Category

General Interest

Mar 26
0

Verify Banking Details Before Paying Any Invoice – You’re at Risk, Not the Creditor

By | Business, Criminal Law / Crime, General Interest

“An ounce of prevention is worth a pound of cure.” (Benjamin Franklin’s warning to fire-threatened Philadelphians in 1736)

Cases of Business Email Compromise (BEC) fraud continue to surge, and recent High Court decisions have confirmed that it’s up to you to verify that you are paying into the correct bank account. 

 How does BEC work and who is at risk?

BEC fraud involves cybercriminals impersonating your trusted contacts (e.g. suppliers and professional advisors) in fraudulent emails that look genuine. The idea is to trick you into making payment into the scammer’s account. 

Everyone’s at risk, but BEC is particularly rife in transactions where large amounts of money are in play. Favourite targets are commercial operations and their customers, as well as all role-players in property sales – buyers, sellers, conveyancers and estate agents.

How do these scams work? For a snapshot of a classic BEC sting, have a look at this recent High Court case…

“But I paid you the R890k!”

Two Cape Town companies, who had been trading happily and successfully with each other for seven years, fell out over who should bear a loss of R886,726.25 after scammers stole the customer’s payment for a consignment of valves. Here’s how it went down:

  • The customer had always made payments to the supplier’s Standard Bank account in the past. So far, so good.
  • But then, enter stage left, our villain: Joe Scammer. Joe intercepts the supplier’s email correspondence and, pretending to be the supplier’s managing director, asks the customer to make all payments to an Absa bank account from now on.
  • The customer asks for a bank confirmation letter, which Joe (still in his guise as MD) gladly supplies.
  • Reassured, the customer makes payment to the Absa account. The fraud is only discovered when, three days later, the supplier emails asking for payment. 
  • Joe is of course now long gone with his loot, leaving customer and supplier to fight it out over who must bear the loss.  
Blaming the supplier won’t work – you must “seek out” your creditor

The customer, sued by the supplier for the outstanding amount, contended that the blame lay with the supplier, whose own negligence in failing to secure its IT systems against email interception caused the fraud. 

That’s a defence often raised by BEC victims, and indeed our courts have stressed in the past the need for suppliers and professionals to ensure that their own computer systems are properly secured at all times. But it cut no ice in this case. 

Rather, said the Court, (emphasis supplied), “it is the debtor’s obligation to ‘seek out his creditor’ and … until payment is duly effected, the debtor carries the risk that the payment may be misappropriated or mislaid.”

The real cause of the loss in this case, held the Court, was not any hacking of the supplier’s emails (if there was in fact a hack – the supplier denied it), but the customer’s failure to take the steps that a “prudent debtor” would have taken to ensure that it was paying into the correct account. 

Our unfortunate customer must now pay the supplier, plus a raft of legal costs to boot. 

Pick up the phone!

Our courts will have no sympathy for you if you fall victim by not protecting yourself. A factor that counted against our customer here was (emphasis supplied): “the fact, known to any persons in business and making use of computer-based methods of communication and payment, that cyber crime is rampant and that care must be taken at all times to limit its impact.”

The good news is that a few simple preventative measures can provide everyone involved with a strong layer of protection:

  1. Put in place strong policies and procedures to ensure that your IT systems and emails are secured against breach and interception. 
  2. You, and all of your staff, must remain constantly vigilant against the techniques which the scammers use. They are particularly adept at exploiting trust-based and long-standing relationships, for instance with suppliers you have dealt with for years, and professionals like attorneys, accountants and financial advisors etc. 
  3. Most importantly, perhaps, given the current attitude of our courts, is to always verify payment details via contact with your creditor through another communication system. As our courts have pointed out, “a simple telephone call” can be enough to avoid falling victim to fraud.

If you need help reviewing your fraud prevention and payment verification procedures, please feel free to contact us. 

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 us for specific and detailed advice.

© LawDotNews

Feb 25
0

From the Horse’s Mouth: “Should You Use AI for Legal Advice?”

By | General Interest

“If you didn’t hear it from the horse’s mouth, it came from the other end of the horse.” (Anon)

The rapid rise of AI is hard to ignore. DeepSeek’s AI assistant, only launched on 10 January this year, has grown to rival ChatGPT in popularity, making it the most widely used AI language model at the time of writing. But DeepSeek isn’t alone in the race – major players like Copilot, Gemini 2.0, OpenAI o3, Meta AI, Grok, Anthropic and the like are all vying for our attention. The competition is fierce, and we’re spoilt for choice!

With AI becoming an integral part of so many aspects of our lives, it’s no surprise that some of us might be tempted to turn to these models for legal help. We decided to ask ChatGPT itself how it feels about that, and what follows is its unedited response. Direct from the horse’s mouth!

Our question to ChatGPT

“With the current high levels of public interest in using AI to answer questions, would you recommend that people without legal training use AI to answer legal questions and to provide legal advice on specific topics?”

ChatGPT said:

“AI is a powerful tool, but when it comes to legal advice, caution is essential. While AI can summarize laws, explain legal concepts, and assist with research, it cannot replace the expertise of a qualified attorney.

The risks of relying on AI for legal advice
  1. Lack of context: AI provides general information, but legal issues are highly fact-specific. What applies in one case may not apply in another.
  2. Potential for inaccuracy: AI models pull from vast datasets but do not verify legal updates, jurisdictional differences, or recent court rulings. This can lead to outdated or incorrect advice.
  3. No professional liability: If AI provides incorrect guidance, there is no recourse. Attorneys, on the other hand, are professionally accountable for the advice they give.
Ethical and confidentiality concerns: Sharing sensitive legal matters with AI platforms can pose risks, as they do not guarantee attorney-client privilege or data security.

Where AI can help
  • Basic legal information: Understanding general legal principles, terminology, and procedures.
  • Document review assistance: AI can help summarize contracts or flag potential issues but should not replace a lawyer’s review.
  • Legal research: AI speeds up finding relevant case law or statutes, but attorneys must verify accuracy and applicability.
The key takeaways
  • AI is a useful tool for research and general legal understanding, but not for personalised legal advice.
  • Only a qualified attorney can provide case-specific guidance, apply legal reasoning, and ensure compliance with current laws.
  • For critical legal matters, always consult a professional – mistakes can be costly.
In short, AI can support legal education but should never be a substitute for expert legal counsel. If in doubt, always seek professional advice.”
A last thought or two from us…

In a South African context, we have found inaccuracy to be even more of a risk than it is internationally – no doubt because of the relatively limited online coverage our local laws enjoy. For example, a test question on a relatively simple aspect of South African law resulted in the bot quoting New Zealand legislation back to the asker! What’s more, there are already media reports of South African lawyers finding themselves in hot water after not thoroughly checking technical AI output (and rightly so!).

Whatever you use AI for, be really careful that its answers are factually and technically accurate before relying on them. As ChatGPT itself says under every question field: “ChatGPT can make mistakes. Check important info.”

AI is a useful tool that may be able to point you in the right direction, but it can never replace a human being – let alone a qualified lawyer. Relying on AI for legal advice could be the worst decision you ever make.

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 us for specific and detailed advice.

© LawDotNews

Feb 25
0

Defending Yourself: What Weapons Can You Legally Carry?

By | General Interest

“The right of self-defence is the first law of nature.” (St. George Tucker, Blackstone’s Commentaries, 1803)

 South Africa’s chronically high crime rates have left many of us wondering what the limits are when defending ourselves and our families from criminals. What weapons does the law allow us to carry, what permissions do we need to carry them, and how and when are we allowed to actually use them? 

There are of course a host of practical considerations to consider on top of the legal ones. Are you trained to use your weapon without hurting yourself or innocent bystanders? Do you know how to stop your attacker from using your own weapon against you? Do you really need a weapon at all, or could you keep yourself and your family safe with home alarms, security response services, and common sense when out and about? 

You’ll have to answer these questions yourself, but we can help with the legal ones. So, let’s have a look at the laws applying to the possession of several popular weapons, before turning to the twin questions of “legal possession” and “legal use”.

Do you need a licence for…
  1. Firearms? You need a licence to own and carry a firearm. The process involves background checks, competency training, and proof that you actually need one. Possessing or carrying a firearm without a valid licence is in itself a serious criminal offence which could land you in very hot water indeed. 
  2. Tasers and stun guns? Tasers and stun guns are legal to own and carry for self-defence purposes. Unlike firearms, they are not classified as weapons under the Firearms Control Act and do not require a licence or permit.
  3. Pepper sprays? Pepper sprays are among the most commonly carried self-defence tools due to their ease of use, affordability, and legality. No licence or permit is required to carry one.
  4. Bladed weapons (knives, swords and the like), batons, hunting bows, martial arts weapons etc? There are no restrictions particular to these weapons, but the legality of their possession and use is, as we shall see below, very much context-sensitive.
When can you carry them? The importance of context 

Context is vital here, in that the Dangerous Weapons Act – which carries penalties of a fine or up to three years’ imprisonment – criminalises possession of any “dangerous weapon”, defined as “any object, other than a firearm, capable of causing death or inflicting serious bodily harm, if it were used for an unlawful purpose.” 

That definition is wide enough to include all of the above (other than firearms), and this is why their possession is very much context-sensitive: 

  • Lawful possession: There is no problem with possession “in pursuit of any lawful employment, duty or activity … during the participation in any religious or cultural activities, or lawful sport, recreation, or entertainment … or legitimate collection, display or exhibition of weapons.”
  • Lawful intention: The line between legal and illegal activity is crossed when possession is in “circumstances which may raise a reasonable suspicion that the person intends to use the dangerous weapon for an unlawful purpose.” It’s important to note that all of the circumstances will be looked at very closely when determining whether an offence has been committed: place, time, and behaviour (including threats or intimidatory behaviour, manner of possession and display of the weapon among others). 
And when can you use them? Our laws on self-defence

Having to defend yourself from an attacker is awful enough – imagine then being arrested for exceeding the limits of self-defence. 

How can you avoid that? As set out by the SCA (Supreme Court of Appeal) “a person acts lawfully when he/she uses force to repel an unlawful attack, which has commenced, or is imminently threatening, upon her or somebody else’s life, bodily integrity, property, or other interests, which deserves to be protected, provided the defensive act is necessary to protect the interest threatened, is directed against the attacker, and is reasonably proportionate to the attack.”

In other words, whatever you do in self-defence must be:

  1. Necessary: You must show that, in all the circumstances, you had no alternative but to use force. If you can for example avoid an attack by running away, that is what the law says you must do.
  2. Proportionate to the threat: You can’t use more force than is needed to avert the threat, so any excessive response risks serious trouble. 
  3. Directed only at your assailant. The critical word here is “directed”, as shown in the case below.

How will that play out in practice? Let’s consider the tragic case of a plain clothes police officer shot in error by another law enforcer.

“Hey, put it down, down, down, down … Shoot him, shoot him”

A City of Cape Town law enforcement officer’s successful appeal against his conviction on two counts of murder (for which he had been sentenced to an effective ten years’ imprisonment) provides a practical example of how our laws on self-defence really work. 

He’d been charged and convicted after shooting dead both an armed undercover policeman in civilian clothes, and the unarmed suspect the policeman had been arresting on a drug dealing charge.

The law enforcement officer and a colleague, patrolling the city streets at night, had responded to reports of an assault by a man carrying a firearm. When they got to the scene, the armed man (they had no idea at the time that he was a police officer) drew his firearm and pointed it at them despite warnings to put it down. The accused then fired two shots in self-defence, fatally injuring both the police officer and also (unintentionally) the suspect being arrested. 

Audio recordings confirmed the accused shouting frantically “Hey, put it down, put it down, down, down, down, down, down, down, down. Shoot him, shoot him.” 

The High Court set aside both murder convictions after analysing evidence from the accused, his colleague, and the prosecution’s witnesses, and finding that the accused’s version was “reasonably possibly true”, and also that it had not been disproportionate for him to fire two shots at someone pointing a firearm at him. 

This case also highlights some other important practical aspects:

  1. “Reasonably possibly true” is enough: It’s up to the prosecution to prove its case beyond a reasonable doubt. 
  2. No armchair critics: Per the Court: “our higher courts have repeatedly stated that judicial officers should not judge the events like an armchair critic but should place themselves in the shoes of the attacked person at the critical moment, and keep in mind that the attacked person probably only had a few seconds in which to make a decision, which was of vital importance to him.”
  3. Honest (but necessary) mistakes are OK: The Court again: “in our law putative self-defence applies when a person honestly believes, although mistakenly, that their actions were necessary to protect themselves or others from imminent harm or danger.”
  4. Only target the assailant: The Court clearly accepted the accused officer’s evidence that he did not have any intention of shooting the unarmed suspect – he directed both shots only at the armed man directly threatening his life.

If you have any questions about the legal implications of your decision to carry a self-defence weapon, please speak to us.

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 us for specific and detailed advice.

© LawDotNews

Jan 07
0

A New School Year Dawns – Can Unpaid Fees Bar Your Child From Enrolling?

By | Family Law, General Interest

“I have never let my schooling interfere with my education.” (Mark Twain)

Our Constitution guarantees everyone rights to education, but that doesn’t mean parents can necessarily pick and choose which schools they send their children to. Nor does it mean that they can expect schools to continue educating their children if they don’t pay the agreed fees.

A recent High Court judgment provides a perfect example. 

Breaking the camel’s back – 4 years of arrears totalling R407k

A father’s failure to settle a bill of over R407k in unpaid school fees for his daughter’s education at “an elite private school” in Cape Town has led to him being interdicted from enrolling her there for the 2025 school year.

The school’s patience has clearly run out after years of the father’s failure to stick to a payment plan, negotiated four years ago. The Court characterised his actions as a “modus operandi of non-payment and broken undertakings”. His explanation, that affordability is the issue and that he could not pay the outstanding arrears, cut no ice with the Court. 

The proverbial “straw that broke the camel’s back”, said the Court, was the father’s “flat-out refusal to sign the most recent restructuring agreement, which had been drafted in a last-ditch effort to record in writing the terms of the most recent agreement between the [school] and the [father] so that his daughter could be enrolled at the school for her next academic year.”

The child’s best interests are always paramount

Our courts are the “upper guardians” of all minor children, and this Court was, as always, careful to consider the daughter’s best interests. 

Critically, she is not left without alternative educational opportunities – that would be a breach of her Constitutional rights as well as a violation of the strict warnings from our courts that “schools that provide basic education are under a constitutional duty not to diminish the right to basic education and at all times to act in the best interests of the child.” (Emphasis added.) 

In this instance, the school had secured “an alternative good school” for her – a government-subsidised school in the same suburb as her brother’s school. The father’s rejection of this alternative school as being “‘unsuitable’ because [it] is not predominantly white, and this does not align with his daughter’s cultural values” was summarily dismissed by the Court with the terse comment: “The less said about this argument, the better”.

The enrolment contract and the school’s obligations 

This case is an important reminder that we are bound by the agreements we make. The father, in signing his daughter’s enrolment contract, was aware that:

  • The school is an independent school, getting virtually no government funding and relying on school fees and donations to fund its operations and to educate its learners.
  • Failure to pay fees was a breach of contract which would inevitably lead to the daughter’s exclusion from the school.

Our courts, once again putting the interests of children first, insist that “any decision to suspend or expel a learner during school term must satisfy due process. These include adequate warning prior to suspension or exclusion, provision to make arrangements to settle fees, or the opportunity to make arrangements to enrol a learner at a new school.” (Emphasis added.)

The school in this case had clearly gone “above and beyond” in this regard, and the Court had no hesitation in issuing the interdict with costs payable by the father who must now enrol his daughter in another school – and pay this school its outstanding fees with interest.

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 us for specific and detailed advice.

© LawDotNews

Oct 28
0

No Means No: What the New Case on Consent Means for Victims of Sexual Violence

By | Criminal Law / Crime, General Interest

“Sexual violence is a horrific reality that continues to plague this country.” (Quoted in judgment below)

It’s often said that victims of rape and other types of sexual violence have to suffer twice – firstly at the hands of the rapist and secondly at the hands of the law.

A recent High Court ruling on the knotty question of consent could go some way towards remedying this. At the heart of the matter is the delicate balance between a victim’s right to be treated with dignity and compassion in their quest for justice, and the accused’s right to be presumed innocent until proven guilty in a fair trial.

The consent conundrum

To secure a conviction of sexual violence the State must prove – beyond reasonable doubt – the absence of consent to the accused person’s actions. Unfortunately, major injustices have resulted in the past from the fact that many perpetrators escaped conviction by simply claiming that they believed that consent had in fact been given – without having to show that their belief was in any way reasonable.

Two shocking acquittals

The Court referred to two practical examples of grave injustice rooted in the current wording of the Criminal Laws (Sexual Offences and Related Matters) Amendment Act:

  1. A woman had agreed to oral sex only, but her then-boyfriend proceeded to perform full penetrative sex. He claimed that her body language gave tacit consent to penetration and that he misconstrued her request to him to stop as a request to pause momentarily. He was acquitted on the basis that his version was “reasonable and possibly true, although his explanation was improbable”. The complainant had not objectively consented, but the State had not proved beyond reasonable doubt that his version that he genuinely believed that there was at least tacit consent, was false. The court considered itself bound to acquit “unless it is satisfied not only that the explanation is improbable but that beyond any reasonable doubt it is false.”
  2. In the second case, a woman was raped by a man she met through an online dating site. He had invited her to his home for a “party” at which she turned out to be the only guest. The perpetrator was acquitted on the basis that, although the victim had not objectively consented to the penetration, “she neither physically resisted nor loudly protested. The State did not exclude the possibility that the accused did not hear her say ‘no’ and did not prove beyond reasonable doubt that he was aware that she was not consenting. Put differently, the court accepted that he had subjectively believed that there was consent.”
Enter a welcome new limit to the consent defence

The courts in question had no choice but to acquit given the Act’s present wording, and as the High Court put it: “Currently … an unreasonable belief in the presence of consent is a defence. The State bears the extraordinarily high burden to prove that the accused’s claim that he [it could of course have been a “she”] was under the impression that consent had been given is not reasonably possibly true.”

It accordingly held the relevant sections of the Act to be unconstitutional and invalid and ordered that they be read such that “…it is not a valid defence for that accused person to rely on a subjective belief that the complainant was consenting to the conduct in question, unless the accused took objectively reasonable steps to ascertain that the complainant consented to [the] sexual conduct in question.” (Emphasis supplied).

How will our courts interpret this in practice?

Based on the Act’s current wording, our courts have previously held that, “where there was no express rejection of the sexual act … consent has the following requirements: (a) the consent itself must be recognised by law; (b) it must be real consent; and (c) it must be given by a person capable of consent.”

Assuming the Constitutional Court upholds the High Court’s declaration of invalidity, we can only guess how our criminal courts will ultimately interpret whatever new wording it and parliament (which has 18 months to amend the Act) finally settle on. But something like the five-point common sense definition of consent given in Amnesty International’s article “Let’s Talk About Consent” may well form the basis of judicial interpretation down the line.

The article further suggests that “Consent is not about signing a contract! It’s about communication and about making sure all sexual activities happen with mutual consent.” Which seems like a fair and practical way of looking at it.

The bottom line?

One would hope that our courts will ultimately decide that only a genuine, unequivocal, unpressured, informed, specific and un-retracted “Yes” will be enough to escape conviction.

As a final thought, remember that this new law only comes into force if and when the Constitutional Court confirms it.

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.

© LawDotNews

Aug 27
0

When Can You Legally Record Conversations?

By | General Interest, Information Technology Law / Cyberlaw

“Big Brother is watching you.” (George Orwell)

Your smartphone lets you record just about anything, anywhere, and at any time. Your laptop and other devices can automatically record online meetings. Technology enabling voice and/or video recording is all-pervasive, providing us all with a powerful tool for keeping accurate records, resolving disputes and gathering evidence.

But it’s crucial to understand when it’s legal to start recording – and when it’s not… Whether you’re talking face-to-face, over the phone, or via digital platforms like WhatsApp, Zoom, Slack, or Teams.

The law: What’s allowed & what’s not

The legal framework for recording conversations in South Africa is primarily governed by the Regulation of Interception of Communications and Provision of Communication-Related Information Act (RICA). The Act is aimed not only at regulating “Big Brother” type government surveillance of its citizens, but also at protecting us from each other when it comes to our rights to privacy generally.

Also relevant is the Protection of Personal Information Act (POPIA) which regulates the processing of personal information. Its impact on recording conversations relates primarily to how the recorded information is handled, stored, and shared.

Here are some key points to consider:

  • Recording conversations you aren’t party to: Recording conversations between other people, to which you are not a party, is generally illegal unless explicit consent is obtained from all parties. That’s because RICA has a general prohibition against “intercepting communications” without the knowledge and consent of those involved. There are only very limited situations where such recordings may be legal, such as under a court order or for establishing a person’s location in an emergency rescue situation.
  • Recording your own conversations: If, however you are directly involved in the conversation, you are legally allowed to record it without consent. RICA permits individuals to record communications to which they are a party, either as a direct participant or in their “immediate presence” and within audible range. There is no legal obligation on you to inform or obtain consent from the other participants before recording, but, as we discuss below, there are often good practical reasons for doing so anyway.

    Note that specific rules apply to recordings “in connection with carrying on of business”. To comply with POPIA ensure that you have a clear, lawful purpose for your recording, and that you use it only for that purpose.

  • Recording public conversations: In public spaces, where there is generally no expectation of privacy, recording conversations without consent is unlikely to land you in serious trouble but be careful what you use your recordings for. For example, a person’s image, voice, preferences or opinions is “personal information” subject to POPIA’s restrictions on its use and storage. Moreover, always consider the context before recording as there may be situations where privacy is reasonably expected.
What about workplace communications?

As an employer, you may need to record calls and workplaces for security, compliance, or training purposes, but tread carefully here as clear and transparent communication is essential to maintain trust and to avoid dispute.

You should typically inform your employees if their communications or workplace activities are being or could be recorded. This can be done through employment contracts, policies, or direct notification. As always with our employment laws there is no room for error, so specific advice is essential!

Practical tips for recording conversations legally

If you plan to record a conversation, consider these practical guidelines to ensure you stay within legal boundaries:

  • Informing others: Even when it might not be legally necessary, informing the other parties involved that you are recording can help prevent misunderstandings and build trust. Many platforms like Teams and Zoom will by default advise all meeting participants upfront that they are being recorded. But there’s no harm in mentioning it specifically when you open the meeting, with an offer to share the recording with participants on request.

    Particularly if you think your recording might be important in a legal dispute down the line (to prove the terms of an online contract for example), advising participants upfront of your intention to record can boost its value as evidence and make it difficult for an opponent to challenge it in court.

    If your conversation is an international one, bear in mind that some jurisdictions have more stringent rules than others on the necessity for consent.

    If in doubt, take no chances: The safest course of action will always be to ask for consent.

  • Secure storage: Store recordings securely, especially if they contain sensitive information. POPIA requires that personal information be secure from unauthorised access or breaches, and that it be kept only as long as necessary for the purpose for which it was recorded.
  • Responsible use: Be mindful of how you use the recordings. Sharing or publishing recorded conversations without consent can have serious legal consequences.

There are plenty of grey areas here, so please call us if you’re in any doubt.

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.

© LawDotNews

Jun 25
0

The New Cannabis Act: Here’s What You Will and Won’t Be Allowed to Do

By | Criminal Law / Crime, General Interest

“It’s high time they legalised cannabis” (Anon)

Much excitement has greeted the signing into law of the Cannabis for Private Purposes Act, which will formally regulate the cultivation, possession, and use of cannabis by adults in a private setting and, says the Presidency, lays the groundwork for regulatory reforms “to allow for the industrialisation of the cannabis sector.”

But although the new Act has been widely reported in the media as though it is already in force, this is not correct – it will only come into effect when its commencement date is gazetted. It is not clear at date of writing when we can expect this to happen, but it could be a lengthy process. Until then the rather vague parameters for private and personal use, possession and cultivation set by the Constitutional Court in 2018 will presumably remain in place.

In the interim, here are some highlights of the Act –

What is “cannabis” in the new Act?

“Cannabis” is defined for the purposes of the Act as meaning “the flowering or fruiting tops of a cannabis plant and includes products made therefrom” (i.e. “buds”, extracts, oils and the like) but the definition excludes “any seed, seedling, the stalk, leaves and branches.”

What you will be able to do, and what you won’t

In a nutshell, it will be legal within prescribed limits to grow, possess, use and share cannabis in private, but not to sell it. More specifically, and with the general requirement of “private purpose” –

  • In private: Any adult (18 or over) will be able to cultivate, use, possess and share cannabis “in a private place for a private purpose”. But not in the presence of a child or non-consenting adult, and not “if it is likely to cause a disturbance or nuisance to any person” in a nearby public place. Note that when it comes to sharing (supplying or obtaining), there cannot be any exchange of “consideration” defined as “any form of compensation, gift, reward, favour or benefit” (i.e. sale for recreational as opposed to medical use will remain prohibited, even for private purposes). The prescribed “maximum amounts” (see below) will apply in private as well as in public places.
  • In public: An adult will be able to possess (subject to prescribed maximum amounts), but not to use, cannabis in a public place.
  • Protections for children: No child (person under 18) can be given cannabis or any cannabis product, nor be allowed to possess or use it without a medical prescription, nor can they be used to deal in it. Importantly, any adult “who is in possession of cannabis must take reasonable measures to ensure that such cannabis is inaccessible to a child whether that child is under the authority, supervision or care of that adult person or not.”
Maximum amounts will be prescribed, and transport will be regulated

Regulations will prescribe –

  • The maximum amounts allowed for cultivation, possession and transport of cannabis.
  • “Conditions, restrictions, prohibitions, obligations, requirements or standards regarding the transportation of cannabis, by the person transporting cannabis as well as in respect of the passenger in such transport.”

Current speculation (i.e. you can’t hold us to this!) is that the prescribed amounts will be based on those proposed in a version of the Bill which was not incorporated in the final Act. That Bill proposed that adults would be able to –

  • Possess unlimited seeds and seedlings.
  • Privately cultivate four flowering cannabis plants per person (or eight per household occupied by two or more adults).
  • Privately possess 600 grams of dried cannabis per person (or 1,200 grams per household occupied by two or more adults).
  • Publicly possess 100 grams of dried cannabis or one flowering cannabis plant.
  • Provide/obtain for personal use 30 seeds/seedlings, 1 flowering cannabis plant, 100 grams of dried cannabis.

Note however that the 2020 Bill’s structure is different to that of the final Act, so wait for the final Regulations before relying on any of these speculated limits!

Criminal records to be expunged

Convictions for possession and use of cannabis (dagga) will be automatically expunged, as will convictions for dealing based on legal presumptions rather than actually dealing. Where records have not been automatically expunged, they will be expunged on application.

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.

© LawDotNews

Jun 25
0

Can You Sign an Affidavit Over Zoom?

By | General Interest, Litigation

“These technological developments would have seemed far-fetched and science fiction a brief few years ago.” (Extract from judgment below)

It’s an important question – the invalidity of an affidavit could sink even the strongest case, so it’s vital to get this right. Of course, it’s always tempting to cut corners where you can on the commissioning side, and perhaps you urgently need to sign an affidavit but are far from a commissioner of oaths or perhaps for some reason you just can’t visit a commissioner physically.

That of course became a commonplace scenario during the Covid-19 restrictions on personal contact and the pandemic accelerated the need for our laws to evolve in step with all the new “science fiction made real” technologies enabling meetings to be held virtually, documents to be signed electronically, and secure online handling and storage of information generally.

Whilst legislation and our courts have made important strides in this regard, some areas of uncertainty remain. One of them is the question of whether or not affidavits can be commissioned remotely.

The problem – what does “in the presence of” mean?

For an affidavit to be valid, the relevant Regulations require that it be signed “in the presence of” a commissioner of oaths. And as much as we might think that we are for all practical purposes “in the presence of” everyone else in a virtual meeting or family chat session, it’s not clear yet to what extent virtual presence will be considered sufficient compliance with the Regulations.

Let’s look at three recent High Court decisions with differing outcomes –

  1. Case 1: An affidavit validly commissioned by Zoom from Italy:

    A commissioner of oaths in South Africa commissioned affidavits in a Zoom video call with deponents in Italy. The Court allowed the affidavits to stand, agreeing with previous judicial comments that “…Courts must adapt to the requirements of the modernities within which we operate and upon which we adjudicate…” and concluding that there had been “substantial compliance” with the requirements of the Regulations. However, the Court also cautioned against the idea that courts can “willy nilly accept non-compliance with acts and regulations.”
  2. Case 2: An application for a general declaration refused:

    A global publishing company asked the High Court for an order declaring that “in the presence of” is to be broadly interpreted to include the administration of an oath or affirmation “by means of live electronic communication, consisting of simultaneous audio and visual components”. The Court dismissed the application, distinguishing this case from the one above and commenting that, although the argument that “the object of the Act and the Regulations can be achieved by virtual means is tempting”, it could not ignore “the clear meaning of the words in the Regulations” and “It is not for a Court to impose its view of what would be sensible or businesslike where the wording of the document is clear”.
  3. Case 3: Courts have a discretion only if normal commissioning is impossible:

    A bank’s property valuation affidavits had been signed electronically in the absence of the commissioner of oaths. The Court agreed that a court has a discretion to accept such affidavits “if it finds that that there has been substantial compliance with the regulations” – but only where physical commissioning is not possible. Thus, in a previous matter, a court had exercised its discretion to allow an affidavit’s remote commissioning as a result of “the impossibility of the oath being administered normally because of the Covid restrictions against personal contact”. That, said the Court, “does not mean that a party may deliberately set out to achieve substantial compliance with such regulation rather than comply with its requirements.” In other words, you can’t elect to commission remotely just because it suits you. The valuator’s affidavits were rejected.
Err on the side of caution

There are some important grey areas there, and clearly remote commissioning will not be allowed as a matter of course. You’ll have to justify it.

So, regardless of how inconvenient it may be, unless and until new legislation (or perhaps a definitive ruling from the Supreme Court of Appeal) brings the Regulation’s wording up to speed with technology, the only way to be sure that a court will accept your affidavit as valid is to err on the side of caution and visit a commissioner of oaths physically whenever possible.

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.

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Feb 26
0

Ponzi Schemes: Can Liquidators Claw Back 600% of Payouts?

By | General Interest, Insolvency / Liquidation

“MTl’s business clearly amounted to an unlawful ponzi-scheme, i.e. a fraudulent investing scam promising high rates of return to investors and generating returns for earlier investors with investments taken from later investors.” (Extract from the MTI judgment)

Recent media reports of the MTI (Mirror Trading International) liquidators making repayment demands of investors highlight once again the dangers of falling for “too good to be true” investment schemes.

The problem is that by their very nature, all pyramid schemes (including “ponzi” schemes) eventually fail, leaving the vast majority of investors with nothing but the hope of being awarded a partial dividend on their claims when the holding entity is eventually liquidated.

But what if an investor is one of the “lucky early birds” who got paid out before the scheme’s collapse?

Debunking the “early bird investor catches the worm” myth

A common myth is that the only losers in a collapsed pyramid scheme are those investors who didn’t get their money out in time, and that the “early birds” who did act quickly are winners in the equation.

The problem for them is that liquidators have wide powers to reclaim payouts made to investors (as creditors) before liquidation. The idea is that payouts by definition come from new money paid in by new investors, and that to be fair to them it is necessary to put everything back into the pot for all investors and other creditors to share according to their claims. But of course they only share in what’s left after all the liquidation costs and fees have been settled, and in a large and complex liquidation like MTI’s those costs will be particularly substantial.

The practical issue is that whatever was paid out to investors/creditors – both by way of the original investment and the “profit” on it – is likely to be claimed back by the liquidator. And the investor forced to repay everything is left with nothing but a concurrent claim in the liquidation.

Of course a liquidator’s prospects of recovery will be boosted if they can obtain a court declaration of unlawfulness of the scheme and invalidity of the investment contracts (as has already happened in the MTI liquidation), but let’s see how that could then play out in practice.

The liquidator’s options for recovery

To summarise the options available to a liquidator in recovering payouts made before liquidation –

  • “Voidable preference”: If the payout was made within six months prior to liquidation and immediately thereafter the company’s liabilities exceeded its assets, it is repayable to the liquidator unless the investor can prove that that the disposition was made “in the ordinary course of business” and without intention to prefer one creditor above another. That could be hard to prove in the case of a pyramid scheme.
  • “Undue preference”: If at any time a payout was made by the company with the intention of preferring one creditor above another, it is repayable to the liquidator if the company’s liabilities exceeded its assets at that stage. In this case, the onus is on the liquidator to prove the intention to prefer, but that may perhaps be easier to prove in a pyramid scheme scenario than in other corporate failure scenarios.
  • “Disposition without value”: Monies paid out to a creditor at any time must be repaid to the liquidator if the company received no “value” in return, subject to –
    •  Where the payout was made more than two years prior to liquidation, the liquidator must prove that immediately thereafter the company’s liabilities exceeded its assets.
    • But if the payout was made within those two years, the onus switches to the creditor to prove that immediately thereafter the company’s assets exceeded its liabilities. In the case of a pyramid scheme that may be impossible to prove.

    Note that the creditor in such a case will also generally lose their claim against the company.

  • “Collusive dealing”: If the liquidator can prove that a creditor colluded with the company to pay out monies with the effect of prejudicing creditors or of preferring one creditor above another, the colluder will not only forfeit their claim but can also be ordered to pay in a penalty of up to the same amount. A liquidator could for example try to prove that the investor/creditor was aware of the unlawfulness of the scheme at the time of the payout.
Even worse, could investors lose a lot more than they put in?

Media reports suggest that an MTI investor, who invested R20,000 and was paid out R21,000 shortly before liquidation, received a demand from the liquidators to repay not just his initial investment and profit, but for 600% of what he put in. The sum claimed (at date of writing) is R122,000, that being the current value of the bitcoin he initially invested – the argument being presumably that what was disposed of was “property” (bitcoin), in which case the liquidators would be entitled to reclaim either the bitcoin or its value at the date the disposition is set aside. The justification will no doubt be that that is what the company and its creditors as a whole have actually lost as a result of the disposition. If our courts agree with that view, being sued for a great deal more than the original investment will be a particular risk when the investment is a volatile asset like bitcoin.

The High Court has previously declared MTI an illegal and unlawful scheme and all agreements between it and investors unlawful and void, but that of course is only the first step for the liquidators in proving their claims against investors. Media reports suggest that many investors are lawyering up to oppose the claims so we must wait and see how it all plays out in the courts.

Regardless, the risk of not only losing the original investment but then also having to cough up a great deal more over and above that certainly does fire yet another warning shot across the bows of anyone tempted to invest in any scheme promising unrealistic returns. Prospective investors shouldn’t part with a cent until they confirm that the scheme is actually legitimate.

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.

© LawDotNews

Jun 27
0

Dual Citizens: Good News if You Lost Your South African Citizenship, But…

By | General Interest

“Citizenship is the gateway through which a number of rights in the Constitution can be accessed.  It enables a person to enjoy freedom of movement, freedom of trade, and political representation” (Constitutional Court, quoted in judgment below)

Note: Many South Africans who should be aware of this new development will be overseas and/or may not have heard of the Supreme Court of Appeal decision we discuss below. If you know of any such person, please consider forwarding this to them as soon as possible.

Reportedly, thousands of South Africans have lost their citizenship through applying for citizenship or nationality of another country without first obtaining Ministerial permission to do so.

Most will have done so unknowingly, ignorant of the fact that whilst dual citizenship itself is allowed, our Citizenship Act requires you to get permission beforehand. Only minors (under 18s) and persons acquiring foreign citizenship by marriage were exempt.

The good news is that the SCA (Supreme Court of Appeal) has now ordered that –

  1. That provision is inconsistent with the Constitution and is invalid retrospectively; and
  2. Citizens who lost their citizenship by operation of that provision “are deemed not to have lost their citizenship.”
But – the Constitutional Court still has to confirm the invalidity order

The SCA’s order of invalidity has no legal force unless and until confirmed by the Constitutional Court (CC), and there is (at date of writing) no indication of when this will go to the CC for confirmation, whether or not Home Affairs will oppose its confirmation in the CC, and whether or not they will continue to enforce the section in the interim. In the interim, tread very carefully if you are either planning to apply for foreign citizenship/nationality, or if you were deprived of SA citizenship and plan to return to the country in the near future.

Another “but” – never let your SA passport lapse!

That new judgment does not affect in any way the fact that, although you can travel freely around the world on your second passport, you must always enter and depart from South Africa on your valid SA passport.  Keep renewing it!

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.

© LawDotNews