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A Game Of Homes – Sea View Wars

Directors: Your New Risk Of Personal Liability For Pension Contributions

Liar Liar! Employers: Can You Use A Polygraph?

Tax Time – Your 2014 Deadlines

Employers, Employees: Note The New Earnings Thresholds

The August Website: Entrepreneurs And The Silver Bullet


August 2014

A Game Of Homes – Sea View Wars


A recent Supreme Court of Appeal (SCA) judgment underlines once again the need to properly record any and all agreements relating to your property.

Sea views and servitudes: Neighbours at war
  • Cape Town (Bantry Bay) neighbours - let’s call them A and B - whose houses “enjoy spectacular views of the Atlantic Ocean which contribute significantly to their huge value” came to blows when A (the neighbour in front of B), started building without municipal plan approval and in breach of restrictive title deed conditions and zoning scheme requirements.

  • At a “settlement” meeting, B agreed not to object to the planning applications for departure and title deed amendments that A needed.

  • According to B, A had then (in exchange for these concessions) orally agreed to register various height servitudes over his property in favour of B’s property.

  • Subsequent attempts by the parties to agree on a written recordal of this oral “agreement” failed after a long saga of disagreement over draft “agreements”, offers and counter-offers.  In the end B relied on a “draft agreement” drawn up by A but signed only by B.  A’s version was that this partially-signed draft was in fact no more than a rejected offer. 

  • Nevertheless A continued with his development to completion, unhindered by any objection from B.

  • But when B then tried to enforce registration of the servitudes, A denied having agreed to any specific departure or details of any height servitudes, forcing B to turn to the High Court for assistance.  He won his case and the High Court ordered A to register the servitudes.

In writing or invalid

“A verbal contract isn't worth the paper it's written on” (Samuel Goldwyn) 

On appeal however, the SCA disagreed, holding that B had failed to prove the existence of a valid agreement by A to register a height servitude.  No oral agreement had been proved and in any event our law requires any agreement for the alienation of “any interest in land” – such as the exchange of rights in this case - to be in writing and signed by both parties.

Save your sea view!

Saving your sea view could be as simple as agreeing with your neighbour to register a “height servitude” – but take advice before you agree to anything relating to your property to make sure that your agreement is in fact valid and enforceable.

Directors: Your New Risk Of Personal Liability For Pension Contributions

“Corporation: An ingenious device for obtaining individual profit without individual responsibility” (P.T. Barnum)

All too often employees of a cash-strapped business only find out too late (when the business finally fails and is liquidated) that management has been deducting pension fund contributions from their earnings and not paying them over to the pension fund.  The losers of course are the employees, whose pension benefits are often seriously prejudiced.  

And until now, where the employer was a company or other corporate entity, employees had no easy recourse against management personally.  They were left with a claim (probably a worthless one) against the company itself as the actual employer.

That has all changed with new legislation which exposes directors (and their equivalents in other corporate entities) to both –
  1. Personal liability for such non-payment, and 

  2. Criminal liability.  The penalties are harsh – a fine of up to R10m and/or 10 years’ imprisonment.

Reduce your risk!
  • Not all directors are at risk, only those exercising control of or with regular involvement in the employer’s “overall financial affairs”. So if you aren’t involved in the financial affairs of the business make sure that the pension fund is informed accordingly – if those personally responsible aren’t identified to the fund, all directors are liable.

  • Ensure that your business has strict controls in place to ensure full and timeous payment of all pension fund contributions.  Note that payment has to be made to the pension fund within 7 days of month end.

  • Take advice immediately if your business runs into cash flow issues and can’t pay over contributions

Liar Liar! Employers: Can You Use A Polygraph?

“…..the respectability of polygraph evidence, at best, remains an open question” (extract from Labour Appeal Court judgment below)

Many employers are confused as to whether or not our labour laws allow you to use “lie detector” testing in disciplinary investigations and/or other processes like selecting suitable candidates for promotion.  

In a nutshell, the answer is that our courts seem generally prepared to take polygraph test results into account in determining the probabilities of any investigation, but with important provisos –

  1. The applicant or employee must consent to the testing.  Take advice on drawing up a comprehensive consent form to ensure its admissibility in court should that be necessary.

  2. The process must be “fair” and in line with all our labour laws. 

  3. Use an expert who can if necessary confirm the validity of the test results.

  4. Our courts have consistently treated polygraph testing with considerable caution, to the extent that it is unlikely to be accepted in isolation as sufficient evidence of dishonesty – ideally it should be corroborated or supported by other evidence.
The examples below illustrate.


Prevention being better than cure, it is worth pre-screening for honesty/integrity all employees applying for promotion.  If you decide to incorporate polygraph testing into your screening process, make sure that you don’t rely solely on it.

In an important Labour Court case for example, two employees applied for promotion to managerial posts but were denied promotion when they failed a polygraph test.  Finding for the applicants, the Court held that the employer “committed an unfair labour practice relating to promotion in relying exclusively on the result of a polygraph test to determine the honesty of the candidates” and that “the exclusive reliance on the polygraph test results to eliminate candidates for appointment on the basis of their deceitful character, in the absence of any other information placing a question mark over their integrity is unfair.”


Similarly, a recent Labour Appeal Court judgment involved the dismissal of two workers who were part of a crew handling cigarettes in a dispatching warehouse.  After a series of thefts, they were suspected of involvement and agreed to undergo polygraph tests.  They were the only two workers (out of a crew of eight) to fail the tests.  That, and their poor performances as witnesses at both the enquiry and the arbitration, led to their dismissal.

Their dismissals were reversed on the basis that no misconduct had been proved.  Not only was there was no other persuasive evidence to support the test result, but the employer had not produced any expert evidence “to establish the cogency of the concept of a polygraph nor to establish the technical integrity of the process”.  Polygraph evidence, held the Court, should not be considered without expert evidence “of its conceptual cogency and the accuracy of its application in every given case”.   So be sure to use a suitable expert for any such testing.

The bottom line

Only use polygraph testing – supported by expert evidence - to support your case, not to prove it.  

Getting this wrong will cost you dearly – take advice in any doubt. 

Tax Time – Your 2014 Deadlines

Tax Season has started for the tax year 1 March 2013 to 28 February 2014, and your personal income tax return (ITR12) deadlines are –  
  • By post or dropping it off in a SARS drop box – 26 September 2014 or
  • Electronically at a SARS branch (provisional and non-provisional taxpayers) – 21 November 2014 or
  • Non-provisional taxpayers who use eFiling – 21 November 2014 or
  • Provisional taxpayers who use eFiling – 30 January 2015.
Company income tax returns (ITR14s) must be submitted within 12 months after the end of the financial year.

Note that only a registered tax practitioner may submit returns on your behalf.

Employers, Employees: Note The New Earnings Thresholds

Overtime limits and pay, working hours regulation, meal intervals, rest periods, night, Sunday and Public Holiday work – these are some of the basic protections and benefits in terms of the Basic Conditions of Employment Act (BCEA) which don’t apply to employees whose earnings exceed a specified threshold.

From 1 July that threshold increased to R205,433-30 p.a. (from R193,805-00) - but note that some of these benefits don’t apply to certain classes of employee (senior management, some sales staff, and employees working less than 24 hours a month) regardless of earnings, nor in certain circumstances – take advice in need.

The August Website: Entrepreneurs And The Silver Bullet

“Silver Bullet, noun: A simple and seemingly magical solution to a complicated problem” (Oxford Dictionaries)

We all dream of finding one simple piece of advice that will magically deliver business success, but of course it’s a lot more complicated than that.  

As Entrepreneur Magazine points out in its article “There Is No Magic Formula for Small-Business Success -- Only This” (on its website at http://www.entrepreneur.com/article/234924) your foundation for success is always going to be hard work and experience.

Beyond that, commit yourself to “dedicated execution” of these 5 steps -
  1. Articulating a clear mission, 

  2. Hiring the right people, 

  3. Setting goals, 

  4. Measuring progress toward them,

  5. Resolving the inevitable conflicts that arise.
Read the full article, follow that formula, and reap the rewards!

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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.