtors well before prescription permanently takes away our right to claim.

But what if you did nothing until it was too late because you didn’t even know you had a claim in the first place?  As a recent Constitutional Court illustrates, the answer depends on what the nature of your ignorance in this regard is.

A damages claim for unlawful arrest

  • An illiterate resident of a rural area was arrested and detained by police for four or five days.
  • He only became aware that his arrest had been unlawful years later when discussing the matter with his neighbour (an attorney). When he then sued the Minister of Police for R350,000 in damages, the Minister raised the defence of prescription.
  • The Court held that in this particular case the claim had indeed prescribed. Central to this decision was the question of the whether the claimant’s ignorance of his right to claim was factual or legal.

If your ignorance is factual…

Prescription only starts to run when you have “knowledge of the identity of the debtor and of the facts from which the debt arises”.

So ignorance of the facts underlying your claim will delay prescription until you become aware of them. Just note that you can’t act unreasonably here – you are “deemed to have such knowledge if [you] could have acquired it by exercising reasonable care.”

But what about ignorance of legal consequences?

The claimant here did not, he said, know that he had a legal remedy against the Minister until it was too late.  He didn’t know the law around the 48 hour limit on detention. He was “innocent, ignorant and uninformed about the legal conclusions or consequences of facts” in his possession.

That ignorance – that the police’s action was “wrongful and actionable” – was, held the Court, not ignorance of a “fact” but ignorance of a “legal conclusion”.  And since ignorance of the law doesn’t stop prescription running, his claim had prescribed.

Your remedy

That sounds like hard law and perhaps it is in an unfortunate case such as this, but the reality is that such time limits are necessary to bring “certainty and stability to social and legal affairs”.  The highest Court in the land has spoken – you can’t hide behind ignorance of your legal rights when it comes to prescription.

There’s only one remedy – don’t delay in getting legal advice!

#BizTRENDS 2018 : FIVE TRENDS IN EMPLOYMENT LAW WE CAN EXPECT IN 2018

As we launch into 2018, here are a handful of trends we’ll be seeing in the workplace this coming year…

Continued focus on sexual harassment in the workplace

Sexual harassment will remain a scourge in the modern workplace in 2018 and concerted efforts by progressively minded companies and individuals will be required if we wish to improve the situation.
The Employment Equity Act is the cornerstone statute guaranteeing the right to equality in the workplace. It gives effect to the prohibition against unfair discrimination contained in the South African Constitution where such discrimination may arise in the employment context. It protects employees against various prohibited actions, including harassment. The EEA also places a positive duty on employers to promote equal opportunity in the workplace through elimination of unfair discrimination. Employers attract liability where they fail to take the necessary steps to ensure that their employees do not breach their obligations under the EEA.
A sexual harassment policy is essential in any workplace, but even more so is how the employer gives effect to it. Employers should ensure that some level of induction or training on harassment and discrimination is provided to employees, especially newly hired staff. Creating an audit trail of complaints lodged and steps taken could avoid some of the difficulties faced by the employer. Employers could also consider appointing a senior executive or manager as its public champion in complaints of discrimination or harassment.

Clamp-down on misconduct relating to corruption and anti-money laundering

In 2018, businesses around the world will be re-evaluating existing workplace policies, awareness and training programmes to eradicate corruption and money laundering within their organisations. In addition to pro-active employment measures, employers will take appropriate action against employees who engage in illicit or wrongful procurement or contracting practices. Managing legal and reputational risk includes dealing with employee misconduct decisively, but fairly.

An increase in dismissals for operational requirements (retrenchments)

Considering the poor economic climate and changes to the approach adopted for the transfer of services (outsourcing/insourcing), we can expect to see an increase in dismissal for operational requirements in 2018.

Employers should bear in mind that have a statutory duty to consult with affected parties when they contemplate dismissals for operational requirements (retrenchments or redundancies). The reason for the legislated duty is simply that the employer should engage the affected employees before making a final decision to retrench them. Businesses should explore creative solutions that will avoid or mitigate the terminations. Where reductions are unavoidable, humane ways of parting ways can and should be explored.

Strike action will increase as workers bear the brunt of inflation

The economic situation including increases in the price of food and transport will most likely lead to more strike action in 2018.

In anticipation of industrial action, an employer should firstly ensure that industrial action is avoided where possible. In many instances, miscommunication is a major contributor to industrial disputes. Where industrial action is unavoidable or even necessary, in some instances, to restore bargaining power, an employer should take meaningful steps to limit the impact of a strike. These include regularly updated strike contingency plans, keeping a strike diary, maintaining an updated list of active staff, and updating standard forms that may be used during a strike.

Further action from the Department of Labour on companies not complying with obligations in terms of the Employment Equity Act

In 2017, 72 JSE-listed companies were identified as the subject of employment equity reviews by the Department of Labour Inspection and Enforcement Services (IES). As a result of this process, the IES announced that 50 JSE-listed companies, including the JSE, were found to be non-compliant with the Employment Equity Act (EEA). The IES noted that areas of non-compliance with the EEA included a lack of properly constituted consultative forums; EE plans that were not properly audited and analysed; assigned senior EE managers who did not have the necessary authority or resources to execute their mandate, and prepared employment equity plans that did not comply with legislation.

To date, there have not been any hefty fines issued for non-compliance with employment equity obligations but clearly the the Department of Labour is seriously clamping down on enforcement and we can expect to see some hefty fines being imposed in 2018.

CREDIT – BizCommunity (www.bizcommunity.com)

Written by Johan Botes.

EMPLOYEES BE WARNED! A CONFLICT OF INTEREST CAN GET YOU DISMISSED

 

“Honesty is the best policy” (Benjamin Franklin)

Employees have a general duty to act loyally, honestly and in their employers’ best interests, and amongst other things that entails avoiding any possible conflicts of interest.

A recent Labour Court decision confirms that any breach of this duty risks dismissal.

A long-service municipal employee dismissed

  • An employee with a 29 year service record failed to disclose to his employer several possible conflicts of interest relating to businesses (which were official “vendors” to the municipality) run by his wife and brother respectively.
  • The employee was bound by his employer’s “Private Work and Declaration of Interests” policy, the practical effect of which was that “he could not give jobs to friends and family” and had to declare any possible conflicts of interest as they arose.
  • Because the employee and his wife were married in community of property, he benefitted directly from his (and his wife’s) failure to disclose a potential conflict when the wife’s business applied to become a vendor to the employer.

It was irrelevant, held the Court, whether he did or did not actually influence the municipality in assigning work to his wife’s business. What counted was whether his failure to disclose possible conflicts of interest amounted to dishonesty, and that required the answers to three questions:

  • Was there a rule about conflict of interest?
  • If so, did the employee knowingly breach it? And
  • If he breached it, was this breach serious enough to warrant dismissal?

In the end result, the Court confirmed the dismissal, holding that the employee was guilty of “serious misconduct amounting to gross dishonesty”, that “his long service does not diminish the gravity of the misconduct” and that “the sanction of dismissal was fair in those circumstances”.

Credit: LawDotNews

SECURITY ESTATES: ARE YOUR RULES ENFORCEABLE?

“It is well established that contractual provisions are against public policy ‘… if there is a probability that unconscionable, immoral or illegal conduct will result from the implementation of the provisions according to the tenor’” (extract from judgment below)

When you choose to buy into a security estate or other community scheme, you will invariably become a member of a Home Owners Association (HOA), Body Corporate or the like, and you will be bound to comply with all its rules and regulations.

It’s essential to check that you are happy with them all before you buy because our courts have often confirmed that you will be held to whatever you agree to.

But there are limits, as a recent High Court judgment illustrates…

Speeding fines and dusk-to-dawn curfews

  • A large Golf Estate, comprising a mix of freehold and sectional title properties with extensive common areas and communal facilities, included in its Conduct Rules two sets of provisions –
    • Enforcing a 40 km/hr speed limit on estate roads, and
    • Restricting domestic employees to, amongst other controls, a 6 p.m. to 6 a.m. curfew, limited use of estate roads, and annual renewal of access cards.
  • A homeowner locked horns with the Estate over its enforcement of these rules, initially around its suspension of his and his family’s access to the Estate (and thus to their own home) over unpaid speeding fines.
  • The Court held that both sets of rules are unlawful and invalid, but gave the estate 12 months to regularise them.

First set of rules:  Speed limits and traps

Holding that although the roads in question are within the estate’s boundaries they are still “public roads” as defined in our Road Traffic laws, the Court held that the Estate could not lawfully impose speed limits nor enforce them without the necessary authority from the relevant MEC or municipality.

The Court suspended its invalidity ruling for 12 months to allow the Estate time to apply for such authority. Presumably that’s likely to be given to the extent that the authorities consider the rules to be reasonable in light of the Estate’s expressed need to protect children, pedestrians and wildlife on the roads.

Second set of rules: Restrictions on domestic employees

These, held the Court, severely restricted the constitutional rights of the employees in question and affected their basic rights to human dignity, equality, freedom of association, freedom of movement, freedom of occupation and fair labour practices. “Their position within the estate”, said the Court, “is reminiscent of the position that prevailed in the apartheid era: while they are good enough to perform domestic duties for their employers on the estate, which include the task of pushing perambulators on the roads, they are precluded from exercising any rights derived from public law and the Constitution.”

Thus, held the Court, “to the extent that these rules restrict the rights of domestic employees from freely being on and traversing public roads in the estate, I consider them to be unreasonable and unlawful.”  This invalidity ruling was also suspended for 12 months.

A warning to all estates

All HOAs and Bodies Corporate need to check their rules and regulations for legal validity.  The Court again: “If in fact there are other associations and/or estates in the country who, like the first respondent herein, either through ignorance or plain arrogance on their part, have seen it fit not to comply with statutory provisions, it’s time that they did.”

Credit: LawDotNews

MEDICAL CERTIFICATES

In terms of Rule 15(1) of the Ethical and Professional Rules of the Medical and Dental Professions Board of the Health Professions Council of South Africa, a practitioner shall only grant a certificate of illness if such certificate contains the following information, namely:

  1. The name, address and qualification of the practitioner
  2. The name of the patient;
  3. The employment number of the patient (if applicable);
  4. The date and time of the examination;
  5. Whether the certificate is being issued as a result of personal observations by the practitioner during an examination, or as the result of information received from the patient and which is based on acceptable medical grounds;
  6. A description of the illness, disorder or malady, with the informed consent of the patient, provided that if the patient is not prepared to give such consent, the medial practitioner or dentist shall merely specify that, in his or her opinion based on an examination of the patient, the patient is unfit to work;
  7. Whether the patient is totally indisposed for duty or whether the patient is able to perform less strenuous duties in the work situation;
  8. The exact period of recommended sick leave;
  9. The date of issuing of the certificate of illness; and
  10. A clear indication of the identity of the practitioner who issued the certificate which will be personally and originally signed by him or her next to his or her initials and surname in printed or block letters.

When one considers clinic certificates or clinic notes in terms of Rule 15 (1)(j) above the medical practitioner is required to print his name and initials on the medical certificate in addition to his or her usual signature. As occurs on a daily basis, medical certificates issued by a clinic hospital or satellite clinic is normally found not to be signed by the registered medical practitioner.  Every clinic and hospital has qualified medical practitioners in attendance, and any person who is ill is to be examined by such a person.

The consequence of Rule 15 (1)(j) above is that an examination by a nurse or other person who is not qualified to carry out examination and diagnoses is not acceptable. A certificate signed by a person other than a medical practitioner who is authorised to make such examination and diagnoses is equally unacceptable.

The resultant effect is that if the certificate from a clinic which contains an illegible signature and a stamp, it does not have to be accepted by the company. In such a case the company may insist that the rules as set out above are complied with and if not complied with the company may treat that period of illness as unpaid leave.

For more information concerning the implementation of correct sick control policies, the regulation thereof and the remedies available to employers for employees who abuse the system, contact Tracey Mouton at Goldberg & de Villiers on 041 501 9800, e-mail: traceym@goldlaw.co.za

BEWARE OF DUE DATES IN CONTRACTS

Deeds of sale in respect of immovable property often contain clauses specifying certain due dates requiring the parties thereto to do certain things by a date or timeframe stipulated in the agreement.

Typically these clauses would provide for the purchaser to pay a deposit by a certain date, to obtain approval of a mortgage bond from a financial institution within a specified number of days from signature of the agreement or to deliver guarantees for payment of the purchase price by a specified date.

It is preferable and more user friendly if the agreement state the exact date. However, contracts often provide for a requirement to be met within a specified number of days from signature of the agreement. Parties are then required to calculate the exact date by which the obligation must be fulfilled.

Contracts often refer to business days, calendar days or days.  Section 4 of the Interpretation Act states that if an agreement does not specifically say whether it is calendar or working days, the days are reckoned exclusively of the first day and inclusively of the last day, unless the last day falls on a Sunday or public holiday in which case the time shall be reckoned exclusively of the first day and exclusively also of such Sunday or public holiday.

It is important that you know when you are required to fulfil the obligations in terms of an agreement. Fulfillment of an obligation such as securing a loan is usually a suspensive condition. In other words the fulfillment of the condition by the stipulated date is a pre-requisite for a valid contract to come into force and effect.

Contact us if you require advice on the due dates in terms of your Agreement. At Goldberg & de Villiers Inc, our Property Law Department, namely Adri Ludorf, Tracey Watson-Gill and Bardine Hall will gladly assist you with any of your Property Law related needs.

 

SELLERS AND LANDLORDS: USING AN UNREGISTERED ESTATE AGENT

With media reports suggesting that up to 50,000 agents may be operating without the required Fidelity Fund Certificate (FFC).  The real figure is likely to be a lot less in that many former agents have probably just closed up shop in the last 10 years, but even so there is a chance that the agent who sold or rented out your house for you is (whether inadvertently or by design) unregistered.

Using an unregistered agent …

  1. Only registered estate agents (and those practicing attorneys not required to register as agents) have the legal right to claim remuneration/commission.  So an unregistered agent won’t be able to enforce any commission claim against you.
  2. Of course you would then stand to save a great deal of money in commission.  The question is, should you take the risk of not checking upfront?  It boils down to this – can you afford to trust your most important asset to someone who may not be registered with a professional body and backed by a Fidelity Fund?

For most of us the best advice is to rather err on the side of caution.  Check for registration, and in any doubt ask your lawyer for help before agreeing to anything.

Credit:LawDotNews

 

 

FINAL DE-REGISTRATION OF ENTITIES CONFIRMED BY CIPC

CIPC (Companies and Intellectual Property Commission) has issued a notice (Notice 61 of 2017) confirming the final deregistration of certain Companies and Close Corporations effective 2 February 2018 due to non-compliance with filing of Annual Returns.

The effect of this notice is that entities which are currently reflected as having the status of ‘Deregistration Process’ on CIPC records will be finally deregistered if the entity has no outstanding liabilities with any major banks or SARS. The deregistered entities will therefore cease to exist as their juristic personality is withdrawn as a result of deregistration.

A Company or Close Corporation is required to file an Annual Return with CIPC within a certain time period each year, dependent on the date on which the entity was registered. The purpose of filing the Annual Return is to provide CIPC with the latest information pertaining to the entity and for CIPC to determine whether or not the entity is still conducting business activities. Failure to file the Annual Return leads to the presumption by CIPC that the entity is no longer trading and thus commences the deregistration process.

For a list of entities due to be finally deregistered on 2 February 2018 visit the CIPC website at http://www.cipc.co.za/index.php/legislation/gazettes/.

To avoid final deregistration, the entities must attend to filing the outstanding Annual Returns with associated duties and penalties before the stipulated date.

For assistance in this regard, contact Goldberg & De Villiers Incorporated on 041 – 501 9830.

PLOT-AND-PLAN: GREAT OPTION, JUST BEWARE THE BUILDING DEADLINE

“Buy land, they’re not making it anymore” (Mark Twain)

Buying a house is an important and exciting experience.  One of the first decisions you must make is whether to buy an existing house (the “turnkey” option) or to buy from a developer on a “plot-and-plan” (“off-plan”) basis.

Which option is best for you only you can decide, but with the popularity of security estate living soaring and with the flexibility of creating your own dream home, off-plan is an increasingly attractive choice both for investment and for lifestyle.

Just remember that the many benefits of “buy and build” come with some important cautions.  Apart from practical considerations, there are many legal pitfalls to watch for, so have your lawyer check the agreements (normally two – one to buy the plot and the other to build the house) before you sign anything.

The building deadline – benefit and risk

One area to be particularly aware of is the common requirement that you build on your new plot within a certain period of time.  In fact as a buyer you should check for such a requirement – otherwise you could be subjected to years of construction activity in the estate with all the attendant noise, dust, inconvenience and security concerns.

Your risk is that, to enforce such time limits, developers commonly provide for defaulting buyers to be subject to penalty levies and/or buy-back/retransfer clauses entitling them to take back the plot.

A recent Supreme Court of Appeal (SCA) judgment provided strong warnings in this regard for both developers and buyers.

Developers – the perils of prescription

  • Two buyers of plots in a large estate failed to build on them within the required 18 month period (this requirement was registered on their respective title deeds).
  • Their sale agreements entitled the developer to take back the plots against repayment of the purchase price (without interest) and the developer asked the High Court to order re-transfer to it accordingly.
  • The SCA on appeal held that the developer’s claims had prescribed (become unenforceable) because it had waited more than three years before taking legal action.
  • The three year period applied, said the Court, because the developer’s right was a “personal right” not a “real right”.  The difference between the two is of great interest to lawyers, but all that really counts for developers and buyers is that the developer should have enforced its retransfer right within three years of the deadline date by which the purchasers were required to have built a house.

Bottom line for developers: Don’t delay in enforcing buy-back clauses!

Buyers – developers can enforce buy-back clauses

An earlier High Court decision, involving the same developer and the same clause but another buyer, had held that the buy-back clause was “grossly unfair”, and that such clauses generally “do not pass constitutional muster”.   Which led to speculation that buy-back clauses might be dead in the water.

Not so.  The SCA commented that the High Court should not have considered the question of constitutionality at all in the particular circumstances of that case, so (for the time being at least) buy-back clauses remain enforceable.

Bottom line for buyers: You could lose your plot if you don’t build by deadline.

Credit: LawDotNews