“The secret of life is honesty and fair dealing… If you can fake that, you’ve got it made.” (Groucho Marx)
We’ve all had this experience – meal over, relaxed and happy, you call for the bill and decide to reward your friendly and helpful waitron with a good tip. Only to find, on checking the bill when you get home, that the restaurant had already added a “compulsory service charge” (perhaps 10% or 15% – sometimes even more). When you challenge it, the manager points to the small print on the menu which says something like “service charge applies to tables of six or more”, or “discretionary service charge may be levied”.
And it’s not only restaurants that engage in such shenanigans. Perhaps it’s a builder or any other service provider adding on bits and pieces to an invoice that you hadn’t noticed when you signed up with them.
Is this kind of behaviour allowed?
The devil, as always, is in the details. If the add-on was properly disclosed to you upfront, you have no legal leg to stand on. It’s up to you to check the menu, or the supplier’s website and Ts and Cs, before ordering.
But it’s a very different story if the add-on was not properly disclosed upfront by the supplier. As a recent judgment of the National Consumer Tribunal (“the Tribunal”) shows, heavy penalties await any “supplier” (widely defined to include not only restaurants and retailers, but anyone who markets or supplies any goods or services to consumers) who breaches any of their many obligations under the CPA (Consumer Protection Act). And that includes “no hidden charges allowed”.
Being found guilty of “prohibited conduct” will be an expensive exercise. Witness the R1m administrative fine imposed recently on a fast-food chain specialising in that beloved South African tradition – braaivleis.
The braai fast-food chain and the disgruntled customer
Acting on a tip-off from a customer, the NCC (National Consumer Commission) found that a fast-food chain, specialising in “organic braai fast food” (chew on that description for a moment) with 16 outlets across Gauteng was adding a service fee over and above its advertised prices. No mention of this was advertised in its branches, on its menus, or on its website.
Unabashed, the chain argued before the Tribunal that it was fully compliant with the CPA, that the charge was a fee “to ensure the best service to the consumer” and that there is “a transparent general practice to disclose cost structures rather than hide behind an exorbitant price model.”
The Tribunal, deeply unimpressed with this (frankly baffling) line of reasoning, found the chain guilty of prohibited conduct and gave it 90 days to pay a R1m administrative fine.
Two breaches of the CPA
The chain was found guilty of two contraventions of the CPA:
A R1m fine for “preying on unwitting customers for selfish financial gains”
The chain, said the Tribunal, had “acted deceitfully towards its customers and contravened the CPA’s significant provisions. It acted contemptuously towards the very consumers who supported it.
Accordingly: “the Tribunal considers it appropriate to impose an administrative fine that will deter it and other suppliers from preying on unwitting consumers for selfish financial gains.”
Disclaimer:
This Newsletter is a general information sheet and should not be used or relied on as legal or other 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 attorney for specific and detailed advice.
Copyright in this publication and its contents vests in DotNews ©
“Only put off until tomorrow what you are willing to die having left undone.” (Pablo Picasso)
If you own assets outside South Africa, you may have wondered: Is my local will enough? This is a question many South Africans are asking, and the answer will depend on your own unique situation. Let’s break it down.
Why your South African will may not be enough.
A South African will can cover all your local and global assets and typically will do so unless otherwise specified. But practical and legal challenges can arise when dealing with foreign laws, tax regimes and regulations:
The case for a foreign will
You might anyway benefit from a foreign will if:
How a foreign will works
A foreign will is drafted according to the laws of the country where your assets are located, and should:
Key considerations
Legal advice is crucial as your South African and foreign wills must align. Contradictions might render one or both wills invalid or open to challenge. When drafting your will(s) be careful to:
Remember that drafting and maintaining multiple wills may incur additional expenses – but it can also save your heirs lots of money and time. Separate wills should be structured to streamline and simplify the administration process in different jurisdictions.
Protecting your legacy at home and abroad
Ensuring that your wishes are honoured and that your loved ones are protected starts with the right legal advice. If you’re unsure whether you need a foreign will, let’s talk. A consultation can give you peace of mind – and save your loved ones time, money, and stress in the future.
Disclaimer:
This Newsletter is a general information sheet and should not be used or relied on as legal or other 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 attorney for specific and detailed advice.
Copyright in this publication and its contents vests in DotNews ©
“Home wasn’t built in a day.” (Jane Ace, radio comedian)
You find the perfect plot on which to build your dream home in a security estate. Your offer is accepted and transfer proceeds – happy days!
So, imagine your distress when, having proudly taken ownership, you are suddenly told by the HOA (Homeowners’ Association) that you are liable for penalty levies because the previous owner didn’t build on the plot within the deadline period set out in the HOA’s constitution.
You ask the HOA for an extension – after all, it was the seller who was in default, not you. And besides, no one said anything to you about the problem until now. Most importantly, even with the best will in the world (and the best architect and builder!) it will take you many months to get plans approved and start laying foundations. The last thing you need now is the crippling financial burden of unforeseen penalty levies.
The HOA is unsympathetic. “You should have checked before buying,” they say. “The seller and the agent should have told you all about it – take it up with them.”
Can that really be correct?
A recent High Court decision addresses exactly that situation. All HOAs, owners and buyers need to understand the ramifications of the Court’s findings.
“You owe R190k in penalty levies and interest. Pay up!”
The scene is an upmarket security estate in Midrand, managed by a HOA.
In terms of the HOA’s constitution, construction of a house has to start within 18 months of the land first being sold, and be completed within 30 months. Fail to meet this deadline and the landowner is liable for penalty levies of twice the normal levy plus the normal levy. That’s triple levies – payable until completion. Critically, the constitution also specifies that “successors in title” (i.e. buyers of vacant plots from existing owners) fall squarely into this net.
Our buyer, as soon as she became aware of these hefty penalty rates, challenged them with the HOA on the basis that – as she had just bought the property and was awaiting approval of building plans – it was physically impossible to expect her to start building immediately after taking transfer. Therefore, she said, it would have been reasonable to give her the same time periods as the previous owners before charging penalties. In any case she could not be held liable for the previous owner’s failure to build.
The HOA declined to offer her any relief, and the dispute went before the CSOS (Community Schemes Ombud Service), with the buyer asking for an order that “the unreasonable and therefore incorrect imposed fines/penalties be rescinded”. The CSOS ruled the penalties to be invalid because the HOA had not followed fair procedure in imposing them, and the High Court confirmed this decision on appeal.
The details of the dispute are highly technical and will be of little practical import to anyone but lawyers. But what are highly relevant to all HOAs, owners and buyers are the Court’s findings that:
While the HOA’s constitution did unequivocally bind subsequent buyers to the penalties, this was not enough to satisfy the Court to rule in its favour. This is because the HOA did not act fairly in its treatment of the buyer. HOAs take note!
Buyers: Do your homework!
Although the buyer in this case is off the hook (for now, at least), things could have gone completely pear-shaped for her if the HOA had acted more reasonably in imposing the penalty levies.
The lesson for buyers therefore is this: Before you put an offer in for any property in a complex, make sure you understand exactly what you are letting yourself in for, and what you are agreeing to. Ask us for help if you’re unsure about anything.
Disclaimer:
This Newsletter is a general information sheet and should not be used or relied on as legal or other 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 attorney for specific and detailed advice.
Copyright in this publication and its contents vests in DotNews ©
The COVID-19 pandemic has started to have a devastating impact on the economy and it seems clear that most businesses will be affected. Governments around the world has had to take drastic action to “flatten the curve” and stem the tide of infections. This will continue to have an adverse impact on business operations and one can expect challenging business operations for some time to come.
Directors of companies are encouraged to take positive, practical and hands-on steps to carry businesses through these challenging times. Some options that businesses may wish to consider include salary cuts, restructuring of loans, retrenchment of staff and applications for funding.
When a company is in financial distress, one of the options that should be considered is business rescue. Business rescue was introduced by Chapter 6 of the Companies Act 71 of 2008 as a means of facilitating the rehabilitation of a financially distressed company in a manner that balances the rights and interests of creditors, employees and shareholders.
Business rescue involves three important aspects.
There are fees payable to a business rescue practitioner, which is one of the aspects which should be negotiated and considered before implementing business rescue. One has to avoid business rescue turning out to be an “expensive liquidation” when there are low prospects of a business actually being salvaged. Globally, business rescue has a 5% success rate, whilst the success rate in South Africa is currently estimated at approximately 10 – 12%.
Directors of companies should also consider “compromise” as an alternative to Business Rescue. It is a less expensive tool provided by the Companies Act. According to Section 155 of the Act, a business may be permitted to enter into a compromise or arrangement (otherwise known as a “restructuring agreement”) with its creditors. Business Rescue is not generally advisable (as the first step) for smaller companies, because it is far more costly than compromise. The company would have to invest in the
Business Rescue Practitioner’s fees and administration costs. These could be wasteful in circumstances where a compromise could have been reached.
Pieter J van Zyl
Director
Bate Chubb and Dickson Inc.
For help or advice please contact us:
Tel: (043)701 4500
Email: attorneys@batechubb.co.za