Daan's Snippets

Gentle Reader

This is my last newsletter for the year – 14 days hence most of my colleagues will take a two-week holiday. Serious news wanes at that time of the year with human interest stories predominating.

Have a great break and enjoy the festive season. 

Regards
Daan

~

News:

  • RAF (surely the newsmaker of the year?):
    • This entity attempted to stay 181 writs of execution issued by the Sunshine Hospital. It got lambasted by the High Court Pretoria for refusing to abide by court directors despite punitive costs orders being given against it. 
    • The RAF changed its accounting practice to a standard, not in accordance with GAAP, and was called out by the Auditor General for materially misstating its liabilities; now it is going to court on this issue, despite governmental instruction to not do so. The wonderful result of the change in practice was to drop its stated liabilities by 90%! I can recommend a whole range of clients to its accountant! 
    • The SIU recovered R317m in duplicate payments by the RAF to attorneys. 12 law firms are implicated and have been referred to the NPA for prosecution. Keeping money that is not yours is not nice but so is paying twice.
    • The Sun, to which I have not and will not subscribe, ran a somewhat lurid headline to the effect that the RAF has discovered that it had paid some R2.6bn in fraudulent claims over the past three years, aided and abetted by doctors and “lawyers”. I have little doubt that there are those in our profession who are guilty of this, but it would be interesting to see whether the RAF is able to back up this claim by prosecution.
  • Lawyers misbehaving:
    • This week, a minor unpleasantness, prompted by what turned out to be a false report by purportedly the SSA on South African judicial corruption, was flighted by the UDM.
    • This caused me to take a look on judicial corruption elsewhere, and I found this in the Yale Law Journal.
    • A Mpumalanga attorney is under investigation for overcharging the Mpumalanga Department of Agriculture; he charged R6m for research – heck, if this had been a Jo’burg lawyer this would have been par for the course?
    • A Regional Court president appeared in the Durban Regional Court on charges of receiving payment for making recommendations for the appointment of Regional Court magistrates.
    • A Gauteng High Court judge appeared before the Judicial Conduct Tribunal on Friday more for not delivering judgement timeously.
  • Four ombuds will be merged into one next year i.e., the non-statutory long-term, short-term, banking and credit ombuds. 
  • The Master now requires that a motivation or consent by one of either a trustee or beneficiary, is required if one applies for copies of trust documents.

Hard News

Ø  Practitioners should know that a power of attorney lapses when the grantor loses his mental capacity to act. Powers of attorney are regularly used by families to deal with the affairs of, for instance, Alzheimer’s patients. They work but are not strictly legal. 

Ø  I had been unaware of the existence of passing off on emerging from University and became acquainted with this during articles. A short note on this topic may be of interest: https://www.financialinstitutionslegalsnapshot.com/2023/11/passing-off-a-common-law-remedy-for-unregistered-trade-marks/

Ø  May employees moonlight? No: https://beechveltman.com/news/top-tip-tuesday-when-can-employees-moonlight/ (Incidentally, I was instructed, in a conveyancing matter, by a gentleman, this week past, and on my enquiring so as to be able to certify his status, he turned out to be an employee of the Legal Aid Board).

Ø  Can an employee, in conduct charges, plead that a defence would jeopardise his liability in pending criminal charges? No: https://www.phinc.co.za/OurInsights/ArticleDetail.aspx?Title=Do-criminal-charges-trump-a-disciplinary-hearing

Ø  Attorneys use stamps, designating their work addresses, when certifying documentation. If oaths are administered, outside of that work address, would they be valid? See the following case at paragraph 8 – 11 (one would think that this could not possibly have been an issue, but still): http://www.saflii.org.za/za/cases/ZAGPPHC/2023/1916.html

Ø  Today the Pretoria High Court will determine whether section 10 (2) of the Recognition of Customary Marriages Act is unconstitutional and, if so, refer this to the Concourt – watch out for it.

Conveyancing:

  • The Kouga Municipality had delegated some of its powers to a Special Rating Area in St Francis Bay – a way of alleviating the struggle to deliver adequate municipal services. Fellow residents ganged up and sought to have this struck down, on the basis of the award being unconstitutional. Worth a read given our widespread municipal dysfunction: http://www.saflii.org.za/za/cases/ZASCA/2023/168.html
  • May a body corporate terminate the delivery of services to a non-paying member? The following court case is interesting, simply because the issue appears to be not entirely clear: http://www.saflii.org.za/za/cases/ZAGPJHC/2023/1394.html
  • Paddocks published a note on what a body corporate could do if insurers will not take on risk on its river-front properties – ask me for a copy.
  • The Registrars’ Conference Resolutions have been published – hardly worth looking at.

Economy/business

Trends:

·       The ABSA PMI for Q3 was downbeat with October at 45.4 (where 50 is neutral).

·       Similarly, it’s Business Confidence index stood at 31 points.

Not much good in this.

However, there is some good news:

·       The AG reported a noticeable improvement in audit outcomes in national and provincial government over the past financial year. As an aside – the somewhat luridly reported R22bn government wastage is but a fraction of the some R2trl that we spend annually.

·       It is an ill wind… those who install solar, benefit hugely from the distress brought about by our chronic lack of electricity.

·       Most fund managers think that our stocks are undervalued – buy now? Whether to do so depends on what you think our future holds.

·       We seem to be making progress on our money-laundering problems.

General news:

  • Starlink is said to be illegally distributing its products in South Africa. The state has an interesting dilemma, as one can buy the hardware elsewhere but operate a global system of communication within the country. So, would you prefer that our citizens spend their money elsewhere, but still use the service within our boundaries?
  • ENS published a short note on employing disabled persons: https://www.ensafrica.com/news/detail/7891/navigating-disability-inclusion-in-the-workpl
  • Greenwashing is a relatively new term and is applied to misleading claims about the sustainability of a product and its environmental impact.
  • Banking and investing:
    • African Bank appears to be turning the corner.
    • Our state-owned Ithala Bank appears to be foundering.
    • Easy Equities was in the news for the implementation of a platform fee – not obvious but more importantly, is a report that for the first six months of this year deposits from retail clients were down by a third and a fifth since then.
  • MiWay again leads the insurance pack in recording the highest net sentiment amongst insurance providers, in that it is said to deliver on its promises.
  • Quis custodiet ipsos custodes?  404 public entities owe R5.9bn in PAYE and R3.5bn in VAT. We are not allowed to know which…
  • Ford has joined VW in warning that parent companies are likely to stop investing in South Africa if the current logistics crisis continues. 
  • An interesting abstract, ex SSNR, is available on corporate fraud, in which the authors estimate that, on average, 10% of large publicly traded firms commit securities fraud every year.
  • A somewhat disconcerting report is, on Treasury having drawn up a report on preferential procurement, which reportedly allows preferred groups to tender/charge up to 3 times more than bidders who are not. Whatever your thoughts on this – the IMF is of opinion that preferential procurement adds a 20% premium to our state’s cost of goods and services.
  • Can you recall the halcyon days of yore when our growth rate was above 5% – which is a thumb suck of what we will require for South Africa to escape from its current financial malaise. Is this achievable? Absolutely, but… have you considered the total economic effect of all the “challenges” brought upon us by our government? Consider the following:
    • 20% premium on our state’s cost of goods and services attributable to preferential procurement;
    • the World Bank estimate that crime costs us 10% of GDP annually – in fact households are said to spend more on security than health and education;
    • the cost of crumbling infrastructure –
      • the estimate to fix our bulk water infrastructure in South Africa is R139bn;
      • to repair our logistical infrastructure of roads and rails is beyond estimation; and
    • the GDP impact of loadshedding – see the following graph

What is not immediately apparent from the, by now accepted infrastructural decay, is this: our country is growing poorer in capital by the day as we are not investing more than we are losing. In other words, as our country weakens, in terms of capital value and money spent in replacement, rather than development, we will all become poorer as we go along. The end result of this will probably be an accelerating deterioration of our economic position and prospects. Such a trend gathers momentum of its own in that, as our economic weal deteriorates, opportunities are lost, new investment will be discouraged, businesses might leave (take VW on the issue at present) and so on. In turn, such reluctance will hasten further deterioration. Hello Zimbabwe!

Property

There is little in the way of trending news and there will be less as the year winds down.

Firstly, general news:

Sapoa reports that bi-annual global commercial property returns are -2.1% – lacklustre, compared to the second half year return for 2001 which was 9.3%. World industrial property fared better, but total capital growth is negative.

With this in mind – should you be buying property in South Africa? A Citizen report says little but reflects a trend of using property as a part-retirement savings portfolio. Objectively though, should you buy the property? There appears to be no clear answer to this, save the oft-repeated trope that one should diversify investments. The fact is that property has served many generations well by providing borrowing security which does afford a financial leg up.

Stats SA published its June 2023 discussion document in its Residential Property Price Index recently. This report is interesting but is of little other than historical value, as a four-month delay renders much of the information dated. 

More general news is:

·       Distressed homes sales are up 80% over last year.

·       The S Gauteng High Court has ruled that the Jo’burg “development contribution” levy, charged by that municipality, is valid.

·       PropertyWheel has proffered another article on the construction mafia with a list of tips on how to deal with this – the problem, however, is difficult to control in that workers, in a threatened development, are intimidated, which intimidation happens off-site and is really hard to control.

·       A recent article by Adams & Adams on the right of a body corporate, to block transfer by withholding levy clearance certificates, is worth reading: https://www.adams.africa/alicia-heyneke/the-power-of-the-embargo-a-reaffirmation-by-the-sca-of-the-body-corporates-right-to-impede-transfer-of-a-sectional-title-unit/

·       What does a body corporate do if its riverbank property is not insurable? Paddocks has an answer – ask me for a copy.

·       The Ethekwini/Durban municipality has a huge backlog of rate certificate applications owing to a change in its system – furthermore they foresee a staff-shortage from 1 December onwards. Expect delays in Durban transfers.

·       May a municipality delegate a part of its functions to an SRA? Read above under Practice/Conveyancing.

Comment

Have you noticed that headline news often carries stories of collisions or drownings that kill one or two of our citizens, but nothing is said of the other 80 who are murdered daily. The reason is simply that murders are so commonplace that they are not newsworthy. One sees this in politics also: recently our MPs flagellated banks for currency manipulation and stress about scandals that would lose them votes but ignore our economic future going down the drain. Pick a reason for this: self-interest, shortsightedness, and should one whisper this, inability?

So, Anglo-American needs to cut jobs – it was asked to consider delaying the cuts to after elections! Nice to know that our government is looking after its people! Bizarre, isn’t it?

Lighten up

There was a time when our practice did not close over December and actually gained traction over competitors who did close down. With the Deeds Registries closing of late, remaining open is less attractive and I had, light-heartedly, offered Xmas divorces at half price; interestingly, the topic of divorce produces a huge outpouring, if searched:

  • Getting a divorce is like getting fired from a job you hated for years.
  • Whoever said money can’t buy happiness never paid for a divorce!
  • One crocodile to the other, referring to her crocodile-skinned purse: ‘Nice purse.’ ‘Thanks, it’s my ex-husband.’
  • They say when you get married ‘till death do you part’: So, I don’t so much think of it as getting divorced is that I’ve somehow cheated death.”

Contributed by:
Daan Steenkamp Attorneys
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