“A bank is a place that will lend you money if you can prove that you don’t need it” (Bob Hope)
A recent High Court decision has settled the knotty question of whether your bank can take money it holds for you in one account to cover your debt to it in another, without your permission and without notice to you.
Firstly, what is “set-off”?
To understand how important this new decision is, we need to go back to our common law (unwritten law) principle of set-off. In simple terms, common law set-off allows one debt to be cancelled out by another. So if for example I owe you R1,000 and you owe me R900, I am both your creditor and your debtor, and vice-versa. If we come to blows, I can then set the one debt off against the other with the net effect that I owe you R100.
Credit-lenders, and in particular banks, used to make extensive use of this to collect debt. If for instance you fell behind in your mortgage bond or credit card payments, your bank could, if it was so inclined, take the arrears out of your current account as soon as your salary was paid into it – without your consent and without notice to you.
Banks have always argued that this ability has made it easier for them to lend money to us when we ask for it, as it reduces their risk by giving them more security if things go wrong. Giving notice or asking for consent would, they argue, allow a recalcitrant debtor to quickly withdraw the funds and frustrate the debt collection. But the other side of the coin of course is that you could suddenly find yourself without money to live, let alone to service your other debt payments – a situation particularly hard on lower earners and those struggling with mountains of debt.
Enter the NCA (National Credit Act) in 2005…
How the NCA changed things
In broad terms, the NCA (when it applies – see next paragraph) restricts set-off in such a way as to give the consumer the right to choose whether or not to consent to set-off, which accounts it may be applied to, in respect of which amounts, when it is to be applied, and in respect of which debts.
But does the NCA apply to your particular debt? In most cases, yes. In a nutshell (there are some “ifs” and “buts” here so ask your lawyer for specific advice) the NCA applies to most personal loans, home loans, overdrafts, credit card debt, asset finance agreements, lease agreements and so on. It covers consumers who are individuals and some – not all – “juristic persons” (companies and the like – take advice for details).
Which brings us to the High Court…
Nevertheless at least one bank (which is unlikely to be alone in this practice) has continued until now to apply common law set-off without consent, in other words they would take money from a customer’s account to cover the customer’s debt on a separate credit agreement. The bank argued that the NCA’s set-off restrictions did not apply on its interpretation of the NCA, in its circumstances and to its credit agreements. Importantly, its agreements omitted any mention of set-off (where an agreement does mention set-off, there is no argument – the NCA restrictions definitely apply).
Having received complaints from consumers to this effect, the National Credit Regulator asked the High Court to interpret the NCA’s provisions and to rule on the legality of the bank’s practice.
The High Court’s decision
Common law set-off without your consent as above cannot happen if the NCA applies to your credit agreement.
In a nutshell – you have the choice! Banks and other credit-lenders must ask you before taking money from one account to cover your debts in another.
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.
“Untold Wealth: That which does not appear on income tax returns” (Anonymous)
“Tax Freedom Day” is the first day of the year that we South Africans (as a whole) have earned enough to pay off the Tax Man and to finally start working for ourselves.
It arrived this year on 18 May. That’s five days later than in 2018, and a whole 37 days later than in 1994 when we first started measuring this – not a happy trend, nor unfortunately one likely to be reversed in future.
But it could be worse. Taxpayers in a lot of other countries are still working for government – Norwegians for example only celebrate on 29 July!
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.
“There’s no such thing as a free lunch” (Economist Milton Friedman)
In these days of online banking and electronic payment, it’s not uncommon to find out to your horror that you have made a payment to someone in error, either to the wrong recipient or in an incorrect amount. If that happens to you and the recipient refuses to pay you back, what can you do about it?
The other side of the coin of course is whether the recipient of an unexplained and unexpected bank account credit can safely go ahead and spend the windfall (the answer in a nutshell is very strong “no” – if there are indeed any free lunches in the world, this is unlikely to be one of them!).
A recent High Court judgment sets out the requirements for a claim based on “unjustified enrichment”.
A banking app duplicates payments of R861,940
A couple were the happy beneficiaries of a malfunction in their bank’s “remote banking” app.
In effect they received duplicate transfers into their two accounts totalling R861,940
The bank duly sued them for return of the money on the basis that they had been “unjustifiably enriched” at its expense.
Initially the couple denied that any duplication had taken place, but at trial they dropped their denial, claiming instead to have repaid the bank in cash.
The husband’s story was that he had paid a bank employee, since deceased, who had put the cash into a safe “in case a claim was made”. He was unable to say how much money had been handed over, he could not give dates, and no receipts were requested or given. Nevertheless his evidence was accepted by the trial court and the bank’s claim failed.
However on appeal to a “full bench” (a “full court” of three High Court judges, sometimes more), the husband’s version was rejected as “inherently improbable”, and the couple was ordered to repay the bank together with interest and legal costs.
What must you prove?
The requirements for an unjustified enrichment claim are –
The recipient has in fact been enriched by receiving the money (it needn’t be money, it could for example be an asset of some sort)
You have been “impoverished” by the transfer
The recipient’s enrichment was at your expense
The enrichment was legally unjustified.
Once the couple admitted receiving the money without a legal basis, held the Court, the onus shifted to them to prove that there was no enrichment. So their failure to prove repayment was the end of their case.
Don’t despair if the facts of your case don’t tie in fully with the above requirements – our law may have other remedies for you. Ask your lawyer for help.
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.
Ridesharing services like Uber are convenient and popular, but you will have read of the “fake Uber” attacks and other safety concerns so on the principle of “safety first” always take a few common sense precautions when using them.
Before you get into your next Uber have a good read of their “Driving safety forward” page here. Pay particular attention to the 3 steps you should always follow before you enter the vehicle in the “Check your ride, every time you ride” section half way down the page. Also be aware of the safety features available to you in the app itself – they are listed in the “Designing a safer ride” section.
Then watch Uber’s “Safety Never Stops” video on YouTube.
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.
Our law will generally hold you liable for damages only if someone else can prove that you caused them loss/damage/injury through your “fault” (intent or negligence). That seems fair and logical – if it’s your fault, you pay.
If however the loss was caused by your animal/s, you are in a much more dangerous position – you can be sued on a “no fault” or “strict liability” basis. And that’s a sobering prospect. It means that bad behaviour by Maxie the Mongrel, Skollie the Cat, Daisy the Cow, or even (per an old 1926 case) your “domesticated” swarm of bees, could leave you with a bill for millions without your being in any way careless or at fault.
Ignorance of that risk is very definitely dangerous rather than bliss.
A recent High Court case illustrates.
R2.3m claimed by a dog attack victim
The claimant was walking down a public street, minding his own business and with every right to be where he was, when three large “Pitbull type” dogs attacked him, viciously and without provocation.
He was very seriously bitten and ultimately had his left arm amputated at the shoulder. He escaped more serious injury or even death only through the courage of a passer-by who fought the dogs off (and was himself attacked for his trouble).
The victim claimed R2,341m in damages from the dogs’ owner.
The dogs had no history of biting or attacking people and were treated as house dogs. They had the run of the owner’s house and garden/yard, which was walled and fenced off from the street. Access to the street was via a gate which was (said the dogs’ owner) normally kept locked, and was on the day in question double-padlocked.
An intruder, claimed the owner, had in his and his family’s absence broken the gate open and left it open – giving the dogs access to the street and to their victim.
Liability and the law
The victim was unable to prove that the dogs’ owner rather than an intruder had left the gate open, so had failed to show that the owner had been negligent in any way.
But, held the Court, the owner was still accountable on the basis of an old Roman law – the “pauperian action” or actio de pauperie – which makes you strictly liable for the consequences of your domesticated animal’s behaviour. The thinking behind this ancient law incidentally was that “an animal (being devoid of reasoning) is incapable of committing a legal wrong” and there have been suggestions that it be scrapped in our modern law. But as of now it is still very much enforced by our courts, and you remain at risk.
Pauperian liability is a complicated subject (involving much Latin and learned judicial interpretation of ancient laws) and you will need specific legal advice if you find yourself on either side of a claim. But in a nutshell you are liable only if your domesticated animal (different rules apply to wild animals) acted from “inward excitement or vice” and against its natural behaviour.
You do also have several defences available to you, such as the victim contributing to his/her loss through their own actions (provoking an attack or trespassing for example) or – the defence raised in this case – where the loss results from the negligence of another person. Again, a complicated subject needing specific legal advice, but out of interest let’s have a look at how the Court in this case dealt with the particular defence raised.
The defence in question is available if you can prove that a third party had control of the animal but negligently failed to exercise that control properly. The dog owner in this case asked the Court to extend that defence to cover his situation where the intruder had no control over the dogs, but negligently gave them the opportunity to attack the victim.
The Court refused, holding that the defence only applies where the third party has control of the animal. The dog owner must therefore pay the victim whatever level of damages he can prove. So – bottom line – you are liable even when the fault lies with someone else, and even when you are completely without fault, unless that other person had control of the animal at the time.
Protect yourself!
First step obviously is to reduce the risks your animals pose to others. Then check that your insurance will cover you if you are sued. Disclaimers of liability need careful wording to afford any hope of protection.
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.
“The one thing that unites all human beings, regardless of age, gender, religion, economic status, or ethnic background, is that, deep down inside, we all believe that we are above-average drivers” (humourist Dave Barry)
AARTO (the Administrative Adjudication of Road Traffic Offences Act) has been partially in force for years, but its demerit provisions have been on ice for so long now that many of us have lost sight of just how seriously it will impact both ourselves as individuals, and our businesses.
Every individual and every business is at risk
Law-abiding motorists will no doubt welcome the crackdown on serial traffic offenders, but we also need to manage the risks.
Every motorist, every vehicle owner, every professional driver and every transport operator will be at serious risk of losing their licences/permits/operator cards. Even businesses outside the transport sector will need to manage this – what happens if your sales people are grounded or your office staff can’t drive to work?
The wheels are turning fast now, with amendments to the Act at long last passed by Parliament, and set to come into law when signed by the President.
Will it be delayed yet again?
The demerit proposal has been bouncing around for a decade, with several false starts and there is talk of court challenges, plus the commencement date may or may not be delayed.
But at long last the wheels are definitely turning, and turning fast.
Be prepared!
Unlucky 13 – easier to reach than you thought
The demerit system is complicated, but in a nutshell you will in addition to paying a fine incur demerit points for a whole range of offences.
And anyone with 13 or more demerits will have their driver’s licence/professional driving permit/operator card automatically suspended (3 months’ suspension for every point over 12). And 3 suspensions will result in full cancellation.
Don’t think that 13 demerits will necessarily take the average driver a long time to accumulate. Consider the demerit points applicable to some sample offences (there are many thousands of them – the table below gives just a few examples).
Sample offences and demerit points
Reducing demerit points, and discounts on fines
You are also rewarded for obeying the law – Any demerit points you have picked up are reduced by one point per 3 month period you remain offence-free.
Early payment of fines will earn you a 50% discount. Set up a payment control system so you don’t miss payment deadlines.
Businesses and employers – manage your risks
Think now about how you will manage the risk of your employees (especially those employed as drivers) repeatedly offending – How will you monitor your drivers’ demerit points? Although for many offences both driver and operator will incur demerits, some driver offences will apply to the driver only.
Are your employment contracts correctly structured to ensure you have access to your employees’ demerit points’ status? And to deal with the consequences if they have their licences suspended or cancelled?
Check your insurance policies – must you disclose any changes in your employees’ demerit status? Are you at risk of losing cover?
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.
