Kruger & Co – Page 2

Jan 27

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Parking Disputes and the “Reasonable Neighbour” Test

By Kruger & Co | Property

“Wouldn’t it be nice to get on with me neighbours?” (from “Lazy Sunday” by Small Faces)

Maintaining friendly relations with the neighbours, or at least an “I’ll ignore you if you ignore me” sort of neutrality, has probably been a primary aim of homeowners since the dawn of history. No doubt even our cave dwelling ancestors were as keen to get on with the Joneses next door as they were to keep up with them. But as we all know, it’s not always easy.

A recent High Court fight over parking rights is unfortunately pretty much par for the course when it comes to neighbourly relations deteriorating into open conflict, both inside and out of the courtroom.

“You can’t park here!” “Yes, we can!”

The setting for this fight: Higgovale, a small and affluent suburb on the slopes of Table Mountain in Cape Town. In one corner: a couple with the right to access their garage using a servitude road. In the other corner: the neighbours, alleged to have impeded the couple’s garage access by parking in the road.

At the heart of the dispute: the road servitude. Servitudes involve a balancing act between the right of the “dominant owner” to exercise the servitude and the right of the “servient owner” to have the servitude exercised in such a way as to impose the “lightest burden” on their property. The tensions inherent in such a relationship can easily escalate into conflict – exactly what happened here.

The garage-owning couple’s initial stance was to ask the Court for a blanket interdict against all parking by the neighbours in the road, but they later softened that to ask only for an order against their garage access being obstructed.

The Court had no hesitation in ordering that the neighbours “are interdicted and restrained from parking vehicles on the servitude area at … Higgovale, in such a manner as to unreasonably obstruct the applicants from entering and exiting their property and exercising their right of way.”

In doing so, the Court took the parties to task for failing to settle their dispute out of court, and urged them “to engage with each other in a manner that promotes the spirit of ubuntu, and the constitutional vision of a caring society based on good neighbourliness and shared concern” (emphasis supplied), and to consider demarcating parking bays in the road as a short-term solution.

The parties now have to pay their own costs (except for the costs of one interim application), and they’re effectively back to square one: having to engage with each other to try to find a fair solution.

What’s a “reasonable neighbour”?

Per the Court (emphasis supplied): “While the common law requires that neighbours act reasonably, the Constitution shows what a reasonable neighbour looks like. She is not only concerned with advancing her own private interests but cares also for the needs of her neighbours. She seeks mutually beneficial solutions. The mindset of the reasonable neighbour is one of collaboration, not competition. She sees herself not as an isolated individual, but a partner in an interdependent community of persons, all of whom are to be respected and valued.”

First prize: Settle!

Courts want us to settle these sorts of disputes in that collaborative spirit, without recourse to law. But if a friendly discussion over a cup of coffee doesn’t resolve the situation, more robust action might be unavoidable – we’re here to help if you need 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.

Jan 27

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Workplace Sexual Harassment: It’s the Victim’s Perspective That Counts

By Kruger & Co | Employment and Labour Law

“Sexual harassment is the most heinous conduct that plagues the workplace.” (Extract from the judgment below)

Our courts have no tolerance for sexual harassment in the workplace, stressing that, at its core, it is concerned with power dynamics at work.

A recent Labour Court decision has confirmed that in assessing whether or not an employee is guilty of such harassment, it is the victim’s perspective that must lie at the heart of the enquiry. Victims will take heart from this decision, while employers and other employees should understand clearly the dangers of not heeding it.

Manager fired after inviting an employee to sit on his lap

A bank manager was found guilty of two counts of gross misconduct in respect of:

Sexual harassment: Allegations of inappropriate, unwelcome comments towards a female employee, which she said continued despite her asking him to stop.These comments were about her hair, clothing and appearance, such as “you are so beautiful”, “you are so stunning”, and “black looks good on you.” Most tellingly perhaps, he suggested that she sit on his lap when he was taking employee temperatures as part of a Covid screening process. All conduct that, she said, upset and offended her.
A harassment allegation of slamming a metal recycling bin lid to frighten her.

The manager denied all these allegations but was found guilty and summarily dismissed. He approached the CCMA (Commission for Conciliation, Mediation and Arbitration) where the arbitrator, deciding that the employee was untruthful and that no harassment had been proved, held that the dismissal was substantively unfair and awarded the manager R400k in back pay.

The bank took this decision on review to the Labour Court, which reversed the finding and confirmed the manager’s dismissal.

Let’s have a look at the Court’s reasoning.

Firstly, what exactly amounts to “harassment” and “sexual harassment”?

In general terms:

Harassment is unwanted conduct which impairs dignity, which creates a hostile or intimidating work environment for one or more employees, and is related to prohibited grounds of discrimination like race, gender, or disability.
Sexual harassment refers to persistent, unsolicited, and unwanted sexual advances or suggestions by one person to another. The “Code of Good Practice on Sexual Harassment” sets out guidelines for identifying and handling such cases.

The victim’s point of view is critical

The Court in deciding to confirm the manager’s dismissal commented that sexual harassment is heinous conduct. As it goes to the root of one’s being, it must be viewed from the victim’s point of view, how the victim perceived it and whether or not that perception is reasonable.

In this case, held the Court, the employee’s evidence was supported by the probabilities and was more credible than her manager’s version. He was accordingly guilty of the charges of harassment and sexual harassment, his employer could not fairly have been expected to continue the employment relationship with him, and his dismissal was fair.

Victims will take heart from this outcome, and it’s a warning to both employers and other employees to view all workplace conduct from the perspective of those on the receiving end.

Perhaps a good way of looking at it could be this: Might the recipient of a “compliment” or other “innocuous” conduct reasonably construe it as inappropriate and unwelcome? If so, employers have a duty to act, and perpetrators are in trouble.

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.

Jan 06

1

Your Top 10 (Legal) New Year’s Resolutions for 2026

By Kruger & Co | General Interest

“My New Year’s resolution is to stop procrastinating. I’ll start tomorrow.” (Anonymous)

Most New Year’s resolutions are vague, unwritten, and destined to be forgotten in the first week of January’s hustle and bustle.

But please don’t neglect this Top Ten list of legal issues that we’ve put together for you. Focus on those that are important to you, taking a few minutes to write down exactly what action you’ll take under each heading. Then set and diarise realistic deadlines to address each item:

Top 10 Legal Issues for 2026
1		Update (or draft?!) your will. Check your executor/s, guardian/s, heirs and beneficiaries. Have there been any life events (marriages, divorces, deaths, births, new relationships, new business ventures, new tax changes, new assets or liabilities or anything else) that call for a change in your will? Should you consider making a foreign will as well as your local one? Update (or consider making) a Living Will/Advance Medical Directive.
2		Revisit your estate planning. Are you still on track with your wealth building, your retirement planning, your corporate, trust and tax planning? Have you prepared and updated a file containing your will and all the other information and paperwork that your executors and loved ones will need when the time comes?
3		Check your property affairs are in order. Make sure that your title deed is safely filed away together with your original purchase documents and receipts, as well as proof of subsequent capital improvements – you’ll need all of these to calculate your CGT base cost when you come to sell. If you’re a landlord or tenant, are all leases current, in order and easily accessible? If you co-own property, do you have an agreement in place laying out what each joint owner’s rights and duties are, who pays what costs and when, and so on? Does it need updating?
4		If you cohabit with your life partner, do you have a full cohabitation agreement in place? Does it need amending or updating? Does it mesh with both of your wills?
5		Review all your contracts: personal, employment, suppliers, clients etc. Have there been any changes in the law or in your circumstances that call for renegotiation or amendment? Are all these contracts compliant with any new legal developments?
6		Review all corporate and tax compliance matters. Are you up to date with CIPC, tax and other returns? Do you need to update your POPIA and PAIA documentation? All the red tape and deadlines out there are as annoying as they are time consuming, but compliance is vital.
7		Make sure you have a disaster/continuity plan in place. This should address risks like cyberattacks, data loss, business disruptors (AI springs to mind), load-shedding, natural disasters, another pandemic – the list is endless.
8		Business and personal insurance. Are you sufficiently covered? Are any changes needed? It’s amazing how easy it is to forget to remove that premium-guzzling e-bike you sold on Marketplace, or to add your expensive new cell phone. Now’s your chance to correct that.
9		Perform a full cybersecurity audit and health check. Check password protection, multi-factor authentication and similar safeguards, email and electronic communication security, defence against malware, phishing, ransomware and the like, staff and family awareness training etc. If you have crypto holdings, double check that they are secure.
10		Anything else? Brainstorm with your family, and with us, everything else that could be important to you.

Step into 2026 secure in the knowledge that all the legal aspects of your life are in order. And remember that we’re always here to help when you need 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.

Jan 06

0

Property Sales and Side Deals: Verbal Agreements Don’t Cut it!

By Kruger & Co | Property

“With a verbal agreement you have nothing but air.” (Author and entrepreneur Robert Ringer)

2026 opens with positive signals for our property market after last year’s encouraging GDP forecasts, a credit-rating upgrade, and a series of interest rate cuts boosting access to bond finance.

All the signs point to a promising year for buyers, sellers, and homeowners. But a recent Supreme Court of Appeal (SCA) judgment is a sharp reminder that getting the legalities wrong, and in particular trying to rely on verbal promises, could mean a very rocky start to your new year. It’s also a reminder that while co-ownership can be a practical way to access and share property, it must be properly structured. When relationships sour, the fallout – as this case aptly shows – can be severe.

One husband discovered all that the hard way, so let’s learn from his mistakes.

“You can’t evict me, I own half the house!”

The central feature of this unhappy tale is unfortunately an all too common one – a personal relationship gone horribly wrong.

A couple married in 2009 and jointly bought a house in 2015. When the husband hit financial trouble in 2017, and creditors threatened to attach his half share, the couple agreed that the wife would buy him out for R1.2 million. A written Deed of Sale was signed, the transfer went through, and she became the registered sole owner. Unsurprisingly, given the purpose of the sale and transfer, she never actually paid him the R1.2 million purchase price.

When the marriage hit the rocks in 2019, she moved out and he stayed on. They divorced but he refused to vacate, arguing that the Deed of Transfer did not reflect their “true intention”. This, he claimed, was for him to remain a co-owner “until it was less risky”, after which she would give him back his half share.

The dispute landed in the SCA, where the ex-wife insisted that the intention was always that the property would be hers alone.

The SCA held that ownership is a question of law, not a factual dispute to be resolved by choosing between different versions of a story. The Court found that the ex-wife remained the sole owner, and its reasons for doing so provide a clear checklist of principles that every buyer, seller, and property owner should keep in mind.

What the ex-husband got wrong, and how to get it right

Let’s discuss the legal principles that sank the ex-husband’s case:

Don’t rely on a verbal agreement: Although our law makes most verbal contracts binding, there are exceptions. One is that any agreement to sell, exchange, donate, or transfer land (or a right to claim transfer) must be in writing and signed to be valid. That includes any “side deals” intended to vary the terms of the sale agreement. So, even if the Court had accepted the ex-husband’s version, a verbal promise to “give back” a half share would have been void and unenforceable.
Make sure your sale agreement is crystal clear: The Court also found the alleged verbal agreement to be “fatally vague” – a poignant reminder to always record agreements with enough detail to avoid them being struck down as “void for vagueness”.
A non-variation clause is essential: Contracts should state that they may not be changed unless the variation is in writing and signed. This is a great way to protect against uncertainty and dispute. The Deed of Sale here contained such a clause, which made the husband’s purported verbal amendment ineffective. There’s a lesson for us all here: never accept verbal assurances or promises from the other party, always insist on them being properly incorporated into the sale agreement in writing.
The value of a “whole agreement” clause: This clause confirms that the written contract reflects the entire agreement. With it in place, no outside evidence can contradict or add to the document – yet another reason the ex-husband found no joy at the SCA. Make sure that your written sale agreement is comprehensive, with nothing important omitted!
On transfer, “intention to pass ownership” is binding and motivation is irrelevant: The couple in this case transferred ownership intentionally and deliberately, and their personal motives for doing so were irrelevant. Equally irrelevant was the fact that the wife never actually paid the husband the purchase price – all that counted was the intentional transfer of ownership.

Complying with all legal formalities is important whether you are a buyer, a seller or an owner. As always, sign nothing without our advice!

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.

Jan 06

0

Electronic Wills Aren’t Valid: Stick to Pen and Paper

By Kruger & Co | Wills and Estate Planning

“Let’s choose executors and talk of wills.” (William Shakespeare in Richard II)

You may have read one of the many online articles about an electronic will being validated recently by the High Court.

Don’t be misled into thinking that electronic wills are now valid as a matter of course – they most certainly are not. Unless and until our Wills Act is updated to say otherwise, not leaving a written and signed will complying with all the Act’s formalities exposes your grieving loved ones to the risk of a hard-fought court battle at the worst possible time.

What makes a will valid?

Only a written, signed will complying with all legal formalities will be accepted by the Master of the High Court. If you leave only a non-compliant will, your loved ones will have to ask the High Court to validate it.

What are these formalities?

You must sign the will on the last page (at the end of the document) in the presence of two witnesses who must also sign as such.
If there is more than one page to the will, you must sign every page. Although it’s not strictly necessary for your witnesses to also sign all the pages, it’s good practice for them to do so.
Your witnesses must be “competent”, that is, at least fourteen years old and mentally competent.
Don’t let any of your heirs or beneficiaries either sign as a witness or write out any part of the will, as that will disqualify them from inheriting.

At this juncture you may be thinking: “But it’s 2026! Aren’t electronic documents and signatures as valid as physical ones?” Nope, unfortunately not when it comes to wills.

ECTA and electronic signatures

The Electronic Communications and Transactions Act (ECTA) says that generally, with only a few exceptions and requirements, electronic signatures and documents are valid and binding. But – and this is critical – it specifically states that they “must not be construed as giving validity to the execution, retention and presentation of a will or codicil [addendum to a will] as defined in the Wills Act.”

In other words, pen and paper are still non-negotiable requirements when it comes to wills.

Which begs the next question. What happens if for some reason your will is found to not comply with these formalities?

What your heirs must prove to overcome non-compliance

Fortunately, the Wills Act does allow our courts to look beyond technical non-compliance so as to give effect to the deceased’s true intentions.

In such cases the heirs will need to prove:

That the document was drafted or executed by the deceased.
The maker of the document must, naturally, be dead.
The person making it must have intended that document to be his or her will.

That’s the law underlying the Court’s decision in this dispute, so let’s see how it all played out in practice.

A bitter fight over two conflicting wills, one written and one electronically signed

The deceased, at the time a Constitutional Court Justice, made a will in 2014. She then made another in 2021.

In both wills, she had named her children, a granddaughter, and her life partner as her heirs and beneficiaries. Critically, in the 2014 will she had left 100% of her Magersfontein property to her life partner. But in the 2021 will she changed that, leaving the property to her children in equal shares.

Perhaps unsurprisingly, the life partner challenged the validity of the 2021 will, and her children and granddaughter in return asked the High Court to instruct the Master of the High Court to accept it as valid.

It became clear that the 2021 will was formally defective in two respects:

All three signatures (those of the deceased and her two witnesses) had been appended electronically
The deceased’s signature was in the wrong place on the document.

Critically, however, the life partner did not dispute the evidence of the two witnesses to the will that the deceased had, after a phone call, emailed them to ask that they append their signatures to the will electronically. He also accepted that the will reflected the deceased’s true intentions and that she had intended it to be her final will.

Finding on this evidence that the deceased had given direct instructions for the drafting of the 2021 will, and that she had indeed accepted that will as her own, the Court instructed the Master of the High Court to accept it as her will.

There’s a very clear lesson for us all here…

Pen and paper rule!

Electronic wills, and electronic signatures on wills, are not automatically valid. The only way to protect your loved ones from all the delay, confusion and cost of a High Court application to get an electronic will condoned is to leave a written, signed will that complies with all the Wills Act’s formalities.

We’re here to help!

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.

Jan 06

1

How to Fund Your Divorce if Your Spouse Can Outlitigate You

By Kruger & Co | Family Law

“For what is wedlock forced but a hell, An age of discord and continual strife?” (William Shakespeare in Henry VI Part I)

This article is a balm for anyone unfortunate enough to be stuck in an unhappy marriage full of Shakespeare’s “discord and continual strife”, yet too scared to consider divorce because of the costs. An uncontested divorce in which you agree on everything need not cost much, but it’s a very different story if you know that your spouse will fight you to the bitter end.

The hard reality is that contested divorces can be extremely expensive. But if your emotional trauma is compounded by the fact that your spouse has a lot more money than you and will use that financial strength to intimidate and outlitigate you, don’t despair!

Outgunned? “Equality of Arms” to the rescue

Enter stage left the “equality of arms” legal principle, which is aimed at ensuring that the outcome of divorce litigation is based on the merits of the case, not on one side’s financial dominance.

In other words, our law says that you should have a fair and reasonable ability to present your case without being disadvantaged because your spouse has greater financial resources. To achieve that, as the financially weaker spouse you can ask the court to order your spouse to contribute to your costs, allowing you to access proper legal advice, to negotiate fairly, to resist pressure to accept unfavourable settlement terms, and, if necessary, to proceed to trial.

What factors will the court consider?

The other side of the coin is that it’s not “open season” on your spouse’s wallet. The court will order only a contribution to costs that is reasonable and necessary considering all the factors relevant to each case, typically:

The financial resources of both parties
The level of complexity in the divorce case
The anticipated expenses for proper legal representation

Bottom line: you’re automatically entitled to a contribution. You must show that you are in genuine need given your own financial situation, that your estimated costs are reasonable in relation to the complexity of the disputes between you, and that your spouse can afford it.

A recent High Court decision provides an excellent example of those principles in action.

A wealthy husband is ordered to pay R1.5 million

The couple in question were married in 2010, out of community of property with the accrual system. They lived, it seems a “lavish lifestyle characterised by frequent overseas trips and a taste for opulence” until the husband left home in 2020. Battle commenced with the wife issuing a divorce summons a few months later.

Five years on we find them locked in dispute over the true extent of the husband’s wealth, with the wife applying for a R2 million costs contribution to cover both her legal expenses and a forensic investigation into her husband’s financial affairs.

In his Financial Disclosure Form (a standard form completed by parties to a divorce) he had listed net assets of R34 million. But the Court – finding that these disclosures were “unreliable”, that he had failed to disclose the value of his shareholdings in two companies and of a property in France, and that “there are huge sums of money not being disclosed” – decided that the wife’s proposed financial investigation was justified.

Having analysed the respective financial positions of the parties and their respective abilities to cover the costs in question, and having decided that the wife could reasonably trim some of her projected expenses, the Court ordered the husband to pay her a contribution of R1.5 million.

Don’t be intimidated by a big war chest

If you are outgunned financially, you may well be entitled to ask for a contribution to your divorce costs in order to level the playing field. Ask us whether you qualify.

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.

Nov 25

0

Can You Airbnb Your House or Apartment in a Residential Complex?

By Kruger & Co | Property

“Landlords grow rich in their sleep.” (John Stuart Mill, economist)

If you are thinking of buying (or already own) a house or apartment in a residential complex with the idea of renting it out as an Airbnb (whether permanently or on an “I can make a fortune this Christmas” basis), tread carefully.

A recent High Court decision has signalled confirmation that your body corporate or homeowners’ association (HOA) can, within limits, regulate your right to do so.

Residents vs. Renters

The setting for this dispute is a large residential scheme in the Silver Lakes area of Pretoria, envisioned by its developers as “a family orientated lifestyle estate where families enjoy the various amenities which include the outdoors, beach and water activities in a safe and secure environment.”

However, many of the owners don’t reside in the complex permanently but rather let their units out on a short-term letting (“STL”) basis as holiday accommodation, usually for one to three days at a time.

That, says the Homeowners’ Association (HOA), has become a major problem for residents, because holidaymakers renting the units don’t always adhere to the rules and family ethos which it tries to maintain and preserve. The short-term tenants are, it says, there only to party and have a good time, which predictably has led to endless complaints from residents relating to noise, overcrowding, traffic congestion, raucous behaviour, security risks and so on.

As its original conduct rules proved inadequate in addressing these concerns, the HOA adopted new, stricter short-term letting rules. Among other restrictions, owners were now prohibited from letting out their units for periods shorter than three months without the HOA’s prior consent. Contraventions of this rule attracted a penalty of 90% of the monthly levy.

These rules were originally approved by the Community Schemes Ombud Service (CSOS) but were later challenged by a group of owners who wanted to keep the short-term-letting party going. The CSOS adjudicator set the rules aside as invalid and unreasonable, characterising the estate as “a leisure holiday resort lifestyle estate in which the presence of non-permanent residence is the norm”.

The HOA appealed this order to the High Court, which has issued an interim order suspending the part of the CSOS order setting aside the rules. Effectively, the Court has allowed the stricter rules to remain in force until the appeal is finalised.

What this means in practice for HOAs, bodies corporate, and unit owners

The Court’s order is only an interim one pending the final outcome of the appeal – but the fact that it didn’t set aside the rules at this stage does suggest at least a provisional confirmation of the right of HOAs and bodies corporate to regulate short-term letting in this way.

We’ll have to wait for the final outcome of the appeal for more clarity, and it is likely that every case will be decided on its own facts and merits. But our courts have previously upheld similar conduct rules and it seems logical that they will continue to do so in appropriate cases.

Here are some thoughts on how you should address this thorny issue in the meantime. To be on the safe side:

Short-term landlords: The fact that the Court allowed the HOA’s stricter STL rules to remain in place for now is a clear signal to tread carefully before letting out your unit on a short-term basis. At the very least, check your complex’s conduct and letting rules and remember that even if STL is not specifically restricted or prohibited, you remain responsible for any breach of the rules by your guests – so make sure your letting agreement obliges them to obey all conduct and other rules. Last but not least, check whether your local authority’s zoning or other regulations restrict your rights in this regard.
HOAs and bodies corporate: On the general principle that you have both the power and the duty to consider the rights of all owners, think of addressing the risks created by constant guest turnover by adopting or tightening rules to regulate or prohibit short-term stays. The term “short-term rental” is not formally defined anywhere, but existing case law relates mostly to conduct rules prohibiting letting for less than three or six months at a time. Make sure rules are properly adopted (via special resolution if required) and that they are defensible as valid and reasonable. I.e. they should balance the competing rights of landlords and permanent residents to use and enjoy their properties as they please. If you have to enforce the rules, do so fairly and reasonably.

This ruling isn’t the last word, but it’s a strong signal

The High Court’s ruling is interim, with the final outcome of the HOA’s appeal still to come. But it does signal a strong likelihood that our courts will continue to uphold restrictions on STL that are fair, reasonable, and correctly instituted and enforced. Regardless, transparency and communication will always help to avoid dispute and conflict.

Could this dispute have gone direct to the High Court?

A recent Supreme Court of Appeal (SCA) ruling has confirmed that, despite previous court rulings suggesting that community scheme disputes must always be referred firstly to the CSOS in the absence of “exceptional circumstances”, you do in fact have a choice – either the CSOS or the High Court can hear your matter direct.

Going direct to court would certainly save you from having to fight your way through two sets of proceedings (as the parties in this case have had to do, with no final resolution yet in sight) but be careful. Not only is the CSOS’s dispute resolution service likely to be a lot quicker, more affordable, and less formal than going to court, if a court feels that you weren’t justified in approaching it direct, it could well punish you with some form of punitive costs order. Choose wisely!

Bottom line: there are plenty of grey areas and difficult decisions here, so don’t hesitate to ask us for advice specific to your situation.

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.

Nov 25

0

Prescription, Procrastination, and Personal Liability for Corporate Debts

By Kruger & Co | Company / Corporate / Compliance, Debt Recovery, Insolvency / Liquidation

“I have heard that in war, haste can be folly, but have never seen delay that was wise.” (Sun Tzu, The Art of War)

Collecting debt from a recalcitrant debtor can feel very much like going to war, particularly if you have to slog through the trenches of a series of increasingly costly court battles.

Which is where Sun Tzu’s warning against delay comes into play, because not starting collection in time could defeat your claim entirely. The reason of course is that debts – with only a few exceptions – prescribe (become unenforceable) after three years. Although that sounds like a long time, it can race by all too quickly!

Indeed, our law reports are full of cases where creditors have lost large amounts of money through procrastination, so it’s essential to start the process as soon as you think you may have a claim against someone.

It’s important to note however that the “prescription” defence has its limits, as a recent Supreme Court of Appeal (SCA) decision illustrates.

Another bent bookkeeper?

A Trust sued the sole member of a close corporation (CC) on the basis of allegations (hotly denied by her) that she, her CC, and her bookkeeper husband (since deceased, apparently by suicide) had defrauded a company in a sophisticated six-year scheme. Her husband, as the bookkeeper/accountant of both the Trust and the company, had allegedly made fraudulent payments totalling R21.8m to her CC through a series of fictitious transactions.

One forensic investigation and an insolvency inquiry later…

The Trust came into the picture when it took over the company in question. It identified suspicious transactions and commissioned auditors and forensic investigators to investigate. Critically, however, it was only during the inquiry held subsequently in her deceased husband’s insolvent estate that the member admitted receiving monies from the CC, and produced the bank statements which came to underpin the claims.

After some R12m was repaid, the Trust sued the member for the balance of R9.8m on two grounds:

Personal liability under the Close Corporations Act for being party to the reckless or fraudulent conduct of the CC’s business.
Liability for damages as a co-wrongdoer alongside her husband and the CC.

Before defending the claims directly, she raised the prescription defence, saying the claims were more than three years old and thus unenforceable. The High Court agreed with her, but the Trust appealed and the SCA held that the claims had not prescribed and that the trial could continue.

Let’s see why, and what lessons we can extract from that outcome.

Why didn’t the Close Corporations Act claim prescribe?

This statutory claim for recklessness or fraud, held the Court, isn’t a “debt” for the purposes of prescription, which only begins to run when a court actually declares a member personally liable. That hasn’t happened, so prescription hasn’t yet started running.

Why didn’t the damages claim prescribe?

Turning to the damages claim, the Court confirmed that “a debt is not considered due until the creditor knows the identity of the debtor and the relevant facts behind the debt. A creditor is assumed to have such knowledge if he could have exercised reasonable care to obtain it” – only then does the three years start running.

In this case, the Court held that although the forensic report had raised suspicion against the member, the Trust only acquired enough knowledge of the facts to actually sue her after the insolvency inquiry. The Trust then avoided prescription by issuing Summons within three years of that inquiry.

The Trust can now breathe a sigh of relief and return to the main trial in the High Court to prove its claims.

The bottom line: Delay can be fatal!

If you are unfortunate enough to fall victim to a sophisticated fraud, it may not be easy to identify the culprit and establish your claim immediately. But the sooner you call in the forensic investigators and ask us to advise on your best course of action, the less likely you are to have to fight your way through the courts (as this Trust has had to do just to retain its right to continue with its claim).

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.

Nov 25

0

Alcohol at Work: The Cough Mixture Defence

By Kruger & Co | Employment and Labour Law

“The employer shall ensure, as far as is reasonably practicable, that all persons who may be directly affected by his activities are not thereby exposed to hazards to their health or safety.” (Occupational Health and Safety Act)

The season of goodwill, holidays, celebrations, and year-end functions is upon us once again. And with it comes a timely reminder to employers that, while their “zero tolerance” alcohol-at-work policies may be key to maintaining health and safety in the workplace, they have their limits when it comes to disciplining offenders.

Two teaspoons of cough mixture

A forklift driver with an impeccable six-year record of service at a beverage manufacturer arrived an hour late for work, then failed a routine breathalyser test – routine in that all employees knew they would be tested on entering and leaving the factory.

He was adamant that he hadn’t been drinking but explained that he’d had some of his neighbour’s cough mixture the night before and another two teaspoons that morning, without knowing that it contained alcohol as he hadn’t read the label.

Critically, he didn’t smell of alcohol and displayed no visible signs of impairment or of being intoxicated.

Nevertheless, he was dismissed for gross misconduct on the grounds that he had breached his employer’s Alcohol, Drug and Substance Abuse Policy, which he knew about and which prohibits employees from having any intoxicating substances in their bloodstream during working hours. It further forbids them from using any alcohol during work or within six hours of the start of their shift. What’s more, it includes a zero-tolerance clause to the effect that no alcohol in an employee’s blood is permitted, and that higher levels of alcohol will automatically lead to a disciplinary hearing and possible dismissal.

The employee disputed his dismissal at the CCMA (Commission for Conciliation, Mediation and Arbitration) which found it to be substantively unfair and ordered his reinstatement with an award of R24,600 in lieu of arrear salary. This despite the employer’s explanation that a zero-tolerance approach was required because an employee working on machinery while under the influence posed a serious occupational and health risk.

The employer took the CCMA’s reinstatement award on review to the Labour Court, but it was unable to convince the Court that dismissal was justified. Its failure to do so holds valuable lessons for all employers and employees.

What must an employer prove to justify dismissal?

As an employer, your duty to ensure health and safety in the workplace may well call for a zero-tolerance policy against substance abuse, particularly in safety-sensitive situations like employees operating heavy machinery (the heavy-duty forklift in this case being a good example).

But a zero-tolerance policy “will only be accepted where the circumstances necessitate its implementation”. Even then, it doesn’t mean that you can automatically dismiss an employee contravening it. You have to go further.

You need to treat each case on its own merits, and be ready to justify whatever sanction you decide to impose by proving that:

There was a workplace rule in place.
The employee was aware of it. Ideally, you should educate staff on the importance of the policy with specific reference to the dangers of alcohol and other banned substances being present in food products, cooked foods, medicines and the like.
The employee wilfully broke the rule.
The nature and responsibilities of the job, the significance of the rule, the employee’s disciplinary record, the process of progressive discipline, and the potential harm caused by the misconduct (fitness for duty and threats to workplace safety would be major factors here) are all sufficient to show that dismissal is “appropriate and proportional to the offence that was committed”.

The employer’s challenge in this case was that it couldn’t prove that the forklift driver knew there was alcohol in the cough mixture, leading the arbitrator to accept his version that he had not knowingly breached the zero-tolerance rule. It was also unable to prove that the driver’s faculties had been impaired, an important factor in the arbitrator’s conclusion that dismissal was not an appropriate sanction here.

No doubt the employer’s case would have been stronger had its zero-tolerance rule specifically required employees to check for alcohol content in all medicines used – but even then, it would still have had to show overall fairness and proportionality.

Are zero-tolerance policies pointless?

Not at all. Our labour courts have previously upheld dismissals in similar cases. Every case is different, with each matter being a balancing act between the employer’s duty to ensure safety in the workplace on the one hand, and its duty to act fairly in enforcing its disciplinary policies on the other.

Bear in mind also that this Court was not “re-trying” the matter but only assessing whether or not the arbitrator’s decision could be considered reasonable in light of all the facts and evidence presented. Another arbitrator presented with a different set of facts could well have decided in the employer’s favour.

The fairness factor

Review your workplace policies and procedures to ensure that they are as tightly worded and as justifiable as possible, and bear in mind that, as the Labour Appeal Court has summarised the legal position, (emphasis supplied): “the law does not allow an employer to adopt a zero-tolerance approach for all infractions, regardless of its appropriateness or proportionality to the offence … The touchstone of the law of dismissal is fairness and an employer cannot contract out of it.”

Employees: This is no “get out of jail free” card

One wonders how often the “cough mixture” defence has been tried both by employees breathalysed at work, and by late-night jollers pulled over at police roadblocks. Of course, it could get you off the hook, just as it did our forklift driver here, but don’t take a chance on it. And don’t unwittingly break the rules – check what’s in your medicines before you take them!

Our employment laws are complex and the penalties for getting them wrong substantial, so call us if you need any help in reviewing or enforcing your workplace policies.

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.

Nov 25

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The AARTO National Rollout has Been Delayed – But Beware of Scams!

By Kruger & Co | General Interest, Road Traffic

“South African drivers, beware! Scammers are issuing fake traffic fines to catch you off guard! Always use AARTO approved collecting agents for your payments.” (Road Traffic Infringement Agency)

The national rollout of AARTO has again been postponed, this time to July 2026. Speculation is that we now won’t see the demerit system implemented before the middle of 2027, but both dates remain provisional until gazetted.

None of this should stop us from sharing with our families, friends, colleagues and staff this warning: Scammers don’t care about the delayed rollout date, they’re too busy stealing from harried motorists.

How to avoid being scammed

Beware of these common scams:

Phishing emails, SMSs and WhatsApp messages. They can look exactly like official communications from genuine organisations – your local traffic department perhaps, or the National Traffic Information System (Natis).
Links to fake payment portals and official websites, cloned to look like the real thing.
Phone calls from helpful “officials”, warning you of “overdue” fines and kindly offering to guide you through a quick and easy payment process to avoid all the horrendous consequences of failing to pay.

These “ghost fine” frauds all take advantage of the confusion swirling around everything AARTO, and use a blend of threats (“If you don’t pay you face arrest and suspension of your driver’s licence”), incentives (“Pay within 5 days to get a 50% discount) and deception to con you into rushing payment.

Use only official, legitimate payment channels. If you aren’t sure, check with your local municipality (or ask us to check for you).

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.