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DIRECTORS - DECISIONS, DECISIONS IN DIFFICULT TIMES
If you are a director or manager of a company in difficulty, at what stage do you start running the risk of incurring personal liability to creditors? Essentially, any fraud or recklessness ("recklessness" includes "gross negligence") in the carrying on of the business will put you squarely in the firing line.
The law says that by carrying on business you are representing that the company will be able to pay its debts when they fall due (not necessarily that its assets exceed its liabilities - an important distinction).
Thus in a recent Supreme Court case a supplier failed to recover from a director personally because it couldn't prove that he had "no reason for thinking that funds would become available to pay the debt when it became due or shortly thereafter". As the company in question had a long history of stopping payment on post-dated cheques in order to preserve cash flow, this may seem like a very lucky break for the director; but the Court found also that the director had a reasonable expectation of funds materialising from potential future deals.
However beware - what seems reasonable and genuine to you today may not look the same way to a Court down the line. When in doubt, seek advice!
THE BOND CLAUSE - ONE WRONG WORD AND THE HOUSE IS LOST!
A very common clause in property sale agreements is the "bond clause", making a sale subject to the purchaser obtaining a bond for a specified amount, by a specified date.
It is critical that this clause be worded properly, and that any attempt to comply with it be correctly recorded. In a recent case, the bond clause made the sale subject to the Purchaser obtaining in principle a mortgage bond. The buyer thought that he complied with the clause by communicating that a bond had been approved in principle - but the Court held that use of the word "obtaining" meant that the buyer had to actually "conclude a binding agreement of loan with a bank". The sale had accordingly fallen away. For the want of correct wording, the buyer lost his dream house!
GREY POWER IN THE WORKPLACE
Employment legislation prohibits unfair discrimination based on age, so as an employer make sure that your conditions of employment clearly set out an official retirement age.
The Labour Court recently awarded 24 months' compensation and damages to an employee, who was forced to retire at 61, where her employer was unable to prove that the normal retirement age for an employee in that capacity was 60.
BUILDERS: HOLD ON TIGHT TO THE KEYS!
As a builder you will know how important it is not to part with possession of any building works in regard to which you are still owed money. Your builder's lien puts you at the head of the queue for payment.
Don't be persuaded to part with the keys until you actually have the bucks - in a recent case, a builder lost his lien when he voluntarily delivered duplicate keys to the owner for the "limited purpose" of inspection of the premises.
TIME TO REVIEW THOSE TAX RULINGS
Now that SARS has introduced its new ATR (Advance Tax Ruling) System, you should review your old tax rulings and, in respect of any really important ones, consider obtaining a ruling under the new system. That's the way to be sure that the ruling will be binding. The costs involved seem reasonable in relation to the benefit of having certainty in critical areas (an application fee of R2.500 for SMMEs or R10.000 for other taxpayers; plus a "cost recovery fee" - get clarity on this one before proceeding).
CHECK THE TITLE DEEDS - OR YOU MAY GET ONE FOR THE PRICE OF TWO!
The perils of not obtaining professional advice when buying immovable property have been highlighted in a new High Court case where a property sold in execution was ultimately bought by a purchaser who thought she was getting two adjacent properties. In fact she was only getting one (in practice, the two erven had historically been treated as one - hence, no doubt, the confusion). A proper investigation of the Deeds Office records would have disclosed that only one of two separate erven was being bought, title deed restrictions and a notarial agreement.
DOMESTIC PARTNERS - NO STATUTORY RIGHTS YET, SO CONTRACT OR REGRET
The Civil Union Bill, which will regulate domestic partnerships (for both opposite-sex and same-sex couples), is still being hotly debated. In the interim, anyone in a domestic partnership not recognised as a legal marriage should ensure that they have a written contract regulating their rights, particularly to property and assets acquired during the partnership.
In the absence of such a written contract, you are probably going to have to rely on proving that a "universal partnership" existed, and (as illustrated in a recent case) that is very difficult. You are going to have to prove all of the following: - - The existence of a joint venture or commercial enterprise;
- The date of commencement of the joint venture;
- A consensual contract to enter into the venture;
- The exact terms of the partnership; and
- The exact assets that were acquired by the partnership.
In the case in question, the Court expressed sympathy for a woman seeking a division of assets, but was unable to assist her; she had to walk away from a 10 year relationship with nothing - not even a share of the house they had lived in.
CRIME: TO REPORT OR NOT TO REPORT? AND, FALSE ARREST: THE REMEDY
Any victim of unlawful arrest and detention should without delay seek legal assistance to claim damages for infringement of their Constitutional right not to be deprived of freedom without just cause.
On the other side of the coin however, we are constantly being told that it is part of our civic duty to report crime to the police. Must we hold back on this for fear of being sued if we inadvertently cause an innocent person to be incorrectly arrested and/or prosecuted?
Not, the Supreme Court has now held, if we report suspected crimes to the police with "reasonable and probable cause". You will not be liable if you "held a genuine belief founded on reasonable grounds" in the guilt of the person you report. Proceed with caution - the "reasonable" part means you must be able to objectively justify your decision down the line.
PRESERVE THE PROOF WITH AN ANTON PILLER
If you fear that someone is about to destroy or hide evidence vital to a pending legal action, you can obtain an "Anton Piller" order for preservation of evidence. Essentially, the Court mandates the Sheriff to enter your opponent's premises in order to search for, and seize, relevant evidence. The magic ingredient in this is secrecy - the other party has no advance notice of the "knock on the door", and therefore no opportunity to get rid of the evidence.
However this lack of notice makes the remedy a draconian one, and the Courts will only grant it in clear cases. You will have to prove that: -- You have a claim that you intend to pursue
- The other party possesses specific vital evidence to substantiate your claim
- You have a "real and well founded apprehension that this evidence may be destroyed or in some manner spirited away"
- There is no other reasonable and practical means of protecting your rights.
Recent judgments have confirmed that the remedy is still available despite concerns that such an order impinges on Constitutional rights to privacy and dignity; however, you cannot use the remedy as a fishing expedition to "preview" evidence; nor to do anything beyond the mere preservation of evidence.
HIT AND RUN VICTIMS: FORMALITIES FOR YOUR CLAIM
If you should ever be the victim of a hit and run accident, provide details on affidavit to the police within 14 days, otherwise you could lose your claim. Although the Supreme Court has now held that the Road Accident Fund is allowed to waive compliance with this requirement, it may be reluctant to do so (the rule is designed to protect the Fund from fraudulent and non-verifiable claims, and complying with red tape detail is the first step to reassuring it that your claim is genuine).
WEBSITES OF THE MONTH: STRESS AND MEDITATION
Stress - a good servant (we need it to perform at our peak), but a terrible master (the potentially fatal kind). For a comprehensive guide to its positives and negatives, causes and symptoms, taking control and de-stressing, go to Health 24 at http://www.health24.com/medical/Condition_centres/777-792-3728.asp.
Meditation is commonly advised as a stress-reliever. Learning Meditation at www.learningmeditation.com has a full guide to this ancient art, with sound files and meditation scripts to assist you. If you have a health problem, or want to look at the science behind the concept, first visit "Meditation for Health Purposes" at the http://nccam.nih.gov/health/meditation website.
For a "quick fix" solution, go to The Mind Body Medical Institute website, which has ideas on eliciting the "Relaxation Response" at http://www.mbmi.org/basics/whatis_rresponse.asp (follow the links "relaxation response" and "simple tips" from the page).
Most importantly, remember that it is our attitude to things that really counts - as the Roman Emperor Marcus Aurelius put it in his Meditations: "If you are distressed by anything external, the pain is not due to the thing itself but to your own estimate of it; and this you have the power to revoke at any moment."
Note: Copyright in this publication and its contents vests in LawDotNews(law.news)
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