Mediation & Arbitration

Although both mediation and arbitration are methods used to resolve disputes, there are substantial differences in the processes.

Arbitration is similar to the court process in that the parties present evidence to the arbitrator, who makes a decision based on the facts and the law. The process is similar to a trial, involving evidence, witnesses, cross-examination and legal argument, although it is usually less formal than court procedures. The decision of the arbitrator is legally binding and may be enforced by court process.

Mediation is a process where a mediator assists the parties to reach a settlement themselves. The dispute is not resolved unless all parties agree.

Mediators do not issue orders, find fault or make findings and usually will not express a view on the merits of the matter. Instead, they help parties to reach a settlement by assisting with communications, obtaining relevant information, and developing options. Proceedings in mediation are less formal than arbitration and are usually less time-consuming.

The mediation process varies, but usually involves the parties meeting together with the mediator and explaining their views of the dispute to each other and to the mediator. The mediator then usually meets with each party separately, often going back and forth a number of times, to discuss the dispute with them and to explore ways of resolving it. These separate discussions are confidential and enable the mediator to explore with each party possible ways of resolving the dispute to their mutual satisfaction.

The emphasis in mediation is on achieving a settlement that will satisfy the parties’ mutual interests, rather than on determining their respective rights. The mediation proceedings are confidential and are held without prejudice to the parties’ rights and, should the mediation not bring about a final settlement, the parties may always resort to litigation or arbitration to have their rights determined.

Most disputes referred to mediation are successfully resolved and result in a settlement agreement that is enforceable and may be made an order of court. Many people experience higher degree of satisfaction with mediation than with arbitration or other court processes because they can control the result.

Sexual harassment in the workplace

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A4_bThe idea of “the corporate workplace” has changed significantly in recent years and nowadays there are more women to be found in positions that were previously filled only by men. Unfortunately this has given rise to the issue of sexual harassment in the workplace. In this article we focus on what sexual harassment is and what someone can do if they are being subjected to it.

Both men and women can be victims of sexual harassment; however, it is more common for this type of harassment to be directed at women in the workplace. According to Section 6(3) of the Employment Equity Act[1] (EEA) harassment of an employee is a form of unfair discrimination and is prohibited on any of the grounds of unfair discrimination, which includes gender. The test for sexual harassment, as set out in Item 4 of the Amended Code of Good Practice on the Handling of Sexual Harassment Cases in the Workplace (the Code), is whether the conduct is unwelcome, of a sexual nature, violates the rights of an employee and constitutes a barrier to equity in the workplace, taking into account the following factors:

  1. Whether the harassment is on the prohibited grounds of sex and/or gender and/or sexual orientation;
  2. Whether the sexual conduct was unwelcome;
  3. The nature and extent of the sexual conduct; and
  4. The impact of the sexual conduct on the employee.[2]

There are three types of conduct that can constitute sexual harassment:

  1. Physical conduct such as touching;
  2. Verbal conduct such as innuendos; and
  3. Non-verbal conduct such as showing another person sexually explicit photographs.[3]

Certain types of sexual harassment are common in the workplace. One such type is quid pro quo harassment, which is where someone is forced to give in to sexual advances to avoid losing their job or a job related benefit. Another type is sexual favouritism where only those who submit to sexual advances can progress or receive benefits in the workplace. There is also sexual victimisation, where those who do not submit to sexual advances are prejudiced. Lastly we have the scenario where jokes, pictures or innuendos create a hostile working environment which need not be directed against one specific employee.[4]

According to Item 8 of the Code there is an obligation on employers to develop clear procedures to deal with sexual harassment, which should enable the resolution of problems in a sensitive, efficient and effective way. Section 60(1) of the EEA provides that conduct in contravention with its provisions must immediately be brought to the attention of the employer. This means as soon as is reasonably possible in the circumstances and without undue delay, taking into account the sensitive nature of sexual harassment, that the complainant may fear reprisals and the relative positions of the complainant and the alleged perpetrator in the workplace. The victim of the sexual harassment need not be the one to bring it to the attention of the employer; any other person who is aware of the sexual harassment may also do so.[5]

Once the sexual harassment has been brought to the attention of the employer the employer should consult all the relevant parties, take the necessary steps to address the complaint in accordance with the Code and the employer’s policy, and take all the necessary steps, which are set out in Item 8.3 of the Code, to eliminate the sexual harassment.[6]

A complainant or another person may choose to follow an informal procedure, the first of which is to explain to the perpetrator that the conduct in question is not welcome, that it offends the complainant, makes him or her feel uncomfortable and that it interferes with his or her work. The second way of handling this is for an appropriate person to approach the perpetrator, without revealing the identity of the complainant, and explain that certain forms of conduct constitute sexual harassment, are offensive and unwelcome, make employees feel uncomfortable and interfere with their work.[7]

If a complainant does not find the abovementioned satisfactory then he or she can follow the formal procedure set out in an employer’s sexual harassment policy and/or collective agreement, which should outline with whom the employee should lodge a grievance, the internal procedures to be followed and time frames which will allow the grievance to be dealt with expeditiously.[8]

If the complainant is still not satisfied with the results a complaint of sexual harassment may be referred to the Commission for Conciliation, Mediation and Arbitration (CCMA). It is important to note here that it is a disciplinary offence to victimise or retaliate against a complainant who in good faith lodges a grievance of sexual harassment.[9]

Reference List:

Employment Equity Act, 55 of 1998

Amended Code of Good Practice on the Handling of Sexual Harassment Cases in the Workplace (4 August 2005)

A C Basson, M A Christianson, A Dekker, C Garbers, P A K le Roux, C Mischke, E M L Strydom: Essential Labour Law 5 ed (2009)

[1] 55 of 1998

[2] Item 4 of the Amended Code of Good Practice on the Handling of Sexual Harassment Cases in the Workplace(4  August 2005)

[3] AC Basson, MA Christianson, A Dekker, C Garbers, PAK le Roux, C Mischke, EML Strydom: Essential Labour Law 5ed (2009) 223

[4] Basson et al: Essential Labour Law 5 ed (2009) 223

[5] Item 8.1 of the Amended Code of Good Practice on the Handling of Sexual Harassment Cases in the Workplace

[6] Item 8.2 of the Amended Code of Good Practice on the Handling of Sexual Harassment Cases in the Workplace

[7] Item 8.6 of the Amended Code of Good Practice on the Handling of Sexual Harassment Cases in the Workplace

[8] Item 8.7 of the Amended Code of Good Practice on the Handling of Sexual Harassment Cases in the Workplace

[9] Item 8.7 of the Amended Code of Good Practice on the Handling of Sexual Harassment Cases in the Workplace

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.

Implications of Estate Duty

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A2_bEstate duty is charged on the dutiable value of the estate in terms of the Estate Duty Act. The general rule is that if the taxpayer is ordinarily resident in South Africa at the time of death, all of his/her assets (including deemed property), wherever they are situated, will be included in the gross value of his/her estate for the determination of duty payable thereon.

The current estate duty rate is 20% of the dutiable value of the estate. Foreigners/non-residents also pay estate duty on their South African property.

To minimise the effects of estate duty you need to understand the calculation thereof. The following provisions apply in determining your liability:

  1. Which property is to be included.
  2. Which property constitutes “deemed property”.
  3. Allowable deductions: the possible deductions that are allowed when calculating estate duty.

Property includes all property, or any right to property, including immovable or movable, corporeal or incorporeal – registered in the deceased’s name at the time of his/her death. It also includes certain types of annuities, and options to purchase land or shares, goodwill, and intellectual property.

Deemed property

A. Insurance policies

  1. Includes proceeds of domestic insurance policies (payable in South Africa in South African currency [ZAR]), taken out on the life of the deceased, irrespective of who the owner (beneficiary) is.
  2. The proceeds of such a policy are subject to estate duty, however this can be reduced by the amount of the premiums, plus interest at 6% per annum, to the extent that the premiums were paid by a third person (the beneficiary) entitled to the proceeds of the policy. Premiums paid by the deceased himself/herself are not deductible from the proceeds for estate duty purposes.
  3. If the proceeds of a policy are payable to the surviving spouse or a child of the deceased in terms of a properly registered antenuptial contract (i.e. registered with the Deeds Office) the policy will be totally exempt from estate duty.
  4. Where a policy is taken out on each other’s lives by business partners, and certain criteria are met, the proceeds are exempt from estate duty.

B. Benefits payable by pension and other funds by or as a result of the death of the deceased

Payments by such funds (pension, retirement annuity, provident funds) usually consist of two components – a lump sum payment on death and an annuity afterwards. The lump sum component used to be subject to estate duty. However as from 1 January 2009, no amount received from such a fund is included in the estate of the deceased for estate duty purposes.

C. Donations at date of death

Donations where the donee will not benefit until the death of the donor and where the donation only materialises if the donor dies, are not subject to donations tax. These have to be included as an asset in the deceased estate and are subject to estate duty.

D.Claims in terms of the Matrimonial Property Act (accrual claim)

An accrual claim that the estate of a deceased has against the surviving spouse is property deemed to be property in the deceased estate.

E. Property that the deceased was competent to dispose of immediately prior to his/her death (Section 3(3)(d) of the Estate Duty Act), like donating an asset to a trust, may be included as deemed property.

Deductions

Some of the most important allowable deductions are:

1. The cost of funeral, tombstone and deathbed expenses.

2. Debts due at date of death to persons who have their ordinary residence in South Africa.

3. The extent to which these debts are to be settled from property included in the estate. This includes the deceased’s income tax liability (which includes capital gains tax) for the period up to the date of death.

4. Foreign assets and rights:

a. The general rule is that foreign assets and rights of a South African resident, wherever situated, are included in his/her estate as assets.

b. However, the value thereof can be deducted for estate duty purposes where such foreign property was acquired before the deceased became ordinarily resident in South Africa for the first time, or was acquired by way of donation or inheritance from a non-resident, after the donee became ordinarily resident in South Africa for the first time (provided that the donor or testator was not ordinarily resident in South Africa at the time of the donation or death). The amount of any profits or proceeds of any such property is also deductible.

5. Debts and liabilities due to non-residents:

a. Debts and liabilities due to non-residents are deductible but only to the extent that such debts exceed the value of the deceased’s assets situated outside South Africa which have not been included in the dutiable estate.

6. Bequests to certain public benefit organisations:

a. Where property is bequeathed to a public benefit organisation or public welfare organisation which is exempt from income tax, or to the State or any local authority within South Africa, the value of such property will be able to be deducted for estate duty purposes.

7. Property accruing to a surviving spouse [Section 4(q)]:

a. This includes that much of the value of any property included in the estate that has not already been allowed as a deduction and accrues to a surviving spouse.

b. Note that proceeds of a policy payable to the surviving spouse are required to be included in the estate for estate duty purposes (as deemed property), but that this is deductible in terms of Section 4(q).

c. Section 4(q) deductions will not be granted where the property inherited is subject to a bequest price.

d. Section 4(q) deductions will not be granted where the bequest is to a trust established by the deceased for the benefit of the surviving spouse, if the trustee(s) has/have discretion to allocate such property or any income out of it to any person other than the surviving spouse (a discretionary trust). Where the trustee(s) has/have no discretion as regards both the income and capital of the trust, the Section 4(q) deduction may be granted (a vested trust).

Portable R3.5 million deduction between spouses

The Act allows for the R3.5 million deduction from estate duty to roll over from the deceased to a surviving spouse so that the surviving spouse can use a R7 million deduction amount on his/her death. The portability of the deduction will only apply when the entire value of the estate of the first dying spouse is left to the surviving spouse.

Life assurance for estate duty

Estate duty will also normally be leviable on these assurance proceeds.

Source: Moore Stephens’ Estate Planning Guide.

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.

Informal “decisions” by Homeowners’ Association

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A3_bMany homeowners’ associations have strict requirements concerning the aesthetic appearance of buildings on the estate. These include fences and other smaller additions that are not always considered by the homeowner to be building projects in terms of the rules, the Memorandum of Association (MOA) or the Memorandum of Incorporation (MOI). The owners then fail to submit plans and/or drawings for formal approval by the trustees or directors of the association.

Some homeowners knowingly attempt to avoid the prescribed formal process and merely invite a trustee or director for an informal discussion, explaining with waving arms the envisaged building project, be it a fence or a pergola. The nod of approval by the trustee is then held by the homeowner to be “approval” of the planned project.

The courts have ruled as follows with regard to the “consent” granted by a trustee at an informal meeting with the homeowner, where the MOA or MOI of the homeowners’ association clearly dictates a procedure for approval of any building or improvement:

  1. In order for a trustee or director to sign off a plan in his official capacity, a trustee must properly inform himself of the issues which affect the complex as a whole and not simply have regard to his or her inter-personal relationship with the homeowner. In order to be properly informed, a trustee must ordinarily make a decision in committee with the benefit of debate. His decision must consciously have regard to the MOA or the MOI, whichever case it may be, and the long-term interests of the members. Failure by the trustee to do so will imply that the trustee has not applied his mind to all the relevant issues. It may be possible to impute acceptance by a person both in his individual and official capacity.
  1. The nature of the relationship established between homeowners under a MOA or MOI to which each subscribes, constitutes an agreement in terms of which each homeowner submits contractually to the decisions of a body of elected trustees to whom they have conferred the right and power to make binding decisions on matters that affect their relationship inter se, or which generally affect the estate.
  1. It is further important to take note of whether written consent has been granted by the trustee, as such an action by the trustee would be an additional consideration to establish whether a formal decision will be deemed to have been made.

See specifically Hoosen & Others NNO v Deedat 1999 (4) SA 425 (SCA) and Khyber Rock Estate East Home Owners Association v 09 of Erf 823 Woodmead Ext 13 CC, a judgement by his honourable acting justice Spilg in the Witwatersrand Local Division in case number 7689/2006.

An informal discussion regarding the building plans of the homeowner can thus not be deemed as a formal decision made by the trustees of the homeowners’ association, if the homeowner failed to follow the prescribed procedure.

In the event that a homeowner indeed deems the informal consent as a “decision” made by the trustees of the homeowners’ association, the courts will not interfere with the decision made by a homeowners’ body save under recognised grounds of judicial review as applied to a voluntary association whose members have bound themselves to its rules, which include the conferring of decision-making functions on an elected body of trustees. (Turner v Jockey Club of South Africa 1974 (3) SA, SA Medical & Dental Council v McLoughlin 1948 (2) SA 355 (AD) and Marlin v Durban Turf Club & Others 1942 AD 112).

Trustees and directors should therefore take care when having informal discussions with homeowners and insist on the due process, in terms of the rules, the MOA or the MOI, to be followed to the letter. Rather avoid commenting or voicing an opinion except at the appropriate forum – the formal meeting of the trustees or directors where the item is noted on the agenda in compliance with the association’s prescribed formal requirements.

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.

What is meant by real security?

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A1_b Real security means that, on the basis of a creditor’s right against the debtor (principal debt), a creditor acquires a limited real right in the property of the debtor as security for the payment of the creditor’s right (principal debt) by the debtor. Real security differs from personal security in that a creditor does not acquire a limited real right in the property of the debtor in the case of personal security, but only acquires a creditor’s right against a third party as security for the payment of the principal debt by the debtor. Such a third party is normally surety of the debtor.

A requirement for real security is the existence of a valid and enforceable principal debt. The real security is accessory to the principal debt, in other words the real security is terminated automatically if the principal debt is paid in full.

If the object of security is moveable property, real security can be in the form of either pledge or notarial bond. In the case of pledge the object of pledge (corporeal or incorporeal moveable property) must be delivered by the pledger (debtor) to the pledgee (creditor). Physical control of the pledge object is a requirement for the establishment and continuation of a limited real security right to the security object. The pledgee has the obligation to maintain the pledged property within reason and, on termination, to return the property to the pledger. A notarial bond can be registered in respect of specified, corporeal moveable property of the debtor (mortgagor) in favour of the creditor (mortgagee) in the deeds registry. After registration of this bond, the mortgagee acquires a limited real right to the encumbered property without delivery thereof to the mortgagee.

Immoveable property of the debtor serves as the object of security in that a mortgage is granted by the debtor (mortgagor) to the creditor (mortgagee) and registered in the deeds registry. A mortgage is a liquid document which grants the mortgagee a limited real right in respect of the immoveable property of the mortgagee without the physical control of the property being passed to the mortgagee. More than one mortgage can be registered over the same immoveable property at the same time. Priority is given, in this case, to mortgagees in the order that the mortgages were registered (prior in tempore, prior in iure).

The pledge of the mortgagee (creditor) can, if the principal debt is not paid in full by the mortgagor or pledger (debtor), have the security object sold in execution and is entitled to the proceeds of the sale in execution for payment of the principal debt. In the case of insolvency of the pledger or mortgagor, the pledge or mortgagee acquires a preferent claim to the proceeds of the sale of the security object.

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.

Editorial: Issue 4

De Klerk and Van Gend celebrated Women’s day lasty month by hosting a breakfast for all of our female clients.  Zelda la Grange, former private secretary to Mr Nelson Mandela, captivated our guests with the interesting life lessons that she learnt from Madiba, which include being a person of integrity and never being late to arrive at an event!Catherine Warr was admitted as an attorney in the High Court and we look forward to the part that she will continue to play in ensuring that De Klerk and Van Gend delivers excellent service to its clients.  She is currently practising in the litigation department at our Claremont offices and, together with Stephen Duffett, also assists our clients with surrogacy law matters.

In a case that was the first of its kind, we assisted a couple to take both civil and criminal action against a defendant who had intimidated and humiliated the couple due to their sexual orientation and succeeded in claiming damages for the couple.

A number of us attended the Kaapstad Sakekamer where the ‘Business Leader of the Year 2015’ was announced.  Mr Arthur Gillis acts as the Chief Executive Officer of Protea Hotels, which was bought over last  year by Marriot International, the largest hotel company in Africa,.

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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.