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Employment & Pension Law Update, Incapacity dismissals…don’t be hasty, reported in the Mercury



ALTHOUGH it is accepted that employers are entitled to terminate the employment of permanently in capacitated employees, it has been confirmed that employers who do not follow a fair procedure do so at their own peril. In the recent Labour Appeal Court case of Imatu obo Anton Strydom v Witzenburg Municipality and Others (CA 08/08) the court was asked to decide whether the employer had adhered to the Code of Good Practice: Dismissal when it had terminated the employee's contract on the basis of incapacity. After an eight-month absence from work, the employee applied for ill-health retirement benefits ("medical boarding") with the employer's pension fund on the basis that he had mental health issues. The underwriter, Metropolitan Insurance Company, declined to grant his application and thereatter the employer had convened an incapacity inquiry. At the inquiry the employee had requested permission to obtain a second opinion from another psychiatrist, but he was not permitted to do so. Subsequently the chairman found that the employee was permanently incapacitated and terminated his employment based on one report from a psychiatrist. At the employee's unfair dismissal arbitration, the first medical report and a further medical report was tendered as evidence. The bargaining council commissioner found that he could not consider the second medical report because it had not been placed before the employer at the incapacity enquiry. This approach was clearly wrong. The court found that the employer's, and the commissioner's, failure to consider the relevant evidence of a second medical opinion had amounted to a failure to adhere to the requirements of the Code of Good Practice. It showed there had been no proper assessment of the employee's capability to continue working in any capacity and signified that the employer had made no effort to reasonably accommodate the employee. The employer's failure to properly investigate the employee's incapacity by allowing the submission of a second medical opinion and its failure to investigate alternative positions exposed it to significant liability. In the circumstances, the court held that reinstatement was an inappropriate order, but that the employee was entitled to 12 months' remuneration as compensation for his unfair dismissal. This case reiterates the dangers of being hasty when dismissing an employee for incapacity (ill-health).

Verlie Ooshuizen, Partner

Contact: 031 575 7206 and voosthuizen@wylie.co.za

 

 

 

 

 

Employment Law Update, Response to reader’s question in the Sunday Times



Q I'm from the school of 4,4 thought that says I must get a copy of everything that I sign, be it a contract, a written warning or any other document. The problem is that the managers at my company do not issue the workers with copies of written warnings, so I have been refusing to sign. Does an employer have a right to fire an employee for refusing to sign a written warning? Is the warning, which has been signed by a witness, regarded as valid? Surely I am legally entitled to get copies?

 Response from Verile Oosthuizen, partner in the employment and pension law department at Shepstone & Wylie Attorneys: The failure to sign a written warning does not mean it is invalid. There is no legal entitlement 10 a copy of the written warning, though there is no legal bar to the employer giving you a copy either. Employers would be advised to get the employee to sign the written warning so that they can prove that the employee was informed that he or she was being disciplined and that a procedure was followed whereby that employee was told what he or she did wrong and given a chance to give reasons for the misconduct. An employer cannot fire an employee for refusing to sign a written warning unless that employee is deliberately grossly insolent in the manner of his or her refusal.

Verlie Oosthuizen, Partner

Contact: 031 575 7206 and voosthuizen@wylie.co.za

Customs @ Wylie Update, The case of the Re-routed container, reported in Freight & Trading Weekly



Shipping lines will accept responsibility for their mistakes — true or false? That's a question posed by Hariesh Manaadiar in his Shipping and Freight Resource blog, and one which FTW has investigated amongst a range of shipping specialists. The question arose in a case study that is raging in one of the social media forums. A forwarder booked two 20-foot containers with a shipping line to Doha on behalf of his client. Due to a mistake by its staff, the shipping line shipped 1×20' to Doha and put the other with another client's container — and shipped it to Bremerhaven. By the time the forwarder found this mistake, the container was already on its way to Bremerhaven. The shipping line has advised that the container will be rerouted but the container will take about 60 days to reach Doha instead of the original transit time of 20 days if it had gone directly. Due to this delay, the forwarder has lost his client (the shipper), because the shipper blames the forwarder, the shipper has lost future orders with his client and has lost his credibility in the market. When the forwarder placed the shipping line on notice and raised a claim against it, the shipping line tried to hide under its bill of lading clauses (See box on pg 11). "The hapless freight forwarder is left without a solution," said Manaadiar, "as the shipping line is rejecting his claim for delayed delivery and loss of current and subsequent business of their client while the shipper is blaming the freight forwarder for the mishap and is expecting it to sort out the problem."


Now Manaadiar thought that the forwarder had a valid case, as the delay was due to the shipping line making the mistake, so FTW posed this question to our group of specialists.
"I think the carrier has a strong case for rejecting the claim in contract law, given the wording of the bill of lading (B/L) clauses," said Mike Walwyn, director of Seaboard Maritime and
national vice-chairman of the SA Association of Freight Forwarders (Saaff). "However, I would think the forwarder has a strong claim in delict, given that it is a generally accepted principle hat one cannot contract out of one's own negligence. "If (as appears to be case), the forwarder suffered measurable loss as a result of negligence on the part of the carrier, then that loss should be recoverable in delict, together with possible damages." A similarly supportive statement came from trade and maritime lawyer, Quintus van der Merwe of Shepstone & Wylie. "It's always dangerous to try to give an opinion without all the facts," he said. "That said, I think most shipping lines are responsible. "I have acted for a shipping line as well as an exporter in the last 12 months — and in both cases the shipping line ultimately accepted responsibility for their error. Certainly on the scant facts you have described, I think there would be a claim." Riad Khan, CEO of the SA Ports Regulator, described
himself as "being evasive". But, he added, "as in all these matters, it depends on the judge on the day, the quality of the legal teams on both sides and the jurisdiction within which the claim is raised. Also, the courage of the forwarder to take on the line with a pre-existing knowledge that a pyrrhic victory (or in some cases his desire for commercial suicide) can be quite hollow." Dave Watts, Durban-based maritime adviser to Saaff, was wary to support the forwarder. "The bill of lading is a contract between the shipper and the line," he said. "It's a contract, therefore all the provisions apply — including the host of get-out clauses all bills of lading have. When you contract, either accept the conditions or don't ship, its easy." Asking if the forwarder would have a valid claim in court, he added: "I imagine
they might — depending on the jurisdiction. If the courts decide there was negligence, or better still gross negligence, then, depending on the law in that jurisdiction, they might view a claim positively. But I very much doubt it." One thing is for sure, according to Watts. If the forwarder or shipper is a major client of the line, and moves plenty of containers, then the big business stick would do the trick and have the goods flown to Doha from Germany. "If not," he said, "tough luck." One thing Watts didn't understand was why the shipper blamed the forwarder. "It was hardly his fault," he said. But there is a tactic the forwarder could apply. "Why not name and shame. Tell your friends these guys are inefficient and useless and duck any responsibility for their own mistakes.

Quintus van der Merwe, Partner & Head of Customs @ Wylie

Contact 031 575 7306 and qvdm@wylie.co.za

 

Corporate & Commercial Law Update, Is your MOI in order? reported in Business Brief



 

The deadline by which a company is required to review and amend its Memorandum of Incorporation or "MOI" to bring it into line with the new Companies Act, 2008 ("the Act") is approaching rapidly, warns Claire Cowan, Partner in the Corporate & Commercial Law Department at Shepstone & Wylie Attorneys.

From 1 May 2013, any provision of a companys MOI which conflicts with a provision of the Act will be void, and the company will instead have to comply with the standard (possibly unfamiliar and unsuitable) rights, duties and powers contained in the Act.

The Act contains provisions relating to the management and administration of a company, some of which have traditionally been the subject matter of a shareholders agreement or Articles of Association, and others which are new. These standard rights, duties and powers will apply to a company unless they are varied in a companys MOI.

It is critical for a company to know and understand the effect that these standard provisions of the Act will have on its management and administration, so as to determine to what extent, if any, such standard provisions should be tweaked in the MOI. Adopting the standard short form MOI contained in the Act is not a quick fix solution unless the company is prepared to comply with all of the standard provisions of the Act without making any changes to accommodate its specific requirements.

In addition to the Act, public companies must ensure that their MOIs comply with the JSE Listings Requirements and are approved by the Johannesburg Stock Exchange, prior to adoption.

Companies should already be familiar with certain standard provisions of the Act including those relating to calling meetings of shareholders or directors and adopting resolutions. These provisions have been applicable since 1 May 2011.

Do not be caught unaware. Ignorance of the law is not an excuse.

 

 

 

 

 

 

 

Employment & Pension Law Update, Face the Firing Squad Tweet, reported in the Sunday Tribune



 Our reporter gets the lowdown from Blake Walker of Shepstone & Wylie — with other input — on who is liable and to what extent for social media affecting business SOCTAL media platforms, blogs and micromedia such as Facebook and Twitter mean that information can spread through the digital world like wildfire – which can be devastating for a business if a message is damaging. "' As more cases pop up worldwide, companies are realising that the risks from online social networks are not restricted to disgruntled customers. Although there have been cases where confidential information has been leaked and outright cyberbullying of brands, by far the greatest problem is employees badmouthing their bosses. "Social networking platforms such as Facebook and Twitter have caused grey hairs for many businesses. First, there's the question of the productivity of employees who use these sites during office hours," says Blake Walker of Shepstone and Wylie's employment and pension law department. – "Second, companies often find that Facebook results in excessive use of Internet bandwidth. However, what many are now seeing is that a company's reputation could also be on the line." But Candice McGregor, a professional assistant in the employment law department at Garlicke & Bougield, points out: "We now have technology at our fingertips. Smartphones mean people have access to the internet wherever they are, while Facebook and Twitter make sharing personal news with friends as simple as pressing a button. "Comments and status updates tend to be innocuous. However, a problem arises when people grow so accustomed to sharing every feeling With their online friends that they fort to filter what they are publishing." McGregor says there has been a string of recent cases in the Commission for Conciliation Mediation and Arbitration (CCMA)after employees posted derogatory comments. "In many, the outcome has been dismissal. This is because negative comments about an employer are seen as bringing the employer's name into disrepute, gross insolence or insubordination and the comments often lead to a breakdown in the relationship of trust between employer and employee." A case in point was the recent dismissal of a Gold Reef City Casino employee. In a post on his Facebook page, he said he had been fired by his employer for being gay -Which he knew was not true. The employee followed up with a comment that read: "F*** you all." He later clarified that the comment was not directed at his friends but at "GRCC". Walker said that in a recent Durban case (Fredericks versus Jo Bartlett Fashions) an employee was dismissed for defaming her general manager. "The remarks would have affected 90 employees as well as key customers. The company's case was that the employee who made the remarks had brought the company's name into disrepute as she had communicated with the general public. "The CCMA found that it was clear that the employee knew what she was doing and that her actions had a negative impact on the company and its general manager." Some cases have been extremely ugly – the head of the Market Theatre Laboratory Matjamela Motluong, was dismissed after an anti-Semitic rant against Jewish producers . in SAs theatre industry However, according to Liza van Wyk, chief executive of training organisation AstroTech, which offers an "IT and the law" course to increasing numbers of concerned employers, carelessness is a factor. Often an employee posts something thinking it will not affect the company, but it does. For example, a high-profile public relations executive landed in Memphis and promptly posted on his Twitter account: "I would die if I had to live here." FedEx, one of his firm's largest clients and based there, was not impressed. Professor Manoj Maharaj, head of the University of KwaZulu-Natal's school of information systems and technology, says: "Online social networks just provide an amplifying effect to traditional word of mouth. The only difference between the coffee machine office gossip and the one online is scale. If an employee is intent on bringing a company into disrepute, this will happen without the networks. I do not believe this is an added danger, except perhaps to the egos of bosses." However, the scale and lack of control over a comment once it is "out there" can be terrifying. For example, Facebook users can replicate someone's post by "liking" it. It then appears in the timeline of the liker and is available to the Ulcer's friends. Walker says that in the Fredericks-Jo Bartlett case, the CCMA had found it was clear the employee knew what she was doing. "The commissioner dealt with the employee's claim that her right to privacy had been infringed when the company gained access to her Facebook page. "He noted that the Regulation of Interception of Communication Act (Rica) provides that any person may intercept any communication provided he doesn't use that information or communication to commit an offence. "The commissioner held that the internet is a public domain and Facebook users have the option to restrict access to their profiles and information they publish. In this case, the employee did not block access to her profile." But McGregor points out that even if access is restricted to a user's friends, the employee may still not be able to make derogatory comments. "This is because the user and employer could have mutual friends or the user could be friends with a fellow employee. Either may be inclined to bring the comments to the employer's attention." With the Gold Reef City case, the issue of privacy wasn't even a consideration. "Interestingly, the question of whether the employee had activated privacy settings was not discussed. The commissioner found that because the employee had 700 friends and the offending comments were posted for all to see, this publication was sufficiently widely distributed to have serious consequences." According to Van Wyk, often comments are an expression of frustration rather than malice. "Problems usually result when an employee forgets he has invited or allowed his manager to connect with him on the social network and then makes a derogatory statement about the company or manager. Companies would, in general, discipline rather than prosecute – services could be terminated. "An employer is entitled to take disciplinary action against an employee whose private actions have a negative impact on the employment relationship." The big question for employees is whether "big brother" has the right to "spy" on social networks. Walker believes that, in carefully managed instances, an employer does have the right of access to an employee's social networking page and to intercept and read information. While the constitution stipulates that everyone has a right to privacy, this is not absolute and may be limited in some cases. This requires a careful balancing act between the interests of the employer and employee, says Walker. To put it bluntly, employers cannot hack into the social networking sites of their employees. If they do and find something they do not like, they may not be able to do anything about it. "Employers who intend using information obtained from social networking platforms as proof of misconduct should be wary of the Rica provisions, which distinguish between participant surveillance and unlawful interception." All agree employers need to set ground rules for the good of all. "First, employers can electronically regulate what the employee can use and access within the workplace. Second, employers must draft and implement e-mail and internet policies regulating the use of internet and e-mail more comprehensively and setting out the consequences of non-compliance." Finally, employers must specify that bringing the name of the company into disrepute on any social networking site or blogging platform is regarded as a serious offence that could result in dismissal, says Walker. Maharaj says damage control should be done before comments are in the public domain. "The best control is education and training. Companies should ensure all employees understand how to use e-mail and social networks properly. Then they cannot claim ignorance of the facts."

 

Conveyancing & Property Update, CPA and Purchasing Property, reported in Personal Finance in Business Report



 

10 THINGS first-time home buyers should know

 If you are considering buying your first home, first consider this: the more you know, the more you are likely to save, and the more that saving will benefit you years down the line. Martin Hesse reports:


BACK IN 2000, AT THE AGE OF 32, JOE bought his first home. If Joe had been better prepared before jumping into the property market, he would probably be reaping greater benefits now, 12 years later. Armed with a smallish deposit, Joe found a house he liked and signed an offer to purchase on the day he saw it. The seller immediately accepted the offer, which was only just below the asking price. Joe had not known much about the extra costs involved, so it came as a shock when he received a hefty bill from the conveyancing attorneys. When he moved in a few months later, he became aware of defects he should have picked up when viewing the house. Too late, Joe realised that he probably could have negotiated a lower price with the seller. Being under-prepared, he had over-paid.

THE TWO KINDS OF PROPERTY OWNERSHIP THAT you, as a first-time buyer, are most likely to have to choose between are sectional title and freehold title.


Sectional title: A sectional title scheme usually takes the form of a block of flats, a complex of townhouses or cluster homes, made up of a number of residential units within a larger common property. You become the owner of a unit, which, together with your undivided share of the common property, forms your "section". You also may have exclusive use of a part of the common property, such as a parking bay. You pay a monthly levy towards shared costs, including maintaining the common property, insurance and security. Your levy is based on your "participation quota", which takes into account the size of your section relative to the other sections. You are billed directly for municipal rates and electricity. Water is usually a shared cost, but in some schemes sections have their own water meters. Samuel Seeff, chairman of Seeff, says the levy is based on the actual expenses of running the building or complex. "If the running costs are low, the levy on a R1-million unit, for example, can be as low as R500. On the other hand, if the complex has things like elevators, swimming pools and security guards, the levy can go up to R1 500, but can be significantly higher in upmarket and luxury areas," he says. The Sectional Titles Act sets out how sectional title schemes must be run. Briefly, you are automatically a member of the body corporate, which consists of all the owners in the scheme. A group of trustees is elected from among the owners at an annual general meeting and represents the body corporate. The trustees are responsible for managing the scheme, although many schemes outsource day-to-day management to a managing agent. Johann le Roux, executive director of levy finance company Propel!, says the trustees have to ensure that all owners and occupiers comply with two sets of rules: management rules, which deal with administration, meetings and the collection of levies; and conduct rules, which relate to the conduct of owners and occupiers. A rule may be amended only by special or, in the case of management rules, unanimous resolution at a general meeting. Apart from your regular monthly levy, the trustees have the authority to implement a special levy to fund an unplanned common expense, without having to hold a general meeting. Le Roux says this would normally happen in an emergency, such as the repair of a burst water pipe, where the trustees would have to act quickly. Before buying into a scheme, you need to be satisfied that it is well run and that the rules suit you. It is important to see the last audited financial statement,
the current budget and the minutes of the last annual general meeting. This will give you an idea of the state of the scheme's finances and whether you can expect levies to increase and whether a hefty special levy is on the cards. You also need to find out if owners' levies are in arrears. It is also important, once an owner, that you become involved, attend meetings and even offer yourself for election as a trustee. "The crux is that you become part of a residential community. Owners need to look out for each other in order to ensure not only the smooth running of the scheme, but also to promote a pleasant living environment with increasing property values," Le Roux says.


Freehold title:  Individual freehold title ownership generally applies to freestanding houses but also to certain cluster developments. (If you want to buy into a cluster or gated development, it is important to establish which type of ownership applies.) It means you fully own — and are fully responsible for — the property you buy. You generally have a greater degree of privacy and freedom than if you were in a sectional title scheme. As the owner of a freehold property, you must pay homeowner's insurance, municipal rates and for water, sewerage, refuse removal and electricity. Note that freehold cluster developments may be governed by homeowners' associations, which can involve financial obligations and rules.
What can you afford?


ASIDE FROM BUDGETING FOR A DEPOSIT AND THE once-off costs of buying a property, you need to assess your expected monthly expenses, comparing what you are paying as a tenant renting a property with what you would be paying as an owner. You need to take into account your bond repayments, the monthly levy if the property is sectional title, maintenance costs, insurance, rates, water and electricity. All the costs rise with inflation, except your bond repayment, which depends on the prevailing interest rate (if you have not fixed your rate). Interest rates, which are at a 38-year low, are likely to rise at some point in the future, so it is important to factor a higher rate into your budget calculations. For example, if you have a R900 000 home loan, at the current prime rate of nine percent, over 20 years you would be paying R8 097 a month, excluding bank fees. If the rate went up to 12 percent, for example, your home loan repayments would increase to R9 909.


Subsidies:

 As a first-time buyer, you may have access to a housing subsidy:

Government subsidy. Depending on your income level, you may qualify for a government subsidy. In February, the national Budget mentioned an improved subsidy for first-time buyers. The 2012 Budget Review states: "Substantial increases to the finance-linked individual subsidy programme will be introduced … the subsidy value that households earning between R3 500 and R15 000 per month can access has increased from R54 000 to R83 000 on a maximum property value of R300 000."

 Employer subsidy. Some employers offer housing subsidies to their employees — usually a fixed amount a month towards your loan repayments.
 

Property as an investment:

 Owning a home should be regarded as a long-term proposition. If you buy and sell over shorter periods, you are unlikely to make much out of your property as an investment because of all the costs involved. Making a profit on a property in the short term depends on the market and whether you can add value, Seeff says. "In the period 2005 to 2007, it often happened that properties were bought and sold at a profit only one year later. Given the current market, however, this is not easily achievable. The transactions we currently see as profitable all entail adding value to the property — for example, purchasing an old house and renovating it." On the appreciation of property over the long term, Bill Rawson, founder of Rawson Properties, says: "In any economy subject to inflation, labour and material costs will rise year after year. New housing will therefore be more expensive next year and the year after that in perpetuity, provided that the basic demographics of the area do not change. "The latest First National Bank (FNB) figures indicate that, in cash terms, South African residential property has risen 220 percent since 2000. That's a pretty good growth rate."


Comparing prices:

 When looking at property prices in a particular area, don't simply compare the asking prices in advertisements. What a seller asks and what he or she actually gets can be two very different things. At present, the market favours the buyer. "In the current market," Seeff says, "we see properties selling for between 85 and 95 percent of the asking price." On gauging value, Rawson says it is essential to do your research. "Carefully check out the sales prices achieved in the area you favour and talk to estate agents. Be prepared to pay higher for something that really pleases you rather than lose it."


Finding a home:


DECISIONS ON THE TYPE OF PROPERTY YOU BUY and the area in which it is situated should be made with a long-term view in mind. Two additional issues you need to consider are: Existing or new. You can buy either an existing home or a new (off-plan) home from a developer that, more likely than not, has not been built yet. An off-plan home is likely to be more expensive than an existing home of the same size. The Absa website offers the following advice for off-plan buyers: "Ensure you are dealing with a reputable developer who has a proven track record (investigate the developer's credentials before making a commitment to buy). Also, establish whether the developer is using the services of a reputable builder."

 Repossessed homes.

 A way of getting into the property market cheaply is to buy a repossessed home from a bank. "Distressed" properties, where the owner is unable to pay back the loan, are first put up on auction, and only as a final step are they repossessed. It is not easy for first-time buyers to buy on auction because of the high upfront costs, but repossessed homes should be considered. The banks have lists of such properties on their websites. Rawson says distressed homes offer great opportunities right now — but you must know what you are doing. "You may have to spend an extra 20 percent or more on renovation. You may have to evict a stubborn tenant and you are unlikely to see all the problems in a property which has, perhaps, been neglected. Once these risks are accepted, the low price of distressed properties can make them brilliant buys with huge value-increasing potential."
Using an estate agent Experienced estate agents have a thorough knowledge of their area and will line up appropriate properties for you to view. The agent will facilitate the sale and should be on hand to deal with hitches in the transfer-of-ownership process. Agents must be registered with the Estate Agency Affairs Board and have a valid fidelity fund certificate, and they are bound by a code of conduct. You have recourse to the board if you believe an agent has acted unethically.


Thoroughly inspect the property:

 Among things to look for are: Structural integrity. Adrian Goslett, chief executive of RE/MAX of Southern Africa, warns that certain "fixer-uppers" can be a nightmare if the structural integrity has failed. "Structural cracks, which are deep and appear on both sides of the wall, can indicate that the foundation has failed or that there is severe structural damage. Buyers should look out for heavy filler work on the walls, diagonal cracks running from the corners of windows or door frames and deformation along roof lines. If in doubt, ask a structural engineer to inspect the property," he says. Your estate agent should be able to refer you to a structural engineer, or you can find a list of competent engineers on the Joint Structural Division website (www.jsd.co.za). Expect to pay from R2 000 to around R4 000 for an inspection and report. Leaking roof or water damage. "Having water in places it shouldn't be is never a good thing for a home. Water damage or rising damp can be costly to repair," Goslett says. "Look for areas in the home where the paint is scaling or bubbling, as these are usually indications that there is damp in the walls or ceilings. If you are unsure, you can get a plumber to check the property."


Are the building plans legal?

Goslett advises that you inquire at the local municipality to ascertain whether the buildings on the property are legal and built to the required standards.


Your deposit:


YOU IMPROVE YOUR CHANCES OF OBTAINING A home loan from a bank — and are more likely to get it at a better rate — if you can put down a deposit, and the bigger it is the better, because you will owe less. And a seller may also be more inclined to accept your offer if you can put down a decent deposit. The banks differ on what they offer, but with an easing in lending criteria, loans of 100 percent of the selling price are available, as are loans of more than 100 percent to cover your additional costs, such as transfer costs and bond registration fees. All loans are subject to what you can afford and your credit profile (see below). Note that you may pay a slightly higher interest rate on a loan of more than 80 percent because of a relatively higher risk to the bank. Absa. Absa encourages you to put down a deposit but provides loans of up to 100 percent of the property value. It provides home loan of up to 110 percent to its Affordable Housing clients who earn below R15 000 a month, subject to conditions. FNB. For all loans up to R2 million, FNB will consider a maximum loan of 100 percent. Nedbank. On loans of up to R1.5 million, nonNedbank clients qualify for a maximum loan of 90 percent and Nedbank clients qualify for a maximum loan of 100 percent, subject to the loan amount applied for and your risk rating; Standard Bank. Of loans of up to R1.5 million Standard Bank offers a maximum loan of 100 percent. The bank also offers loans of 104 percent to first-time buyers who buy a property valued at R1 million or less, if you approach the bank directly and do not go through a bond originator.


Getting a home loan:


YOUR HOME LOAN (ALSO KNOWN AS A MORTgage bond, mortgage or bond) is bonded to your property and is registered, together with your title deed documents, at the Deeds Office. It is a secured loan, and the security is the property itself, so if you get into arrears with your repayments, the bank has the right to sell your home to recoup its money. The National Credit Act (NCA), which took effect in June 2007, tightened the conditions for getting a loan and shifted more responsibility onto the banks to ensure that the people to whom they grant loans can afford to pay them off. Before the NCA, when you applied for a home loan, banks simply looked at your income. The rule of thumb was that your repayments should not exceed 30 percent of your gross income (your total household income before deductions and tax). Now you must provide detailed information about your income and expenditure, and full details of any debts you have. Banks will look at your day-to-day expenses. They will also do a credit check. If you are relatively free of debt and/or if they regard you as a low credit risk, you could qualify for a bigger loan or get a better rate on your loan. You must provide the following: Identity document; Salary slip; Bank statements for the three months prior to the loan application; Proof of your residential address, as required by the Financial Intelligence Centre Act; Full details of your household expenses — joint expenses and joint income if you are married.


Credit check:

 The bank will check your credit information, which is held by the four major credit bureaus: Compuscan, Experian, Transunion and XDS. Each bureau has a credit record on you (to which you have access — you can request one free report a year) containing details about your loans, credit cards, and bank and store accounts, showing how much credit you are using and the total credit available to you. Your record will also show if have any adverse listings or judgments against you. A judgment remains on your record for five years. Your payment profile is part of your credit record that only credit providers can access and it reflects what type of credit customer you are. For example, you could be recorded as a "slow payer", even though you have not actually missed any payments. Banks look mainly at how you are paying off your credit, but your credit extension limits are also taken into account.


Interest rate and charges:

 The NCA also introduced maximum interest rates and initiation fees on home loans.

 Interest rate.

The maximum interest rate you can be charged is the repo rate (currently 5.5 percent) multiplied by 2.2 plus five percentage points (17.1 percent a year at current rates). However, most people qualify for a loan at around the bank prime rate (currently nine percent). People regarded as very low risk (high earners with low debt and a good credit record) may get one percentage point below prime, while those seen as high risk may be charged up to six percentage points above prime, or 15 percent.

 Bond initiation fee and monthly service fee.

 The NCA sets the maximum initiation fee at R1 000 plus 10 percent of the amount of the loan over R10 000, capped at R5 000 excluding VAT. The bank will also charge a monthly service fee of no more than R50, excluding VAT (see "Bank charges on home loans", right).

 Property evaluation fee.

 This is included in the initiation fee. The bank sends a property valuer, who verifies that the value of the property provides sufficient security against the loan. Note that the valuer does not necessarily inspect the structural condition of the building, and the bank cannot be held liable for any structural defects.


Pre-approval

 You can formally apply for a home loan only once your offer to purchase has been accepted by the seller. However, while searching for a home you can obtain pre-approval for a loan of a certain amount from a bank or through a bond originator. This will narrow down your range of properties to view and should strengthen your position as a buyer. Note that pre-approval does not guarantee you a loan. And although banks may do a thorough assessment before granting a pre-approved amount, this may differ from the final amount granted. Praven Subbramoney, head of pricing, product, marketing and customer experience, FNB Home Loans, says: "The pre-approved amount is highly dependent on the information declared upfront by the customer. Very often, customers tend to omit expenses, which will affect their affordability and, by implication, the loan amount they are approved for. Eventually, when a customer does sign an offer to purchase and more comprehensive information is provided by the customer or sourced on behalf of the customer, the expenses are adjusted and the loan amount is revised accordingly. This can unfortunately lead to discrepancies between pre-approval and final loan amounts."


Term of loan

The standard term for first-time buyers is 20 years. However, when homes became less affordable to firsttime buyers, the banks began offering 25- and 30-year home loans. On a longer repayment period, you don't pay a great deal less a month, but you pay far more in interest overall. For example, assuming a nine-percent rate, on a R900 000 loan your monthly repayments will be R8 097 over 20 years and R7 241 (a difference of only R856) over 30 years. Over 20 years the total interest paid will amount to R1 043 408; over 30 years, it will be R1 706 977, a hefty R663 569 more. If a longer-term loan is your only option, it is advisable to restructure it at a later stage, reducing the term, when you are able to afford higher repayments.


Types of loans:

 The banks otter various types of home loans. The main features are: Variable loan. This gives you access to excess
Absa. Absa's initiation fee is 10 percent of the value of the loan to a maximum of R5 700, including VAT. If you apply for a further advance (say, for renovations) no further fee applies. The monthly fee is R34.20 for MyHome home loans and R57 for all other home loans. Customers with a new Value Bundle current account qualify for cash back of up to R20 a month on their Absa home loan account. First National Bank (FNB). FNB's initiation fee is a flat R5 700, including VAT, on all home loans. The monthly administration fee is R57. Nedbank. The initiation fee for all first-time home loans is R5 700, including VAT. Nedbank's monthly service fee is R47 for a client with Nedbank homeowner's insurance and R57 for a client with external insurance. Standard Bank. The initiation fee on all home loans is R5 700, including VAT. The monthly administration fee is R51, including VAT.
capital you have paid into the home loan account to use for other purposes. Fixed-rate versus variable-rate loan. On a standard loan, your interest rate varies in line with the prevailing prime rate. On a fixed-rate loan, your rate is fixed for a certain period. With interest rates at a 38-year low, having a fixedrate bond is an attractive proposition, Goslett says. Generally, the fixed rate is between 1.5 and two percentage points above the prime rate, he says. This means the fixed rate will provide a buffer if there is a sharp hike before the contract term is over. "However, given the current economic conditions," he says, "it is highly unlikely that the interest rate will increase dramatically over the next five years, and it is more likely to stay fairly steady or increase marginally." Fixed-rate agreements are generally for a period of between two and five years. You may incur a penalty if you cancel the agreement early.


Bank or bond originator?

You can either apply directly to a bank for a home loan or you can use a bond originator. Bond originators can save you a lot of trouble and time by gathering your documentation and approaching the banks on your behalf, with a view to getting you a favourable rate. They will disclose to you all offers from all the lenders they have approached. Note that not all originators approach all lenders. Also note that the deal may not necessarily be better than if you approach the banks yourself. Bond originators earn commission from the lenders, so there is no cost to you. Unlike financial advisers, they have no obligation to disclose their commission to you. If your offer to purchase is subject to your  obtaining a bond, the seller may prefer that you go through a bond originator to expedite the sale.


The offer to purchase:


ONCE YOU HAVE FOUND A PROPERTY YOU WANT to buy, you submit an offer to the seller, through the estate agent, in an offer to purchase. It's important to note that the offer to purchase, usually a standard document, once signed by both the buyer and the seller, becomes a binding contract that sets out the terms of the sale. The document may contain clauses that do not suit you, and you may want to amend it or add conditions. It is therefore vital that you read and understand the document thoroughly before signing it, and that the estate agent, who may be anxious to secure the sale, does not pressurise you into signing something you do not fully understand. You also have the right to take a copy of the offer to purchase to a lawyer to check it over before you sign it. According to Goslett, the more specific the offer to purchase is, the better. If all aspects of the sale have been covered, he says, there will be very little room for either the buyer or seller to contest anything later.
Apart from the offer amount, the most important aspects of the offer to purchase are:

Conditional or "subject to" clauses.

You can make the contract conditional on certain events or actions. If you are taking out a home loan, you must make sure that the contract is subject to your being granted a loan. It is common to set a time period on this clause — it can vary from seven to 60 days.

 72-hour clause.

 A 72-hour clause, often included, allows the seller to look for an alternative buyer even after accepting your offer, if the offer is subject to conditions such as the approval of a home loan. If the seller accepts another offer, you will have 72 hours to fulfil the conditions.

 Fixtures and fittings.

Most offers to purchase state that the property is sold with its fixtures and fittings. These are items that are permanently attached to the property and include built-in cupboards and light fittings. However, sellers and buyers may disagree on what is permanent, so if there is a fixture you want included in the sale, you should identify it. Similarly, the seller may identify an item he or she would like to remove from the property.

 Voetstoots clause.

Offer-to-purchase agreements include a voetstoots clause, which means you agree to buy the property "as is", with its latent defects (see "Dealing with defects" on opposite page).

 Occupation and possession.

The dates of occupation and possession are usually included in the offer to purchase. Ideally, the date you take occupation should be the same as the date of possession (when the property is transferred into your name). If you move into the home before it officially becomes yours, you will be charged occupational rent for the interim period until the date of transfer. Similarly, if the seller has not moved out by the date of possession, you can charge him or her occupational rent. The rate, which must be included in the offer to purchase, is usually set at a market-related rental.

Repairs or renovations.

If you want the seller to repair defects or finish any renovations before you take possession, you should make this a condition in the offer to purchase. All amendments to the contract must be signed by you the buyer, the seller and the estate agent. Once the offer to purchase has been accepted by the seller, and both buyer and seller have signed it, it becomes the sale agreement or "deed of sale". If not accepted by the seller by a certain deadline, the document becomes null and void. If you renege on the deal after the seller has accepted your offer and signed it, the seller can sue you for damages, including the estate agent's commission. For an example of a standard offer-to-purchase document and what it entails, you can download one free of charge at www.freelegaldocs.co.za


Cooling-off period

You are entitled to a cooling-off period of five working days if the property you are buying is selling for R250 000 or less. According to the Land Alienation Act of 1981, during this period you have the right to withdraw your offer to purchase without incurring any penalties.

 Under the new Consumer Protection


The seller's obligations I he seller must provide you, the buyer, with an electrical compliance certificate. This certificate, paid for by the seller, is issued by a registered contractor and verifies that the property's electrical installations are in order. You can also request an entomologist (beetle) certificate, which states that the property is free of certain pests, such as wood-borer beetle. For older houses in coastal areas, it is customary to include this requirement in the offer to purchase. You can also request a plumber's certificate, which verifies that the property's water installations are in order. This is a compulsory requirement for the City of Cape Town. The seller must have moved out by your occupation date, preferably leaving the home in an acceptable condition for you to move in. On leaving the property in an acceptable condition, Seeff says: "In law there is no such obligation on the seller, but it can be negotiated by the parties and made a term of the offer to purchase."


Dealing with defects


THERE ARE TWO TYPES OF DEFECTS: ONES THAT are clearly visible on a normal inspection of the property (patent defects) and underlying ones that cannot be ascertained on a normal inspection and that the seller may or may not know about (latent defects). Defects the seller knows about must be disclosed to you before you sign the offer to purchase. In reality though, it can be difficult to prove whether a seller knew of a defect or not, or that he or she deliberately misled you. The voetstoots clause in the sale agreement protects the seller from being liable for latent defects. But the CPA puts an onus on the agent to ensure that the seller discloses defects (see "The CPA and buying property"). Many agents now compile detailed disclosure reports to be incorporated in sale agreements, so that there can be no dispute later. By taking the initiative, you, the buyer, can avoid a lot of trouble and expense later. Thoroughly inspect the property. If you suspect latent defects, or even if you don't, hire a qualified professional to do an inspection and submit a report.


THE CPA AND BUYING PROPERTY:


THE CONSUMER PROTECTION ACT (CPA), WHICH came into effect in April 2011, has wide implications for the property industry in terms both of improved rights for consumers buying property and more onerous demands on estate agents, developers and sellers. Two aspects that affect you as a buyer relate to the cooling-off period and the voetstoots clause. Says Bill Rawson of Rawson Properties: "There have been several high-level conferences on [the CPA], one of which, addressed by senior Estate Agency Affairs Board managers, indicated that it will change the whole way in which property is marketed, will make the voetstoots clause redundant and will put estate agents as part of the supply chain. Others have said that there will be little change and that the Code of Conduct to which all estate agents sign agreement, if observed, covers the full spectrum of the CPA. Only court cases (in the next few years) will clarify matters."

Cooling-off period: The CPA may allow you a cooling-off period when you buy any property directly marketed to you by an estate agent, Claire McGee, an attorney with Shepstone & Wylie, says, regardless of its price. Direct marketing is when an agent approaches you directly, rather than you responding to an advertisement.


McGee says that, in the case of direct marketing, the Act gives you the right to cancel the sale within five working days of taking occupation of the property. This would mean having to reverse the property transfer and claw back the entailed costs, which could involve protracted litigation. However, you may be more successful in claiming a cooling-off period of five days within signing the offer to purchase, as is currently the case with properties of less than R250 000.

Voetstoots clause: Jaco Rademeyer of Jaco Rademeyer Estates in Port Elizabeth, who has an LLB focusing on contract law, is of the view that the CPA does not cover the deed of sale between the seller and buyer, as this is a once-off transaction and is not conducted in the stipulated "ordinary course of business". Therefore, he says, the voetstoots clause, which eliminates the seller's liability for latent defects, is excluded from the Act. "You, the buyer, may contest latent defects, but the burden of proof is on you to show that the seller knew of, or intentionally concealed the defect, which makes it an extremely difficult case to win." Nevertheless, Rademeyer says, the CPA makes it impossible for developers and estate agents to rely on the voetstoots clause to exclude their liability for defects.ay cooling-off period regardless of the selling price under certain conditions (see "The CPA and buying property")


Homeowner's insurance.

 If you take out a home loan, you are required to have homeowner's insurance, which covers the property and the permanent structures on it. This differs from householder's insurance, which covers your home contents. The bank providing you with the home loan will probably encourage you to take out homeowner's insurance with its affiliated insurer. You are entitled to take out insurance with an external insurer of your choice, but if you do, some banks, although not exceeding the NCA limit of R57, will charge a higher monthly bond administration fee. On sectional title properties, the body corporate is responsible for insurance on the property as a whole. The homeowner's insurance is included in your levy.

 Life assurance.

This is normally, though not always, required to cover the loan in the event of your death. If you have an existing life policy you can cede it to the bank for the duration of the loan, or you can take out a separate home loan protection policy.


Once-off costs


APART FROM THE AGREED PURCHASE PRICE, YOU must pay property transfer, bond initiation and bond registration costs, as well as some lesser costs (see opposite page for actual amounts).

Transfer duty.

On a property of more than R600 000, you have to pay a tax (transfer duty) based on the purchase price. You do not pay transfer duty if you buy from a registered VAT vendor and the sale is part of the seller's business activities – for example, if you buy from a developer or at an auction – but you pay VAT, which you don't otherwise. You are still liable for conveyancing and bond registration fees.


Conveyancing fees, which are charged by the transfer attorney.

 Bond initiation fee

 Bond registration fees,

 which are charged by the bond attorney. Sometimes banks, as a special offer to attract clients, will reduce or waive your liability for these fees.

 Deeds Office transfer and bond registration

 levies, charged by the Deeds Office.

Pro rata municipal rates and clearance certificate.

A variable cost. Most municipalities require between four and six months' rates paid upfront. You must also pay for a rates clearance certificate.

 Sectional title insurance certificate.

 On a sectional title property, you may have to provide the bank with a certificate showing that the property is insured. The policy is issued to the body corporate and the certificate will cost you about R500.

Sectional title levy clearance certificate.

 You need to get this from the trustees to show that the seller's levies have been paid up to a certain date. There is normally a fee for the certificate.

Occupational rent.

Another variable cost. If you move in before the transfer date, you will be charged at the rate stipulated in the offer to purchase.

The legal process


IF YOU ARE BUYING AN EXISTING HOME WITH A bond from a seller who has a bond, three sets of attorneys are involved, although a single attorney may carry out more than one function:

 1. Transfer attorney (appointed by the seller, although this can be negotiated): arranges transfer of the property into the buyer's name through the Deeds Office; pays pro rata rates to the municipality and obtains a rates clearance certificate; pays transfer duty; arranges for the payment of occupational rent;

2. Bond attorney (normally appointed by your bank, but again open to negotiation): registers your bond through the Deeds Office; and

 3. Cancellation attorney (appointed by the seller's bank): cancels the seller's bond. The Deeds Office – there is one in each province – holds the following documents:

 A full description of the property;

 The current deed of sale on the property;

 Full details of the current owner; and Full details of the bond on the property.

When a property is sold, a new deed of sale is required. Ownership is transferred to the buyer, the current home loan on the property is cancelled, with the amount owing on the bond deducted from proceeds of the sale, and the new owner's bond is
Risk cover egistered with the property. The municipality will require a pro rata amount for rates, which may include charges for water and sewerage. It will then issue a rates clearance certificate.


Step-by-step

The process is as follows (the information has been condensed from that on the Standard Bank website):

 Step 1. Your signed offer to purchase is accepted and signed by the seller, and the document becomes a binding "deed of sale".

 Step 2. If a deposit is required, it should be paid into an interest-bearing trust account, preferably that of the transfer attorney. Do not pay your deposit to any other party, such as the seller, or directly to the agent. Make sure you find out your interest rate and what protection is offered and that you get a receipt.

 Step 3. Apply directly to your bank or through a bond originator for a bond. They will need a copy of the offer to purchase and all the documents listed earlier, and will then do a credit assessment and a property valuation.

Step 4. On approval, the bank sends you a grant quotation notifying you that the bond has been approved. If you are using a bond originator, the bank will notify the bond originator directly. You have five days to accept the bank's offer, once you receive it.

Step 5. The bank appoints an attorney to register your bond and the seller appoints a transfer attorney. The title deed and bond cancellation figures are requested from the seller's bank. A rates clearance certificate is requested from the municipality.

 Step 6. The transfer and bond attorneys require you to sign the documents at their offices. You must pay in full the transfer and bond registration fees and the pro rata municipal rates. Payments to the Deeds Office and municipality are handled by the attorneys.

Step 7. After the transfer, bond registration and bond cancellation documents have been signed by buyer and/or seller and the costs paid, the documents are prepared by the respective attorneys for lodging with the Deeds Office.

Step 8. The documents are lodged at the Deeds Office by arrangement with all the attorneys. The Deeds Office takes two to three weeks to check the documents before they are ready for registration.

Step 9. Your bond is registered and the property transferred into your name. The seller's bond is cancelled and settled. Funds are paid to the relevant parties, with your bank paying over the bond amount. Allow about three to four months for the registration of your bond and transfer of ownership. Delays could be caused by, among other things: you or the seller not providing all the necessary information or bank details; a hold-up in the transfer attorney obtaining a rates clearance certificate; a delay in you paying your deposit or your transfer and/or bond costs; and you or the seller delaying signing the transfer and/or bond documents.

Claire Cowan (nee McGee), Partner

Contact: 031 575 7404 and cowan@wylie.co.za

 

 

 

Employment & Pension Law Update, Beware of axing worker who has bad mouthed you, reported in the Mercury



THERE have recently been a number of cases where employees have been dismissed as a result of publishing defamatory information about their employers on social media networks and in newspapers. Employers often seek advice in these types of cases as to whether dismissal would be an appropriate sanction in the circumstances. Each case, of course,-must be decided on its own merits. Each case brings with it its own circumstances, facts and considerations that will have a bearing on whether dismissal is appropriate. The Labour Court recently considered this issue in the matter of Ikwezi Municipality v South African Local Government Bargaining Council & Others (2011) 20 LC. In this case, the employee wrote a letter to the editor of a local newspaper. The letter was published under the employee's own name, and indicated he was a shop steward. The employee made a number of serious allegations against his employer. As a result of these allegations, the employee was charged with publishing "false, damaging and malicious information about your employer" and was dismissed. The employee, aggrieved with his dismissal, referred an unfair dismissal dispute to the Bargaining Council. The arbitrating commissioner found that, although the employee had committed serious misconduct, dismissal was too harsh a penalty The basis of the commissioner's finding was that the employer had failed to prove that the employment relationship had irretrievably broken down. As a consequence, the employee was ordered to return to work (with no back pay). The employer was not prepared to accept the commissioner's reasoning and approached the Labour Court for relief. The Labour Court had to decide whether it should interfere with the commissioner's finding. The Labour Court noted that the employee had been deprived of a salary for five years (as the award did not provide for backpay). The court felt that this was a significant penalty given the fact that the offence involved a single act of misconduct and the allegations made by the employee had not implicated any particular manager. The court also relied heavily on the fact that the municipality failed to adduce any evidence which showed that the trust relationship had broken down. The Labour Court dismissed the application and the employer was ordered to re-employ the employee. This decision sounds a warning for employers having to deal with an employee who has published defamatory remarks that may bring the name of your business into disrepute. Employers must be sure that they lead sound evidence at their disciplinary inquiries and arbitrations that prove that the trust relationship between the parties has been destroyed.

Environmental & Clean Energy Law, Remediation of contaminated land, reported in Environmental Management



The publication of the long-awaited draft contaminated land regulations, and norms and standards, in March this year has been met with mixed reactions. Whilst there is recognition of the need to address contaminated land, the substantial financial implications for landowners — once the contaminated land provisions of the National Environmental Management: Waste Act 59 of 2008 come into effect — are of major concern, especially for those landowners who did not contribute to the contamination of the properties they own. In order to assist landowners in understanding the scope of their obligations, it is thus essential that the regulatory framework for the assessment and remediation of contaminated land is clear and unambiguous.
Currently, the remediation of contaminated land is listed as an activity requiring a waste management licence and the obligation to remediate is established in terms of the general duty of care in section 28 of the National Environmental Management Act 107 of 1998 and section 19 of the National Water Act 36 of 1998. However, Part 8 of Chapter 4 of the Waste Act goes further in providing a framework for the identification, assessment and remediation of contaminated land. Although these provisions have not yet been brought into force, once operative, they will apply to all contaminated land, regardless of when the contamination arose, and will affect those persons who caused the contamination as well as the landowners. Site assessments and remediation will be costly, and contaminated land may not be transferred without informing the person to whom it is to be transferred that the land is contaminated. Provision is made for the establishment of a contaminated land register and for the Deeds' Office to retain information on contaminated land. This will have significant implications for land sales. The draft National Regulations for Site Assessments and Reports and the draft National Norms and Standards for the Remediation of Contaminated Land and Soil Quality were published for comment in March 2012. Their purpose is to provide clarity on the procedures and standards to be followed when assessing and remediating contaminated land, and to provide a uniform approach to the remediation of contaminated sites by setting levels for remediation. The Standards also set safety and general requirements for the management of remediation activities. The Regulations prescribe the contents of and procedures for the site assessment reports that must be submitted in terms of the Waste Act. Unfortunately, there are a number of deficiencies in the Regulations and Standards which tend to run contrary to these notions of clarity and uniformity. For example, the extent of public involvement required — other than a public meeting and notification in the media — is unclear. In terms of the Regulations, the public must be given an opportunity to "comment on or raise issues relevant to specific matters", but whether this envisages a comprehensive process as set out in the Environmental Impact Assessment Regulations is uncertain. In addition, although the Standards provide remediation levels for listed contaminants, levels for unlisted contaminants must simply be indicated in the remediation plan, which has the potential to result in an inconsistent approach. The Standards have also not accounted for situations in which it is not possible to remove contaminated soil from the land. Leaving aside, for current purposes, any technical faults, there are a number of drafting and terminology errors which, if left unattended, will result in substantial challenges for implementation. Firstly, the Regulations and Standards define remediation as "the interim or permanent elimination through mitigation or abatement of toxic or biohazard contaminants that pose human health consequences or threats to the environment". However, the undefined term "rehabilitation" is used intermittently in the Standards. Dictionary definitions define the latter in terms of restoring to a previous state, which is something different to remediation in this context. Without further clarification in the Standards, there are no parameters to determine at what stage land can be considered to be rehabilitated. The Standards go on to refer to "fully rehabilitated" land which has been "declared free of any contamination or harmful substances", "proper rehabilitation", land which has been "declared clean", and land which has been returned to its "natural state". The Regulations on the other hand refer to the "completion of remedial activities". In the context in which these terms are used, without any further guidance in the Standards, they are ambiguous and subject to varying interpretations. When is land fully or properly rehabilitated? Are these two different concepts? When will land be regarded as having been returned to its natural state, particularly in historically industrial areas? Furthermore, whilst the landowner is obliged to continue management and monitoring of remediation activities until the site is
"fully rehabilitated and declared free of any contamination or harmful substances", a report that must be submitted after an emergency incident must indicate monitoring activities that will be undertaken "until the site is able to sustain itself". When is a site able to sustain itself? Does this occur when it has been "declared free of any contamination"? Under the Regulations, site assessments must be conducted by an "independent and suitably qualified person", but no further guidance is provided as to when a person is suitably qualified. Is the person required to be an expert in any particular area? Can an Environmental Assessment Practitioner conduct site assessments? None of these answers can be drawn from the Standards or Regulations, and thus interpretation will pose a substantial barrier to implementation. According to the recently finalised National Waste Management Strategy, in addition to the promulgation of the Regulations and Standards, we can in the future also expect the establishment of a contaminated land register, the publication of guidelines for affected sectors and the establishment of a National Remediation Fund. Once implemented, government aims to ensure that by 2015, assessments for 80% of the land reported to the contaminated land register are completed and remediation plans for 50% of these sites are approved. In the meantime, however, polluters are still liable to rectify pollution and degradation of the environment in terms of existing legislation. It is clear that despite specific objectives to limit uncertainties, the draft Regulations and Standards as they currently stand unfortunately raise many ambiguities. Nevertheless, they set the ball rolling in what is to be a long process of establishing regulatory controls for contaminated land. The public has now had an opportunity to provide formal input to the drafting process, and so the extent to which the Regulations and Standards are to be re-drafted remains to be seen. Government certainly has its hands full.

 

Melissa Groenink, Associate

Contact: 031 575 7214 and groenink@wylie.co.za

Mining, Minerals & Energy Law Update, Court ends special treatment for mines, reported in Business Day



THE Constitutional Court judgment that holders of mining rights cannot mine until the land has been zoned for mining marked the beginning of the end of decades of special treatment for the mining industry, according to the Centre for Environmental Rights.

The judgment last week confirmed a Supreme Court of Appeal decision that where mining was not permitted by a zoning scheme, the holder of a mining right or permit could not start to mine, unless the land was rezoned to allow mining.

"The consequences of decisions made on mining operations without proper regard for other authorities and other legislation are severe, aggravate the detrimental impact mining operations have on the environment, and do nothing to benefit the country, the mining industry, mine workers or communities. It can no longer be justified," the centre’s executive director, Melissa Fourie, said at the weekend.

The judgment confirmed that mining operations and mining companies had to comply with all laws, and that the Mineral and Petroleum Resources Development Act (MPRDA) did not trump other legislation, including provincial legislation such as the Land Use Planning Ordinance, Ms Fourie said.
The court dismissed an application by mining company Maccsand, which had applied to the court to set aside the Supreme Court of Appeal judgment that held that the holder of a mining right granted under the MPRDA could not proceed to mine unless the Western Cape’s Land Use Planning Ordinance permitted mining on the land concerned.
Maccsand had argued that the provincial legislation that required rezoning did not apply to land used for mining.

Prè Prinsloo, partner and head of the mining, minerals and energy law department at Shepstone & Wylie Attorneys, said there was now no doubt that commencing mining on land that was not zoned for mining activities was unlawful.
"It was further confirmed that where a mining right (or) permit has been granted in accordance with the Minerals and Petroleum Resources Development Act, the holder of such right must comply with any land zoning laws which apply to the land over which the right (or) permit was granted," Mr Prinsloo said.

PRE PRINSLOO, PARTNER AND HEAD OF THE MINING, MINERALS & ENERGY LAW DEPARTMENT,

Contact: 031 575 7304
E-mail Pre Prinsloo

Litigation Update, Salary conundrum for drug dealer, reported in the Sunday Tribune



Salary conundrum for drug dealer

Having reached an out-of -court settlement with her employer, the Hibiscus Coast Municipality, convicted drug dealer Sheryl Cwele is back on full pay.

 But a top Durban lawyer says Cwele could lose her salary if the municipality can show he had created problems and med its good name.

Mike Maeso, a partner at Shepstone & Wylie, said the municipality had the discretion to institute disciplinary action against her for bringing it into disrepute.

Cwele, suspended from her post of director of health at the municipality in May, is appealing her criminal conviction.

"The moment you appeal a conviction; the sentence gets suspended or set aside until the process is finalised," Maeso said. He said the municipality would have to prove what the council had suffered, or it would have to prove she had created problems for it.

"In that case, the municipality may decide not to continue with the relationship it has with the employee. "It's a very difficult position for the municipality. Here you have a very senior employee found guilty by a court of law and the trick now is to determine what impact that has had on the day-to-day functioning of the council," he said.

Maeso said any employer would determine whether the person was guilty in terms of their employment, in addition to guilt in a criminal case. Cwele is asserting that the municipality based its charges of misconduct on her conviction in the High Court in May, which she is appealing, saying it would be "improper" to act until the final word from the Supreme Court of Appeal.

Cwele was convicted and sentenced to 12 years' imprisonment with co-accused Frank Nabolisa for recruiting women to smuggle drugs from South American countries.

Cwele and Nabolisa were granted leave to appeal. The municipality then suspended Cwele as director of health services and started disciplinary proceedings.

Salary

Last month, the municipality suspended her salary Cwele then filed papers with the Durban Labour Court, challenging the suspension.

This week the municipality settled out of court, and agreed to pay her salary pending the outcome of the disciplinary proceedings.

Cwele will lose her salary if the municipality's disciplinary committee finds her guilty. It's a costly situation for the municipality, which pays an extra salary while Thembi Khawula, erstwhile manager of cultural services, acts in Cwele's absence.

Municipal manager S'bu Mlihize said last week that the first leg of proceedings in Cwele's independent disciplinary hearing was complete.

"Cwele and the municipality have to submit papers to the chairman of the disciplinary committee on mitigating or aggravating circumstances. "Once the chairman makes his decision, it is final," he said referring to Cwele's comments in court papers that she would appeal the outcome of the disciplinary hearing if it rules against her.

Cwele may also face losing her house. The National Prosecuting Authority said in May it would lodge an application for Cwele's assets to be forfeited if her appeal bid failed.

Cwele's lawyer, Mvuseni Ngubane, said on Friday he was not aware of any action by the Asset Forfeiture Unit to attach her client's property. nathi.olifant@inl.co.za

Michael Maeso, Partner & Head of Employment and Pension Law

Contact: 031 575 7207 and maeso@wylie.co.za