CONSUMER PROTECTION AND PROPERTY PANIC - WHO'S AT RISK?
"Don't Panic!" (Douglas Adams, Hitchhiker's Guide to the Galaxy)
Property sellers, estate agents and landlords - many of your deals will be subject to the requirements of the new Consumer Protection Act ("CPA"), so prepare for them now!
Firstly, be ready to comply with the Act when it comes into force at the end of March - you risk major losses if you don't. You could for example have your agreement declared invalid and administrative penalties, even criminal prosecution, are provided for contraventions.
Secondly, the additional consumer protections expose you to some serious new restrictions and risks. Indeed, a note of panic has crept into some recent media articles on the subject, with suggestions that the whole property industry will be adversely affected.
Don't panic, the risks are manageable - but seek advice and assistance now if you haven't done so already.
Note incidentally that CPA will not apply to every agreement and transaction:-
Pre-existing agreements will by and large not be affected, except that: -
Any fixed-term contract still to be in existence on or after 31 March 2013 will be partially subject to the Act.
Supplies of defective goods on or after 24 April 2010 will still carry the risk of damages claims.
The Act applies only to the supply of goods or services "in the ordinary course of the supplier's business", so it's likely that most run-of-the-mill "private" or "once-off" transactions will be exempt (although estate agents will still need to comply in respect of their marketing practices, sales mandates etc).
Not all consumers are protected, only those who are either:-
Individuals, or Smaller "juristic persons" (corporates/partnerships/trusts with assets or annual turnovers under a threshold - provisionally R3m).
Of particular concern to landlords has been the proposed 2 year limit on fixed-term contracts, and the fear that tenants will be able to give 20 business days' notice of cancellation at any time (subject only to the imposition of a "reasonable" - maximum 10% - cancellation penalty). The silver lining here for landlords is that neither of these particular provisions applies to any "juristic persons" at all (regardless of assets or turnover) - only to individuals.
Take advice on whether or not you are at risk here; and if so, on how to manage it.
Note: The above is of necessity a summary of selected general principles only - seek specific advice in doubt.
SIGNING SURETYSHIP: THE STING'S IN THE TAIL!
Yet another warning on the dangers of signing surety for someone else's debts comes from a recent High Court case in which a bank secured a substantial judgment against a party who had signed surety for a close corporation's debts.
Signing a surety ship always seems safe (and standard: "Everyone does it.......") at the time. But you will be stung - and stung hard - if the principal debtor hits hard times down the line.
The case in question saw the surety's two lines of defence crumble:-
She was unable to claim the protections of the National Credit Act ("NCA"), because the main agreement - i.e. the bank's agreement with the CC - wasn't a "credit agreement" as defined in the NCA (which has limited application to corporate entities).
Nor did she succeed with her defence that she had never agreed to the bank increasing its loan to the CC. She had signed a standard-wording surety agreement binding her to "the repayment of any sum or sums of money" owed by the CC "from whatever cause arising" and could not go outside that written agreement.
If you have no alternative but to stand surety, take advice before you sign anything! And at the very least, limit your liability - in both amount and time period - as much as you can.
"SNATCHING BACK UMBRELLAS WHEN IT RAINS"
The National Credit Act ("NCA") protects over-indebted consumers (and victims of "reckless lending") from enforcement proceedings by credit providers, subject to compliance with various requirements and procedures.
To limit abuse of these procedures by debtors trying only to delay the inevitable, creditors may in some circumstances follow a procedure for termination of the debt relief process.
Where for example an application for debt review has not, within 60 business days, resulted in a court order for restructuring of the debt, the literal wording of the Act allows the creditor to give notice of termination - even where the review process is still underway. Some creditors have been automatically giving notice of termination where, although an application for debt restructuring has been lodged in a magistrate's court, it hasn't yet come up for hearing.
Confusingly, some High Courts have been allowing termination in such circumstances, whilst others have been disallowing it. Now however, in just such a case, a full-bench judgment of the Western Cape High Court has held that: -
Once an application for restructuring of an over-indebted consumer's debts has been lodged in the magistrate's court, a judicial process has been set in motion that cannot be "contingent upon the mere sending of a letter between private parties".
"It would be like providing the consumer with an umbrella and then snatching it back the moment it starts raining" to allow a creditor to unilaterally terminate a debtor's protection "at the precise moment when he or she may need it the most".
The Court accordingly looked beyond the strict wording of the Act, dismissed the bank's application for cancellation of a motor vehicle lease agreement (and repossession of the vehicle), and ordered that the debt review resume.
NOTIFY YOUR INSURERS OF EVERY POSSIBLE CLAIM - EVEN IF THE RISK IS "SMALL"!
When must you advise your insurance company of a possible claim against you?
The temptation is to do nothing until a claim is actually made against you, particularly if - although something has happened that might perhaps result in a claim - it doesn't seem particularly likely at the time.
Big mistake! In a case recently before the High Court, a shop's customer had tripped over an electric cord and fallen, sustaining injuries. He sued the shop, which in turn blamed the cleaners it had contracted to provide general cleaning services in the store. The cleaners then claimed indemnity from their insurers under a Public Liability policy.
The Court supported the insurers' repudiation of the claim on the ground that the cleaners, although first made aware of the incident in 2008, had only given them notice of the claim when summons was actually served on them in 2010. This was in breach of a (standard) clause in the policy requiring clients to give notice "as soon as reasonably possible". That, held the Court, meant reporting any such incident as soon as is "reasonably practicable in all the circumstances. The enquiry is a factual one. And the answer will depend upon the circumstances of each particular case."
The moment you appreciate that there is "inherent in the situation a possibility that a claim might be made", even if (as in this case) it seems to you that the risk of a claim resulting is "small", you must notify your insurers without delay.
If you don't, you risk being left - like the cleaning company in this case - to face the music alone.
REPORT WHITE COLLAR CRIME! COURTS GETTING TOUGHER
One of the reasons that "white collar" crime (fraud, forgery, corruption etc) is often left unreported is the perception that, even if a successful prosecution ensues, the offender is likely to be let off with a slap on the wrist.
That is changing however, and our courts have for some years been signaling a much tougher stance.
For example, the Supreme Court of Appeal, in confirming last year a sentence of an effective 4 years' imprisonment (with a further 3 years conditionally suspended) on a financial adviser convicted of 6 counts of fraud involving R807.000 of his clients' money, commented that "the sentence borders on the lenient", and that, even with white collar crime, "direct imprisonment is not uncommon, even for first offenders".
THE MARCH WEBSITE: FREE ONLINE FILE SHARING
Here's how to: -
Online, back up and synchronise files between computers. If you have more than one computer, you can save a file on one of them, and it instantly syncs to the others, whilst automatically updating your online version. So you can for example start working on one computer, and continue on another.
Share files and photos with friends and colleagues (particularly useful with files too large for easy e-mailing)
Access your files on any computer from a web browser
Access your files on the go with your iPhone, iPad, BlackBerry or Android
Go to Dropbox at www.dropbox.com, download the software, and set up a free account (you get 2 GB storage free).
You can share files with recipients regardless of whether or not they have their own Dropbox accounts - follow the simple instructions to send your recipient/s a weblink to the file - it's quick and easy on both sides.
P.S. Are you registered to vote?
Check your status as a voter on the IEC's website at https://www.elections.org.za/ The next voter registration weekend is due to be held on 5-6 March.
Have a great March!
"Don't Panic!" (Douglas Adams, Hitchhiker's Guide to the Galaxy)
Property sellers, estate agents and landlords - many of your deals will be subject to the requirements of the new Consumer Protection Act ("CPA"), so prepare for them now!
Firstly, be ready to comply with the Act when it comes into force at the end of March - you risk major losses if you don't. You could for example have your agreement declared invalid and administrative penalties, even criminal prosecution, are provided for contraventions.
Secondly, the additional consumer protections expose you to some serious new restrictions and risks. Indeed, a note of panic has crept into some recent media articles on the subject, with suggestions that the whole property industry will be adversely affected.
Don't panic, the risks are manageable - but seek advice and assistance now if you haven't done so already.
Note incidentally that CPA will not apply to every agreement and transaction:-
Pre-existing agreements will by and large not be affected, except that: -
Any fixed-term contract still to be in existence on or after 31 March 2013 will be partially subject to the Act.
Supplies of defective goods on or after 24 April 2010 will still carry the risk of damages claims.
The Act applies only to the supply of goods or services "in the ordinary course of the supplier's business", so it's likely that most run-of-the-mill "private" or "once-off" transactions will be exempt (although estate agents will still need to comply in respect of their marketing practices, sales mandates etc).
Not all consumers are protected, only those who are either:-
Individuals, or Smaller "juristic persons" (corporates/partnerships/trusts with assets or annual turnovers under a threshold - provisionally R3m).
Of particular concern to landlords has been the proposed 2 year limit on fixed-term contracts, and the fear that tenants will be able to give 20 business days' notice of cancellation at any time (subject only to the imposition of a "reasonable" - maximum 10% - cancellation penalty). The silver lining here for landlords is that neither of these particular provisions applies to any "juristic persons" at all (regardless of assets or turnover) - only to individuals.
Take advice on whether or not you are at risk here; and if so, on how to manage it.
Note: The above is of necessity a summary of selected general principles only - seek specific advice in doubt.
SIGNING SURETYSHIP: THE STING'S IN THE TAIL!
Yet another warning on the dangers of signing surety for someone else's debts comes from a recent High Court case in which a bank secured a substantial judgment against a party who had signed surety for a close corporation's debts.
Signing a surety ship always seems safe (and standard: "Everyone does it.......") at the time. But you will be stung - and stung hard - if the principal debtor hits hard times down the line.
The case in question saw the surety's two lines of defence crumble:-
She was unable to claim the protections of the National Credit Act ("NCA"), because the main agreement - i.e. the bank's agreement with the CC - wasn't a "credit agreement" as defined in the NCA (which has limited application to corporate entities).
Nor did she succeed with her defence that she had never agreed to the bank increasing its loan to the CC. She had signed a standard-wording surety agreement binding her to "the repayment of any sum or sums of money" owed by the CC "from whatever cause arising" and could not go outside that written agreement.
If you have no alternative but to stand surety, take advice before you sign anything! And at the very least, limit your liability - in both amount and time period - as much as you can.
"SNATCHING BACK UMBRELLAS WHEN IT RAINS"
The National Credit Act ("NCA") protects over-indebted consumers (and victims of "reckless lending") from enforcement proceedings by credit providers, subject to compliance with various requirements and procedures.
To limit abuse of these procedures by debtors trying only to delay the inevitable, creditors may in some circumstances follow a procedure for termination of the debt relief process.
Where for example an application for debt review has not, within 60 business days, resulted in a court order for restructuring of the debt, the literal wording of the Act allows the creditor to give notice of termination - even where the review process is still underway. Some creditors have been automatically giving notice of termination where, although an application for debt restructuring has been lodged in a magistrate's court, it hasn't yet come up for hearing.
Confusingly, some High Courts have been allowing termination in such circumstances, whilst others have been disallowing it. Now however, in just such a case, a full-bench judgment of the Western Cape High Court has held that: -
Once an application for restructuring of an over-indebted consumer's debts has been lodged in the magistrate's court, a judicial process has been set in motion that cannot be "contingent upon the mere sending of a letter between private parties".
"It would be like providing the consumer with an umbrella and then snatching it back the moment it starts raining" to allow a creditor to unilaterally terminate a debtor's protection "at the precise moment when he or she may need it the most".
The Court accordingly looked beyond the strict wording of the Act, dismissed the bank's application for cancellation of a motor vehicle lease agreement (and repossession of the vehicle), and ordered that the debt review resume.
NOTIFY YOUR INSURERS OF EVERY POSSIBLE CLAIM - EVEN IF THE RISK IS "SMALL"!
When must you advise your insurance company of a possible claim against you?
The temptation is to do nothing until a claim is actually made against you, particularly if - although something has happened that might perhaps result in a claim - it doesn't seem particularly likely at the time.
Big mistake! In a case recently before the High Court, a shop's customer had tripped over an electric cord and fallen, sustaining injuries. He sued the shop, which in turn blamed the cleaners it had contracted to provide general cleaning services in the store. The cleaners then claimed indemnity from their insurers under a Public Liability policy.
The Court supported the insurers' repudiation of the claim on the ground that the cleaners, although first made aware of the incident in 2008, had only given them notice of the claim when summons was actually served on them in 2010. This was in breach of a (standard) clause in the policy requiring clients to give notice "as soon as reasonably possible". That, held the Court, meant reporting any such incident as soon as is "reasonably practicable in all the circumstances. The enquiry is a factual one. And the answer will depend upon the circumstances of each particular case."
The moment you appreciate that there is "inherent in the situation a possibility that a claim might be made", even if (as in this case) it seems to you that the risk of a claim resulting is "small", you must notify your insurers without delay.
If you don't, you risk being left - like the cleaning company in this case - to face the music alone.
REPORT WHITE COLLAR CRIME! COURTS GETTING TOUGHER
One of the reasons that "white collar" crime (fraud, forgery, corruption etc) is often left unreported is the perception that, even if a successful prosecution ensues, the offender is likely to be let off with a slap on the wrist.
That is changing however, and our courts have for some years been signaling a much tougher stance.
For example, the Supreme Court of Appeal, in confirming last year a sentence of an effective 4 years' imprisonment (with a further 3 years conditionally suspended) on a financial adviser convicted of 6 counts of fraud involving R807.000 of his clients' money, commented that "the sentence borders on the lenient", and that, even with white collar crime, "direct imprisonment is not uncommon, even for first offenders".
THE MARCH WEBSITE: FREE ONLINE FILE SHARING
Here's how to: -
Online, back up and synchronise files between computers. If you have more than one computer, you can save a file on one of them, and it instantly syncs to the others, whilst automatically updating your online version. So you can for example start working on one computer, and continue on another.
Share files and photos with friends and colleagues (particularly useful with files too large for easy e-mailing)
Access your files on any computer from a web browser
Access your files on the go with your iPhone, iPad, BlackBerry or Android
Go to Dropbox at www.dropbox.com, download the software, and set up a free account (you get 2 GB storage free).
You can share files with recipients regardless of whether or not they have their own Dropbox accounts - follow the simple instructions to send your recipient/s a weblink to the file - it's quick and easy on both sides.
P.S. Are you registered to vote?
Check your status as a voter on the IEC's website at https://www.elections.org.za/ The next voter registration weekend is due to be held on 5-6 March.
Have a great March!