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BUYER BEWARE! THE VOETSTOOTS CLAUSE BITES AGAIN
Before you buy your dream house, inspect it thoroughly. Employ a professional if you aren't an expert.
If you don't, you are at risk in two areas: - - You have no recourse for "patent" (visible or obvious without expert inspection) defects - it is up to you to look for them, and to decide whether or not to proceed with the purchase; and
- Our old friend the "voetstoots" clause, which is standard in property sale agreements, and binds you to take the property "as is". It covers the seller against all defects, including "latent" (non-obvious or hidden) defects. You will have a claim only if you can prove that the seller (or estate agent acting within the seller's mandate) knew of a hidden defect and deliberately concealed it with intent to defraud you; and that won't be easy, as the courts have held that "fraud will not lightly be inferred."
A particular risk here is highlighted in a new Supreme Court of Appeal case concerning an outbuilding with no approved plans, and a carport which contravened building regulations. The Court held that "the absence of statutory permissions necessary to render them authorised are defects to which the voetstoots clause applies".
What that means is that you shouldn't limit your checking to the physical aspects of the house - you should also check for local authority approval of all building work, including additions and alterations. Unless you can prove fraud by the seller, the problem with the municipality is yours - and that could be disastrous.
P.S. Mark Twain's advice still rings true: "Buy land - they've stopped making it"! ... Just do your homework first.
NEW RISK OF LOSING A TAX LOSS
If you are carrying forward a corporate tax loss (note that these restrictions do not apply to individual taxpayers), be warned that it is no longer sufficient to merely trade in every subsequent tax year. The Tax Court has now held that you must go further than just trading - the company must also earn income from that trading. If it doesn't, SARS can disallow the loss.
And remember that the income must be derived from your active "trading" - so just keeping a bank account open and collecting interest from the call account, or earning "sundry income", won't help! In doubt, take proper advice on exactly what sort of business activity will meet SARS' criteria in your particular circumstances.
DIRECTOR OR EMPLOYEE? THAT IS THE QUESTION
A company director may or may not also be an employee of the company. If a director has no express contract with the company, the contract "will be implied, the effect being that the position is regulated by the company's articles of association" - but that won't shed any light on whether or not there is also an employment contract in place.
In a case recently before the Labour Appeal Court, an employee (the company accountant) was appointed as Financial Director. She later resigned from the Board, saying however that she would stay on as an employee. The company argued that she had been employed "in a single post", from which she had resigned. The Court however made no finding on that point, holding instead that there had been an unfair dismissal because "a notice of intention to resign from employment and therefore to terminate the contract must be clear and unequivocal" - certainly not the case in this matter.
Avoid confusion - and perhaps expensive litigation - by ensuring that every director has a written contract that clearly identifies both: - - His or her status as director and/or employee; and
- All duties, responsibilities and remuneration attaching to each post.
ELECTRIC FENCES - COMPLY WITH THE LAW!
Electric fences are proliferating in our crime-ridden cities and towns as never before; if you install one, it is essential that you comply strictly with the various construction and maintenance requirements set out in the Electrical Machinery Regulations (as well as with any local municipal requirements).
For example, anyone installing an electric fence "along a public road or in an urban area" must: -- "As far as is practicable mount the electrified wires or articles in such positions that persons cannot inadvertently come into contact therewith"; and
- "Display notices conspicuously, warning people that the property is protected by an electric fence."
The High Court, in recently reversing a home-owner's conviction for contravening the first requirement, held that even a negligent - as opposed to a deliberate - failure to comply would give rise to criminal liability. In this particular case the accused was acquitted, but bear in mind that a contravention of any of the regulations also increases your risk of being sued civilly for any injury or damage caused by the fence.
ADULTERY AND DAMAGES CLAIMS
Adultery is no longer the severely-punished crime that it was in the early Cape law, but the "innocent spouse" has always had a civil claim for damages against the "third party", on the basis that adultery is a violation of personal rights.
A recent High Court decision confirms that this claim still exists in our law, despite arguments that it is outdated and inconsistent with modern concepts of marriage.
RIGHTS ABUSED BY A FOREIGN GOVERNMENT? HELP IS AT HAND
"Diplomatic protection" might conjure up images of a suave consular official refusing to pay a speeding fine, or visiting you whilst you languish in some remote and fetid foreign prison after falling foul of the local constabulary.
But in fact the concept is much wider. Because "our Constitution contemplates that Government will act positively to protect its citizens against human rights abuses", you can - and should - seek assistance from the State should any foreign government ever infringe any of your human rights recognised under international law.
That includes your property rights - thus, on application by a South African whose farms were unlawfully expropriated in Zimbabwe, the High Court recently ordered Government to "take all necessary steps to have the applicant's violation of his rights by the Government of Zimbabwe remedied".
You will have to prove that: -- You are a South African citizen, and
- The "international minimum standard for treatment of foreigners" has been violated, and
- All your remedies in the foreign country have been exhausted.
WEBSITES OF THE MONTH: THE BRIGHT SIDE OF LIFE!
Scientific research has confirmed what common sense tells us - that optimism is an excellent predictor of good health, long life, success, and a high happiness quotient.
The good news is that we can actually teach ourselves to increase our levels of optimism. Follow these links: -- First, measure how optimistic or pessimistic you currently are with the "Optimism Test" on the Authentic Happiness website - you need to register (free) and then find the test on the Questionnaires page at www.authentichappiness.sas.upenn.edu/questionnaires.aspx.
- Then read a few of the many articles on the Internet on the subject - if you tend to be a pessimist, get going with "How To Be Optimistic" on the wikiHow website at www.wikihow.com/Be-Optimistic. And wherever you are now on the optimism scale, find out how to move up it - start off with a look at the summaries and reviews of the book "Learned Optimism" by psychologist Martin Seligman at www.bainvestor.com/Learned-Optimism.html and www.shearonforschools.com/learned_optimism.htm.
- Finally, if you're getting a bit tired of all the doom and gloom in our local media (you can't blame them really - bad news sells!), cheer up with a visit to www.sagoodnews.co.za and read all about "South Africa: The Good News".
Enjoy October!
Note: Copyright in this publication and its contents vests in LawDotNews(law.news)
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