CREDITORS AND DEBTORS: IMPORTANT NEW PRESCRIPTION JUDGMENT

“Running into debt isn’t so bad. It’s running into creditors that hurts” (Unknown)

Debts prescribe (become uncollectable) after a specified period of time – 3 years for most run-of-the-mill debts but 30 years for others such as judgment debts, mortgage bond debts, property rates and tax debts. Various other periods apply to specific statutory debts and a few other exceptions – take advice if you need more detail.

It’s important to know that the prescription period can be “delayed” in certain cases.  For example where the debtor is a minor or insane, or under curatorship, or out of South Africa etc (there’s a long list).

Prescription can also be “interrupted”, most commonly by serving summons on the debtor or by the debtor making an “express or tacit” admission of liability.

It’s that last scenario we’re going to discuss, because of course it’s both an opportunity for creditors to extend the prescription period, and a danger for debtors waiting hopefully for their debts to prescribe.  Unscrupulous but savvy debtors will accordingly try their utmost to avoid making any form of admission of liability.

A very prejudicial “without prejudice” admission

Now a new SCA (Supreme Court of Appeal) decision has just added a significant twist that both creditors and debtors should take note of.

It revolves around the principle that during settlement negotiations we can safely make admissions “without prejudice”.  The idea is that, in order to encourage us to avoid the expense, delay, hostility and inconvenience of litigation, we can speak frankly without fear that our admissions can later on be used against us in court.  The only exception to that rule has (until now) been that an “act of insolvency” can be proved by admissions made by a debtor in without prejudice negotiations.

Developer v estate agency – R2m at stake

  • An estate agency claimed R2.147m in sales commissions from a property developer.
  • The developer in turn sued the agency for R1.023m for a variety of counterclaims against it.
  • During settlement negotiations the developer admitted its liability for the commission claims but suggested, on a without prejudice basis, that the two sets of claims be set off against each other, and tendered payment of the net balance.
  • The agency rejected this offer, a court battle ensued, and the developer raised the defence that most of the agency’s claims had prescribed as being older than three years.
  • The SCA rejected the prescription defence, holding that the three year period had been interrupted by the developer’s admission of liability – despite it having been made without prejudice. That’s new law, and it’s important both –
    • For creditors to recognise the new opportunity they now have to extend prescription, and
    • For debtors to recognise the new danger of hiding behind the “without prejudice” shield when making admissions.
  • The end result – the claims haven’t prescribed and the developer must fight on in the main action.

Note that the new exception to the without prejudice rule is limited solely to interrupting prescription.  Admissions made without prejudice still can’t be used to prove that you owe money, nor to prove how much you owe.  They can only be used to interrupt prescription, and even then as the Court put it:  “The exception itself is not absolute and will depend on the facts of each matter. And there is nothing to prevent the parties from expressly or impliedly ousting it in their discussions.”

Lessons for creditors and debtors

Creditors:  Prevention as always is a lot better than cure, so avoid arguments over prescription arising in the first place.  Don’t delay in collecting debts, suing for damages or recovering any other form of claim.  Serve summons on your debtor before you lose your claim forever.

Debtors:  We should of course all try to honour our debts.  As the Roman writer Publilius Syrus pointed out over two millennia ago “A good reputation is more valuable than money”.  But if you plan to fight any claim against you, you lose a valuable defence if you in any way admit liability, “without prejudice” or not.

Credit: LawDotNews

For more information, contact our team on 041 501 9800.

More restrictions may be imposed: Demolition of buildings older than 60 years

A provincial heritage resources authority may when it permits the demolition of a 60 year old building also impose conditions as to how the property may be developed in the future to conserve heritage resources.

In terms of the National Heritage Resources Act 25 of 1999, (the Act), no person may alter or demolish any structure or part of a structure which is older than 60 years without a permit issued by the relevant provincial heritage resources authority. In terms of a recent court case the provincial heritage resources authority granted a demolition permit in terms of the Act for the demolition of a structure older than 60 years situated on a property. The building had no formal heritage status yet the authority also imposed conditions controlling future development on the property. The owner of the property applied to court to review the conditions that were imposed on the basis that they were ultra vires the powers of the appeal tribunal and heritage authority. The court found that s 48(2) of the Act gave a wide discretion to the appeal tribunal and heritage authority to impose terms, conditions, restrictions or directions in the permit and held that such conditions were lawfully imposed.

The owner of the property also argued that conditions controlling future building or development on the property, permits the arbitrary deprivation of property contrary to the provisions of s 25(1) of the Constitution.

The court found that although the curtailment of the owner’s right to deal with his/her property may to a certain extent be regarded as a deprivation of property it was not arbitrary. The court stated that in our present constitutional democracy an increased emphasis has been placed upon the characteristic of ownership which requires that entitlements must be exercised in accordance with the social function of law in the interest of the community. The conditions in the demolition permit stems from the purpose of the Act namely the conservation of a heritage resource. (Gees v Provincial Minister of Cultural affairs and Sport, Western Cape and Others (974/2015) [2016] ZASCA 136; 2017 (1) SA 1 (SCA) (29 September 2016)).

For advice or assistance contact our professional team on Tel 041 5019800.

CLOSING DOWN THE GUESTHOUSE NEXT DOOR: NOTES FOR OWNERS AND NEIGHBOURS

“You can be a good neighbour only if you have good neighbours” (Howard E. Koch, playwright)

You decide – for whatever reason – that your neighbour’s new guesthouse is definitely not first prize in your sleepy and peaceful suburb, so you investigate.

You find out that the local municipal zoning scheme doesn’t allow anyone to trade as a guesthouse without a special departure permit, and that your neighbour doesn’t have one.

What are your rights and what must you prove to get assistance from our courts?  Must you prove, for example, that you have suffered some form of damage or is it enough to prove only the lack of a permit?

A recent High Court decision illustrates, and would-be guesthouse owners as well as their neighbours should take note.

Shattering the peace – wild parties and nuisance guests

  • Residents of a quiet suburb with ‘single residential’ zoning asked the Court to interdict their neighbour from running a guesthouse next door.
  • They alleged a number of nuisance disturbances including a wild party of over 50 people “drinking, swearing, yelling and urinating in the street”. That all-nighter was, they said, only temporarily interrupted by a visit from SAPS at 3 a.m. – it finally ended at 7 a.m. after a second police intervention.  Other allegations related to disruptive behavior by guests arriving and departing in buses, taxis, trucks and construction vehicles.
  • The guesthouse was being operated without the special permit required by the local zoning bye-laws.
  • The guesthouse owners said that they had twice applied for special permission in the correct format and had twice been given consent to continue operating the business pending final approval. This was hotly disputed and in any event, held the Court, “such informal authority cannot be the authority … envisaged by the relevant ordinances and regulations in this regard. After the proper procedure had been followed, and in particular after proper notices have been given to the property owners in the vicinity of the guesthouse, and notices in the local Newspaper, only then after proper consideration may consent be granted for the special use as a guesthouse. Up until that stage the guesthouse on the property is being run illegally.”
  • Nor did it help the owners to deny the allegations of nuisance behavior by guests. Such denial, said the Court “does not detract from the continued illegality of [their] use of the property.”
  • The owners also argued that a complaining neighbour has no right to ask for a court’s intervention without proving that it suffered some “special damage”. The Court disagreed – zoning schemes confer rights on affected property owners and they “are entitled to require that neighbouring owners comply with the applicable zoning scheme”.  That’s an important decision – it makes it a lot easier for affected neighbours to get redress.
  • The Court also rejected the guesthouse owners’ application for a suspension of the interdict pending the outcome of their permit application.
  • The end result is that the guesthouse must close (after a short grace period to allow longer term residents to find alternative accommodation).

Opening a guesthouse?  It boils down to this …

Each municipality will have its own bye-laws in regard to exactly what is and what isn’t allowed in each zoning category.  Where a formal municipal permit is required to operate a guesthouse, that permit must be applied for and must be granted before the business opens.  Otherwise your neighbours can ask a court to close down you down, proving nothing more than the lack of a required permit.

First prize is always to negotiate all your neighbours onto your side from day one, and in any event it’s worth getting legal help for your permit application to ensure your position is unassailable.

And a final note for suffering neighbours

Stand up for your rights, although of course even if you are 100% in the right, going to war with your neighbours should be the very last resort – there are no winners in a fight like that.  But if a polite request to “please close your doors” or “please stop disrupting our peace” doesn’t help, seek legal assistance immediately.

P.S. What about Airbnb?

There are grey areas around how zoning restrictions apply to short-term lets in South Africa, and municipalities all have their own requirements for bed and breakfast and other types of guest accommodation.  Take advice on what your local council’s requirements and limitations are.

Credit – LawDotNews

For more information, make an appointment with our legal team.

 

PROTECTION OF PERSONAL INFORMATION: DRAFT REGULATIONS IN TERMS OF THE PROTECTION OF PERSONAL INFORMATION ACT (POPIA)

What will be required from businesses?

STATUS OF POPIA

The Protection of Personal Information Act, 2014, (Act 13 of 2014), (POPIA), was assented to on 19 November 2013.

Only certain sections of POPIA are currently in operation. On 11 April 2014, sections 1 (Definitions), 112 (Regulations), 113 (Procedure for making Regulations) and Part A of chapter 5 (Information Regulator) were brought into operation in order to appoint the Information Regulator and to allow the Minister to develop and draft regulations.

PURPOSE OF POPIA

Once POPIA is fully in operation it will safeguard the personal information received, collected or disseminated from your business clients during the course of your business operations.

The purpose of POPIA is to prevent the misuse and abuse of your clients’ personal information for instance through identity theft and unsolicited marketing.

POPIA will not prevent the processing or sharing of the personal information of your clients but will regulate how it should be done so that the information is safeguarded against misuse and abuse.

DRAFT REGULATIONS

It is expected that POPIA will be brought into full operation once the regulations under POPIA have been drafted and promulgated. In terms of section 113 of POPIA the draft regulations must be published for public comment and consulted with the Information Regulator before it is finally promulgated.

The draft regulations in terms of POPIA have recently been published for comment. Comments on the draft regulations had to be submitted to the Information Regulator by 7 November 2017. Comments submitted on the draft regulations must now be considered and be addressed through amendments to the draft regulations before the final regulations may be promulgated.

WHAT IS PROPOSED BY THE DRAFT REGUATLIONS

The draft regulations propose certain administrative processes, prescribed forms and impose obligations on information officers. These processes and obligations, if finally adopted, will have to be incorporated in the business practices and policies of businesses that receive, collect or disseminate (use) the personal information of their clients.

What internal and external processes must businesses provide for?

The draft regulations propose that businesses adopt the following processes:

  • Receiving and dealing with objections by clients regarding the use of their personal information
  • Receiving and dealing with request by clients to delete or correct their personal information
  • Requesting the consent of clients to use their personal information for direct unsolicited electronic marketing

What further obligations must businesses comply with?

The draft regulations propose that the following obligations be imposed on the information officer (the head) of a business:

  • A compliance framework must be developed, implemented and monitored
  • Assessments must be conducted
  • Measures and standards for lawful processing of information must be developed and implemented
  • A manual must be drafted setting out what personal information will be used, who it will be shared with, for what purpose it will be used and shared, and describing the security measures to protect the information
  • Processes must be developed to deal with requests for access to information
  • Awareness sessions must be held

Unfortunately, the draft regulations do not provide guidance regarding the content and requirements of the above framework and standards that must be developed and implemented.

What other matters are proposed?

The draft regulations also propose the following procedures:

  • How to submit complaints to the Information Regulator
  • Procedures for Assessments and Investigations by the Information Regulator
  • Applications by bodies representing industries to develop codes of conduct

HOW CAN BUSINESSES PREPARE FOR IMPLEMENTATION?

Should the draft regulations be adopted in their current form, it is clear that businesses will have to review their internal and external processes to make sure that they comply with the above.

Many businesses have started to implement the requirements of POPIA which is advisable, but it should be kept in mind that any measure implemented at this stage will have to be reviewed when the regulations and supporting instruments in terms of POPIA come into operation to ensure compliance therewith. Once POPIA comes into operation there will be a grace period of one year to implement the prescribed measures.

It will be important for businesses that receive, collect or disseminate their clients’ personal information to closely follow the developments pertaining to POPIA to ensure readiness, to receive advice on how to comply and possibly to influence how the Information Regulator will implement POPIA by submitting comments on the supporting instruments and guidelines when published for comment.

For more information or advice contact us at Goldberg & de Villiers Inc Tel: 041 501 9800. (Bardine Hall – BA LLB)

 

CAN A SUCCESSFUL PARTY RECOVER THEIR LEGAL COSTS?

You have taken legal action against another party and emerged victorious as the successful litigant. Even better, you have been awarded “costs”, but what does that mean? Are you going to walk away without being responsible for your legal bill now? Not necessarily. Let’s examine the different scales of costs and how they impact the litigant.

The default scale is “party and party” scale. This means the court has granted the successful litigant costs, but limited to the prescribed tariff for that particular court which tariff determines what can be charged for and how much can be charged for each specific attendance. This is the most restrictive scale of costs and, due to the nature of legal work performed by an attorney, most likely will not include all the work required to finalise your legal matter. This means that, even though you were awarded costs, part of the legal bill cannot be recouped from the other party and remains your responsibility.

A higher scale that is sometimes applied is known as “attorney and client” costs. This is sometimes used by the court as a punitive measure, i.e. to punish the unsuccessful litigant who acted inappropriately during the proceedings of the matter or in pursuing or defending a matter.  This scale of costs normally includes more leeway in allowing more attendances in general and further allowing a higher rate for attendances. The idea behind this scale of costs is to recover as much of the attorney’s costs incurred by the successful client and the taxing master (i.e. the court official responsible for taxing a bill of costs) has more discretion in allowing various costs.  Although being awarded this scale of costs allows a successful litigant to recover more of their legal costs (and certainly more than would be recovered on a party and party scale) it is still likely that there will be a balance of legal costs which the successful litigant would remain liable for.

Lastly, there is a more extreme scale of costs referred to as “attorney and own client” costs. This is applied when there are substantial and compelling reasons that would justify deviation from the prescribed tariffs and is aimed at enabling a successful party to recover most if not all of their legal costs. The taxing master does, however, still have some discretion in how far they allow deviation from the prescribed tariffs.

In summary, it is important to canvas the issue of costs when first consulting with your attorney to ensure that you are aware of the restrictions in recovering same if successful and to assess your responsibility for such costs.

For quality guidance on your legal matters, contact Goldberg & de Villiers Inc. on (041) – 501 9800.

Right to a View?

South African law does not recognise an inherent right to the existing view from a property. A beautiful view is considered a mere incidental advantage of property ownership and not an actionable right. Views can be protected by registering a servitude, restrictive title conditions or through contractual provisions. The wording of such a servitude or restrictive condition should be clear and as wide as possible to prohibit obstruction by buildings or plants.

Neighbours often use the provisions of the National Building Regulations and Building Standards Act 103 of 1977 to object against building plans relating to buildings that would obstruct the views of their property. In terms of section 7(1)(b)(ii) of the National Building Regulations and Building Standards Act 103 of 1977, a municipality is compelled to reject building plans if the value of a neighbouring property would diminish because of the specific nature or appearance of the proposed building.

However, case law has established that building plans do not have to be rejected even if the proposed buildings would obstruct a neighbour’s view from his/her property.

Know your rights! For advice or assistance contact our professional team on Tel 041 5019800.

IS MY EMPLOYEE ENTITLED TO OVERTIME?

The current prescribed earning threshold in terms of the Basic Conditions of Employment Act is R205 433-30 per year.  This equates to R17 119-44 per month, as a gross remuneration.

Employees employed at a remuneration in excess of this amount would be excluded from the overtime provisions of the Basic Conditions of Employment Act.

This in turn has the consequence that such employees do not have a legal right to demand the protection and rights which are conferred upon employees in terms of chapter 2 of the Basic Conditions of Employment Act.

The resultant effect of this is that whilst an employer is not entitled to force employees to work unreasonable hours, the employee has no right to demand to be paid overtime as stipulated in the Basic Conditions of Employment Act.  The employee may however negotiate in this regard.  It is thus important that contracts of employment clearly spell out the conditions relating to overtime and the payment thereof.

For more information on the regulation of hours of work and overtime pertaining to those employees earning above the threshhold, please do not hesitate to contact Tracey Mouton at (041) 501 9818.

10 QUESTIONS TO ASK ABOUT YOUR WILL

No-one likes thinking about – let alone discussing – death, and this dislike seems to extend also, for many of us, to our Wills.

However, all too often our Wills have been drafted many years ago, are out of date, not legally sound or practicable and really need wholesale revision. Perhaps you Will was not drafted by a suitably experienced and qualified Estates planning professional, such as an Attorney who specialises in this field.

Take out your Will, and ask yourself these questions:

  1. Was this Will drafted more than two years ago?
  2. Have I had children since this Will was drafted, or have I had grandchildren?
  3. Has my marital status changed, or do I now have a life partner?
  4. Have I acquired immovable property, an interest in a business, or other significant assets?
  5. Has my Estate grown significantly – and some tax planning has become necessary – or has it declined in size, and is no longer able to honour all the bequests made?
  6. Have people named in the Will in any capacity –as Executors, Trustees, Guardians, legatees or the like – either died, or moved out of my life, or if mentioned in the capacity of Executor, Trustee or Guardian, emigrated?
  7. How practical are some of my bequests – for example, have I considered how practical it will be, to leave my movable assets to heirs who now live abroad? Does my marital status make some of the bequests fair and reasonable?
  8. Will my Estate have sufficient liquidity to pay my liabilities and the administration costs in my Estate?
  9. Is the nominated Executor (or a co-Executor), not an experienced Estates professional, who can also give a personal touch to the process, and flexibility on costs, rather than institutional red tape? (It is best to have an experienced professional on board)
  10. Will the Estate administration process prove excessively complicated, costly or burdensome to my loved ones?

If the answer to any of these questions is “yes”, or “I’m not sure” – or if you don’t have a Will at all – you should make an appointment urgently to discuss your Estate planning with us. Contact Nicholas Mitchell, the Director of our Estates Department, on 041-501 9812 or nicholas@goldlaw.co.za , to set up an appointment.

 

 

PASSING OF RISK

We buy and sell things every day, and no doubt most of us assume that it is only when we become the owner that we take the risk of our purchase being damaged or destroyed. Not always – in our law, passing of ownership and passing of risk are two different concepts, and although in our day-to-day lives they are normally simultaneous, sometimes they aren’t.

What happens then?  The general rule in our law – unless the parties have agreed otherwise – is this –

  1. A buyer becomes the owner of a movable only when it is “delivered” to him/her (be careful here – “delivery” is a much more complicated concept in law than you might think).
  2. Risk however passes to the buyer on conclusion of the contract of sale; in other words, you could buy something, and if it is stolen or destroyed before you take ownership, you could end up losing both it and the purchase price. There are many provisos and exceptions to this rule (such as when the seller causes the loss) but the legal principles are complex and all in all it’s a minefield for the unwary.”

For more information, contact us on 041 501 9800.

 

What constitutes gross negligence?

It is vital that companies understand the difference between negligence and gross negligence as this could be the difference at an enquiry of being in a position to find an employee guilty of the charge.

Negligence has been described as a failure to comply with the standard of care that would be exercised in the circumstances by a reasonable person.  The test therefore for negligence is whether a reasonable person in the position of the employee concerned would have foreseen the harm resulting from the act or omissions and would have taken steps to guard against that harm.

In a practical situation, this would read as follows:  “did the production manager foresee the harm of him failing to ensure quality checks were carried out hourly and failed to take steps to guard against that harm”.

Gross negligence is said to have occurred if the employee is persistently negligent, or if the act or omission under consideration is particularly serious in itself.

Case law has described gross negligence as including an attitude or state of mind characterised by an entire failure to give consideration to the consequences of one’s actions, in other words, an attitude of reckless disregard of such consequences.  It is thus a conscious and voluntary disregard of the need to use reasonable care.

Whilst disciplinary action is normally taken against employees for negligence only if they have caused damage or loss, the case authorities are clear that potential loss is sufficient in finding an employee guilty of negligence or gross negligence, depending on the circumstances.

Going into an enquiry, it is wise to charge the employee with alternative charges relating to negligence.  This would thus read gross negligence in the alternative negligence.

For more information relating to the correct manner in which to charge employees and conducting enquiries, please do not hesitate to contact Tracey Mouton on 041 501 9832 or traceym@goldlaw.co.za.