B Lubbe & Associates Attorneys B Lubbe - Table View Based Litigation & Divorce Attorneys

Before you close up for the year, remember that if you are a “designated” employer, your Employment Equity Act (“EEA”) Report is due on 15 January 2023.

Failure to comply carries substantial penalties so don’t miss this deadline.

You are likely to be a designated employer if either –

You have 50 or more employees, or
Your annual turnover equals or exceeds your particular industry’s threshold. See the table below for details.

(Source – Schedule 4 to the Employment Equity Act)

There’s good news for some SMEs in the pipeline

Good news for smaller businesses drowning in red tape it that it seems likely that the threshold test will fall away at the end of September 2023. If you have less than 50 employees, that would let you off the reporting hook from October next year. But for now, if you are in the turnover net, meet the 15 January deadline.

Bear in mind also that all employers, designated or not, must comply with the EEA’s strict prohibitions against unfair discrimination.

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.

“You can tell a lot about a person by the way they handle three things: a rainy day, lost luggage and tangled Christmas tree lights.” (Maya Angelou)

December holidays are a time for winding down, recharging your batteries and sharing some quality family time. But it can also be stressful. There’s a reason we often talk about the “Silly Season”.

Don’t let the pressure get to you! Relax, take a deep breath, and read “10 tips to reduce festive season stress” on the Lionesses of Africa website.

Whatever else you do, enjoy your break!

“I love deadlines. I love the whooshing noise they make as they go by.” (Douglas Adams)

Here’s yet another reminder from our courts on the danger of not complying strictly with every provision in a property sale agreement. Don’t be like Douglas Adams and listen to the deadlines go whooshing by – missing a property sale deadline is a mistake, probably an expensive one. The deadline set by every bond clause is no exception…

Sale’s a dead duck. Who gets the R600,000 deposit?

A property sale agreement contained a standard “suspensive condition” in the form of a bond clause making the sale conditional upon the buyer obtaining R1.5m in bond finance by a specified date. The buyer could waive the benefit of this clause, and if it wasn’t fulfilled or waived by the deadline date the sale would become null and void – in which event the deposit, with interest, was to be repaid to the buyer within 5 business days.
The buyer paid the R600,000 deposit to the estate agent, but had difficulty in raising finance and (before the deadline expired) asked for more time to get the necessary bond approval. Both parties assumed that an extension of the deadline had been validly granted, but in fact there was never any compliance with the requirement in the bond clause that any extension be by “written agreement”. In other words, the sale had lapsed, but neither the seller nor the buyer realised that – they both thought they still had an agreement in place.
Two months later, thinking that the sale was still alive and well, the buyer signed a waiver giving up the benefit of the bond clause and stating that the agreement was no longer subject to the suspensive condition.
Another two months down the line the buyer told the seller he was no longer proceeding with the purchase (his wife had in fact bought another property in the interim). The seller took that as a repudiation of the contract and cancelled the sale.
The buyer demanded his deposit back. The seller wanted it forfeited to him. Off to the High Court they went.

The law, and the result

The general rule in our law is that no agreement comes into existence unless and until all suspensive conditions are fulfilled. So the seller has no claim against the buyer unless either the sale agreement provides for such a claim (unlikely) or “where the party has designedly prevented the fulfilment of the condition.”
That, in lawyer-speak, is the legal principle of “fictional fulfillment of a suspensive condition”. In lay terms – the law protects the seller and doesn’t allow the buyer to escape from the sale by deliberately ensuring that he doesn’t get a bond.
The seller argued that that was exactly what the buyer in this case had done; that he had breached the agreement and had deliberately frustrated the fulfilment of the bond clause.
On the facts however, the Court held that both seller and buyer had remained committed to the sale, blissfully unaware that in law the sale agreement was already a dead duck. The buyer only decided to get out of the agreement after it had already lapsed.
The buyer gets his deposit back with interest, and the seller is left with an unsold property and a large legal bill.

Buyers – your risk

As the Court put it, what saved the buyer in this case was a lack of evidence that the buyer had – by commission or omission – prevented the necessary finance from being granted. In other words, you risk being sued (which will put your deposit at risk) if you don’t make a genuine effort to get the necessary bond finance by the due date.

Sellers – keep an eye on the bond clause deadline

The seller on the other hand is left to lick his wounds after all the delay, cost and effort this dispute has caused him. He could have avoided all that pain by keeping an eye on the due date and ensuring that the deadline extension was agreed to in writing before it expired. As the Court pointed out “The contract was readily available to all involved and the requirements of clause 6.3 pertaining to an extension were available for all to read. A simple investigation would have revealed what was required.” (Emphasis added).

“Marriage is a matter of more worth / Than to be dealt in by attorneyship” (Shakespeare)

Wedding Season is well and truly upon us, and if you (or anyone near and dear to you) is busy planning for marriage (note that we are talking “civil marriage” here, “customary marriages” and “civil unions” are beyond the scope of this article), you will have a long “To Do” List to work through. Venue, invites, catering, flowers, service, this, that, the other. The list goes on, and on…

But no matter how long or complicated your Wedding Plan may get, make sure that “Get All the Boring Legal Bits Sorted” is high on your priority list. Yes, this is the not-fun part of all this, and getting to grips with all the legal niceties is a chore.

But whilst we can all agree with Shakespeare’s observation that “Marriage is a matter of more worth / Than to be dealt in by attorneyship”, understanding and managing the legal consequences of marriage remains absolutely vital.

So, where to start? Ask your lawyer three questions –

1. “Do we need an ANC?”

Whether you need an ANC (antenuptial contract), and if so, what should be in it, will depend in part on which “marital regime” you choose.

This is a critical decision. Which regime you choose now (and you must choose before you marry) will affect you and your family long after the ink dries on your marriage certificate. It will affect all of you throughout your marriage, and it will affect everyone when your marriage eventually comes to an end (whether by divorce or death – both grim prospects, but realities that must be faced).

Our law presents you with three alternatives, and professional assistance is essential here because your choice involves a complex mix of individual preference, circumstance, and personal and financial status –

Marriage in community of property: All of your assets and liabilities are merged into one “joint estate” in which each of you has an undivided half share. On divorce or death the joint estate (including any profit or loss) is split equally between you, regardless of what each of you brought into the marriage or contributed to it thereafter. This is the “default” regime – so you will automatically be married in community of property if you don’t specify otherwise in an ANC executed before you marry. This regime will suit some couples, but most will be advised to rather choose one of the other options (b or c below).
Marriage out of community of property without the accrual system: Your own assets and liabilities, both what you bring in and what you acquire during the marriage, remain exclusively yours to do with as you wish. Note here that the “accrual system” (see option c below) will apply to you unless your ANC specifically excludes it.
Marriage out of community of property with the accrual system: As with the previous option, your own assets and liabilities remain solely yours. On divorce or death you share equally in the “accrual” (growth) of your assets (with a few exceptions) during the marriage.

P.S. Already married? As a side note, if you happen to be married already and you now want to change your marital regime – perhaps you have only now found out that you are by default married in community of property and you realise what a mistake that was in your case – you may still be able to fix things. Ask your lawyer if you might be able to enter into a postnuptial contract. You are in for an expensive court application and requirements apply, so rather make the right choice before you marry.

2. “Are our wills in order?”

Marriage is one of those life events that focuses the mind on how important it is to have valid wills (or perhaps one “joint will”) in place. Existing wills need immediate review. Of course, your will (“Last Will and Testament”) is only the first step in a full estate planning exercise, but it is the foundational step, so prioritise it.

Don’t be tempted to procrastinate on this one – as the old saying has it “Death Knocks at All Doors”, and often it knocks without warning. There’s no other way to ensure that your loved ones will be fully protected and catered for after you are gone.

3. “Can we choose new surnames?”

As a man, you can only change your surname by application to DHA (the Department of Home Affairs) but as a woman you can automatically –

Take your husband’s surname, or
Revert to or retain your maiden surname or any other prior surname, or
Join your surname with your husband’s as a double-barreled surname.

Ask about the legal ramifications of your choice and tell the marriage officer upfront what your choice is so that your marriage certificate, marriage register and National Population Register all reflect your married name correctly.

“For many, many people, I’m a firm believer that 60 is the new 50.” (Carolyn Aldwin, director of Oregon State University’s Center for Healthy Aging Research)

As even the youngest Boomers (the generation born between 1946 and 1964) approach the “Big Sixty”, an increasing number of employees will be thinking about whether or not they want to retire. And an increasing number of employers will be wondering whether to ask them to stay on or to retire them (and if so, when).

Bear in mind that our law does not recognise any concept of a general “normal/standard retirement age” and that you need to tread carefully here because a dismissal is automatically unfair if the reason for the dismissal is that the employer unfairly discriminates against an employee, directly or indirectly, on any arbitrary ground such as age.

Our courts look upon automatically unfair dismissals with particular disfavour, and a guilty employer can expect harsh penalties.

When is age-related dismissal fair?

As an employer you can avoid a finding of automatically unfair dismissal if you prove –

That there is a clause in your employment contract specifying an agreed retirement date, or
That there is a “normal or agreed retirement age” for employees “employed in the capacity of the employee concerned”, and
That the dismissal is based on age and not, for example, a disguised retrenchment or dismissal for some other reason.

What if your employee wants to stay on after retirement date?

“Sixty really is the new Fifty” says at least one recent scientific study, and it certainly is the case that many employees want to carry on working long after 60 or 65. Sometimes economic necessity is the motivation, sometimes a need to carry on being useful, sometimes just a reluctance to “retire and go fishing”.

Equally, many employers are reluctant to lose the experience, loyalty and talent of senior staff and will happily accept a request to stay on.

However, a recent Labour Appeal Court case confirms the need for all concerned to tread carefully in such a situation –

Dismissed 9 months after reaching 60

An employee turned 60 but carried on working and being paid as normal. No mention was made of the fact that he had reached the agreed retirement age set out in his employment contract.
Nine months later however, his employer told him that his services would now terminate as he had reached the agreed retirement age.
He disputed this as an automatically unfair dismissal, arguing in the Labour Appeal Court that a new employment contract or “tacit” (implied) contract had come into effect, and that this contract extended his employment indefinitely or at least to 65. Alternatively, he said, his employer had waived (relinquished) the retirement clause.
The Court disagreed, holding that the employment contract and its agreed retirement date had continued uninterrupted, with both employer and employee having a right to terminate employment at any time thereafter.
Per the Court: “The focus is not so much on when the employee reached his or her retirement date, but rather that the employee has already reached or passed the normal or agreed retirement age.” There was also nothing in the conduct of the parties to suggest they had entered into a new tacit contract or that the employer had waived its rights.
The employee’s enforced retirement stands.

An action list for employers

Avoid a situation where your employee can no longer do the job but there is no agreed retirement date. That would leave you trying to prove a valid ground for dismissal – incapacity or incompetence perhaps. Not easily done, and traumatic for you both.
Moreover, it’s not always easy to prove what a “normal” or “standard practice” retirement age is for your industry and circumstances. Much safer to have a specific retirement clause in all your employment contracts.
Don’t try to unilaterally impose retirement clauses on employees if their existing contracts don’t already have them – this is a matter for negotiation and agreement.
Diarise each employee’s retirement date and before that date rolls around, either make it clear to the employee that their employment is about to end automatically or put in place a new employment contract.

Notes for employees

If you work beyond an agreed or normal retirement age, the harsh reality is that you are, as the Labour Court has put it before “working on borrowed time”.
Without a written agreement, setting out clearly when your new retirement date is, you have no guarantee that your post-retirement employment is in any way secure or legally protected.

As always with employment law matters there are complexities, grey areas and substantial downsides to getting it wrong, so seek specific professional advice!

“The Constitution guarantees that administrative action will be reasonable, lawful and procedurally fair. It also makes sure that you have the right to request reasons for administrative action that negatively affects you.” (Department of Justice and Constitutional Development)

Bureaucratic decisions can and do have far-reaching consequences for us, both financially and in our personal lives. It’s good to know therefore that whenever your rights are affected by any such decision, you have access to the protections set out in PAJA (the Promotion of Administrative Justice Act).

In a nutshell, PAJA provides that “administrative decisions” by government departments, parastatals and the like must be fair, lawful and reasonable. Decision makers must follow fair procedures, allow you to have your say before deciding, and give you written reasons for their decisions when asked.

If a decision goes against you, your first step should be to use any internal appeal procedures. Ultimately you can go to court, although often a lawyer’s letter or two will solve the problem without the need for litigation.

A recent High Court decision illustrates one way in which PAJA can help you if all else fails –

A service station’s building plans rejected

A service station submitted to its local authority building plans for a proposed refurbishment.
After a series of meetings with the municipality and alterations to the plans as various issues were raised and resolved, the service station owners thought they were home and dry. But in the end the plans were not accepted on the basis that the application was for an extension of the service station which could not be approved in terms of the local Town Planning Scheme.
The High Court however found that factually there was no “extension” involved and that the municipality had therefore made an “error in law”.
That opened the door for the Court to review the municipality’s decision, which it duly set aside. In referring the decision back to the municipality for reconsideration, the Court directed it to make a decision within 21 days, and without regarding the proposed refurbishment as being an extension of the building.

A final thought – strict time limits apply with PAJA, so if a decision goes against you seek professional help without delay!

No matter how good your product and your service levels, the hard reality in business is that customer issues will arise. Perhaps they will be genuine problems or perhaps they are just misperceptions, but either way you need to act quickly and effectively to resolve them. Particularly in these times of online reviews making or breaking reputations so quickly and easily.

Here’s a tried and tested method to boost customer satisfaction generally, to change complaints into compliments, and to resolve all forms of conflict (it is equally useful for workplace and personal issues) with kindness and respect.

Read “How to Use the HEART Method to Improve Customer Satisfaction” on The Real Time Report’s website.

“… had the respondent imposed more moderate penalties, it would likely not have had the desired effect, or put differently, the same persuasive sting for individuals of substantial means.” (Extract from judgment below)

Buying “plot and plan” in a residential complex allows you the freedom to build your own dream house in a secure environment, quite apart from providing what is likely to be sound long-term investment. Just make sure that you will actually be ready to build within the time frame required by the HOA (homeowners’ association). If you don’t, you risk having to transfer the plot back to the developer (a costly exercise), or you could be lumbered with penalty levies many times higher than normal levies.

You can ask a court to reduce the penalty, but…

Our law gives us general protection from excessive “out of proportion” penalties by means of the Conventional Penalties Act, which in the section headed “Reduction of excessive penalty” provides that –

“If upon the hearing of a claim for a penalty, it appears to the court that such penalty is out of proportion to the prejudice suffered by the creditor by reason of the act or omission in respect of which the penalty was stipulated, the court may reduce the penalty to such extent as it may consider equitable in the circumstances: Provided that in determining the extent of such prejudice the court shall take into consideration not only the creditor’s proprietary interest, but every other rightful interest which may be affected by the act or omission in question.”

However, as a recent High Court decision illustrates, you will have your work cut out for you if you want the court to exercise that discretion in regard to penalty levies.

The ‘persuasive sting’ of 5x normal penalties

The HOA of a “luxury/ultra-luxury” residential estate required in its constitution that –
- Each owner must start construction within one year of transfer,
- Should construction not commence timeously the developer had the option to require re-transfer of the erf to it,
- If the developer did not exercise this option, the HOA could “impose whatever penalties it deems appropriate in its sole discretion” on the owner.
When several erf owners failed to build within the one-year deadline, the HOA passed resolutions imposing penalty levies on them until they started construction.
These levies started off at 2x the normal levies, and over an eight-year period were increased in stages to 5x the normal.
The HOA sued the defaulting owners in the Regional Court to recover these levies, winning both in that Court and on appeal to the High Court.
It was, held the High Court, up to the owners challenging the amount of the penalty to prove –
- What prejudice the HOA suffered,
- That the penalty was disproportionate to that prejudice, and
- The extent to which the penalty should be reduced.
In addition to the actual monetary prejudice (damages) suffered by the HOA, it was said the Court necessary to consider the HOA’s other “rightful interests” that might be affected by the failure to build, such as problems with security, nuisance, aesthetics, damage, and value loss caused by extended building activities. In this case, one of the additional reasons for the penalty provision was to discourage speculation in the erven by buyers intending to re-sell the plots for profit rather than build and live in the estate.
There was prejudice to the HOA even though the penalty provision was intended to create a deterrent rather than compensation for default – the prejudice was to the HOA’s “right to enforce concerted action for the common good, and to its interest in obtaining concerted action”.
Whether the penalty was “out of proportion” to the prejudice could be assessed in three ways:
1. By looking at comparable situations where the desired result was achieved (the Court compared another similar matter in which a 10x normal penalty was reduced by the Court to 8x normal, much more than the 5x imposed here),
2. By looking at the size of this penalty and the penalties in general in relation to the income and expenditure of the HOA, and
3. “By exercising one’s sense of fairness and justice.”
The HOA had been fair and reasonable in phasing in the increases over an eight-year period.
Imposing more “moderate” penalties “would likely not have had the desired effect, or put differently, the same persuasive sting for individuals of substantial means.”

In the end result, the owners must pay the full penalty levies, interest, and costs on an attorney and client scale.

If you are emigrating, or perhaps just going overseas for an extended holiday or work contract, you may well leave behind some form of “unfinished business”. Perhaps you own a property, other assets or bank accounts needing attention, or have outstanding tax/business/financial affairs, or contracts to be signed, cars to be licenced, or something else unresolved that requires your future agreement or signature. Even if you can’t think of anything specific, consider executing (before you leave of course) an appropriate power of attorney in favour of someone you trust to act for you.

What is a power of attorney?

A Power of Attorney (“POA”) a document you sign authorising someone else to manage your affairs on your behalf as your agent. You can grant it for a specific purpose as a “Special Power of Attorney” or it can be a widely worded “General Power of Attorney”. In theory you can grant power of attorney orally, but in practice no one will (or should) act on that.

You must be at least 18 years old to execute a POA, and it remains valid only for so long as you have “legal capacity”.

You can terminate the POA at any time.

Why is a power of attorney important?

You can in a pinch execute and sign contracts, legal forms and the like whilst in a foreign country, but it can be a real mission. Depending on the circumstances, you may need to find (and pay) a notary public or embassy/consular official to authenticate documents, your signature, copies of papers etc. If it’s an embassy or consulate you need, you could find yourself travelling to another city, perhaps even another country. And if everything isn’t done exactly right the first time (a particular risk if you are dealing with someone not fully versed in South African law and procedure), you could find yourself repeating the process – perhaps even more than once in a sort of “Ground Hog Day” scenario. All avoidable if you leave behind in South Africa a valid and correctly structured POA.

How should you structure it?

The structure you will need depends on what affairs you need dealt with and why. It can be difficult to decide whether a POA is appropriate for a particular purpose, and if so how wide or how restricted you should make the powers you are granting to your agent. It can also be a challenge to find the correct wording to satisfy the requirements of whichever authority or other party is involved – for instance, specific forms are required by the Deeds Office, SARS, and banks. You might also need to leave behind more than one POA, each structured for a particular purpose. Similarly, you may be uncertain as to who to appoint as your agent, who is best qualified for each purpose, even perhaps who can you trust to act professionally and honestly.

There is no prescribed form and no list of required formalities for a valid POA but there are many possible permutations and legal risks involved, so the only way to ensure that it is valid and fit-for-purpose is to seek professional assistance specific to your circumstances.

You should always take as much security for your claims as you possibly can before advancing credit or lending money to a debtor. That’s because if your debtor fails and is “liquidated” (if a corporate) or “sequestrated” (if an individual), without security you will have only a concurrent claim in the estate.

And with a concurrent claim, you will be lucky to get back more than a few cents in the Rand, because you will rank right at the bottom of the ladder after both secured creditors and preferent creditors (employees, SARS etc).

So, first prize is always to hold security for your claim

Having a “secured claim” greatly increases your chances of being paid out a decent amount (hopefully your claim in full), because the proceeds of the asset/s subject to your security are earmarked (after payment of some estate costs and the like) to paying out the claims of the “secured creditors” holding security over each particular asset.

If your debtor owns immovable property, registering a mortgage bond over it will generally give you a very strong security, whilst with movable property you have various options. There are many options here, applicable to various types of claim in various circumstances – liens, cessions, tacit hypothecs, rights of retention and so on – but for the moment let’s have a look at the more general concepts of pledge and notarial bonds.

One of the strongest options with movables is to take a pledge over them, but that will require you to actually hold the movables in your possession. And of course it’s not always viable for a debtor to give you that possession – a much more likely scenario with most business debtors is that they need to keep possession and use their assets (machinery, fittings, vehicles, stock etc) to carry on trading. So what are your options in that situation?

The two types of notarial bond

In that case – where you cannot take actual possession of the movables – consider registering a notarial bond over them. There are two types of notarial bond, both requiring registration in the Deeds Office –

Your first and best option is a special notarial bond. This gives you substantial security, in the form of a “deemed pledge”. You now have first bite at the cherry over any movable asset listed in the bond, even though you don’t have possession. Note that these assets need to be clearly identified in the bond (“….specified and described in the bond in a manner which renders it readily recognisable…”) so list full descriptions, models, serial numbers, and the like for every asset.
Secondly, take a general notarial bond over all the debtor’s movable assets generally. That will bring into your net those assets which are not individually identifiable, such as stock, building materials and so on. The bad news is that a general notarial bond in itself gives you only a weak preference on liquidation, but the good news is that you can convert that into full, “real”, security if you move quickly enough.

How do you convert a General Notarial Bond into full security?

Provided you seek legal assistance quickly at the first sign of financial distress in your debtor, you may well have time to “perfect” the bond into full security by way of a court order prior to liquidation. Armed with the court order you take possession of all the debtor’s movables and hey presto you have a “real” security over them.

Let’s look at a recent example –

A supermarket group, owed over R2m by a trading store, held two general notarial bonds over its movable assets (presumably shop fittings, fixtures, equipment, stock etc).
Fearing that the store’s owner (a company) was trading in insolvent circumstances and would be liquidated, the creditor applied for an urgent High Court order allowing it to perfect its security.
The debtor opposed the application, asking the Court to exercise its discretion not to grant a perfection order. But the Court refused to do so, and granted the perfection order, on the basis that the creditor had no other remedy available to it (such as a damages claim). The Court was equally unimpressed with the debtor’s argument that the terms of the bonds were “unconscionable and contra bonos mores [offensive to conscience]”.

That’s clear judicial confirmation of the strong position you are likely to find yourself in where you hold properly drawn and registered general notarial bonds, and act quickly to perfect them in appropriate circumstances.

There’s good news for some SMEs in the pipeline

Sale’s a dead duck. Who gets the R600,000 deposit?

The law, and the result

Buyers – your risk

Sellers – keep an eye on the bond clause deadline

1. “Do we need an ANC?”

2. “Are our wills in order?”

3. “Can we choose new surnames?”

When is age-related dismissal fair?

What if your employee wants to stay on after retirement date?

Dismissed 9 months after reaching 60

An action list for employers

Notes for employees

A service station’s building plans rejected

You can ask a court to reduce the penalty, but…

The ‘persuasive sting’ of 5x normal penalties

What is a power of attorney?

Why is a power of attorney important?

How should you structure it?

So, first prize is always to hold security for your claim

The two types of notarial bond

How do you convert a General Notarial Bond into full security?

Contact Us

ADDRESS

POPIA

There’s good news for some SMEs in the pipeline

Sale’s a dead duck. Who gets the R600,000 deposit?

The law, and the result

Buyers – your risk

Sellers – keep an eye on the bond clause deadline

1. “Do we need an ANC?”

2. “Are our wills in order?”

3. “Can we choose new surnames?”

When is age-related dismissal fair?

What if your employee wants to stay on after retirement date?

Dismissed 9 months after reaching 60

An action list for employers

Notes for employees

A service station’s building plans rejected

You can ask a court to reduce the penalty, but…

The ‘persuasive sting’ of 5x normal penalties

What is a power of attorney?

Why is a power of attorney important?

How should you structure it?

So, first prize is always to hold security for your claim

The two types of notarial bond

How do you convert a General Notarial Bond into full security?

Contact Us

ADDRESS

POPIA

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