“A bad neighbour is as great a calamity as a good one is a great advantage”. (Hesiod, poet of Ancient Greece)

Your neighbour’s business is driving you to distraction. Perhaps it’s loud all-night music, or an invasion of your hard-earned privacy, or illegal parking in your driveway, but regardless of what the nuisance factor is, it really is untenable. You’ve tried everything you can think of to sort it out amicably – polite requests, offers of mediation, compromise proposals. Nothing has worked, and the nightmare continues.

So, it’s off to court you go. Legal action is never first prize when it comes to long-term relationships with neighbours, but if they leave you with no other alternative, take heart from two recent High Court cases. In both, businesses being operated by neighbours in contravention of land use laws were penalised for doing so.

Noisy nightclubs shut down … with some harsh words for the landlord

• A university residence was subjected to noise from nearby nightclubs, with students complaining that loud music prevented them from sleeping and studying until the early hours of the morning.
• The establishments were on property zoned “Use 6: Business 1″ which allowed for the use of the premises as a “Place of Refreshment”, such as a café or bar. But these particular businesses fell into the municipality’s definition of “nightclub”, which put them into the “Place of Amusement” category – for which they were not zoned.
• They argued that their “tavern” liquor licences obliged them to provide entertainment and therefore allowed them a secondary use of the premises as a “Place of Amusement”. The Court disagreed: “the terms of the liquor licence can never override the provisions of the Town Planning Scheme”.
• The premises were accordingly being used outside of their land use rights and were prohibited from continuing to do so, i.e. the nightclubs must close down. If they convert to just being “pubs” they are prohibited from making any noise in excess of the noise levels permitted by the land use rights of the premises.
• Finally, the Court had a harsh word or two for the landlord of the premises in question, which had, it said, remained “supine” rather than enforcing a clause in the lease prohibiting the tenants from creating any nuisance to neighbours. The landlord was accordingly ordered to take “all reasonable measures” to stop its tenants from making a noise nuisance, plus it must pay a share of the costs. That’s a clear warning to all landlords that they risk liability for their tenants’ wrongdoing.

Approvals for a seaside guest house set aside

• The owner of a seaside property realised that not only were her neighbours running a seven-room guest house without municipal permission, but that they planned to go double story with it. “There”, she thought, “goes my privacy”.
• She also feared the negative impact of a guest house on the general character of the area, on traffic volumes and on stormwater management, particularly in light of the guest house’s plan to increase its size to eight suites with parking for sixteen cars.
• The guest house owners had applied to the local authority for a permanent departure from the zoning scheme conditions (their house being zoned “single residential”) and for the removal of restrictive conditions attached to the title deed. The municipality refused to remove the title deed restrictions but granted a conditional approval for the operation of a guest house.
• The homeowner was having none of that and took the matter to the High Court, which found that the local town planning scheme in force at the time (before a new scheme was adopted) did not empower the municipality to grant approval for building or running a guest house on the property. The Court set aside the municipal approvals.
• Both the development and the operation of a guest house on the neighbour’s property were thus declared unlawful. The neighbour, if it still wants to operate the guest house, must now make new applications to the municipality under the “new” town planning scheme for the area. That’s Round 1 to the homeowner, and an expensive lesson for the neighbour.

Before you buy a property…

Whether you plan to run a business from the property you are about to buy or are worried that one of your new neighbours might do so in the future, check what zoning and land use restrictions apply to your respective properties before you put pen to paper!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“The greatness of a nation and its moral progress can be judged by the way its animals are treated.” (Mahatma Gandhi)

For many of us our pets are a central part of our lives, our much loved “fur babies”, our companions, exercise partners, even therapists through the hard times.

But what will happen to them after we die? Or if we lose the ability to make the decisions necessary for their welfare? Unless you make specific provision for your beloved pets to address these situations, their fate could be a grim one. When you die for example, the executor of your estate will have no option but to hand pets over to your heirs as “property”. And if your heirs are unable or unwilling to give them a good home and have no guidance from you as to what your wishes are, your beloved pets could end up needlessly euthanised or in a shelter.

Let’s look at a few ways you can avoid that –

A “Living Will for Pets”

In the “when you are gone” section below we will discuss options that only apply after your death, but in contrast a “Living Will” applies when you are still alive but no longer able to make your own decisions.

Thus, your own personal “Living Will” or “Advance Medical Care Directive” sets out what medical treatment you consent to receiving when you are no longer able to speak for yourself.

Similarly, you may want to do something like that for your pets, setting out what is to happen to them when you are no longer able to make such decisions yourself. You could leave specific care instructions (including perhaps veterinary care instructions and authority for euthanasia in specific circumstances) or you could appoint a trusted heir or animal welfare organisation to make those decisions for you. Note that you cannot leave money or assets to anyone in a living will – bequests can only be made in your actual will.

Three alternatives for when you are gone

1. A clause in your will: As “property”, your pets cannot inherit from you, but you could provide in your will (“Last Will and Testament”) for a named heir to inherit them, ideally with a bequest to help them cover the costs of pet ownership. Make sure your chosen heir is on board with your plan!
2. A directive – in your “important information” file, or in a separate letter of wishes: In addition to your will, you should always leave your executor and heirs a comprehensive file of important information and documents to assist them in winding up your estate. It should include a “My directives” section with instructions as to what is to happen to your pets. Alternatively, you could set that all out in a separate “letter of wishes”. These directions aren’t legally binding on anyone, but they do provide guidance to those winding up your affairs as to your wishes.
3. A testamentary trust: This will be overkill for most situations, but if you want to leave a lot of money to care for your pet/s, you might be advised to set up a testamentary (i.e. set up in your will) trust. You would appoint trustees to manage a bequest to the trust, with guidance on how the money is to be spent for your pets’ benefit.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“He who is quick to borrow is slow to pay” (Old proverb)

A recent High Court decision means that, for the first time, creditors of debtor companies are specifically cleared to apply for the company’s directors to be declared “delinquent” in certain circumstances. And that has significant implications for both directors and creditors.

For directors – major long-term career risks

Company directors need to manage a whole range of duties, responsibilities and risks, including being declared “delinquent” in terms of the Companies Act. For more serious categories of misconduct a director risks disqualification from holding any directorship or senior management position for a period ranging from 7 years to a lifetime.

A wide range of less serious categories of misconduct can lead to “probation” orders, with possible disqualification for up to 5 years, supervision by a mentor, remedial education, community service and payment of compensation.

The fact that creditors can now make delinquency applications adds a new level of director risk, the reality being that of all the stakeholders out for blood after a corporate failure, unpaid creditors may well be the fiercest. Your best defence against any personal attack is to always be aware of, and to scrupulously comply with, all your many fiduciary duties.

For creditors – a new door opens

As a creditor on the other hand, your chances of recovering a company debt from a director personally will depend on a range of factors – whether you hold personal suretyships, whether you can prove personal liability for breach of statutory duties and so on (this is a complex topic – specific legal advice is essential).

Now another door has opened to you, and although as we shall see below you will have to convince the court that you are acting in the public interest, it will certainly make directors think twice about defrauding you or exposing you (and creditors and the public generally) to loss through corporate misconduct.

• The case in question stems from the creditors of a company in liquidation failing to recover their debt from it, and consequently taking action against the directors in their personal capacities for over R370m.
• They also asked the High Court to declare the directors delinquent, and one of the directors objected on the basis that creditors have no power to bring such an application. Indeed, the Companies Act gives this right only to a specific list of stakeholders – namely a shareholder, director, company director, secretary or prescribed officer, registered trade union, employee representative, Takeover Regulation Panel, some organs of state and the CIPC (Companies and Intellectual Property Commission).
• The Court however agreed with the creditors that they could apply under another provision of the Companies Act which allows anyone to apply “acting in the public interest, with leave of the court”. On the facts of this particular matter, the creditors were cleared to proceed under that provision.
• In reaching this decision, the Court took account of the (as yet unproven) serious allegations levelled against the directors – extreme breaches of fiduciary duty over a long period of time and involving substantial amounts of money, “a full panoply of misdemeanours” including gross abuse of position and gross negligence, the large number of directorships held by the directors, the (indirect) involvement of public entities – the list goes on.
• Importantly, the Court rejected the director’s argument that “the danger of giving the creditor such standing was that it could use the threat of a delinquency declaration to squeeze the proverbial few extra bob out of the directors.” Every case, said the Court, must be decided on its own facts, and the fact that creditors are suing directors personally does not automatically mean that they are acting cynically and opportunistically.
• But clearly, to succeed you will have to prove that you are acting in the public interest and not just in your own interest as a creditor. It will help to be able to argue, as the creditors in this case did, that “the general public and creditors deserve and require to be protected in their dealings, engagements and transactions with the companies and close corporations of which the defendants are respectively directors and/or members; and … the relief will protect the public from the defendants repeating or replicating their delinquent conduct in other entities.”

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“…moonlighting as a matter of principle is unacceptable…” (extract from judgment)

Up to a quarter of all middle-class South Africans are reported to “moonlight”, that is to run a part-time side hustle or side business in addition to their full-time jobs. Some, it seems, go one step further and manage to hold down two full-time jobs simultaneously. No doubt the pandemic-accelerated increase in remote working has enabled that trend as much as financial pressures on employees have fuelled it.

But, as the Labour Court has once again confirmed, moonlighting without permission risks instant dismissal.

“Juggling two jobs” leads to dismissal after an anonymous tip off

• A “highly qualified and academic” employee held down two part-time lecturing jobs, one with a university. The university had consented to this arrangement, so all was well at that stage.
• However, she thereafter elected to resign from her second part-time job and to take up full-time employment as a lecturer “in a senior position of trust and responsibility” with the university at an annual salary package of R787,520. Almost immediately after that she took on another full-time job as an accounts director at a data consultancy, this time at an annual salary of R1,100,004. Critically, this time she did so without seeking the university’s authority to do so.
• We will never know whether or not the employee might perhaps have got away with juggling these two full-time jobs for any length of time, because after only a month an anonymous tip-off put an abrupt end to her scheme.
• The university convened a disciplinary hearing and she was dismissed after being found guilty of gross misconduct for taking up a second full-time position without the university’s knowledge or authority, in breach of her duty of good faith to the university and of its “Policy on the Declaration of Interests”.
• She referred the matter to the CCMA (Commission for Conciliation, Mediation and Arbitration) which held her dismissal to have been both substantively and procedurally fair – which decision she referred to the Labour Court on review.
• Unimpressed with the employee’s defence that she could manage the two positions, that she did not think it would prejudice the university, and that she saw no conflict of interest, the Court agreed that she had been guilty of “extremely serious misconduct” and upheld her dismissal.
• Rubbing salt into her wounds, the Court ordered her to pay the university’s legal costs (unusual in labour law matters).

Moonlighting – a breach of duty and good faith

The Court’s findings apply to all employment contracts, even those without specific moonlighting policies in place, because of the breach of trust inherent in unauthorised moonlighting. To quote the Court in bullet point form –

• “In simple terms, moonlighting as a matter of principle is unacceptable, and a breach of an employee’s fiduciary duties towards the employer.
• It must always be the sole prerogative of an employer to decide whether to allow this to take place, and also on what terms it may be allowed.
• Nothing can be assumed by the employee. That is why it has to be critical that full disclosure be made by the employee to the employer beforehand, so the employer can exercise its prerogative in an informed manner.”
• To make disclosure to an employer after the fact effectively confronts the employer with a fait accompli, and cannot undo the breach of the duty of good faith that has already taken place.”

Is dismissal always appropriate?

To quote the Court again: “It would in my view be difficult for an employer to re employ an employee who has shown no remorse. Acknowledgment of wrongdoing is the first step towards rehabilitation. In the absence of a recommitment to the employer’s workplace values, an employee cannot hope to re-establish the trust which he himself has broken. Where, as in this case, an employee, over and above having committed an act of dishonesty, falsely denies having done so, an employer would, particularly where a high degree of trust is reposed in an employee, be legitimately entitled to say to itself that the risk of continuing to employ the offender is unacceptably great.”

In this case the employee’s consistent denials of wrongdoing left the university, said the Court, with no alternative but to terminate her employment. But clearly dismissal will not automatically be appropriate in all cases, particularly where it is possible to re-establish trust in a case of genuine remorse. Every case will be different and specific legal advice is essential.

Consistency is critical

Employers need to be able to justify any inconsistency in approach to similar misconduct by other employees. In this case the employee’s “consistency challenge” was groundless and rejected, but it will always be a factor in assessing whether or not dismissal is appropriate.

A final note for employees

If you need or want to earn some extra cash on the side, tell your employer and get prior consent (in writing). Or risk dismissal.

And a final note for employers

Follow the principles set out above and think of putting something into your employment contracts to cover all possible “conflict of interest” situations including moonlighting. With the complexity of our labour laws and the downsides of getting it wrong, specific legal advice is essential.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“If you don’t like where you are, move. You are not a tree” (Jim Rohn)

It’s that time of year again – summer sunshine, happy holidaymakers in festive mode, and an upsurge in property sales.

Whether seller or buyer, be aware of the various compliance certificates that may be required for your transfer to go through smoothly. These certificates ensure that the property is up to standard in terms of safety, health and building regulations, and can also help prevent any unexpected costs or legal issues from arising later on.

In most cases the responsibility for obtaining these certificates lies with the owner of the property, and failure to do so can result in delays in the transfer process, or even legal action. Also, if remedial work is required, this could take time and delay the whole transfer process. For these reasons, it’s a good idea to obtain the necessary clearance certificates as early as possible (just keep an eye on how long each is valid for). 

So, sellers – here’s a checklist for you of the certificates of compliance you might (or might not) need –

• Electrical: One of the key certificates required for property transfer is the Electrical Compliance Certificate. This confirms that the electrical installations (distribution boards, wiring etc) in the property meet safety standards and other requirements, and that any necessary repairs or upgrades have been carried out. It does not cover actual appliances like stoves, geysers and the like. The certificate must be issued by a registered electrical contractor, and you cannot agree with the buyer to waive this requirement.
• Electric Fence System: Additional to and separate from the electrical certificate discussed above, this applies if you have an electric fence system installed (or modified) after 1 October 2012.  It can be transferred to the buyer. Only a registered electric fence system installer can issue it. Again. It can’t be waived.
• Gas: A Gas Compliance Certificate is only required if you have gas appliances installed and confirms that the installations meet safety standards and are in good working order. A registered professional must issue it, and again it cannot be waived.
• Beetle Infestation: Required by banks and perhaps insurers in some (mostly coastal) areas of the country, this certificate confirms that the accessible wood of permanent structures is free of wood destroying insects. You can agree with the buyer on whether or not a certificate is necessary, and if so, who must obtain and pay for it. Usually valid for 3 to 6 months.
• Water Installation: Currently only required by the City of Cape Town and aimed at preventing illegal water connections and stormwater ingress, this certificate confirms that the water system installations comply with the City’s byelaws. It does not confirm that the whole plumbing system is in order even though it may be referred to as a “plumbing certificate”. Only a qualified and registered plumber can issue it. Again, you cannot agree with the buyer to waive this.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“It’s the most wonderful time of the year!” (Songwriters Pola & Wyle)

As the end of another year approaches, with its family celebrations and holidays, take the time to check that your estate plan really does ensure that your loved ones will be looked after when you are no longer here for them.

Here are two questions to ask yourself right now –

1. “Is it time to review my will?”

   The heart of any estate plan is of course your will (“Last Will and Testament”) and it is essential to review it regularly. Check for the following –

   1. Changes in your financial or personal circumstances. If you have changed your circumstances in any way – perhaps you have a new spouse or life partner, perhaps you have divorced or had another child, perhaps your assets and liabilities are different now – whatever it is, you may well want to change the relevant provisions in your will.
   2. Changes in your family’s circumstances. Similarly, changes in a family member’s personal or financial circumstances could trigger a need for change.
   3. Changes in tax or other laws that might affect your estate. As in everything else in life, constant change is a feature of our legal and tax landscape – your estate plan may need to adapt accordingly.

   To update your will, ask your lawyer whether a “codicil” to your will is enough, or whether it would be better to execute a brand-new will.

2. “Is there enough “ready cash” in my estate?”

   Something easily overlooked in the estate planning process is the need to provide your loved ones and your executor with “liquid” funds – readily-available cash or other accessible funds.

   Without that, your family is at risk in two respects –

   1. They may struggle to make ends meet while your estate is being wound up. 

      Winding up a deceased estate is a specialised process which can take a long time. Your family needs something to live on in the interim, and although your executor has the power to advance monies to heirs in certain circumstances, first prize will always be to leave your loved ones a source of income outside of that whole process. Remember that your bank accounts and the like will be frozen as soon as the banks learn of your death.

   2. Your family could even face homelessness. 

      That’s not an exaggeration – it’s exactly the prospect confronting a widow after a recent High Court order authorised an executor to sell the deceased’s family home. The problem was that the executor needed to have sufficient funds to pay creditors, the administration costs of the estate, the advertising, the Master’s fees and the executor’s fees – in that case, just over R206,000.

      The only way he could raise enough cash was to sell the house in the estate, because the sole heir (the deceased’s widow) had declined to make the necessary cash contribution to the estate to avoid that. The Court ordered the Master of the High Court to set the manner and conditions for the sale accordingly – the widow will have to move.

      In many estates there will be assets other than the family home that the executor can sell to raise cash, but it will always be best to avoid that – it could be your business for example, or a valuable heirloom.

      So how do you prevent that unhappy scenario?

The answer is simple – find another way to leave your family access to ready cash outside of your estate. Commonly recommended strategies include separate bank accounts controlled by family members, family trusts, life policies and living annuities with family members nominated as beneficiaries, really anything accessible directly to your family members outside the estate. Professional advice specific to your circumstances is a no-brainer here.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“The crux of the case is about unequal treatment of persons. (Extract from judgment below)

The recent High Court judgment which declared unconstitutional differences between maternity, paternity, parental, adoption and surrogacy leave has received a lot of media attention, much of it focusing on the reasons for the decision – but what has actually changed on a practical level for employers and their employees?

In summary, the Court has given Parliament two years to remedy those sections of two Acts – the BCEA or Basic Conditions of Employment Act and the UIF Act – that discriminate unfairly between mothers and fathers and between different sets of parents on the basis of whether a child was born of the mother, conceived by surrogacy or adopted.

Employers and employees – what you need to know

The matter now goes to the Constitutional Court for confirmation of the declaration of invalidity and of the Court’s interim order that “…all parents of whatever stripe, enjoy 4 consecutive months’ parental leave, collectively. In other words, each pair of parents of a qualifying child shall share the 4 months leave as they elect.”

To break that down, all parents (regardless of gender or category) will, subject to confirmation by the Constitutional Court, be entitled to at least four consecutive months’ leave – what until now has been described in the BCEA as “maternity leave”.

To break that down simply –

• Single parents of any gender will be entitled to the full four months’ leave.
• A pair of parents will be entitled to the same leave, but they must share it between them They can choose how to take the leave – either one of them can take the whole period, or they can take turns taking leave. Both parents’ employers must, before the child’s birth, be notified in writing of the parents’ decision and of the periods to be taken by each parent.
• Adoptive parents will be entitled to the same leave when adopting children under two years of age.
• Surrogacy – the same leave will be available to a commissioning parent or parents (a “commissioning parent” is a person who enters into a surrogate motherhood agreement with a surrogate mother).

If it’s unpaid leave, a UIF claim may help…

The BCEA provides job security by obliging employers to grant parental leave rather than lay off new parents, but it does not force employers to make it paid leave. It will be unpaid unless your particular contract of employment specifies that it will be paid.

That’s where the UIF (Unemployment Insurance Fund) comes in, with its provision of “maternity benefit” claims. These will be available to all qualifying parents who are contributors to UIF.

Employers – take advice on how to update your leave policies to comply with these anticipated new provisions.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“Fraud is a cancer that is crippling our country” (Supreme Court of Appeal in 2019)

An all-too-common scenario in these times of high unemployment is job applicants who, desperate to be hired, lie about their qualifications on their CVs. Recent high-profile stories of fake doctors and the like are no doubt only the tip of the iceberg when it comes to this growing problem.

And of course, the consequences for any business hiring such a candidate can be extremely serious. You face loss of reputation, loss of clients, dangerous workplaces where safety issues are at stake, and potential liability for any damage caused by the under-qualified employee.

The new offences

But there is help at hand! All employers, employees and jobseekers need to know that anyone lying about their qualifications now faces heavy fines and up to 5 years’ imprisonment.

That’s in terms of the newly operational National Qualifications Framework Amendment Act, which makes it a criminal offence to “falsely or fraudulently” claim to be holding a qualification or part-qualification from any educational or skills development provider, including a foreign institution. Fraudulent claims needn’t necessarily be in the form of a CV – any deliberate “falsification and dissemination or publication” of false qualifications is now criminalized, so posting fake matric certificates or degrees on social media for example would now be a criminal offence.

What you should do as an employer

• If a job seeker lies
  

  Of course, prevention is always better than cure, do your due diligence upfront – verify all qualifications claimed, speak personally to references, query inconsistencies or gaps in CVs and so on.

  You naturally won’t hire an applicant who turns out to be a liar but think of going one step further – lay criminal charges! It may seem overkill but the applicant has put your business at risk just by claiming the false qualification, and the best protection you can have from future attempts to defraud you in this way is to build a reputation for taking firm action against cheats.

• If an existing employee lies

  If on the other hand you find out that an existing employee has been guilty of CV fraud, either to get the job initially or to qualify for a benefit such as a promotion, you have a range of options available to you –

  • Lay charges: Send out a clear message: “Don’t mess with us!” by pursuing criminal charges, either as above if it’s qualification fraud or under our general criminal laws for other types of fraud. A recent example is provided by the case of a fake radiographer who misrepresented her qualification to get employment and has been sentenced to 2,000 hours’ periodical imprisonment.
  • Disciplinary action: You should also consider disciplinary action against the employee, with dismissal a distinct possibility in appropriate cases. Note that specific legal advice is essential here to get it right.
  • Claim damages: You may well also have a claim against employees for any losses flowing from their fraud. For example, the High Court recently ordered an employee who had claimed to hold what turned out to be a fake degree to repay everything he had earned back to his employer – over R2.2m. Moreover, the Court authorised the employer to execute against the employee’s provident fund, and that’s really going to hurt the fraudster’s retirement plans. Note that pension and provident funds are normally protected from creditors but not from claims for “any damage caused to the employer by reason of any theft, dishonesty, fraud or misconduct”. As a final mark of its displeasure, the Court ordered the employee to pay costs on the punitive attorney and client scale.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“Caveat subscriptor” – old legal maxim meaning “Let the signer beware!’

A recent High Court decision once again highlights the dangers of signing anything without reading, understanding and fully considering it.

A “Renovator’s Dream” and a case of buyer’s remorse

• A couple viewed a house advertised as “a renovator’s dream” and they immediately decided to sign an offer to purchase for R550,000 (R20,000 under asking price).
• The seller accepted the offer that afternoon (after the agent agreed to reduce her commission to R40,000) and the agent emailed a copy of the sale agreement to the buyers with confirmation of the acceptance.
• Early the next morning the buyers emailed the agent saying that the cost of renovations meant the purchase was not feasible for them “Therefore I hereby decline my offer to purchase and thanks for your time.”
• After taking legal advice the agent confirmed that a binding sale agreement had been concluded and that the sale must proceed.
• The buyers’ response was to suggest that the sale was subject to their daughter’s approval, to which the agent countered that had that been discussed, a special condition to that effect would have been inserted into the agreement.
• The seller thereafter sold the house to another buyer, and the agent (having not been involved in the second sale) sued the buyers for the agreed commission of R40,000 in terms of a standard clause in the sale agreement making the buyer liable for commission on breach by the buyer.

“Let the signer beware!”

• The Court dismissed the buyers’ objection that they hadn’t realised that they would be liable to pay the commission if they breached the sale agreement. “It is evident”, held the Court, “that the caveat subscriptor [‘let the signer beware’] rule provides that a person who signs a contract signifies their assent to the contents of the document, and they are bound by the document even if it subsequently turns out that the terms are not to their liking. In that event, they have no one to blame but themselves.” In other words, read and understand any agreement before you sign it – once you sign, you are bound whether you read it or not.
• Nor could the buyers prove that the sale was subject to their daughter’s approval as there was no condition in the agreement to that effect. In other words, make sure that any special conditions you want to form part of the sale are inserted into the signed agreement.
• Finally, there was no evidence of misrepresentation or fraud inducing the buyers to sign – if they were mistaken as to what was in the agreement and in particular in the commission clause, that was due to their failure to read it before signing.
• The buyers must pay the R40,000 commission plus two sets of legal costs.

Bottom line – sign nothing without understanding exactly what you are agreeing to.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“The buyer needs a hundred eyes, the seller but one” (Old proverb)

You buy a “pre-loved” vehicle which turns out to be a complete dud. You go back to the dealership which says “sorry, you bought it as is, not our problem”. What are your rights?

Buying from a private seller

When we discuss the CPA (Consumer Protection Act)’s consumer protections below, note that the CPA only applies to dealerships and to other sellers acting “in the ordinary course of business”. Private sales won’t fall under the CPA and any savvy private seller will sell subject to an “as is” or “voetstoots” clause, which will be valid and means that unless you can prove fraud on the part of the seller in concealing defects from you, the risk is on you. Bottom line – have the vehicle fully checked out before you pay a cent!

Buying from a dealership – CPA to the rescue!

Dealership sales are another matter entirely. The CPA provides that –

• Goods must be “reasonably suitable for the purposes for which they are generally intended … of good quality, in good working order, and free of any defects … will be useable and durable for a reasonable period of time, having regard to the use to which they would generally be put and to all the surrounding circumstances of their supply”.
• You are automatically given an implied warranty of quality that goods comply with those requirements and standards.
• If the goods fail to meet this standard, you can return them (at the seller’s risk and expense) within 6 months of their delivery and then the seller must – at your direction, the choice is yours – either
  • Repair or replace the goods, or
  • Refund you in full.

Note that the defects complained of cannot be just cosmetic or inconsequential. As the SCA (Supreme Court of Appeal) has put it: “Not every small fault is a defect as defined. It must either render the goods less acceptable than people generally would be reasonably entitled to expect from goods of that type, or it must render the goods less useful, practicable or safe for the purpose for which they were purchased.”

Four cases in point…

The National Consumer Tribunal deals with a large number of consumer complaints, and many of them relate to used car disputes. If you complain, it will be for you to prove that the dealership is in breach of the CPA, and if you succeed in doing so the Tribunal can impose administrative fines on the dealership as well as help you get redress. Let’s have a look at a few recent Tribunal judgments to see how that works in practice –

1. A breakdown after four months

A couple bought a Mercedes Benz 220 CDI Automatic motor vehicle for R225,900. Four months later they suffered a breakdown, and were quoted R47,782 for repairs. The dealership replied that it was not liable because the issue was wear and tear, the buyers knew of the vehicle’s high mileage and they had declined to buy a warranty.

Declining a “goodwill” offer of R10,000 from the dealership, the buyers referred the matter to the Motor Industry Ombudsman and thence it found its way to the Tribunal. The Tribunal, finding that the dealership had failed to make out a case that the damaged parts was a wear and tear issue, held the dealer guilty of prohibited conduct in terms of the CPA and ordered the dealership to refund the buyers in full.

2. Wrong tyres fitted – ordered to replace and to pay a R50k administrative fine

A consumer bought a 2015 Mercedes Benz C200 Bluetec Avantgarde A/T motor vehicle for R300,469 and two days later established that its tyres were standard, and not run-flat per the manufacturer’s specifications. That meant there was no room in the vehicle for a spare wheel, plus she was told that this could result in her insurers repudiating any claims made.

The dealer refused to act, claiming that the standard tyres were “100% according to specification and road legal as per roadworthy”. The Tribunal however held the dealership in breach of the CPA, ordered it to replace the tyres with run-flat tyres, and imposed a R50,000 administrative fine.

3. Continuous breakdowns and a R100k fine

A 2015 model Toyota Avanza vehicle, with 172,475 kilometers on the odometer, kept breaking down and being repaired by the dealership. Eventually, three months after purchase, the buyer had had enough and told the dealer to take the vehicle back and refund him. The dealer however insisted on repairing the vehicle once again, and held the buyer liable for a R6,000 shortfall on a warranty policy repair, plus R58,000 in storage charges. He was unable to pay, plus he ran into arrears on his financing agreement and the financing bank repossessed and sold the vehicle.

The dealership claimed that the buyer had acknowledged that the vehicle was in good condition by signing a checklist to that effect and argued that the buyer “purchased the vehicle pursuant to his satisfaction thereof”. Finding on the facts however that the dealership was guilty of conduct prohibited by the CPA, the Tribunal imposed an administrative fine of R100,000 on the dealership. The buyer can now claim his damages in the High Court with a certificate issued by the Tribunal confirming its findings.

4. Undisclosed accident damage reduces a vehicle’s value by R110k

Bought for R342,900, a 2015 model Isuzu KB300 turned out to have been involved in a major collision before it was sold to the buyer, and to have a trade value of only R230,900. Finding that the material fact of the collision was not disclosed to the buyer at the time of sale, the Tribunal held the dealer to have engaged in prohibited conduct which caused the buyer financial prejudice, entitling him to compensation. He now has a Tribunal certificate to that effect and can pursue his damages claim accordingly.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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