Author: My Lawyer (page 1 of 16)

THE BENEFITS OF CREATING A TRUST

Trusts are well-known to facilitate effective estate planning and continuity planning strategies. That said, setting up a trust – whether an inter vivos (between the living) or a testamentary (created in a will) − should be carefully considered and not just implemented blindly. 

The difference between testamentary and inter vivos trusts

  1. A testamentary trust is established when a person (the founder) makes provision for establishing a trust in their will. The trust does not come into existence until the founder dies.
  2. An inter vivos trust is set up between the living. In other words, property is transferred before death to the trust by its founder and managed by the trustees for the benefit of another person or persons.

The death benefits of creating an inter vivos trust exceeds the cost – both in time and money. According to The Estate Duty Act, upon death, a duty is levied against your estate known as estate duty. The nett value of any estate will be determined by deducting all liabilities from your assets of your estate, both real and deemed.

Should you create a testamentary trust, upon death the assets are in your name and will need to be transferred to the trust posthumously, meaning all assets are taken into account when assessing the duty payable.

Advantages

Taking the above into account, here are some benefits you could experience from creating a trust:

  1. Reducing estate duty: Inter vivos trusts can be used to minimise estate duty. No estate duty should be payable on assets owned by the trust as a trust does not die.
  2. Protection against creditors: As the trust’s assets are not owned by the beneficiaries, creditors do not have a claim on the assets. This advantage is especially important for people who could be exposed to potential liability. Companies as well as individuals are able to transfer assets into trusts.
  3. Efficient succession: Since trusts never die, beneficiaries will be able to continue enjoying the assets if one beneficiary were to pass away. 

Disadvantages

Despite the advantages, there are also some disadvantages of having a trust. They include the following:

  1. Costs: The costs of setting up a trust can be high. If assets are transferred into the trust, then transfer duty needs to also be paid.
  2. Duties of trustees: Trustees could find themselves personally liable for losses suffered by the trust if it can be proven that they did not act with care, diligence and skill according to Section 9 of the Trust Property Control Act.

This article 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

 

https://www.iprotect.co.za/articals-trust-info/article-arcives/why-an-intervivos-trust-as-opposed-to-a-testamentary-trust.html

http://www.entrepreneurmag.co.za/advice/starting-a-business/start-up-advice/should-i-set-up-a-trust/

https://www.findanattorney.co.za/content_inter-vivos-trust

EMPLOYERS BEWARE: DISMISSAL FOR POOR PERFORMANCE COULD BACKFIRE

It is reasonable to want to dismiss an employee for not performing on the job, or failing to meet a specific target. However, Employer’s should ensure that the targets they set are actually achievable for the employee. If not, they could be found at fault for dismissing an employee who failed to achieve unreasonable targets.

Damelin (Pty) Ltd vs Parkinson

In a recent judgement, delivered in January 2017, tertiary education company Damelin (Pty) Ltd, hired Parkinson as the general manager of the Boksburg campus. Parkinson’s employment contract stated that, ‟continued nonattainment of performance goals may result in the termination of employment.”

When Parkinson took up his position in January 2011, the campus had 352 enrolled students of which 168 were first-year students. His target for 2012, which was the national target, was to enrol 420 first year students by February 2012. Andrew Pienaar, the national sales director, estimated that there were 15 000 grade 12 learners in the catchment area the Boksburg campus. Parkinson queried the target, saying that his team contacted all the schools in the area and there were only 12 735 grade 12 learners in his area. He claimed that unrealistic numbers give rise to unrealistic targets, and that it was like being set up to fail.

The actual enrolment of first-year students for the Boksburg campus for 2012 was 117 first year students. In 2011, the figure had been 168. Parkinson had not met the target. A disciplinary inquiry was convened. Parkinson was charged with poor work performance relating to his failure to reach sales targets and was dismissed.

Unhappy with his dismissal, Parkinson and his union went to the CCMA. The commissioner determined that the dismissal was the appropriate sanction. Still dissatisfied, Parkinson then went to court. The court determined that dismissal could only be considered as a fourth step. The court set aside the award and reinstated Parkinson saying that the informal letters written to Parkinson could not be considered warnings, and that he was not given an appropriate amount of time to reach his targets.

Conclusion

Setting unrealistic expectations on employees could set them up for failure. In these circumstances, dismissal would not be appropriate. It is therefore important that employers ensure the standards they set for their employees are achievable within a reasonable amount of time.

This article 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

Case no: JA 48/15

HOW CAN AN UNMARRIED FATHER OBTAIN PARENTAL RIGHTS AND RESPONSIBILITIES?

Under the old dispensation, where parties were divorced, one parent (usually the mother) would usually be awarded custody of a minor child and the other parent (usually the father) would be entitled to visitation rights.

The custodian parent would be vested with making all of the day-to-day decisions of the minor child including which school the child would attend, what religion the child would practice, where the child would reside and so on.

The parents now have joint parental responsibilities and rights, and all major decisions relating to the minor child need to be taken by the parties jointly, which is a far healthier situation for the child.

  • If the unmarried father only wants to apply for care and/or contact, he can do so in the Children’s Court.
  • If the unmarried father wants to apply for guardianship, an application must be made in the High Court.
  • If the unmarried father wants to apply for care, contact and guardianship, he must bring the application in the High Court.

An unmarried biological father may ask a court of law to grant him full parental responsibilities if he:

  • at the time of the child’s birth, is living with the mother in a permanent life partnership, or
  • consents to be identified as the child’s father, or
  • successfully applies to be identified as the child’s father, or
  • pays damages in terms of Customary Law, or
  • contributes or has tried to contribute to the child’s maintenance and upbringing for a reasonable period.

What factors will the court take into account when considering an application for parental rights and responsibilities?

  • The best interests of the child.
  • The relationship between the unmarried father and the child.
  • The relationship between any other person and the child, such as the mother.
  • The degree of commitment the unmarried father has shown towards the child.
  • Whether the unmarried father has contributed or attempted to contribute to the maintenance of the child.
  • Any other factor the court considers to be relevant, such as:
    • whether the unmarried father has a history of violence towards children;
    • the effect of separating the child from his/her mother; or
    • the child’s attitude towards the relief sought in the application.

This article 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

https://www.legalwise.co.za/help-yourself/quicklaw-guides/unwed-father/

http://www.parent24.com/Family/Finance_Legal/Unmarried-Know-your-rights-20150826

THE VALIDITY OF TAX INVOICES – IT IS YOUR RESPONSIBILITY

The audits of Value-Added Tax (VAT) returns by the South African Revenue Service (SARS), have increased the focus on the validity of tax invoices for the purposes of VAT.

A VAT vendor submitting VAT returns is responsible for ensuring that all invoices included in the returns comply with the relevant legislation. If valid tax invoices cannot be provided at the time of a VAT audit, the vendor may lose up to 100% of the input tax being claimed on the invoice, even if an amended valid invoice can be provided subsequent to the audit. Furthermore, serious penalties, interest and other consequences may be imposed on the VAT vendor for errors, intentional omissions and fraud.

The requirements

Section 20 of the Value-Added Tax Act, no 89 of 1991, together with the VAT404 Guide for Vendors as updated in March 2012, sets out the requirements for a valid tax invoice.

A VAT vendor must issue a tax invoice within 21 days of the supply having been made where the consideration for the supply exceeds R50, whether the purchaser has requested this or not. If the consideration for the supply is R50 or less, a tax invoice is not required. However, a document such as a till slip or sales docket indicating the VAT charged by the supplier, will be required to verify the input tax.

The requirements for tax invoices of which the consideration or taxable supply is more than R5 000 are:

  1. the words “tax invoice” should be displayed;
  2. name, physical address and VAT registration number of the supplier name, physical; address and VAT registration number of the recipient;
  3. original serial number of the tax invoice;
  4. the date of issue of the tax invoice;
  5. full and proper description of the goods sold and / or services rendered;
  6. quantity or volume of goods and / or services supplied; and
  7. total amount of the invoice and VAT amount in South African currency (except for certain zero-rated supplies).

The requirements for tax invoices of less than R5 000 are:

  1. the words “tax invoice” should be displayed;
  2. name, physical address and VAT registration number of the supplier;
  3. original serial number of the tax invoice;
  4. the date of issue of the tax invoice;
  5. full and proper description of the goods sold and / or services rendered;
  6. total amount of the invoice and VAT amount in South African currency (except for certain zero-rated supplies).

Second-hand goods

In the case of second-hand goods purchased from a non-vendor, the purchaser has to record the following information:

  1. name, address and identity number of the supplier, confirmed by the person’s identity document or passport. (If the value of the supply is equal to or greater than R1 000, a copy of this document must be retained by the purchaser. If the non-vendor is a juristic person, a letterhead or similar document stating the name and registration number of the juristic person is required);
  2. date of acquisition;
  3. quantity or volume of goods;
  4. description of the goods;
  5. total consideration paid for the supply; and
  6. declaration by the supplier stating that the supply is not a taxable supply.

Conclusion 

If a vendor fails to deduct an input tax in respect of a particular tax period, that input tax may be deducted in a later tax period, but limited to a period of five years from the date that the particular supply was made. However, when a vendor becomes aware of an output tax not declared in the relevant period, a corrected VAT return for that specific period should be submitted.  It is not acceptable to declare the output tax in the next period and SARS may impose penalties and interest on the output VAT omitted.

This article 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

AUTHENTICATING DOCUMENTS FOR USE OUTSIDE SA

If you need to use official South African documents in another country, it is necessary that they are legalised for use abroad. This can be for any number of reasons, such as legalising university degrees for a job in another country.

What is legalisation?

Legalising documents means that official (public) documents executed within South Africa for use outside the country are affixed, sealed and signed either with an Apostille Certificate (where countries are party to The Hague Convention) or with a Certificate of Authentication (where countries are not party to The Hague Convention).

  • Legalisationbasically means the process followed by which the signature and seal on an official (public) document is verified.

The process involved in signing/executing documents:

If a country is part of The Hague Convention, the following process applies:

  • The documents are signed and/or executed in the presence of a Notary Public. The Notary Public will attach the Certificate of Authentication to the documents which must bear his signature, stamp and seal.
  • The documents are then forwarded by the Notary Public to the High Court in the area in which the Notary Public practices. The Court will then attach an Apostille Certificate authenticating the Notary Public’s signature.

There are certain documents that the High Court will not Apostille/Authenticate and must be sent to the Department of International Relations and Co-operation (DIRCO), which is based in Pretoria. For example:

  • All Home Affairs documents; and
  • Police Clearance Certificates.

If a country is not part of The Hague Convention, the following process applies:

  • The documents are signed and/or executed in the presence of a Notary Public. The Notary Public will attach the Certificate of Authentication to the documents which must bear his signature, stamp and seal.
  • The documents are then forwarded by the Notary Public to The High Court in the area in which the Notary Public practices. The Court will then attach an Apostille Certificate authenticating the Notary Public’s signature.
  • Documents are then submitted to the Legalisation Section at DIRCO to be legalised.
  • Once legalised by DIRCO the documents are then forwarded to the Embassy/Consulate of the country in which they are intended to be used for further authentication.

This article 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

http://www.dirco.gov.za/consular/legalisation.htm

http://www.dingleymarshall.co.za/getting-docs-row-authenticate-documents-south-africa/

EMAIL MANAGEMENT SYSTEM? GET IT BEFORE IT GETS YOU

If your company uses emails to communicate with clients, then it’s not enough to just rely on traditional ways of managing email, such as backing up emails periodically. There needs to be a well-equipped email management system in place that will keep your business safe.

The key point that relates to the heavy use of email, is the maintenance of the integrity of the email, and being able to prove that integrity. Unfortunately, you can’t simply do nothing and leave your email system as is and hope for the best. Firstly, it is important to understand the legal requirements. This includes the Electronic Communications and Transaction Act, 2002, or the ECT Act.

The ECT Act provides that information is not without legal force and effect simply because it is in electronic form. These are some of the rules set out by the ECT Act regarding electronic communications.

  1. An electronic document must be captured, retained and retrievable.
  2. Electronic documents must be accessible so as to be useable for subsequent reference, this includes the origin, destination, date and time it was sent or received.
  3. If a signature is required, it must be accompanied by an authentication service.

So what should you do?

All companies who wish to comply with the regulations should implement an effective email management system. The core requirements of a good email management system are as follows:

  1. The ability to monitor and intercept email;
  2. Effective capturing of all email;
  3. Cost effective storage of all email and efficient discarding of email that has lost its business value or is no longer required for legal or regulatory or compliance;
  4. Efficient and cost effective restoration of email;
  5. The ability to maintain the integrity of email and the contents thereof; and
  6. The ability to audit email use in order to be able to prove integrity.

Although it seems like a trivial matter, it is worthwhile to implement an email management system in your company. It will help protect your business in the event that you need a record of communication due to an incident or contract dispute. New regulations introduced by POPI will also make this a necessary part of how your company handles information.

This article 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Reference:

The Electronic Communications and Transaction Act, 2002

THE RENTAL HOUSING TRIBUNAL: I HAVE A COMPLAINT AGAINST MY LANDLORD/TENANT

Formed in 2001, the tribunal is comprised of five members (including a chair and vice chairperson) appointed by the Provincial Minister of Human Settlements, who each have expertise in property management, housing development and consumer matters pertaining to rental housing.

The tribunal seeks to:

  1. Harmonise relationships between landlords and tenants in the rental housing sector.
  2. Resolve disputes that arise due to unfair practices.
  3. Inform landlords and tenants about their rights and obligations in terms of the Rental Housing Act.
  4. Make recommendations to relevant stakeholders.

How do I lodge a complaint?

  1. First complete the relevant forms available from the Rental Housing Tribunal.
  2. The Rental Housing Tribunal will investigate the matter and find out what the problem is and try to resolve it amicably and as soon as possible.

What will the Rental Housing Tribunal do?

  1. They will establish whether there is any dispute between the landlord and tenant.
  2. They will try to resolve the matter through mediation – if the dispute cannot be resolved it should be referred to a hearing.
  3. They will conduct a hearing, where the landlord and tenant will be summoned for hearing by the Tribunal.
  4. A just and fair ruling will be made.
  5. Where a mediation agreement has been concluded, make such an agreement a ruling of the Tribunal. This ruling is binding on both parties.
  6. The Tribunal may make a ruling as to who pays whose costs.

What happens after I have lodged a complaint?

  1. After a complaint has been lodged with the Tribunal until the date of the ruling on the matter, the:
  2. landlord may not evict the tenant;
  3. tenant must continue to pay the rent; and
  4. landlord must maintain the property.

This article 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

AN EX-SPOUSE REFUSING TO PAY MAINTENANCE?

If a couple has gotten divorced and they have a child, then it’s the responsibility of both parents to support the child. The duty to pay maintenance cannot be avoided, regardless of either parents’ situation. If one parent refuses to pay maintenance, then the other parent can go to a court and make a claim. Being a single parent doesn’t mean being the only one to contribute to maintenance.

What should I do about it?

To deal with a spouse who refuses to pay maintenance you would first need to inform the maintenance officer. The maintenance officer can apply to the court for:

  1. A warrant of execution;
  2. An attachment order against the defaulter’s salary;
  3. An order to attach any debts; and
  4. A criminal prosecution.

Does the non-paying parent have a defence?

The only defence that a parent could have for not paying maintenance is having a lack of income. However, if the parent is unwilling to work, such as laziness, then this will not count as a defence. Failure to pay maintenance is taken very serious, guilty parents won’t get much sympathy from the court or others. If the parent is capable of working, then they will be expected to pay maintenance.

But I can’t find my ex-spouse?

Non-paying parents may think that they’re being clever by changing their address and not notifying the court. This is considered a criminal offence, and will result in punishment. Fortunately, it’s not the responsibility of the single parent to find anyone. A maintenance investigator will track down and find a non-paying parent.

How to claim maintenance

If you want someone to pay maintenance or believe that they are not paying the proper amount, then you can follow these steps at your local magistrate’s court. Remember to go the court in the district where you live.

  1. Go to the court and complete the form “Application for a maintenance order (J101)”.
  2. Also submit proof of your monthly income and expenses.
  3. A date will be set on which you and the respondent (the person whom you wish to pay maintenance) must go to the court.
  4. A maintenance officer and an investigator will investigate your claim and look into your circumstances.
  5. The court will serve a summons on the respondent.
  6. The respondent then has to either agree to pay the maintenance, or challenge the matter in court.

If found liable to pay maintenance

If the court finds someone liable for paying maintenance, it will make an order for the amount of maintenance to be paid. The court will also determine when and how the payments must be made. There are several ways the payments could be made. The court can order that the maintenance be paid at the local magistrate’s office or that the amount to be paid into the bank account chosen by the person claiming. The payments could also just be made directing to them. According to the new Maintenance Act (1998), an employer can deduct payments from an employee’s salary, if they’re liable for paying maintenance.

This article 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

I CAN’T REPAY MY DEBTS, WHAT CAN I DO?

If you are over-indebted, in other words, unable to repay all your credit agreements. Your biggest concern might be not getting dragged off to court or having all your possessions taken away. So what can you do to get out of your mess?

Debt review

Before you receive a summons for your outstanding debt you can opt for debt review. It’s important to take this option if you believe you won’t be able to pay your debts because once you receive a summons it’s too late. Debt review was introduced in 2007 with the National Credit Act (NCA).

During the first 60 business days from the date of your application to be placed in debt counselling, legal action may not be taken against you in respect of debts that are “under review”. Therefore, if you’ve opted for debt review, you don’t have to stress about someone knocking on your door, yet.

What if you don’t pay your debts?

If you decide not to go for debt review and fail to pay your outstanding debt, the creditors could take the following actions against you:

  1. Issue a summons and obtain judgement against you for the outstanding debt, interest and their legal costs;
  2. Send the sheriff to attach your property, such as your car;
  3. Instruct the sheriff to sell the attached property at an auction;
  4. Obtain a court order that your employer deduct an amount an amount from your salary and pay it over to the creditor (emolument attachment order).

Debt review process

If you decide to go for debt review, a registered debt counsellor has to first assess your financial obligations. This is basically what you have to pay every month. Some of your financial obligations may be due to reckless credit. This is when a creditor grants you credit without checking if you can afford it first. However, if you lied in your credit application, your financial obligations won’t be considered reckless credit.

If you are over-indebted the debt counsellor will draw up a repayment plan to rearrange your debt obligations. If your creditors reject the repayment plan, your debt counsellor can refer the matter to a magistrate’s court with a recommendation.

The court could make the following orders:

  1. You are not over-indebted and must continue making regular payments. If you don’t the creditor may take legal action to force you to pay.
  2. You are over-indebted and reckless credit was granted to you. The court may relieve you of some or even all of the payments under a reckless credit agreement depending on what is fair and just. The court may also postpone the date of payment under reckless credit agreements.
  3. You are over-indebted and must rearrange your payment obligation.

Hopefully, the creditors accept the repayment plan, or a magistrate’s court agrees to the repayment plan. The Payment Distribution Agent (PDA) will then channel your revised payments to your creditors. The payments are made directly to the PDA.

Once you’ve successfully paid all your debts, the debt counsellor will issue you with a clearance certificate. They will also notify the credit bureaus that you are no longer in debt counselling.

This article 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

Arde, A. 2013. “Debt review process step by step”. IOL. [online] Available at: http://www.iol.co.za/business/personal-finance/debt-review-process-step-by-step-1616109/ [Accessed 07/06/2016].

Anderson, AM. Dodd, A. Roos, MC. 2012. “Everyone’s Guide to South African Law. Third Edition”. Zebra Press.

CAUTION TO EMPLOYERS: DON’T FALSELY ACCUSE EMPLOYEES

Employers who dismiss employees should take remember not to falsely implicate them in the process. This could land employers in hot water with the CCMA, and the Court.

Clover SA (Pty) Ltd and Another v Sintwa

In a recent case, the High Court heard a damages claim arising from defamatory statements made by a witness while giving evidence before the CCMA.

Harrison Sintwa was employed by Clover SA as a team leader, reporting to Frederick Bopp, a production manager. He was responsible for checking machines and products to ensure that they passed the relevant standards. He was required to sign a daily operator report to confirm that the checks were done.

One day, it came to Clover’s attention that Sintwa had falsely signed that he had conducted certain checks when, actually, he had not. Clover charged him with fraudulently co-signing the report. A disciplinary inquiry was convened and Sintwa was dismissed.

The CCMA

Sintwa approached the CCMA with an unfair dismissal dispute. Bopp gave evidence on behalf of Clover at the disciplinary hearing and at the arbitration proceedings before the CCMA. During his evidence, he stated that it came to his attention that Sintwa had co-signed the report sheet and, therefore, committed fraud. The CCMA commissioner found Sintwa’s dismissal to be unfair on the basis that Clover had failed to prove that he was guilty of fraud, finding that his conduct was instead a result of negligence. Mr Sintwa was awarded four months’ salary as compensation.

Implicating an employee can lead to defamation

It didn’t end there, Sintwa also approached the High Court and instituted a damages claim against Clover and Bopp, based on the alleged defamatory statements they presented at the arbitration proceedings before the CCMA. Sintwa claimed R100 000 as damages saying that Bopp and Clover had wrongfully and unlawfully claimed that he had committed fraud.

The court concluded that the statement implicating Sintwa of fraud was irrelevant and unconnected to the arbitration proceedings before the CCMA and that Bopp had acted out of spite, which was supported by the fact that another employee who had co-signed the report with Sintwa had not been charged. It decided that Clover and Bopp had exceeded the bounds of qualified privilege and awarded Sintwa R100 000 in damages.

Conclusion

The take away is that employers should refrain from acting out of spite when dismissing employees. What you say, if untrue or unsupported, could make you accountable for an employee’s dismissal, to the CCMA and the Court.

This article 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Reference:

Clover SA (Pty) Limited and Another v Sintwa (CA2011/2015) [2016] ZAECGHC 77; [2016] 12 BLLR 1265 (ECG); (2017) 38 ILJ 350 (ECG) (13 September 2016)

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