Kruger & Co – Page 34

May 26

0

Domestic Violence and the Lockdown: Your Personalised Safety Plan

By Kruger & Co | Family Law

“Preamble to the Domestic Violence Act: “To afford the victims of domestic violence the maximum protection from domestic abuse that the law can provide”

There is great concern that the COVID-19 crisis, particularly the mandatory “stay at home” lockdown phase, will see both an increase in the levels of domestic violence, and a decrease in the ability of victims to access help. It’s a worldwide concern and as the World Health Organisation puts it: “Stress, the disruption of social and protective networks, loss of income and decreased access to services all can exacerbate the risk of violence for women.”

South Africa’s Domestic Violence Act (“domestic violence” isn’t limited to cases of physical harm – it includes a very wide range of abusive conduct) provides legal protection to victims, especially to those most vulnerable such as women, children, disabled people and the elderly. If you are a victim (or helping a victim) you should be aware of a victim’s rights to lay criminal charges and/or to apply for a protection order.

Police officers attending to such cases must help victims to lay criminal charges, find shelter and obtain medical treatment where necessary. The Supreme Court of Appeal has confirmed that SAPS members have a positive duty to render assistance to victims.

But how can you achieve that with the lockdown restrictions and its constraints on your freedom of movement and ability to escape the abuser?

Your personalised safety plan

Note that from 14 May 2020 new lockdown regulations specifically allow you to move to a new home where “the movement is necessitated due to domestic violence”.

Download here the National Shelter Movement of South Africa’s free PDF document “Domestic Violence Safety Planning During the Time of COVID-19” which will help you with suggestions for developing a personalised and practical Safety Plan during lockdown under these headings –

“Be Prepared” with a comprehensive list of helplines and contacts (both National and Provincial) and how to access them
“Reaching Out”
“Signalling for Help”
“Delete Searches/Requests for Help”
“Planning to Leave”
“Legally Speaking”
“Leaving”
“Staying Safe”.

How a protection order works

The “Staying Safe” section above suggests that you apply for a protection order if you don’t already have one, and that you get help in doing so from a shelter or other organisation. Or you can yourself approach your nearest Magistrates Court and ask for assistance.

If an order is granted, the issue of a warrant of arrest is authorised at the same time. The warrant is suspended on condition that there is no breach of the terms of the protection order. To have the warrant executed, you will need to give details of any violation of the order on affidavit – be aware that you will both face criminal charges and risk a damages claim if you intentionally make any false allegations.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

May 26

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Website of the Month: A Complete Guide to Working from Home in 2020

By Kruger & Co | Website of the Month

“The secret of change is to focus all of your energy, not on fighting the old, but on building the new” (Socrates)

One wonders how many office-based businesses, having been forced to work remotely during the lockdown, will now abandon or minimise their office spaces on a permanent basis rather than return to the “old normal”.

Regardless, if you and your staff are currently working from home, you need to configure the arrangement for maximum productivity and quality of life.

Career Karma’s “A Complete Guide to Working from Home in 2020” on its website shares 10 tips on “How to Succeed as a Remote Worker”, offers a free PDF download “Remote Working: The Ultimate Guide”, and addresses 3 common myths about home working that both employers and employees should get to grips with.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

Apr 27

1

Leases, Contracts and COVID-19: What is Force Majeure?

By Kruger & Co | Contract, Litigation, Property

The COVID-19 crisis has changed everything. Our personal lives have been upended and our businesses hit hard.

And with many businesses operating out of leased premises, a great many landlords and tenants are asking themselves what happens if the crisis leaves a tenant unable to pay the agreed rental.

What follows is of necessity a general guide only – professional advice specific to your case is essential here.

Tenants – your risk

As always “With Great Change comes Great Opportunity”, but if you aren’t able to very quickly find and exploit a viable new opportunity you may well struggle to pay your rental.

Don’t just stop paying rental! Failing to pay rental on time means breaching your lease, and if you do that you face cancellation, legal action for recovery of outstanding rental, damages claims for breach (substantial if your lease has a long time to run and your landlord struggles to re-let) and calling up of your personal suretyships (exposing you to loss of all your personal assets, house etc).

Bottom line – take professional advice before you just stop paying!

Landlords – your balancing act

As a landlord you have a very delicate balancing act – on the one hand you won’t want to lose even half-reasonable tenants at a time when finding new ones is going to be problematic. One wonders for example how many small businesses will now either fail entirely or be forced to cut costs. And how many others, having had an enforced period of “working from home”, will now be reconsidering the whole concept of leasing separate office space at all.

On the other hand of course you need to cover your ongoing costs, which probably means enforcing payment of rent. That in turn means understanding your legal position – for example does your tenant now have an excuse to cancel the lease without penalty? If so, you lose a tenant without recompense. But if your tenant is still bound by the lease, you are free (if you wish – long-term support of your tenant may still be your best option) to demand full payment, then to reduce your losses by cancelling, evicting, executing against the tenant’s assets and calling up personal suretyships.

What about “force majeure” or “impossibility of performance”?

“Force majeure” (a French legal term meaning “superior force”) is an event, either due to “natural causes” (earthquakes, cyclones and so on) or to “human agency” (war, riots, legislation and the like) that makes it impossible to comply with the lease.

We really are sailing into uncharted waters here with worldwide debate over whether or not this pandemic is indeed a case of force majeure. There is bound to be a great deal of litigation before we can be certain whether or not the crisis (particularly the declaration of a national state of disaster and the lockdown period) will be accepted by our courts as a “force majeure” event. If it is, many tenants will argue that their failure to pay rental is not a breach of lease but rather a lease-destroying “supervening impossibility of performance”.

So where do you stand? There are two main scenarios to consider –

What does the lease say? The onus of proving a force majeure is on the tenant trying to escape from the lease, and the first thing for both parties to check is what the lease says.
Many leases have a clause that deals with a tenant’s inability to occupy premises as a result of damage to or destruction of the premises which won’t apply here, but some leases do have specific force majeure clauses. If yours has such a clause you are bound by whatever it says so check whether a pandemic or government order to cease business might fall under the clause, and if so what results and remedies are specified.
What must the tenant prove if there is nothing in the lease? If there is no force majeure clause in your lease, our common law applies. Your problem here is that there are a lot of grey areas involved and every case will be different, so what follows is just a general and non-exhaustive guide.
A tenant would have to prove not only that the impossibility caused a loss of beneficial occupation (entitling the tenant perhaps to a rebate of rental for the lockdown period, or perhaps frustrating the lease altogether) but in all probability also that it is –

“Unforeseeable with reasonable foresight”. In this regard we may well hear arguments along the lines of “the emergence of the coronavirus and its impacts were neither unexpected nor improbable”. Could such an argument prevail? Only time will tell.
“Unavoidable with reasonable care”.
An absolute as opposed to a probable impossibility. “The mere likelihood that performance will prove impossible is not sufficient to destroy the contract.”
An absolute not a relative impossibility. “If I promise to do something which, in general, can be done, but which I cannot do, I am liable on the contract”.
Not the fault of either party. “A party who has caused the impossibility cannot take advantage of it and so will be liable on the contract.”
The “contrary common intention of the parties” could override the defence of impossibility. Consider any representations made by either party to the other that may be relevant.

Moreover our courts have held that “In each case it is necessary to ‘look to the nature of the contract, the relation of the parties, the circumstances of the case, and the nature of the impossibility invoked by the defendant, to see whether the general rule ought, in the particular circumstances of the case, to be applied’.”

That’s all fertile ground for expensive and draining litigation, at a time when neither of you is likely to have an appetite for either.

Which brings us to…

A practical template for negotiation

Take this advice from Roman lawyer and statesman Cicero over two millennia ago: “Agree, for the law is costly”.

So if you are a tenant, rather than just stopping rental payments and then having to fight it out through the legal system, ask your landlord to agree to a win-win compromise that will limit both short-term and long-term damage to your respective businesses.

Draw up a checklist including matters such as –

Do you or your landlord have any sort of insurance cover for this sort of disaster?
If you want to cancel the lease entirely, consider whether, if the protections of the Consumer Protection Act are available to you (see below*) it might pay you to give your 20 business days’ notice and pay the “reasonable cancellation penalty” the landlord is entitled to demand. (*You need to take advice on this – leases between “juristic persons” such as companies and trusts in particular are excluded from this particular protection).
Alternatively consider what you can offer the landlord to accept your cancellation without a fight.
If you want to continue in the premises, make sure that your failure to pay on time is specifically recorded as not being a breach of the lease.
Decide whether you will ask for a full rental holiday, or a rental reduction. For how long? The better a tenant you have been, the more incentivized your landlord is going to be to help you stay in place. Offering an extension of the lease – if it ties in with your long-term planning – could help a lot with that.
If you run into a brick wall there, think of proposing that the arrears not be written off but rather just be deferred until your business is back up on its feet. Specify when payment of arrears will be made, what if any interest will be charged and so on.
If the tenant is a corporate entity and you signed a personal suretyship for it, don’t forget to specifically cover that aspect in your agreement.
Remember to include in your agreement what happens to any deposit the landlord may be holding from you.
If you agree on a new or amended lease, think of including a professionally-drawn force majeure clause (or check an existing clause for possible update).

Beyond leases – force majeure and contracts generally

Although this article specifically addresses landlords and tenants, the general principles of “force majeure” and “impossibility of performance” apply to all contracts and might in some cases entitle you to delay or avoid contractual obligations beyond lease agreements. Take professional advice specific to your circumstances!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

Apr 27

0

In Times of Great Change, Make Sure Your Will is Updated!

By Kruger & Co | Wills and Estate Planning

“Death always comes without knocking” (Margaret Atwood)

Particularly in these times of pandemic, deadly infections and uncertainty, no one can ever say with any confidence that we will still be alive tomorrow, or next month, or next year.

Now more than ever having a valid and updated will in place is no luxury to be attended to “when I have the time” or “when I am older”.

The risk is that without a proper will (your “Final Will and Testament”) you die “intestate”, in which event the law and not you decides which of your heirs gets what from your estate. You have forfeited your right to ensure that your loved ones are properly looked after when you are gone. You have lost your right to decide how your assets will be distributed on your death. And you have no say in who will wind up your estate as Executor. Executing a valid will is the only way to avoid all that.

Then – just as importantly – once you have your will done and dusted, avoid the very common mistake of forgetting to update it regularly.

Nine events to trigger an update review

Don’t leave your loved ones struggling with an outdated will. Firstly diarise frequent review dates. Then keep in mind the many changes in circumstances that will require interim review –

Times of great change in your health risk profile: The current COVID-19 pandemic exposes us all to the threat of a sudden and radical change in our health status, and that (or indeed any new diagnosis or other actual change to your risk profile) calls for an immediate review of your will. Now more than ever it has to be fully up to date.
Marriage: Have I or any of my heirs married, re-married, changed marital regime (in or out of community of property, with our without accrual), entered into or left a life partnership or the like? Does my will tie in with my marital regime and ante-nuptial contract if any?
Divorce: Have there been any divorces? This is vital because so many couples leave everything to their spouses. And if for example that applies to you and you divorce, you have only a three month window period within which to change your will. For three months your ex-spouse is effectively disinherited; but if you don’t change your will within that window period your ex-spouse inherits everything.
Birth or adoption: Have there been any births or adoptions, do you have new children or grandchildren? This is particularly important if your will specifically names all heirs without a catch-all phrase that will include new children/grandchildren.
Death: Has anyone died and if so must any specific bequests or anything else change?
Other changes in personal circumstances: Have any of your heirs undergone a relevant change in circumstances, perhaps become more financially vulnerable for whatever reason (serious illness or motor vehicle accident causing disability, loss of bread-winner for example)?
Changes in assets, liabilities, financial and business structures etc: Have you sold any assets named in your will, or acquired assets that you would like to bequeath specially to a particular heir or that necessitate a re-allocation of bequests? Perhaps existing assets have changed dramatically in value? What about new liabilities, such as perhaps a new bond over a property which will reduce its value to a particular beneficiary?
Have you formed or deregistered any trusts or asset-holding structures? Have you started or acquired or sold a business to be earmarked for a particular beneficiary? Do you have any new assets overseas that may call for a separate foreign will?
Executor, Trustees, Guardians: Is there any need to review your appointments of Executors, Trustees, Guardians?
Changes in the law: Have there been any changes in relevant laws, either through legislation or new court decisions? Tax laws in particular can change unexpectedly and affect the continued suitability of your estate planning.

How to update your will

If you plan major changes to your will, consider making an entirely new one but if the changes are minor a codicil may suffice. In both cases you need to comply with important legal requirements so professional advice is critical here!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

Apr 27

0

Divorce in a Time of Lockdown – What Grounds Can You Rely On?

By Kruger & Co | Family Law

Note: If, as we hope, you personally have no need for an article on divorce, please think of passing this on to anyone you know who may find it relevant and useful.

The National Lockdown has thrown together many couples not used to spending “24/7” time in each other’s company. Relationships will have strengthened for many couples, but others will be struggling. The fears, anxieties and money worries now looming over us all certainly won’t haven’t helped.

If your marriage is one of those unfortunate ones that is foundering, counselling hasn’t helped or won’t help, and you have come to the decision that divorce is your only option, be aware that you need a formal court order before your divorce will be legally recognised.

Moreover our law does not recognise the concept of “legal/judicial separation” so if you decide to just physically separate without divorcing, you should take professional advice on drawing up a contract in the form of a “separation agreement”. Normally this would be for a trial period but you could also agree to a longer-term separation.

The 3 grounds for divorce

In most cases couples opt for formal divorce rather than long-term separation, and it is important to appreciate that a court will only grant a divorce order if it is satisfied that at least one of the three recognised grounds for divorce exists.

In practice most couples will fall under the first ground i.e. “irretrievable breakdown of marriage” but to give you the full picture, the grounds for divorce in full are (all quotes are straight from the Divorce Act) –

Irretrievable breakdown of marriage

This is by far the most commonly relied on ground for divorce: “A court may grant a decree of divorce on the ground of the irretrievable breakdown of a marriage if it is satisfied that the marriage relationship between the parties to the marriage has reached such a state of disintegration that there is no reasonable prospect of the restoration of a normal marriage relationship between them.”

The court may take into account “any facts or circumstances which may be indicative of the irretrievable breakdown of a marriage” and may also accept evidence that –
1. The spouses have not lived together for “a continuous period of at least one year immediately prior to the date of the institution of the divorce action”;
2. The spouse being sued for divorce has committed adultery and the other spouse “finds it irreconcilable with a continued marriage relationship”; or
3. The spouse being sued for divorce “has in terms of a sentence of a court been declared an habitual criminal and is undergoing imprisonment as a result of such sentence”.
  However: “If it appears to the court that there is a reasonable possibility that the parties may become reconciled through marriage counsel, treatment or reflection, the court may postpone the proceedings in order that the parties may attempt a reconciliation.”
Mental illness

The court must be satisfied of two things here –
1. The spouse must have been admitted to or detained in an institution under our mental health legislation as a patient, State patient or mentally ill convicted prisoner, and “has, for a continuous period of at least two years immediately prior to the institution of the divorce action, not been discharged unconditionally”, and
2. After having heard the evidence of at least two psychiatrists, of whom one shall have been appointed by the court, that the defendant is mentally ill and that there is no reasonable prospect that he will be cured of his mental illness.”

A state of continuous unconsciousness “by reason of a physical disorder”

Again the court must be satisfied of two things here –
1. The unconsciousness must have lasted “for a continuous period of at least six months immediately prior to the institution of the divorce action”, and
2. After having heard the evidence of at least two medical practitioners, of whom one shall be a neurologist or a neurosurgeon appointed by the court, that there is no reasonable prospect that the defendant will regain consciousness.

Having grounds for divorce is not the end of the story

You will need also to satisfy the court that “the provisions made or contemplated with regard to the welfare of any minor or dependent child of the marriage are satisfactory or are the best that can be effected in the circumstances”.

Consider also, and prepare for, questions around division of assets and maintenance.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

Apr 27

0

Property Sellers – Prepare for SPLUMA

By Kruger & Co | Property

Many factors can delay your property transfer, and all of them are likely to cost you.

A last-minute rush to comply with statutory requirements is one such pitfall to avoid. Beware therefore of the possibility that you will soon need (in some parts of the country you may already need), to lodge before transfer a formal “SPLUMA” (Spatial Planning and Land Use Management Act) certificate of compliance. SPLUMA, without getting too technical, provides a framework for all provinces and municipalities to pass laws governing land use and development.

There is (at date of writing) some confusion over what is actually required, and although currently a formal certificate of compliance seems to be necessary in some municipal areas only, there is a suggestion that the requirement will apply everywhere by October 2020.

It pays to comply anyway!

The important thing however is that – regardless of statutory requirements – you won’t want any problems with your buyer down the line complaining about unlawful building work or zoning contraventions. So it makes sense to ensure that you are fully compliant well before you start any sales process.

Take professional advice (in good time so you can take corrective action if you need to) and make sure that –

Building plans for all structures have been approved,
Your property’s use complies with its zoning, and
There are no encroachments over building lines and property boundaries.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

Apr 27

0

Your Website of the Month: Lockdown Advice for Entrepreneurs

By Kruger & Co | Business, Website of the Month

“The scale of the national COVID-19 lockdown is unprecedented in living memory. The repercussions – personal, professional, national and international – will reverberate for years to come. As entrepreneurs, we need to be making the right decisions for right now to ensure that our businesses and our people’s livelihoods do not become another casualty of the virus.”

At date of writing it is still unclear to what extent the Lockdown will be relaxed in each Province, but regardless of timelines the COVID-19 pandemic and the crisis it has landed us all in are not going anywhere in a hurry.

Businesses and perhaps SMEs in particular face both enormous challenges and many new opportunities. Some good solid advice on how they can navigate these stormy seas comes from Allon Raiz of Raizcorp in the form of a series of articles under the heading “Lockdown advice for entrepreneurs” here. To date six articles are available –

“Get to rational quickly”
“Building an opportunity matrix”
“Scenario planning as a vital tool”
“Building an exploded resources list”
“Creating a small list of big questions”
“Embrace your X”.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

Mar 27

0

COVID-19: Small Businesses, Employment Laws, and Survival Support

By Kruger & Co | Business, Employment and Labour Law

“The secret of crisis management is not good vs. bad, it’s preventing the bad from getting worse” (Andy Gilman)

We can only guess at how the COVID-19 coronavirus outbreak will end, but let’s all take whatever concrete steps we can right now to lessen its impact on our personal lives, on our businesses, and on our country.

One of those steps is for businesses to find ways of continuing to operate as normally as possible, given of course the exceptional times we are living through. And as employers, many businesses will find themselves facing some novel challenges, particularly during the National Lockdown…

Small businesses – the new relief programs

A whole raft of support and relief programs has been announced. Some still need to be finalised and the situation is changing daily, so keep an eye on the media and incorporate into your business survival plan all relief channels you think may be open to you. At date of writing, these are the main ones –

The DSBD (Department of Small Business Development) will provide relief to businesses in several categories. Call the DSBD on its 0860 663 7867 hotline or email info@dsbd.gov.za to see if you quality. Apply at https://smmesa.gov.za/.
The DTI (Department of Trade and Industry) is set to provide relief for large businesses as well as small. Keep an eye on the DTI’s website for developments.
The Solidarity Fund has been set up with R150 million from the government to, amongst other things, assist and support those affected (contact details here).
Employer and employee relief: Access the “Easy Guide for employers on COVID19” here and read up on the “Temporary Employer/Employee Relief Scheme” and UIF benefits from a special R30bn National Disaster Benefit Fund. Confirmation that employees who fall victim to the virus will be paid through the Compensation Fund – details here.
Other funds and relief measures: The Rupert and Oppenheimer families have pledged R1 billion each to help struggling small businesses and employees – the details are not available at date of writing. Read the President’s speech here for more on planned or implemented measures involving tax relief, changes to the Competition Act, a fund to support the tourism sector, and more.

Employers – comply with the law!

From a legal perspective, employers in particular need to have a solid action plan in place to ensure that they comply with all our many employment laws, which will continue to apply as is, unless and until government announces any new measures to the contrary.

Detailed planning will not be easy. With the situation changing daily, keep informed of developments and keep all your plans flexible.

In any event there is unfortunately no “one size fits all” answer to questions like “Can I dismiss an employee who tests positive for COVID-19?”, “Can my employees insist on working from home?”, “Can I start retrenching?”, “Can I prohibit employees from travelling abroad for personal reasons?”, “What steps must I take to ensure a safe working environment and what rules can I put in place to underpin them?”.

The list is endless and the answers to these questions will depend upon your Lockdown exemption status, your particular employment contracts, business circumstances, operational needs, and so on.

Your employee action plan

We need to get used to constant change and uncertainty, but there are steps you can take now to plan for as many eventualities as possible –

As a start, incorporate into your “COVID-19 Business Plan” all the possible scenarios you can think of, both during the National Lockdown and after it ends.
Then brainstorm – with your employees where you can – a list of all the employment-related problems you and they might face. Use that in turn to make a list of questions you will need the answers to under each scenario.
Then, make sure you are fully prepared to deal with whatever may come your way by taking specific legal advice on each and every one of those questions.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

Mar 27

0

Your Neighbour Builds Without Plans – Can You Get a Demolition Order?

By Kruger & Co | Property

“The primary remedy therefore is an order for removal of the structure” (extract from the judgment below)

What can you do if your neighbour has started (or finished) building without the necessary municipal approvals?

In a nutshell, our courts will very probably assist you with a demolition order, as a recent High Court decision around a long-running property encroachment illustrates.

The 16 year saga of an encroaching garage

A couple, owners of a property next to a church Mission, expanded their house in 2004 by building a brick garage.
They thought they were building on their own land, having in 1998 built a wall along what they genuinely – but mistakenly – thought was the correct boundary between the two properties.
As we shall see below, their fatal mistake was building their garage without municipal plans or approval.
In fact the garage was inadvertently built on Mission land, but the Mission was having none of that –
- First in 2012 it asked the couple – and another neighbour in the same position – to demolish.
- When the couple refused (the other neighbour complied) the Mission in 2014 laid criminal charges against them for failing to comply with the relevant Act (the National Building Regulations and Building Standards Act). These charges, for purely technical reasons, failed to stick.
- On pressed the Mission, this time turning to the local municipality for help in 2016. The municipality duly issued a formal Notice requiring demolition of the garage as it had been erected illegally without plans or permission. The couple simply refused to either receive the Notice or to remove the encroaching garage.
Which brings us to the High Court in 2017, with the Mission applying for a demolition order and the couple asking the Court to rather order the Mission to transfer the relevant piece of its land to them against payment of reasonable compensation.

What about alternatives to demolition?

A court deciding a demolition application has “discretion to reach an equitable and reasonable solution in terms of the common law by ordering payment or compensation rather than removal in cases where the cost of removal would be disproportionate to the benefit derived from the removal”.

In this respect said the Court (emphasis supplied) “the encroaching owner’s own conduct plays an important role” and “while one is acutely aware of the financial implications, inconvenience and disruption which the partial demolition will cause the [couple], the upholding of the doctrine of legality, a fundamental component of the rule of law, must inevitably trump such personal considerations.”

Commenting on the couple’s “obstructive behaviour” in this case, and finding that they “are indeed in legal and administrative breach of the law … to allow them to keep the structures where they are, would be to perpetuate the illegality”, the Court ordered the couple to demolish their illegal garage within 90 days.

So if you are the neighbour planning to build…

Whilst the case in question deals with encroachment on another’s land, our courts have applied exactly the same principles to a wide variety of “neighbour dispute” cases – sea view obstructions, failure to observe building lines and the like.

So don’t even think of starting to build without having all necessary municipal plan approvals and permissions in place!

And if you are the objecting neighbour…

The couple in this case put up an argument that the Mission couldn’t demand demolition as it had “acquiesced in their occupation of the relevant land because it did not object when they built the wall on the church ground in 1998, and did not complain when they built the ‘offending’ garage in 2004 or 2005.”

Factually the Mission’s long history of actively objecting to the unlawful construction put an end to that argument, but the longer you delay in objecting and taking action the greater your risk of facing a similar argument. Take immediate action against any neighbour building unlawfully.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

Mar 27

0

How to Stop an Ex-Director from Competing With You

By Kruger & Co | Company / Corporate / Compliance, Employment and Labour Law

“…the default position is that an executive director or a senior employee may not carry on business activities which fall within the scope of his company’s business during the time when he serves as director or works as employee. The default position however changes on resignation.” (Extract from judgment below)

What happens if relations between you and your fellow company directors sour to the extent that a director leaves? Can he or she immediately open up a new business in direct competition to you?

A recent High Court decision both addresses that knotty question, and highlights a quick and easy solution.

Fishing for business: “Big Catch” claims R24m

Big Catch Fishing Tackle (Pty) Ltd markets and hosts fishing and fly fishing tours in both local and international waters.
The company’s two directors and shareholders fell out, culminating in one director accusing the other of serious breaches of his duties as director.
Although hotly disputing any wrongdoing he resigned his directorship (under, he says, duress and coercion). He remains a shareholder.
Big Catch is now suing the ex-director for some R24m in “past” and “future” damages, relying on disputed claims of improper or unlawful conduct which include the channeling away of business from Big Catch, misappropriating stock, diverting payment of commissions and acting recklessly and without authority. Whether or not these allegations will be proved eventually will only be determined when the main case finally goes to trial.
What is of interest to us at this stage is Big Catch’s interim application to the High Court to interdict the ex-director and his new business (Upstream Fly Fishing) from competing with Big Catch.

Ex-director off the hook

Directors have a range of fiduciary duties towards their companies. They must at all times act in good faith and in the best interests of the company. They must avoid conflicts of interest. They cannot compete with the company nor make secret profits. “The default position”, as the Court in this case put it, “is that an executive director or a senior employee may not carry on business activities which fall within the scope of his company’s business during the time when he serves as director or works as employee.”
Big Catch had to convince the Court that those duties survive resignation unchanged. But, held the Court, that “default position” changes on resignation and “the director or employee does not commit a breach of his fiduciary duty merely because he takes steps to ensure that, on ceasing to be a director or employee, he can continue to make a living even by setting up a business in competition with his former company or by joining a competitor and then pursuing opportunities similar in nature to those targeted by his former company.”
Although a director’s fiduciary duty does indeed survive departure, “the content of that duty does not remain the same … The duty will only be breached after resignation if it involves the use of confidential information or violates an interest of the company that is worthy of protection in some other way” (emphasis supplied).
In other words, a company cannot simply say “our ex-director is breaching an ongoing fiduciary duty towards us”, it must go further and actively prove a right to protection. Big Catch in this case being unable to make out its case, the Court dismissed the application with costs and the ex-director is off the hook, at least for now.

Big Catch’s big mistake – no restraints of trade

Round 1 therefore to the ex-director; a victory made easier by Big Catch’s failure to put restraints of trade in place for all its directors and senior employees.

As the Court put it “…in the absence of a restraint of trade, the onus shifts to the director’s former company to justify the interdict both in law and in fact” and “…a company that wishes to prevent a director or employee from competing with it after resignation should either do so by way of imposing a reasonable restraint of trade or it will have to persuade a Court that it has an interest worthy of protection, such as confidential information, client lists or connections, that justifies an interdict.”

Bottom line – make protecting your company easy with restraints of trade!

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