January 2025 | Constitutional Law, Consumer Law, Uncategorized
“The secret of life is honesty and fair dealing… If you can fake that, you’ve got it made.” (Groucho Marx)
We’ve all had this experience – meal over, relaxed and happy, you call for the bill and decide to reward your friendly and helpful waitron with a good tip. Only to find, on checking the bill when you get home, that the restaurant had already added a “compulsory service charge” (perhaps 10% or 15% – sometimes even more). When you challenge it, the manager points to the small print on the menu which says something like “service charge applies to tables of six or more”, or “discretionary service charge may be levied”.
And it’s not only restaurants that engage in such shenanigans. Perhaps it’s a builder or any other service provider adding on bits and pieces to an invoice that you hadn’t noticed when you signed up with them.
Is this kind of behaviour allowed?
The devil, as always, is in the details. If the add-on was properly disclosed to you upfront, you have no legal leg to stand on. It’s up to you to check the menu, or the supplier’s website and Ts and Cs, before ordering.
But it’s a very different story if the add-on was not properly disclosed upfront by the supplier. As a recent judgment of the National Consumer Tribunal (“the Tribunal”) shows, heavy penalties await any “supplier” (widely defined to include not only restaurants and retailers, but anyone who markets or supplies any goods or services to consumers) who breaches any of their many obligations under the CPA (Consumer Protection Act). And that includes “no hidden charges allowed”.
Being found guilty of “prohibited conduct” will be an expensive exercise. Witness the R1m administrative fine imposed recently on a fast-food chain specialising in that beloved South African tradition – braaivleis.
The braai fast-food chain and the disgruntled customer
Acting on a tip-off from a customer, the NCC (National Consumer Commission) found that a fast-food chain, specialising in “organic braai fast food” (chew on that description for a moment) with 16 outlets across Gauteng was adding a service fee over and above its advertised prices. No mention of this was advertised in its branches, on its menus, or on its website.
Unabashed, the chain argued before the Tribunal that it was fully compliant with the CPA, that the charge was a fee “to ensure the best service to the consumer” and that there is “a transparent general practice to disclose cost structures rather than hide behind an exorbitant price model.”
The Tribunal, deeply unimpressed with this (frankly baffling) line of reasoning, found the chain guilty of prohibited conduct and gave it 90 days to pay a R1m administrative fine.
Two breaches of the CPA
The chain was found guilty of two contraventions of the CPA:
1. That as a supplier it “must not require a consumer to pay a price for any goods or services higher than the displayed price for those goods or services.”
2. It must also “provide a written record of each transaction to the consumer to whom any goods or services are supplied.” This record “must include at least the following information: the address of the premises at which, or from which, the goods or services were supplied.” Without that, as the Tribunal put it, “vulnerable consumers could find it difficult to institute legal proceedings and enforce their rights.”
A R1m fine for “preying on unwitting customers for selfish financial gains”
The chain, said the Tribunal, had “acted deceitfully towards its customers and contravened the CPA’s significant provisions. It acted contemptuously towards the very consumers who supported it.
Accordingly: “the Tribunal considers it appropriate to impose an administrative fine that will deter it and other suppliers from preying on unwitting consumers for selfish financial gains.”
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 us for specific and detailed advice.
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January 2025 | Employment and Labour Law, Uncategorized
“Only in our dreams are we free; the rest of the time we need wages.” (Terry Pratchett)
Retrenching employees can be an expensive business. You’ll have to pay each employee a minimum of one week’s pay for each completed year of ongoing service, and that total liability can add up alarmingly.
A recent Labour Court ruling has however set out clear guidelines for avoiding that cost by arranging alternative employment for your retrenched employees.
A lost cleaning contract and a raft of retrenchments
A contract cleaning services company, fearing it would lose a particular contract in an upcoming tender process, warned all staff employed at the factory in question that they could face retrenchment.
Sure enough, the tender went to a competitor. The company was able to absorb 130 employees into other positions and locations, but 41 had to be retrenched. Eleven of them were given severance pay, but the employer declined to pay anything to the 30 who accepted alternative employment.
The employees were having none of that, and approached the CCMA (Commission for Conciliation, Mediation and Arbitration). The CCMA awarded them both retrenchment pay and notice pay.
The employer then took the matter to the Labour Court, which set aside those awards. So, the employer is off the hook on both counts – and employers and employees should understand the Court’s reasoning for that decision.
Having your cake, and eating it
- The BCEA (Basic Conditions of Employment Act) provides that employees cannot demand severance pay if they are offered alternative employment and unreasonably reject it. As the Labour Court here put it, “the raison d’être of [severance pay] is to compensate an employee who has been dismissed for operational requirements, through no fault of her own, to be paid compensation for her loss of employment. However, the legislature considered that an employee who unreasonably refuses an offer of alternative employment is not without blame. She should therefore shoulder the loss of employment without any compensation.” (Emphasis added)
- Equally, “where an employee accepts alternative employment, arranged by the employer, she forfeits her right to receive severance pay.” Being paid both severance pay and a salary is a double benefit not intended by the BCEA.
Employers: Two practical steps to avoid liability
Employers should take two lessons from this ruling:
- Don’t just “sit on your hands watching the world go by”! As this Court put it, employers are incentivised to ensure that their employees get another job. Which is exactly what the cleaning company did here: it “did not just sit on [its] hands and impassively watch the world go by,” it managed to find alternative employment for 30 employees. It was extremely pro-active in this regard, meeting with the new employer, giving it all the information it needed, and allowing employees paid time off to attend interviews at a venue which it arranged.
- Act early and urgently. This employer avoided the claim for notice pay by giving over four weeks’ notice of termination. What’s more, it engaged in the consultation process and issued notice of retrenchment circulars at the earliest opportunity, then acted “as a matter of some urgency” to collaborate with the new employer in arranging new job offers.
Another point to consider
It’s worth noting perhaps that the Court also mentioned in passing (“obiter dicta”) that even if an employee were to find her own new employment “through her own efforts and without the aid of her retrenching employer” she “needs no soft cushion of severance pay to land on” and would have to justify any such claim.
Still, on the “better safe than sorry” principle, employers should not take chances here – rather be pro-active in arranging alternative employment as soon as you can.
A final thought for employees
Before you decide to reject any offer of alternate employment bear in mind that, as this court confirmed, it will be up to you to prove your entitlement to severance and/or notice pay – it’s not automatic!
Whether you’re an employer planning to retrench staff, or an employee facing an impending retrenchment, getting the best legal advice is key.
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 us for specific and detailed advice.
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July 2022 | Property, Uncategorized
“Knowledge is power” (old proverb)
Whether you are buying or selling property, remember that it is too late to ask questions after you sign the Deed of Sale (often called a “Sale Agreement” or “Offer to Purchase”).
“Knowledge is power” rings particularly true when it comes to any form of process with significant legal consequences, so here are some of the important questions you should ask upfront, before you commit to anything –
- What do all the terms and conditions (particularly the legal-speak bits) in the Deed of Sale mean in practice?
- Are my rights adequately protected and my risks minimised by the terms and conditions?
- What costs will I have to pay, and when?
- Is there anything in the Title Deed or local municipal laws and zoning restrictions that may impact me (as a buyer)?
- Do I (as buyer) have a copy of the plans, and have all extensions and alterations been authorised by the local authority?
- What defects have been disclosed in the Mandatory Disclosure Form, is a home inspection report worthwhile (and permitted by the deed of sale), what is the legal position around voetstoots clauses and patent and latent defects, and does the Consumer Protection Act apply to this sale?
- As a buyer, have I checked for practical issues like local fibre availability, crime levels, security, school feeder zones, fixtures and fittings to remain, work-from-home practicality, buy-to-let possibilities etc?
- Are there tenants (or other occupants) in the property, and if so what is their status and what does the deed of sale say about when they will vacate?
- When does the buyer take possession and occupation? (Careful here, possession and occupation are two different concepts in law)
- What arrangements have been made for date of transfer and payment of occupational interest, rates and taxes, levies, municipal service charges and the like?
- In a residential complex: As a buyer, what Rules and Regulations will I be bound to, is there a danger of a special levy being levied, and do the latest financial statements for the Body Corporate or Homeowners Association show a healthy financial situation?
- Have I as seller appointed my choice of conveyancer (transferring attorney)?
A final but vital thought here – whether you are buying or selling property, a lot of your money will be at stake here. Get professional advice before committing yourself to anything!
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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July 2022 | Company / Corporate / Compliance, Debt Recovery, Uncategorized
“… for the benefit of immunity from liability for its debts, those running the corporation may not use its formal identity to incur obligations recklessly, grossly negligently or fraudulently. If they do, they risk being made personally liable.” (Quoted in the judgment below)
Particularly in hard times, it is not at all uncommon to find yourself unable to recover a debt from a company in financial straits whilst at the same time you know that its directors hold assets in their own names. Can you attack them personally?
The answer is founded in the centuries-old concept of companies as separate legal entities or “juristic persons”. They trade in their own names and have their own assets and liabilities, so as a rule directors will not be personally liable for a company’s debts unless either –
- They signed personal suretyship for them, or
- They fall foul of one of our law’s provisions entitling a court to declare them personally liable.
So, in the absence of personal suretyships, when in practice can you recover a company debt from its director/s? And when are you as director at risk of being sued personally?
Let’s look at the facts and outcome of a recent High Court case for some insights –
The fraudulent car auction, the disappearing company and the director’s defence
- The buyer of a car on auction subsequently discovered that it was a 2010 model despite being sold to her as a 2012 model.
- She cancelled the sale, returned the car to the auction company that had sold it to her, and, when her demand for a refund of the purchase price was refused, took a default judgment against the company.
- What followed was a saga of unsuccessful attempts to recover her money from the company, its address having changed and the director claiming to have resigned and sold the company, which he said had ceased trading and was awaiting deregistration.
- The buyer eventually sued the director personally, asking the Court to “pierce the corporate veil”. The director’s defence boiled down to saying that he had not used the company “as a front”.
Piercing the corporate veil
“Piercing the corporate veil” in this context is, simply put, a court holding directors personally liable for a company’s debts by declaring that the company is to be “deemed not to be a juristic person” in respect of particular debt/s.
On what grounds will a court make such a declaration? Per the High Court in this matter:
- Where there is “fraud and the improper use of a company or conduct of the affairs of a company” or
- “[W]here its incorporation, use or an act performed by or on its behalf [the Court’s underlining] constitutes an unconscionable abuse of the juristic personality of the company as a separate entity.”
The director’s misrepresentation and “cavalier disregard” for the company’s interests
- On the facts, the Court found that the director had misrepresented the details of the motor vehicle to the buyer, that this misrepresentation was material and induced her to purchase the vehicle, and that it “was deliberate such that it amounted to fraud, alternatively dishonesty, further alternatively improper conduct.”
- “Additionally, as the director and owner, he acted with cavalier disregard for the interests of the company … Such conduct is manifestly not in the best interest of the company and may be considered reckless and dishonest. This conduct was indubitably with callous disregard for its effect on the company as a separate legal entity and at a time when he describes its financial situation as being parlous.Therefore, whilst a director is entitled to resign at any time, his resignation cannot be used as a means of evading his fiduciary duties as a director.”
- Concluding that “the conduct of the director adversely affected the [buyer] in a way that reasonably should not be countenanced and which constitutes an unconscionable abuse of the company’s juristic personality”, the Court declared him personally liable to repay her the purchase price, interest, and costs.
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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July 2022 | Credit Law, Debt Recovery, Uncategorized
“How sharper than a serpent’s tooth it is to have a thankless child!” (Shakespeare)
“Family helps family in times of need” – that’s been part of human culture since long before the dawn of history but be sure to observe all legal formalities. A recent High Court decision provides an excellent example of the risks of not doing so.
Parents lose R540,000
- A daughter in the middle of a divorce borrowed R540,000 from her parents so that she could buy out her spouse’s 50% share in her house.
- As far as her parents were concerned it was a repayable loan, but when they had to sue their daughter for repayment they were in for a rude shock.
- Although their daughter had admitted asking to “borrow” the money, the Court held that the parents had failed to prove (the onus being on them to do so) “the existence of a loan agreement, its terms and consequent breach thereof on a balance of probabilities”. Nor had they proved “the material terms and conditions agreed upon including the amount of the loan and the date of repayment”. Another nail in their coffin – they had failed to prove animus contrahendi (lawyer speak for “a serious intention to contract”).
- Their claim was dismissed with costs, so it’s goodbye to their R540k.
5 reasons why you need a contract, no matter how strong your family
One wonders how many families have rued their attitude of “We have a very close and strong family, and we trust each other with everything. No way do we need a contract. Forget it.”
But it’s not just a matter of trust. Consider these scenarios –
- Without a written contract, who is to say for certain that you are all on the same page as to whether it is a gift or a loan, and if so when and how it is repayable? You could in all innocence have two totally different visions of what you have agreed on. It’s only fair to everyone to put everything on record.
- Even the strongest families go through rough patches – it may be highly unlikely, but it happens, and our law reports are full of unforeseen and bitter family fights.
- What if (horrible thought, but we must all be realistic) one of you dies before the debt is repaid? Now you are dealing not with a parent, a grandparent, or a child, but with the executor of their estate, an executor who will need proof of the loan and its terms.
- If a divorce should intervene, a family loan is as much an asset (or liability) as any other, and solid proof of it will be essential.
- The same applies to an attack by a third party such as the taxman or a creditor.
Bottom line: Have a clear, written contract recording at the very least the amount of the loan and the agreed date and terms of repayment. For significant amounts of money, professional advice is essential.
A final thought – ask about the National Credit Act
It may seem strange in the context of a family, but your loan agreement will be unenforceable if you didn’t register as a “credit provider” in terms of the National Credit Act (NCA) in circumstances where you should have registered. In many cases it won’t be necessary, in that it doesn’t apply where family members are dependent on each other. Plus, only “arm’s length” transactions will as a general rule fall under the NCA. But there are grey areas here, so specific advice is again 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
January 2022 | Family Law, Uncategorized
Even if your marriage is collapsing around you, you might be afraid to sue for divorce because you have no money to survive on, plus you know that a hotly contested divorce might take years to finalise while your breadwinner spouse fights you tooth and nail every step of the way.
How will you support yourself and your children until the case is finalised? How will you pay your lawyer to run the case for you? Must you wait for the end of the case before you see a cent?
The answer luckily is “no” in that you have a relatively quick and simple remedy in the form of asking the court for “interim relief” in respect of –
- An order that your spouse pay you –
- Maintenance (for children and/or for yourself) pending finalisation of the divorce,
- A contribution towards your costs in the divorce proceedings,
- Interim care of, and contact with, your children (if there is any dispute over this aspect).
You may well hear this form of relief referred to in High Court divorces as a “Rule 43 application” (or, if your divorce is in the Regional Court, as a “Rule 58 application”), whilst the technical term for the maintenance is “maintenance pendente lite” (“maintenance pending the litigation”).
At this stage the Court isn’t interested in recriminations, or blame-finding, or the itemised details of your and your spouses’ financial positions. Those enquiries come later, during the actual divorce litigation. At this stage all it wants to know is how much you need, and how much your spouse can afford to pay.
A recent High Court judgment illustrates…
A “coy about his wealth” spouse ordered to pay up – now
- The warring spouses here are a senior banking executive and his wife, who qualified as a teacher but gave up that career to become a homemaker and mother to the couple’s two children.
- She asked the High Court for interim maintenance for herself and the children, and for a contribution to her legal costs.
- In assessing these requests the Court laid out some of the general principles involved –
- Unless the care and residence of children is involved the issues are straightforward, relating to “the applicant’s reasonable needs, and the respondent’s ability to meet those needs. The applicant’s entitlement to maintenance must be assessed having regard to the standard of living enjoyed by the parties during the marriage.” This should be “a simple and straightforward calculation of needs and means”. (Emphasis supplied).
- The aim is “to avoid substantial prejudice to either party pending divorce. It is not to provide a precise account of what is due to or from either party, according to the parties’ or the court’s sense of morality, propriety, the blameworthiness of the parties’ conduct during the marriage, or their habits of living after the separation.” The case should be cast in practical rather than moralistic terms, and the “emotional heat of a separation” should be kept out of it.
How much money could you be awarded?
Of course every case will be different, but where the parties have, as in this case, enjoyed a high standard of living, the figures can be substantial.
Here for example the Court’s awards were sizeable, commenting that the husband “is coy about his wealth, but there is little doubt that he has a substantial income” – just under R7m in the previous year – with “considerable resources” and an estimated net worth of just over R40 million. Moreover the couple had enjoyed “a very comfortable lifestyle” together.
The end result is that the husband must pay substantially what his wife asked for in the form of R1.6m immediately and thereafter R108k p.m. –
- R88,701-69 p.m. for the wife and children’s interim maintenance, plus school fees, extra mural activity costs, medical aid and medical costs
- Rental of up to R20,000-00 p.m., plus cost of utilities
- R34 656.39 for house moving costs
- R1,572,945-80 as a contribution towards the wife’s interim legal costs.
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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