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30 Aug 2017

Air-Purifying Plants for Office and Home

“Sick building syndrome” caused by poor indoor air quality has been linked to illness and lack of productivity around the world.

One easy way to fight it is to decorate with pot plants. Not only do they help in purifying the air of all the toxins we put into it with our cleaning chemicals and household products, they are also credited with many other benefits such as lower stress levels and increased happiness and productivity.

And who better to find the best plants for the job than NASA, with its focus on the well-being of astronauts in space?

Wikipedia’s “NASA Clean Air Study” article has a chart detailing which air-filtering plants are most effective at removing horror pollutants like benzene, formaldehyde, trichloroethylene, xylene, toluene and ammonia. Pay attention to the last column “toxic to dogs, cats” and in particular watch out if babies or children might be able to reach any of them.

30 Aug 2017

The R1m Buffalo That Died: A Lesson in 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 asset 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.

A recent SCA (Supreme Court of Appeal) decision illustrates two particular dangers.

A buffalo dies – whose loss?

  • A game farmer sold a bull buffalo to another game farmer.
  • Before delivery to the buyer, the buffalo had to be tested for disease, which meant darting it to draw a blood sample.
  • The darting itself went well, but the buffalo naturally enough made a run for it and could not be found in time to prevent it from lying down and suffocating.
  • The seller sued the buyer for R1.14m, his case being this –
    • Whilst on top of the truck in which the buffalo had been transported, the buyer decided then and there he wanted it, and the parties agreed verbally on a sale at R1m + vat.
    • The buyer, said the seller, also specifically agreed to assume the risk of death or injury arising from the darting and sedation.
    • The death resulted from the darting operation.
  • The buyer at first denied everything, but, by the time the parties ended up in the Supreme Court of Appeal, he had conceded all three points. He argued however that the seller had to deliver the buffalo before claiming payment, that it was up to the seller to prove that his conduct hadn’t caused the buffalo’s death, and that the seller’s inability to deliver (“impossibility of performance” in legal speak) was self-created.
  • Having resolved a number of factual disputes in favour of the seller, and holding that the buyer’s specific contractual assumption of risk arising from the darting operation made the question of “self-created impossibility of performance” irrelevant, the Court held that it is the buyer who must suffer the loss.
  • The end result therefore – the buyer is down one buffalo, R1.14m, and legal costs (which, after three bouts in senior courts, will be substantial).

Verbal contracts, high risk events, and deep pockets

It boils down to this –

  1. Relying on a verbal sale agreement is a recipe for disaster – dispute, delay, and the costs and frustrations of litigation. Rather have your lawyer record in a written contract, in the clearest possible terms, exactly what you have agreed to in regard to the passing of ownership and the passing of risk.
  2. If you accept the danger of loss from a “high risk event” – such as sedating R1m worth of wild buffalo – you’d better have deep pockets.
30 Aug 2017

Making Money with Airbnb? Tax and Other Issues

Airbnb is an increasingly popular and lucrative way for residential property owners to earn extra income from short-term rentals of spare rooms, holiday houses, apartments and the like.

Bear in mind these 3 factors –

  1. You need to provide for taxes. SARS has recently confirmed that your Airbnb earnings (after deduction of allowable expenses) are taxable and must be included in your income tax returns. You will also have to register for VAT if your rental income exceeds R1m per year.
  2. You must comply with the “permitted uses” applying to your property under your local municipality’s zoning regulations.
  3. If you are in a community scheme (Sectional Title or Home Owners Association) check whether the scheme’s rules and regulations allow short-term rentals of this nature, and if so what restrictions apply. Remember you are responsible for any breaches of the rules and for any unlawful or bad behaviour by your tenants.
30 Aug 2017

Property Sellers: Don’t Pay “Future Rates”

“Cause they told me everybody’s got to pay their dues
And I explained that I had overpaid them” (Sixto Rodriguez in ‘Cause’)

Before you as seller can transfer your property to the buyer, you must have a clearance certificate from your local municipality confirming that you have paid in full all rates and taxes, services etc due to it on the property.

What happens though when the municipality refuses to issue the clearance certificate until you have paid not only rates currently due, but also future rates i.e. rates payable by the buyer after transfer as new registered owner? If you are forced to pay, you will be left with a claim against the buyer and that could well mean dispute and delay.

But now here’s good news for you from a recent SCA (Supreme Court of Appeal) decision.

At issue – a R2.28m rates bill paid under protest

  • A municipality presented a seller with a rates account of R2,281,014-68 in terms of its rates policy which required it to recover all rates due for the seller’s “remaining financial year”.
  • The seller said it only owed R1,2m but it was forced to pay – with reluctance and “under protest” – the whole amount due in order to get the clearance certificate. It then sued the municipality for return of the R1,066,532 “overpayment”.
  • On its interpretation of the relevant legislation, the Court held that the municipality’s policy on future rates was inconsistent with the Rates Act, and therefore void. The seller had therefore overpaid, and the municipality must repay it, together with interest and costs.
30 Aug 2017

7 Myths about making a Will

“Let’s choose executors and talk of wills” (Shakespeare)

If you haven’t made your will yet, get it done now. Why is that so important and how should you go about it?

To answer that let’s debunk a few of the more pervasive myths and misconceptions around those questions –

  1. “I’m too young to need a will”
    Of course the older you get, the greater your chance of dying from illness or disease. But conversely, the younger you are the higher your risk of sudden violent death. For example our road fatality stats (amongst the highest in the world) show that 80 percent of deaths are in the 19 to 34 year old age group. No matter your age and no matter your health status, you could die today. Or tomorrow. No one (least of all you) knows for sure.
    And so to this related myth …
  2. “I’m too busy right now, it can wait”
    The more frantically busy we are (and that’s most of us in today’s world) the more tempting it is to postpone this one. It’s a hassle, you have other priorities, and besides who wants to contemplate their own mortality? But of course “Death knocks at all doors”, often without warning. And the hassle you save yourself today is just more hassle for your grieving loved ones to have to deal with tomorrow.
  3. “It’s OK to die without a will”
    No it’s not. A will is the only way to ensure that your loved ones are looked after properly after you are gone. It’s the only way to control how your estate is divided and who divides it for you. Without a will you die “intestate” and the law – not you – determines who gets what. You could be inadvertently condemning your spouse to a life of trying to survive on only a “child’s share” of your estate. You have no say in who will be appointed executor of your estate, or guardian of your children, or trustee of their trust if they are under age or unable to manage their own affairs. Your childrens’ inheritances will sit in the Guardians Fund until they turn 18. If you aren’t formally married but have a life partner, he or she may end up in a bitter dispute with your family over rights of inheritance. There are no advantages to dying intestate, only disadvantages – big ones.
  4. “I’m single and have no assets, so a will is pointless”
    Firstly, you will have some assets – a bank account perhaps, or a car, or monies in your employer’s pension fund, or perhaps your estate will have a claim on the Road Accident Fund. Even if you have no spouse/life partner/children to worry about, you will still leave loved ones behind – parents perhaps, or siblings. Whatever the case, someone close to you will have to be involved in winding up your estate and you should leave a will to make the process less stressful for them.
  5. “My spouse already holds my Power of Attorney, that’s all he/she needs”
    Powers of attorney lapse on your death and from then on only your executor, after being formally appointed by the Master of the High Court, can deal with your estate. Any powers you may have given your heirs – for example to draw money to live on from your bank account, or to run your business, or to rent out your house – fall away when you die.
  6. “It’s easy to draw a will, I can do it myself”
    There is no legal requirement for a professional to draw your will, but before you buy a template will or copy someone else’s, consider these common pitfalls –

    • Your will must comply with legal formalities to be valid. If it doesn’t pass muster for any reason, your heirs will have to make an expensive application to the High Court to have it validated.
    • Unless the terms of your will are crystal clear, you could ignite a bitter family feud over what your wishes really were, and that’s the last thing your grieving loved ones need to be dealing with in their time of distress. Our law reports are filled with cases caused by imprecision, ambiguity and vagueness, and sometimes there is just no substitute for the legal terminology and the “Latin bits” – unless you fully understand them, don’t go there alone.
    • Your marital status, marital regime and ante-nuptial contract (if you have one) need to be taken into account when drawing your will, and there are grey areas here which are best left to a professional.
    • If you have foreign assets, you may need a foreign will as well as a local one, but there’s “no one-size fits all” answer – specialised advice is essential.
    • The structure of your will, and upfront estate/tax planning, will reduce unnecessary cost and delay – another issue beyond the average layperson.
    • A last point – not strictly part of the process of drawing the will but still vitally important – is to leave your heirs with ready access to funds whilst the estate is wound up. All your bank accounts and the like are automatically frozen on death so ensure your heirs have their own bank accounts, nominate them as beneficiaries of life policies etc.
  7. “I made a will years ago, that’ll do the job”
    Bad idea. Life events (marriage, divorce, birth, death etc) and a whole host of other factors (like new laws and changes in your financial and business structures) all require review. So diarise to revisit your will regularly, at least once a year.

In closing, don’t confuse this sort of “will”, which only applies after you die, with a “Living Will” (or its close cousin an “Advance Directive”), both of which only apply before you die.

We’ll discuss whether you need a Living Will or Advance Directive in next month’s news.

30 Aug 2017

New home owners not liable for historical debt, ConCourt rules

In several newsflashes since last year, we reported on developments surrounding the thorny issue of arrear rates accounts, and who is liable for these, after transfer of immovable property, where the local authority fails to include this in its rates clearance schedule.

By way of brief reminder, when we apply for rates clearance figures from council to effect transfer, the law states that council may only actually recover arrears going back as far as two years, and that (at least theoretically), anything older than two years remains a “charge upon the land”. This then exposed the new owner to disconnection or even legal action, to recover that said arrears, by way of publicly auctioning off the land. The new owner would then be saddled with trying to save the property from auction by paying the arrears and then trying to recover this from the former owner.

This ended up in a High Court in Gauteng several months ago, where the court ruled that this was unconstitutional and it was then referred to the Con Court for final decision.

We are pleased to share with you, that the Con Court has now confirmed that this law is indeed unconstitutional. This therefore means in simple terms, that once council issues a rates clearance certificate, council can no longer recover any arrears older than two years, as a “charge upon the land”. Council will now have to recover this from the previous owner, and will not be allowed to use the property as security for the debt.

The decision is a victory for property owners, and for the banks, as the rights of the municipalities were previously interpreted to be preferrent to the holders of mortgage bonds registered after transfer. The decision will however place an additional burden on municipalities where their accounts are in disarray, and where they are unable to produce accurate figures of amounts owing at the time of transfer before issuing a rates clearance certificate. These municipalities will now most certainly have to write off a larger portion of this historical debt.

 

01 Aug 2017

Verbal Agreements – The Property Perspective

“A verbal contract isn’t worth the paper it’s written on” (Samuel Goldwyn)

A recent High Court judgment is yet another reminder of how essential it is to comply with all necessary formalities when entering into any sort of agreement, particularly when dealing with the sale of property.

A fight over eviction and a property transfer attack

  1. A property was transferred to a buyer in terms of a sale agreement in 2015.
  2. The occupants of the property refused to vacate, and when the new owner applied for their eviction, they alleged that in 2007 they had verbally agreed with the original owners that, upon finalisation of several specified issues, they would enter into a formal agreement of sale to purchase the property.
  3. They therefore asked not only for the eviction application to be dismissed, but also for the 2015 sale and transfer to the new owner to be set aside in order to transfer the property to their own nominated family trust.

What the Court said

  • Any such verbal contract would, held the Court, be an “agreement to agree” which in our law certainly can be valid and binding, but generally only if it complies with all the formal and other requirements for validity applying to the “main” contract that they have agreed to enter into.
  • The occupants’ problem was that a verbal agreement for the sale of immovable property cannot be valid, because this is one of the few classes of agreement which our law requires to be (a) in writing and (b) signed by both seller and buyer “or by their agents acting on their written authority”.
  • The occupants were accordingly given 15 days to leave the property, and the original sale and transfer remain in place.

Three things to bear in mind

  1. Remember that in our law you will usually be bound by what you agree to verbally; property sales are one of only a few specific exceptions to that principle.
    • But as a general rule verbal contracts are best avoided. They are a recipe for misunderstanding and dispute because people tend to hear only what they want to hear, and to then convince themselves that their memory is better than yours. Worse, a dishonest opponent will have more wriggle room to get out of your agreement. Rather have everything recorded in black and white, and signed.
  2. Also tread carefully around “agree to agree” scenarios. Our case law is full of costly disputes over “letter of intent” and “let’s agree now to enter into a full contract later” cases.
  3. In particular, if you are about to embark on any form of property transaction, the lesson is, as always, to seek legal help before you agree to anything. There’s usually a lot at stake when property’s involved, and many pitfalls for the unwary.
01 Aug 2017

Sexual Offences: No More Time Limit to Prosecute

“There are some crimes that do not go away” (quoted in the judgment below)

Victims of sexual abuse are often so deeply traumatised and intimidated that they either never report the crimes, or take decades to go to the police.

And that, until now, has been a major source of injustice in our legal system, because section 18 of our Criminal Procedure Act (CPA) provides that the right to prosecute crimes lapses after 20 years except for a specified list of serious offences – murder, treason, aggravated robbery, kidnapping, child stealing, rape/”compelled rape”, genocide/war crimes, people trafficking, and pornography involving children or mentally disabled people.

The end result has been that many desperate and vulnerable survivors of abuse have been deprived of their right to seek justice. Fortunately that has now changed. A recent High Court judgment involving accusations of sexual crimes over 28 years ago has had the result that, subject only to confirmation by the Constitutional Court, sexual offences can now be prosecuted at any time.

Allegations of habitual child sex abuse; and the law

  • Eight male and female applicants, who at the time of the alleged offences were children between the ages of 6 and 15 years, accused the man in question of having habitually “indecently and/or sexually assaulted” them in the 70s and 80s.
  • In terms of the CPA, the offences had prescribed by the time that, between June 2012 and June 2015, the applicants had acquired “full appreciation of the criminal acts committed by the [man]”, and they then opened a criminal case and instituted a civil claim against him.
  • The Director of Public Prosecutions declined to prosecute the cases (being barred by the CPA from doing so) and the applicants asked the High Court for help.
  • Having analysed in depth both the legal position and the many deep-seated causes of “delayed disclosure” by victims, the Court held that “section 18 is arbitrary and irrational and accordingly is inconsistent with the Constitution and invalid, in relation to not only children, but to all victims, including adults” in respect of “the right to institute a prosecution for all sexual offences”.
  • Although the declaration of invalidity was suspended for 18 months “in order to allow Parliament to remedy the constitutional defect”, the Court ordered that in the interim, i.e. with immediate effect, the 20 year time limit falls away for “all other sexual offences, whether in terms of common law or statute”.

The civil case against the accused’s deceased estate (he died shortly before the hearing) will now no doubt also proceed, with another Court having previously held in respect of civil prescription “that a victim of child or sexual abuse who acquired an appreciation of the criminal act during adulthood is able to sue the abuser within three years of gaining that appreciation”.

01 Aug 2017

Expired Firearm Licences: High Court to the Rescue

“There is no question that firearms are hazardous objects and that possession and ownership must be strictly controlled. A failure to comply with the Act exposes the public to potential harm, especially in a society like ours where violence is rife.” (Extract from judgment below)

Whilst our law quite correctly treats unlawful possession of a firearm as a most serious offence – you could go to prison for 15 years if convicted – law-abiding citizens who hold valid firearm licences face a major problem if for whatever reason they fail to renew them in time.

To set the scene, the Firearms Act provides that all licences are valid for a limited period only (10 years for hunting licences and 5 years for self-defence) and you must apply for renewal at least 90 days before expiry. If you drop the ball on that one, you have a major problem …

The 90 day guillotine: High Court to the rescue

“The difficulty that arises, and which causes confusion” held the High Court recently when asked to intervene on behalf of firearm owners “is that, if a person fails to apply for a renewal at least 90 days before expiry there is no provision in the Act that permits one, after the guillotine has dropped, to bring oneself back within the parameters of the law. This then leads to the result that one is in unlawful possession of a firearm, with no means to rectify the position…”.

Worse, there is no way to surrender the firearm to the police without risking prosecution, nor any way to get value for the surrendered firearm – clearly an untenable position.

Having analysed the purpose and effect of the Act, and in particular of the sections dealing with renewal of licences and the consequences of not doing so in time, the Court declared those sections unconstitutional and gave Parliament 18 months to amend the Act so as to ensure constitutional compliance.

What happens now if your licence has already expired?

This must now go to the Constitutional Court for confirmation, but fear not, you are covered in the interim. The Court directed that all licences “issued in terms of the Firearms Control Act, 2000 (Act 60 of 2000), which are or were due to be renewed in terms of section 24 of the Firearms Control Act, 2000 (Act 60 of 2000), shall be deemed to be valid, until the Constitutional Court has made its determination on the constitutionality of the aforesaid sections”.

In other words, provided that you did in fact hold a valid licence in the first place, and provided that it has lapsed purely through “effluxion of time” (none of this applies to termination of licences for other reasons), you have a good defence to any prosecution.
Of course your best defence will always be to apply for renewal timeously. But if for any reason you forget or can’t comply, don’t take any chances – ask your lawyer to confirm that you are protected by this new ruling, and get help immediately if the police come after you.

URGENT UPDATE – Since time of writing of the above article, media reports suggest that SAPS has now appealed against the above judgment to the Constitutional Court and that the effect of this is that gun owners must continue to comply strictly with the relevant sections of the Firearms Act. SAPS has reportedly also stated that “no prosecutions will be instituted against persons whose firearm licences have expired and who voluntary surrendered such firearms to the South African Police Service.” Take immediate advice in any doubt!

01 Aug 2017

SARS and the Special Voluntary Disclosure Programme: It’s Deadline Time!

“The SVDP is meant for individuals and companies who have not in the past disclosed tax and exchange control defaults in relation to offshore assets” (SARS)

If you aren’t sure whether or not you should apply for the Special Voluntary Disclosure Programme (SVDP), take advice immediately –

  • The deadline is 31 August 2017, and you will need time to prepare properly.
  • By the end of next month, SARS will have in place an automatic exchange of tax information with the revenue authorities of over 50 other countries (100 by September 2018) under the OECD’s “Common Reporting Standard”.

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