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Struggling To Evict A “Commercial” Occupant? Don’t Stress About PIE
 

Bureaucrats And Brick Walls – Fight Back!
 

Contracts – Leave No Shadow Of A Doubt
 

Creditors: How To Secure Your Surety Claims In Business Rescue
 

Budget 2015: Submit Your Tips
 

The February Websites: Your Practical Guide To Surviving Blackouts
 

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FEBRUARY 2015


Struggling To Evict A “Commercial” Occupant? Don’t Stress About PIE


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A recent Constitutional Court judgment highlights a fundamental difference in the legal protections afforded to two types of unlawful occupant:–

Residential occupants:Occupants residing on premises are afforded protection in terms of PIE (The Prevention of Illegal Eviction from and Unlawful Occupation of Land Act) with its many onerous requirements for eviction.  Note that even residents of “commercial” property are covered – it is not the categorisation of property that counts, but whether or not the unlawful occupierresides on it.

“Commercial” occupants:  In contrast, “commercial” occupants (“juristic persons and persons that do not use buildings and structures as ‘a form of dwelling or shelter’”) have no such protection, and are accordingly (in principle at any rate) easier to evict.


To illustrate …..

The case in question concerned a mixed-use property which was sold on an insolvency auction.  The previous owners refused to vacate and the new owner asked the Court to evict two classes of unlawful occupier –
  1. A business in the form of a vehicle service station and convenience store operating from the commercial portion of the property, and

  2. The previous owners of the property who personally resided on the residential portion. 
Because the buyer had not complied with PIE, eviction was granted only for the non-residential occupants (the service station and various employees).  The previous owners themselves could not be evicted without PIE compliance.





Bureaucrats And Brick Walls – Fight Back!


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“Bureaucracies are inherently antidemocratic. Bureaucrats derive their power from their position in the structure, not from their relations with the people they are supposed to serve” (Alan Keyes, American politician)

Fighting red tape is a growing problem worldwide, and we South Africans are certainly not immune.  We should welcome therefore two recent court decisions which threaten inefficient/disinterested/ corrupt bureaucrats with personal liability for legal costs if their misconduct forces us to fight them in court.


Case 1:  Government officials ordered to pay legal costs - personally

A provincial hospital patient whose son was born with severe disabilities as a result of medical negligence succeeded in having the relevant Health Department declared liable for damages.  The High Court further awarded her legal costs on the punitive attorney and client scale and ordered that 50% of such costs (likely to total about R500,000 according to media estimates) be paid personally by three officials –
  1. An attorney employed in the State Attorney’s office,

  2. A senior legal administrative officer employed by the department of health, and

  3. A medical practitioner employed as a medico – legal advisor by the department of health.
This order followed the Court’s findings that the government’s decision to defend the claim was reckless, and after the Court had slated all three officials for a long list of failures, indifference and incompetence in their handling of the matter.  The plight of the mother and her severely disabled son as observed by the Court was “symbolic of the destruction wrought by the callous, incompetent indifference on the part of public officials inflicting South Africa at the moment.”  


Case 2: Tender trouble, and a stark warning to truant office bearers

The Supreme Court of Appeal, in confirming the setting aside of the award of a municipal tender on the grounds of a string of irregularities, errors and defective processes, warned the Municipality that any recurrence of such conduct would risk the Court taking the decision away from it and awarding the tender itself.  

“That”, said the Court, “may also result in identifiable officials responsible for that situation being ordered to pay the costs personally, because: ‘It is time for courts to seriously consider holding officials who behave in the high-handed manner described above, personally liable for costs incurred. This might have a sobering effect on truant public office bearers.’”


So if you come up against a brick wall of bureaucracy …..

Public officials, said the High Court, “should not be terrorised and paralysed into not doing their jobs by the fear that every little error could be met by the extreme sanction of a personal cost order”.  

In fact the many officials who do their jobs efficiently and honestly deserve our full support and acknowledgment. 

But if you are unlucky enough to run into a brick wall of bureaucratic bungling, disinterest and inefficiency, don’t take it lying down.  Have your lawyer send a formal warning to the officials in question – perhaps the fear of personal liability will focus their minds on actually providing the public services they are paid to provide. 





Contracts – Leave No Shadow Of A Doubt


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Contracts should always contain a “non-variation” clause providing that no variation of the agreement is of any force or effect unless it is in writing and is signed by all parties.  

A recent High Court case resulting from a property dispute shows why.


Landlord v Tenant:  The restaurant that fell on hard times ….. 
  • A restaurant owner, who rented premises in terms of a lease agreement containing a standard non-variation clause, fell on hard times and ran up rental arrears.

  • The landlord cancelled the lease and gave written notice to the tenant to vacate the premises.

  • When the tenant refused to vacate, the landlord asked the Court for an eviction order.

  • The tenant’s defence was that it had verbally agreed with the landlord to pay a reduced rental (set at 25% of daily takings), that it had complied with this alleged “compromise agreement”, and that it should not therefore be evicted.  It argued (citing public policy considerations amongst other legal principles) that an oral agreement should suffice in the particular circumstances.

….. and the certainty principle

But to no avail.  Commenting that when parties to a contract impose restrictions on their own powers to vary the contract “they do so to achieve certainty and avoid later disputes”, the Court granted the eviction order and gave the tenant 5 days to vacate the premises.  


Protect your position
  1. A non-variation clause, worded correctly to suit your particular needs, is essential.  Without it, you could end up arguing endlessly (and expensively) in a succession of courts about who agreed what, with whom, and when.

  2. Comply strictly with the clause, no matter how great the temptation may be to accept verbal undertakings and agreements from the other party.  This is a case where compliance with formalities is essential.
  3. Even if by some mischance your agreement allows verbal amendment or cancellation, still reduce everything to writing to avoid uncertainty and dispute down the line.   

P.S. Beware electronic amendment!

Next month we’ll look at a related danger – that of inadvertently concluding, amending and/or cancelling agreements by email or other electronic messaging, which can amount to both “written” and “signed” agreement.





Creditors: How To Secure Your Surety Claims In Business Rescue


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Will your claims against sureties be prejudiced if your claim against the main debtor is compromised during business rescue proceedings?  

Regular LawDotNews readers will recall the different approaches taken by various High Courts to this question, and creditors will be relieved to learn that now the Supreme Court of Appeal has confirmed that your suretyship claims can indeed be protected – but it’s up to you to do so.


Your Action List
  • Your best protection remains a correctly worded suretyship – as in this case, where the bank’s standard suretyship document specifically catered for the eventuality of the main debtor’s claims being compromised.  Have your lawyer check your suretyship forms now.

  • Moreover, said the Court, the surety’s liability to you is “fixed” if you have actually taken final judgment against him/her, and is not therefore affected by a subsequent business rescue plan.  Take enforcement action early.
  • More widely, the Court commented that “unless the plan itself made specific provision for the situation of sureties”, a surety’s liability may in any event be unaffected by business rescue.  On one hand, that might possibly throw a lifeline to even those creditors not assisted by the above principles.  On the other, it implies that you might actually lose your suretyship claims if the rescue plan is worded to that effect. Long before you are called on to consider any business rescue plan, check that nothing in it might let sureties off the hook.





Budget 2015: Submit Your Tips


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“Giving money and power to government is like giving whiskey and car keys to teenage boys” (P.J.  O'Rourke) 

Finance Minister Nhlanhla Nene will table the 2015 Budget in Parliament on Wednesday 25 February 2015 at 2 p.m.  All Budget documents will be available on the National Treasury website http://www.treasury.gov.za/ as soon as the Minister starts speaking.

Help him with your Budget Tips.  Submit them online via the National Treasury website at http://tinyurl.com/2015BudgetTips or fax them to (012) 406 9055.






The February Websites: Your Practical Guide To Surviving Blackouts


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“What fresh hell is this?” (Dorothy Parker)

Regrettably it seems that loadshedding is going to be particularly bad in the next few months – have a look at all the “red” days in Eskom’s loadshedding calendar at http://www.fin24.com/Economy/LIVE-Eskom-state-of-the-system-briefing-20150115.


Here’s what you need to do -
  • Prepare:  Keep an eye on http://loadshedding.eskom.co.za/ and your municipality’s schedules - links at http://www.eskom.co.za/Pages/loadsheddingmunic.aspx (Cape Town - watch for new schedules from 1 February).  But accept that you may get no warning, so in times of high risk, assume the worst – and prepare for it.  

  • Invest in a UPS:  Protect your computers and other electrical equipment with an Uninterrupted Power Supply or two.  Even if your insurance policy covers damage from the power surges which are often associated with outages (not all policies provide such cover – check with your broker), sudden unexpected computer shutdowns can result in significant loss/corruption of data as well as difficulties in re-booting. 

  • If you want to go further and buy a generator: Research your needs and the options thoroughly first.  See Moneyweb’s “The Generator Generation” at http://www.moneyweb.co.za/moneyweb-south-africa/the-generator-generation. 

  • Make the best of it:  Read Health 24’s “How to survive load shedding” http://www.health24.com/Lifestyle/Environmental-health/21st-century-life/How-to-survive-load-shedding-20140307 for some practical tips on making life in the dark bearable.

  • Your taps may run dry:  A side-effect of extensive blackouts is loss of pressure in municipal water supply – in some cases your taps will run dry altogether - because of reliance on booster and other electrical pumps.  Have an alternative supply of water on hand!

  • Keep your vehicles topped up:  You don’t want to coast into your local service station on an empty tank only to find its pumps are out of action or that Eskom has bought up all the diesel. 

  • Check flight times:  Refuelling issues at airports may cause significant flight delays.




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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.