October 18, 2017
Small Businesses and POPI: Not Crying Wolf This Time?
“Crying wolf is a real danger” (David Attenborough)
POPI (the Protection of Personal Information Act) will provide welcome protection for our personal information – our names, ID numbers, addresses, medical histories and so on.
But the other side of the coin is that it will expose small businesses in particular to a whole new raft of onerous obligations and risks.
The problem is that there have been so many false alarms as to when POPI’s compliance provisions will actually commence, that many of us have lost sight of just how heavy a burden it will place on our businesses.
But now the process is strongly underway again, and this time it’s not a case of “Crying Wolf”. So here’s what you need to know for now ….
What is required of you and when
There’s a lot to contend with even for big businesses with their vast administrative resources and deep pockets. So since 2014 they’ve been planning ahead and spending fortunes on training for POPI and on preparing their systems for compliance.
But if you’re a typical small business with limited resources you face a real challenge here. You probably have very limited understanding of what POPI is, of how it impacts on you, of the substantial risks it exposes you to, and – perhaps most importantly – what you must do about it and when.
In a nutshell –
- At long last, an Information Regulator has been appointed, and Draft Regulations have been published for comment by 7 November 2017.
- So it seems logical that the one year grace period for compliance will run from early next year. So there’s no major panic just yet, but take advantage of this advance warning to understand your compliance burden and to get ready for it.
- One of your major obligations is to take appropriate and reasonable measures to secure all “personal information” collected, used or stored by you. Don’t think by the way that you don’t hold any “personal information” – pretty much every detail you have or have used for every client/customer, supplier, service provider, employee etc is included in the definition. POPI applies to you!
- You will have to officially report and explain any suspected breach of confidentiality. Not just a hack or data loss, but any potential data compromise such as the loss or theft of a laptop, cell phone or backup drive.
- You are also strictly limited as to what personal information you can collect, where you can acquire it from, what you can hold and for how long, and what you can use it for.
- Amongst a host of other issues you will have to tackle, you must ensure that the information you hold is accurate. The list goes on …
The big risks of non-compliance
- Breaches of any of these duties lay you open to severe penalties (administrative fines of up to R10m) and prosecution (up to 10 years imprisonment), quite apart from the harm and loss of trust in you that adverse publicity will undoubtedly cause.
- That’s not all – you can also be sued for millions in damages by anyone whose data has been compromised, and you are limited to a list of specified defences to such a claim. Critically, this is a case of “strict liability” in that no “intent or negligence” on your part need be proved.
- To give you an idea of the extent of the risk, an SME in the UK was recently fined under similar laws. It must pay £60k (R1m) for failing to prevent hackers from accessing its clients’ personal information.
We’ll let you have some practical guidance on complying once the Regulations (possibly also Codes of Conduct) and effective dates are finalised, but for starters your software, your business processes, and your security systems (passwords, encryption etc) will almost certainly need a major overhaul.
The best thing you can do right now is to start thinking about what personal information you hold, where you hold it, who has access to it, and how secure it is.
© LawDotNews
October 18, 2017
October 2017 | A note from our director
In the final stretch of 2017 we at KVV are more adamant to continue to be an industry leader. Service will remain our focus as we dive deeper into the customer’s needs and what we can bring to the table to ensure that they are met. According to a GIBS survey, it is no longer good enough to only have the customer at the centre or to create a custom-made package. The latest buzz and movement is a shift away from customization into personalization! This will be our goal and pivot-point as we relate and connect with internal and external customers. Customers can have complete peace of mind knowing that KVV are at the forefront of innovation in the Property Law industry.
With the above mentioned as cornerstone, we launch many exciting things in the KVV house. 2017 saw the birth of The KVV Masters, this initiative revealed its face on the greens of Ruimsig Golf Club. October has already offered a Leadership Masterclass with the trending theme: “Leadership, the unknown and the next 20 miles”. In hosting and offering these events, we strive to equip ourselves and our valued clients on relative topics and developmental trends. On the 20th of October, our Masterclass will be on challenging the status quo and doing so courageously.
Digitization is here to stay; thus we are in an exciting process of upgrading our website to make it more interactive and beneficial. Selling or buying of property is a personal and serious matter which we understand very well. With this in mind we have developed an easy user friendly website to best inform and serve all existing and future clients. We are confident that this will add even more value to the KVV offerings and brand.
We want to wish all our partners well during the last 2 months of active business. Please do not hesitate to contact any of our offices for information or assistance.
Kind Regards
Diaan van Wyk | Director
September 13, 2017
Property Sellers: Don’t Pay “Future Rates”
“Cause they told me everybody’s got to pay their dues“Cause they told me everybody’s got to pay their dues And I explained that I had overpaid them” (Sixto Rodriguez in ‘Cause’)
Before you as seller can transfer your property to the buyer, you must have a clearance certificate from your local municipality confirming that you have paid in full all rates and taxes, services etc due to it on the property.
What happens though when the municipality refuses to issue the clearance certificate until you have paid not only rates currently due, but also future rates i.e. rates payable by the buyer after transfer as new registered owner? If you are forced to pay, you will be left with a claim against the buyer and that could well mean dispute and delay.
But now here’s good news for you from a recent SCA (Supreme Court of Appeal) decision.
At issue – a R2.28m rates bill paid under protest
- A municipality presented a seller with a rates account of R2,281,014-68 in terms of its rates policy which required it to recover all rates due for the seller’s “remaining financial year”.
- The seller said it only owed R1,2m but it was forced to pay – with reluctance and “under protest” – the whole amount due in order to get the clearance certificate. It then sued the municipality for return of the R1,066,532 “overpayment”.
- On its interpretation of the relevant legislation, the Court held that the municipality’s policy on future rates was inconsistent with the Rates Act, and therefore void. The seller had therefore overpaid, and the municipality must repay it, together with interest and costs.
© LawDotNews
September 13, 2017
Myths about Making a Will
“Let’s choose executors and talk of wills” (Shakespeare)“Let’s choose executors and talk of wills” (Shakespeare)
If you haven’t made your will yet, get it done now. Why is that so important and how should you go about it?
To answer that let’s debunk a few of the more pervasive myths and misconceptions around those questions –
“I’m too young to need a will”
Of course the older you get, the greater your chance of dying from illness or disease. But conversely, the younger you are the higher your risk of sudden violent death. For example our road fatality stats (amongst the highest in the world) show that 80 percent of deaths are in the 19 to 34 year old age group. No matter your age and no matter your health status, you could die today. Or tomorrow. No one (least of all you) knows for sure.
And so to this related myth …
“I’m too busy right now, it can wait”
The more frantically busy we are (and that’s most of us in today’s world) the more tempting it is to postpone this one. It’s a hassle, you have other priorities, and besides who wants to contemplate their own mortality? But of course “Death knocks at all doors”, often without warning. And the hassle you save yourself today is just more hassle for your grieving loved ones to have to deal with tomorrow.
“It’s OK to die without a will”
No it’s not. A will is the only way to ensure that your loved ones are looked after properly after you are gone. It’s the only way to control how your estate is divided and who divides it for you.
Without a will you die “intestate” and the law – not you – determines who gets what. You could be inadvertently condemning your spouse to a life of trying to survive on only a “child’s share” of your estate. You have no say in who will be appointed executor of your estate, or guardian of your children, or trustee of their trust if they are under age or unable to manage their own affairs. Your childrens’ inheritances will sit in the Guardians Fund until they turn 18. If you aren’t formally married but have a life partner, he or she may end up in a bitter dispute with your family over rights of inheritance. There are no advantages to dying intestate, only disadvantages – big ones.
“I’m single and have no assets, so a will is pointless”
Firstly, you will have some assets – a bank account perhaps, or a car, or monies in your employer’s pension fund, or perhaps your estate will have a claim on the Road Accident Fund. Even if you have no spouse/life partner/children to worry about, you will still leave loved ones behind – parents perhaps, or siblings. Whatever the case, someone close to you will have to be involved in winding up your estate and you should leave a will to make the process less stressful for them.
“My spouse already holds my Power of Attorney, that’s all he/she needs”
Powers of attorney lapse on your death and from then on only your executor, after being formally appointed by the Master of the High Court, can deal with your estate. Any powers you may have given your heirs – for example to draw money to live on from your bank account, or to run your business, or to rent out your house – fall away when you die.
“It’s easy to draw a will, I can do it myself”
There is no legal requirement for a professional to draw your will, but before you buy a template will or copy someone else’s, consider these common pitfalls –
- Your will must comply with legal formalities to be valid. If it doesn’t pass muster for any reason, your heirs will have to make an expensive application to the High Court to have it validated.
- Unless the terms of your will are crystal clear, you could ignite a bitter family feud over what your wishes really were, and that’s the last thing your grieving loved ones need to be dealing with in their time of distress. Our law reports are filled with cases caused by imprecision, ambiguity and vagueness, and sometimes there is just no substitute for the legal terminology and the “Latin bits” – unless you fully understand them, don’t go there alone.
- Your marital status, marital regime and ante-nuptial contract (if you have one) need to be taken into account when drawing your will, and there are grey areas here which are best left to a professional.
- If you have foreign assets, you may need a foreign will as well as a local one, but there’s “no one-size fits all” answer – specialised advice is essential.
- The structure of your will, and upfront estate/tax planning, will reduce unnecessary cost and delay – another issue beyond the average layperson.
- A last point – not strictly part of the process of drawing the will but still vitally important – is to leave your heirs with ready access to funds whilst the estate is wound up. All your bank accounts and the like are automatically frozen on death so ensure your heirs have their own bank accounts, nominate them as beneficiaries of life policies etc.
“I made a will years ago, that’ll do the job”
Bad idea. Life events (marriage, divorce, birth, death etc) and a whole host of other factors (like new laws and changes in your financial and business structures) all require review. So diarise to revisit your will regularly, at least once a year.
In closing, don’t confuse this sort of “will”, which only applies after you die, with a “Living Will” (or its close cousin an “Advance Directive”), both of which only apply before you die.
We’ll discuss whether you need a Living Will or Advance Directive in next month’s issue.
© LawDotNews
September 13, 2017
Making Money with Airbnb? Tax and Other Issues
Airbnb is an increasingly popular and lucrative way for residential property owners to earn extra income from short-term rentals of spare rooms, holiday houses, apartments and the like.
Bear in mind these 3 factors –
- You need to provide for taxes. SARS has recently confirmed that your Airbnb earnings (after deduction of allowable expenses) are taxable and must be included in your income tax returns. You will also have to register for VAT if your rental income exceeds R1m per year.
- You must comply with the “permitted uses” applying to your property under your local municipality’s zoning regulations.
- If you are in a community scheme (Sectional Title or Home Owners Association) check whether the scheme’s rules and regulations allow short-term rentals of this nature, and if so what restrictions apply. Remember you are responsible for any breaches of the rules and for any unlawful or bad behaviour by your tenants.
© LawDotNews
September 13, 2017
The R1m Buffalo That Died: A Lesson in Passing of Risk
We buy and sell things every day, and no doubt most of us assume that it is only when we become the owner that we take the risk of our purchase being damaged or destroyed. Not always – in our law, passing of ownership and passing of risk are two different concepts, and although in our day-to-day lives they are normally simultaneous, sometimes they aren’t.
What happens then? The general rule in our law – unless the parties have agreed otherwise – is this –
- A buyer becomes the owner of a movable only when it is “delivered” to him/her (be careful here – “delivery” is a much more complicated concept in law than you might think).
- Risk however passes to the buyer on conclusion of the contract of sale; in other words, you could buy something, and if it is stolen or destroyed before you take ownership, you could end up losing both it and the purchase price. There are many provisos and exceptions to this rule (such as when the seller causes the loss) but the legal principles are complex and all in all it’s a minefield for the unwary.
A recent SCA (Supreme Court of Appeal) decision illustrates two particular dangers.
A buffalo dies – whose loss?
- A game farmer sold a bull buffalo to another game farmer.
- Before delivery to the buyer, the buffalo had to be tested for disease, which meant darting it to draw a blood sample.
- The darting itself went well, but the buffalo naturally enough made a run for it and could not be found in time to prevent it from lying down and suffocating.
- The seller sued the buyer for R1.14m, his case being this –
- Whilst on top of the truck in which the buffalo had been transported, the buyer decided then and there he wanted it, and the parties agreed verbally on a sale at R1m + vat.
- The buyer, said the seller, also specifically agreed to assume the risk of death or injury arising from the darting and sedation.
- The death resulted from the darting operation.
- The buyer at first denied everything, but, by the time the parties ended up in the Supreme Court of Appeal, he had conceded all three points. He argued however that the seller had to deliver the buffalo before claiming payment, that it was up to the seller to prove that his conduct hadn’t caused the buffalo’s death, and that the seller’s inability to deliver (“impossibility of performance” in legal speak) was self-created.
- Having resolved a number of factual disputes in favour of the seller, and holding that the buyer’s specific contractual assumption of risk arising from the darting operation made the question of “self-created impossibility of performance” irrelevant, the Court held that it is the buyer who must suffer the loss.
- The end result therefore – the buyer is down one buffalo, R1.14m, and legal costs (which, after three bouts in senior courts, will be substantial).
Verbal contracts, high risk events, and deep pockets
It boils down to this –
- Relying on a verbal sale agreement is a recipe for disaster – dispute, delay, and the costs and frustrations of litigation. Rather have your lawyer record in a written contract, in the clearest possible terms, exactly what you have agreed to in regard to the passing of ownership and the passing of risk
- If you accept the danger of loss from a “high risk event” – such as sedating R1m worth of wild buffalo – you’d better have deep pockets.
© LawDotNews
August 15, 2017
Sexual Offences: No More Time Limit to Prosecute
“There are some crimes that do not go away” (quoted in the judgment below)“There are some crimes that do not go away” (quoted in the judgment below)
Victims of sexual abuse are often so deeply traumatised and intimidated that they either never report the crimes, or take decades to go to the police.
And that, until now, has been a major source of injustice in our legal system, because section 18 of our Criminal Procedure Act (CPA) provides that the right to prosecute crimes lapses after 20 years except for a specified list of serious offences – murder, treason, aggravated robbery, kidnapping, child stealing, rape/”compelled rape”, genocide/war crimes, people trafficking, and pornography involving children or mentally disabled people.
The end result has been that many desperate and vulnerable survivors of abuse have been deprived of their right to seek justice. Fortunately that has now changed. A recent High Court judgment involving accusations of sexual crimes over 28 years ago has had the result that, subject only to confirmation by the Constitutional Court, sexual offences can now be prosecuted at any time.
Allegations of habitual child sex abuse; and the law
- Eight male and female applicants, who at the time of the alleged offences were children between the ages of 6 and 15 years, accused the man in question of having habitually “indecently and/or sexually assaulted” them in the 70s and 80s.
- In terms of the CPA, the offences had prescribed by the time that, between June 2012 and June 2015, the applicants had acquired “full appreciation of the criminal acts committed by the [man]”, and they then opened a criminal case and instituted a civil claim against him.
- The Director of Public Prosecutions declined to prosecute the cases (being barred by the CPA from doing so) and the applicants asked the High Court for help.
- Having analysed in depth both the legal position and the many deep-seated causes of “delayed disclosure” by victims, the Court held that “section 18 is arbitrary and irrational and accordingly is inconsistent with the Constitution and invalid, in relation to not only children, but to all victims, including adults” in respect of “the right to institute a prosecution for all sexual offences”.
- Although the declaration of invalidity was suspended for 18 months “in order to allow Parliament to remedy the constitutional defect”, the Court ordered that in the interim, i.e. with immediate effect, the 20 year time limit falls away for “all other sexual offences, whether in terms of common law or statute”.
The civil case against the accused’s deceased estate (he died shortly before the hearing) will now no doubt also proceed, with another Court having previously held in respect of civil prescription “that a victim of child or sexual abuse who acquired an appreciation of the criminal act during adulthood is able to sue the abuser within three years of gaining that appreciation”.
© LawDotNews
August 15, 2017
SARS and the Special Voluntary Disclosure Programme: It’s Deadline Time!
“The SVDP is meant for individuals and companies who have not in the past disclosed tax and exchange control defaults in relation to offshore assets” (SARS)“The SVDP is meant for individuals and companies who have not in the past disclosed tax and exchange control defaults in relation to offshore assets” (SARS)
If you aren’t sure whether or not you should apply for the Special Voluntary Disclosure Programme (SVDP), take advice immediately –
- The deadline is 31 August 2017, and you will need time to prepare properly.
- By the end of next month, SARS will have in place an automatic exchange of tax information with the revenue authorities of over 50 other countries (100 by September 2018) under the OECD’s “Common Reporting Standard”.
© LawDotNews
August 15, 2017
Verbal Agreements – The Property Perspective
“A verbal contract isn’t worth the paper it’s written on” (Samuel Goldwyn)“A verbal contract isn’t worth the paper it’s written on” (Samuel Goldwyn)
A recent High Court judgment is yet another reminder of how essential it is to comply with all necessary formalities when entering into any sort of agreement, particularly when dealing with the sale of property.
A fight over eviction and a property transfer attack
- A property was transferred to a buyer in terms of a sale agreement in 2015.
- The occupants of the property refused to vacate, and when the new owner applied for their eviction, they alleged that in 2007 they had verbally agreed with the original owners that, upon finalisation of several specified issues, they would enter into a formal agreement of sale to purchase the property.
- They therefore asked not only for the eviction application to be dismissed, but also for the 2015 sale and transfer to the new owner to be set aside in order to transfer the property to their own nominated family trust.
What the Court said
- Any such verbal contract would, held the Court, be an “agreement to agree” which in our law certainly can be valid and binding, but generally only if it complies with all the formal and other requirements for validity applying to the “main” contract that they have agreed to enter into.
- The occupants’ problem was that a verbal agreement for the sale of immovable property cannot be valid, because this is one of the few classes of agreement which our law requires to be (a) in writing and (b) signed by both seller and buyer “or by their agents acting on their written authority”.
- The occupants were accordingly given 15 days to leave the property, and the original sale and transfer remain in place.
Three things to bear in mind
- Remember that in our law you will usually be bound by what you agree to verbally; property sales are one of only a few specific exceptions to that principle.But as a general rule verbal contracts are best avoided. They are a recipe for misunderstanding and dispute because people tend to hear only what they want to hear, and to then convince themselves that their memory is better than yours. Worse, a dishonest opponent will have more wriggle room to get out of your agreement. Rather have everything recorded in black and white, and signed.
- Also tread carefully around “agree to agree” scenarios. Our case law is full of costly disputes over “letter of intent” and “let’s agree now to enter into a full contract later” cases.
- In particular, if you are about to embark on any form of property transaction, the lesson is, as always, to seek legal help before you agree to anything. There’s usually a lot at stake when property’s involved, and many pitfalls for the unwary.
© LawDotNews
July 7, 2017
Evicting Your Troublesome Tenant: More Problems with PIE
“The effect of PIE is not and should not be to effectively expropriate the rights of the landowner in favour of unlawful occupiers. The landowner retains the protection against arbitrary deprivation of property. Properly applied, PIE should serve merely to delay or suspend the exercise of the landowner’s full property rights until a determination has been made whether it is just and equitable to evict the unlawful occupiers and under what conditions.” (From judgment below)
Buy-to-let property can be an excellent investment.
Just take into account the possible difficulty, cost and delay of evicting a defaulting tenant – or indeed any unlawful occupier – who refuses to budge. The problem of course is that you have to keep on paying all your property expenses whilst the legal processes grind their way slowly, painfully and expensively through the courts.
It is however an entirely manageable risk if you take steps to do so upfront, and if you have factored it into your initial calculations.
A recent Constitutional Court judgment illustrates.
An expensive 4 year court battle; and counting …
- An investor used the proceeds of his pension to buy an apartment block from a close corporation in liquidation, intending to spend over R3m on upgrading it for leasing out to tenants.
- The building was however already occupied by 184 people (men, women and children), most of them either low income earners or unemployed, and some of them with long histories of occupation (up to 26 years).
- When they refused to vacate, the liquidators and the investor approached the High Court for an eviction order, which was granted – supposedly by agreement with the occupiers, who at that time had no legal representation.
- The occupiers – by now represented at no charge by a human rights organisation – made a succession of failed attempts to have the eviction order rescinded in both the High Court and on appeal to the Supreme Court of Appeal.
- The Constitutional Court however rescinded the eviction order and sent the matter back to the High Court for further investigation.
- The practical position therefore is this – 4 years down the line, the investor is still fighting for vacant occupation. Litigation like this doesn’t come cheap and whilst the occupiers carried no legal expenses, the investor ran out of money and in the end had to rely on his attorneys to represent him pro bono (free of charge).
- The Court found on the facts that “there was no legally effective and informed consent by the applicants when the eviction order was granted against them”. More importantly, it held that in all eviction applications – even where occupants consent to an eviction order – the court must still investigate whether there has been compliance with PIE (the Prevention of Illegal Eviction From and Unlawful Occupation of Land Act).
- And that ruling – from our highest court – raises the risk factor for landlords, as we see below.
When homelessness is a risk, factor in more delay and cost
PIE requires, as the Constitutional Court put it, that a court only makes an eviction order “after having considered all the relevant circumstances and satisfying itself that it is just and equitable to do so”.
And, said the Court, “An order that will give rise to homelessness could not be said to be just and equitable, unless provision had been made to provide for alternative or temporary accommodation.”
The High Court should therefore have joined the local municipality into the court action, it being the municipality’s duty to provide temporary emergency accommodation. The potential for further delay and cost is obvious.
© LawDotNews