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NEIGHBOURS AND PROPERTY VALUES - YOUR RIGHTS, AND A WARNING
Can you stop the municipality from approving your neighbour's building plans if you are able to show that the proposed construction will reduce the value of your house?
The answer is "Yes", but with a very important limitation. Be warned that a recent case before the Supreme Court of Appeal highlights the need, before buying a property, to value it on the basis that your neighbours might in future develop their properties to the full potential allowed in the area.
In this case, a house owner complained that a proposed 2½ storey addition to the house next door would be "unsightly, objectionable and out-of-keeping with the architecture of the suburb", would violate his privacy, would prejudice his access to warmth and sunlight, and would "cause a substantial derogation in the value" of his property.
The Court held that, in considering building plans, the local authority must: - - Approve the plans only when satisfied that the building will comply with all applicable laws; and
- Disallow the plans if the proposed construction will probably (not "possibly" - it must be a probability) reduce the market value of neighbouring properties, disfigure the area, be unsightly or objectionable, or be "dangerous to life or property".
What is important is that you cannot prove that your property's value will diminish simply by providing "before and after" valuations.
"Market value", held the Court, "is the price that an informed willing buyer would pay to an informed willing seller for the property, having regard to all its potential at the time of sale, both realised and unrealised." "Informed" parties would have investigated all factors that could influence the property's inherent value - zoning, height restrictions, building lines etc - and would have determined a "market value" accordingly at the time of purchase.
The Court did accept that in some cases the likelihood of a neighbour developing in a particular manner might be considered by the parties "as too remote to influence their price", but in the normal run, if you buy a property in an area with say a height restriction of 3 storeys, you must take that into account when buying the property. You cannot then later complain of a loss of value when your neighbour elects to realise the full potential of his property by building up to 2 ½ storeys. That's exactly what happened in this case, and the Court ruled against the affected owner as being unable to show that the municipality had acted wrongly in approving the plans.
Don't buy a property without first considering all relevant building restrictions in the area! And, because plans could well have been approved without any notice to you, seek legal advice urgently if you become aware of any new construction in the area that concerns you.
YOUR WILL - MAKE SURE IT'S TAX EFFICIENT!
When drawing your will, it is vital to have it checked for tax efficiency. If you don't, you could lumber your estate (and thus your heirs) with having to pay far more estate duty and other taxes than necessary.
To take just one example, a recent decision by the Tax Court confirmed that a trust is liable to pay CGT (a substantial 20% for a trust) on the value of a loan account specially bequeathed to it. It is vital to structure your will properly to avoid this, and the dividing line in what wording to use is a fine one - any mistake will be expensive!
COLLECTING FROM THE DEAD
The world-wide credit crunch has, according to media reports from the U.S., had one particularly distasteful side effect, namely debt collection firms coaxing or cajoling people, often shortly after the death of a loved one, into paying their dead relatives' credit card bills or other debts.
If this practice spreads to South Africa, and if you are on the receiving end of such a call, don't be bullied into paying. Any claim against a deceased estate must be lodged by the creditor with the estate's executor, and cannot be collected from surviving relatives. Take advice also on whether you should report any offending debt collector to the Council for Debt Collectors, which enforces a strict code of conduct.
TENANT EXCLUSIVITY - FIRST COME, FIRST SERVED
If it is vital for you as a shopping centre tenant to avoid competition from a similar business in the centre, insist on a clause in your lease granting you a sole right to operate your particular type of business.
Ensure however that the landlord has not inadvertently already granted a similar right of exclusivity to another tenant. That happened in a recent High Court case where sole rights to trade as a pharmacy were granted firstly to an existing pharmacy, then to a supermarket chain in the same complex, and finally to a new owner who had bought the existing pharmacy's business.
Whose sole right was valid? Critical to the Court's decision in favour of the supermarket chain was the old legal maxim "he who is prior in time is stronger in right". Unfortunately for the purchaser of the existing pharmacy, it had concluded an entirely new lease with the landlord, replacing the original lease. And since that new lease was dated after the supermarket's lease, the supermarket had the prior right.
The buyer of the pharmacy would have been in the stronger position had it, instead of entering into a new lease with a new exclusivity clause, rather structured its purchase and lease agreements so as to take cession from the original owner of its original rights to exclusivity. It would then have been "prior in time", and its claim would have trumped that of the next tenant in line - the supermarket.
2010 WORLD CUP - DON'T MARKET OR ADVERTISE WITHOUT READING THIS!
If you are about to start any advertising or marketing around the substantial opportunities that next year's World Cup has laid at our door, check whether or not your campaign will conflict in any way with FIFA's "exclusive rights" to be associated with the event, and/or infringe its "Official Marks" (logo, emblem, mascot, poster etc).
These rights are clearly going to be vigorously enforced, and you should take proper advice before incurring cost.
"PASSING OFF" - PROTECTING YOUR GOODWILL
You've built up your business through "blood sweat and tears" (and a lot of expertise); and now the opposition is trying to catch a free ride by deceiving buyers into thinking that its product is yours, or that it is in some way associated with you. How can you protect yourself?
First prize is often to register a distinguishing trademark, which you can then defend from infringement using the Trade Marks Act. A lesser degree of protection is given by the common law to unregistered trademarks (registration is not necessary to give protection to a mark, it just makes it much easier to defend) via a prohibition against what is known as "passing off".
You will need to prove that: - - Your "name, mark or get-up" has a reputation i.e. has become distinctive of your goods or services in the sense that the public now associates them with your business or products; and
- The opposition has made a representation - express or implied - that causes the public to be "confused or deceived"; and
- Your goodwill or "trade reputation" has been damaged as a result.
Take advice upfront on the best way to protect your name and branding.
MERGER NOTIFICATION THRESHOLDS INCREASE
The thresholds for compulsory notification to the Competition Commission of any proposed merger/acquisition increase from 1 April 2009 as follows: -- "Intermediate" merger: combined asset and/or turnover value of R560m (up from R200m) and/or target business turnover of R80m (up from R30m)
- "Large" merger: combined asset and/or turnover value of R6.6bn (up from R3.5bn) and/or target business turnover of R190m (up from R100m)
(Note that "small" mergers - those under the "intermediate" threshold - can be voluntarily notified but this is not compulsory. The Commission has 6 months from such a "small" merger to intervene if it considers it necessary.)
APRIL WEBSITE: BUSINESS SUCCESS IN DIFFICULT TIMES
Albert Einstein hit the nail on the head with his: "In the middle of difficulty lies opportunity".
And the current challenges in the economy are no exception. New opportunities are arising in almost every field, and the really successful businesses will be those that identify and exploit them. But don't delay - these are opportunities that won't be available to you in "normal" times.
One of those opportunities is the likelihood that much of your opposition will panic its way into a limbo of contraction and hibernation. Take advantage - keep your profile high, polish your reputation, stay in touch with customers, keep your capacity to produce as intact as you can. When the tide inevitably turns, when "Doom and Gloom" turn again into "Boom", you will be way ahead of the pack.
For some powerful thoughts on how best to manage and benefit from the current crisis, see BDO Spencer Steward's article "Business tips for surviving difficult times" on their website at www.bdo.co.za/businesstips
Have a great April - and remember that 22 April is now officially a Public Holiday, so you have no excuse for not voting!
Note: Copyright in this publication and its contents vests in LawDotNews(law.news)
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