Archives: General Interests & News Flashes

“The number of cases of dementia is estimated to almost triple by 2050” (World Health Organisation)

It’s a growing problem – with our aging population comes a steady increase in the number of older people developing dementia and other incapacitating mental conditions.

How as a family member or caregiver can you help? How as a person approaching old age can you plan for a future time when you will need help? Your first thought will likely be the quick, simple and cheap option of a power of attorney, but beware – it will fail (in a legal sense) just when it is needed most.

We’ll have a look at what a power of attorney is, at why it is (unfortunately) not a “forever” solution, and at the alternatives available to you.

Although the actual prevalence per capita of dementia is reportedly on the decline, aging populations ensure that it is becoming more and more of a problem in society – for older people, their families and caregivers.

If someone close to you (normally an aging parent or relative) needs – or may in the future need – assistance with their financial affairs, your first thought will probably be a power of attorney by which the “principal” appoints an “agent” to act for him/her, either for a particular purpose (a ‘special power of attorney’) or generally (a ‘general power of attorney’). You may well have the same thought if you yourself are approaching old age and starting to plan for your future needs.

A power of attorney is certainly a quick, cheap and easy solution but be careful – it’s only a temporary one. It is not “forever”!

The downside – automatic termination (just when help is most needed)

Of course a principal can cancel his/her own power of attorney at any time, but what is not so well known is that it terminates automatically if and when the principal –

1. Dies (an executor is then appointed); or
2. Becomes insolvent and his/her estate is sequestrated (a trustee is then appointed); or
3. Becomes mentally incapacitated in the sense of being no longer able to make his/her own decisions for whatever reason – perhaps a stroke, coma following an accident, mental illness, dementia, Alzheimer’s, general age-related diminishing capacity etc.

It’s this last scenario that catches most people unawares, because it seems so illogical for the power of attorney to lapse just when it’s needed most.

But that, unfortunately, is the law. An agent can only do what the principal can do, so if a principal loses legal capacity, the power of attorney immediately fails. Or as a Department of Justice document neatly puts it: “In South Africa the power of attorney remains valid only for as long as the principal is still capable of appreciating the concept and consequences of granting another person his or her power of attorney”.

In practice there are probably many cases of powers of attorney continuing to be used to everyone’s benefit long after the principal has lost formal capacity, but an agent in that situation acts without authority and risks personal liability for doing so if the validity of anything done under the failed power of attorney is challenged.

So what are the alternatives?

• The High Court can appoint a “curator” when a person becomes unable to manage his/her own affairs. A curator bonis handles all the person’s financial affairs, a curator ad personam his/her personal affairs (such as giving consent for medical treatment, where to live etc). Unfortunately curatorships are costly, prone to bureaucratic red tape and delay, paternalistic and, being public, demeaning to the principal.
• A simpler and cheaper alternative is the appointment by a Master of the High Court of an “administrator” in terms of the Mental Health Care Act. An administrator only has power to deal with the person’s property (not personal affairs), and this alternative is only available in cases of actual “mental illness” or severe/profound intellectual disability, and only for smaller estates (assets up to R 200,000 and annual income up to R 24,000).
• A trust to address the purely financial aspects might also be worth considering whilst the person in question still has legal capacity. Take advice however on the costs, tax and other implications.

What about an “enduring” or “conditional” power of attorney?

In 2004 the South African Law Reform Commission recommended changes to our law to allow for alternatives like –

1. An “enduring power of attorney” (or “EPA”) which would remain valid despite the subsequent incapacity of the principal; and
2. A “conditional power of attorney” which would come into operation only on the incapacity of the principal.

Unfortunately nothing concrete has as yet come of that, and although some legal commentators suggest that our courts might perhaps uphold a properly-worded EPA, the general consensus appears to be that they will not be recognised.

It boils down to this – take full legal advice on your particular circumstances.

“Spoliation is the wrongful deprivation of another’s right of possession. The aim of spoliation is to prevent self-help. It seeks to prevent people from taking the law into their own hands … The cause for possession is irrelevant – that is why a thief is protected … The fact that possession is wrongful or illegal is irrelevant, as that would go to the merits of the dispute” (extracts from a 2012 Supreme Court of Appeal decision)

Landlord vs tenant disputes can quickly escalate into protracted and expensive litigation, and as a landlord you may be tempted to take the law into your own hands by changing locks, cutting electricity etc.

We analyse our law in that regard, explain what a “spoliation order” is and what a tenant must prove to obtain one, and discuss a recent High Court case in which an internet café owner in a shopping centre disputed her landlord’s method of billing for electricity.

When the landlord cut her electricity and changed the locks she successfully asked the High Court for a “spoliation order” – a good practical example of why unlawful self-help is a bad option for landlords.

As a landlord in dispute with your tenant you may well be tempted to avoid the delay and cost of litigation by taking your own eviction or enforcement action.

Bad idea. No matter how good your overall case may be (or how good you may think it is), taking the law into your own hands automatically puts you in the wrong.

Let’s look at how that works, firstly the theory of it and then with reference to a practical example recently decided by the High Court.

The tenant’s right to immediate return of possession

Our law requires that you approach a court for assistance; self-help is not an option. So if you remove the tenant’s access to the leased premises without a court order, you face having to immediately restore possession to the tenant via a “spoliation order”.

The important thing is that at this stage the court has no interest in how strong or weak your actual case against the tenant is. That you can fight about in a full court action down the line. All that counts now is how you dispossessed the tenant, not whether you are the owner nor whether you have any legal right to possession.

So to succeed in obtaining a spoliation order, all the tenant has to prove is –

1. That he/she was in “peaceful and undisturbed possession”, and
2. That he/she was “unlawfully deprived of that possession.” The critical question here is whether or not the tenant consented – freely and genuinely – to the dispossession. If so, the dispossession was lawful. If not, it was unlawful. Thus spoliation “may take place in numerous unlawful ways. It may be unlawful because it was by force, or by threat of force, or by stealth, deceit or theft” – or just without consent.

Let’s move on to the practical example of the shopping centre tenant …

The internet café and the self-help landlord

• An internet café business owner was locked in dispute with her landlord over its method of electricity billing.
• The landlord’s response was firstly to cut electricity to the premises, then to change the locks.
• After trying without success to resolve the dispute, the tenant applied for a spoliation order.
• The landlord did not dispute that the applicant was in possession of the premises, nor that he had dispossessed her with neither consent nor court order.
• What the landlord did argue was that the tenant’s application was not urgent, that it should have been brought in the magistrate’s court and not in the High Court, and that it was really not about spoliation but about the tenant trying to enforce her rights in terms of the lease.
• Rejecting all these contentions, the Court held that the landlord had committed two separate acts of spoliation –
  • The first when it disconnected the electricity supply thus denying the tenant use of the premises – “a limitation of her rights as a possessor” and
  • The second when it changed the locks to the premises, thus dispossessing her entirely.
• The end result – the landlord must pay all costs, immediately restore possession of the leased premises to the tenant, and immediately re-connect the electricity.

Landlords – the self-help option automatically puts you in the wrong. Rather go the legal route!

Times are hard, and although hopefully we are now seeing the first green shoots in our economy, there has never been a better time to improve your relationship with money and the state of your finances.

Have a look at these website articles for ideas on how to make a start –

• “No more fighting over bills! Here are 3 tips to master your money” on The Catalyst website
• Time’s “Struggling to Repay Your Debt? The Snowball Method Could Help” here.

What happens if you want to access a South African bequest overseas?

BizNews gives you a step-by-step breakdown of how to go about it, depending on whether you are –

• Non-resident,
• Financially emigrated, or
• A South African resident temporarily abroad.

Read also the section on taxation.

Bear in mind that of necessity an article like this can only give you an overview of some general principles, and that getting anything wrong could cost you dearly. Professional advice on your specific circumstances is a no-brainer here!

This may be a good time to take Mark Twain’s advice to “Buy land, they’re not making it anymore”.

“It is only once the court concludes that there is no defence to the claim for eviction and that it would be just and equitable to grant an eviction order that it is obliged to grant that order” (Extract from judgment below)

When you find a property you like the looks of, just check upfront whether there is anyone currently in occupation. If there is, be sure to take legal advice on the occupiers’ legal position, because whilst it’s certainly possible to evict unlawful occupiers, you might be in for a long and difficult fight.

We discuss the strong constitutional and statutory rights enjoyed by unlawful occupants in the context of a recent High Court matter where a family, having refused to vacate a newly-sold apartment, proceeded to live in it rent-free for over two years.

“Buy land” said Mark Twain, “they’re not making it anymore.” With the first green shoots of a property market recovery supposedly now showing through perhaps this is indeed the time to take his advice.

Just be sure, if the property you have your eye on is occupied by anyone, to seek proper legal advice on the occupiers’ legal position before you put pen to paper.

We all know that unlawful property occupiers enjoy substantial constitutional and statutory rights, and a recent High Court case provides a good example of the fact that whilst it is certainly possible to evict unlawful occupiers, it could well be neither quick nor easy.

The family that lived rent free for two years

• A buyer bought an apartment from the previous owner’s liquidators and took transfer on 31 March 2017.
• The new owner advised the family occupying the apartment that it must vacate by 14 April or face eviction proceedings.
• The family refused to budge, and the owner, after complying with the many formalities required of it by PIE (the Prevention of Illegal Eviction From and Unlawful Occupation of Land Act), applied to the High Court for an eviction order.
• The family defended the application, firstly on the basis that it was, it said, in lawful occupation in the form of a lease agreement. The Court rejected this defence, finding that the family was in unlawful occupation even on its own version of the facts, because the “lease” (which the owner denied was ever validly entered into) had lapsed at the end of May 2017. The family’s attempt to persuade the Court that the lease had been “tacitly” renewed was doomed to failure because of the owner’s unrelenting insistence that the family’s continued occupation was unlawful.
• Secondly the Court considered the all-important question “Is it just and equitable to evict?”

Per a 2017 Constitutional Court judgment which dealt extensively with the constitutional and statutory rights of unlawful occupiers, the High Court’s starting point was this: “that no one may be evicted from their home without an order of court made, after considering all the relevant circumstances”, having regard to the interests and circumstances of the occupier/s, and paying “due regard to broader considerations of fairness and other constitutional values, so as to produce a just and equitable result” (emphasis added).

This is where questions of indigence and the risk of homelessness arise, and this is the hurdle at which many a property owner has stumbled in the past.

In this case however, the owner triumphed, the Court finding on the facts that the family was financially able to pay rental but had paid nothing whilst enjoying free occupation for over two years. It had also had legal representation and could not be regarded as economically vulnerable or unable to obtain alternate accommodation.

Critically, perhaps, the Court commented that the father (in whose name the eviction application was brought and fought) “has known of the real risk of eviction for a period in excess of two years and as such, he ought reasonably and responsibly to have made contingent plans in the event that an eviction order is granted … The professed risk of homelessness is not borne out by the undisputed facts of the matter and [the father] cannot be characterised as indigent by any means”.

• Finally, the Court, having decided to grant the eviction order, had to consider when to make the order effective from. It’s an important enquiry because as an owner you could find yourself successfully holding an eviction order, but with an expensive delay before being able to implement it. The Court must consider “what justice and equity demand in relation to the date of implementation of that order and it must consider what conditions must be attached to that order. In that second enquiry it must consider the impact of an eviction order on the occupiers and whether they may be rendered homeless thereby or need emergency assistance to relocate elsewhere.”

Fortunately for the property owner in this case the Court did not provide for too long a delay, giving the family eight weeks to vacate (slightly longer than requested because a minor child’s interests were involved).

The family also has to pick up the tab for all the legal costs.

Buyers – some final advice

First prize is always to have a solid agreement in place with any occupiers before you buy an occupied property.

So sign nothing – not an offer to purchase, nor a lease, nor any form of occupier contract – until you have your lawyer’s advice!

“Surprise the enemy” (Sun Tzu in ‘Art of War’)

Your “strong” court case is worth nothing without the hard evidence to support it.

What if that vital evidence is in the hands of the enemy, and you have every reason to believe that it will be destroyed or spirited away before trial? Fear not, our law has a powerful weapon to help you in the form of an “Anton Piller” search and seizure order.

Let’s have a look at how the “surprise” element inherent in applying for these orders is both central to their successful execution, and an underlying reason for our courts’ caution in granting them. You have many requirements to meet and the recent Supreme Court of Appeal case of a software developer’s claims for damages and unlawful competition show how they work in practice.

You suspect that someone you are suing (or about to sue) will destroy or hide vital evidence in their possession. Perhaps by shredding documents or deleting electronic records supporting your case, or perhaps by spiriting away computer hard drives full of incriminating information. You fear that if they get away with it your case will be dead, or at least compromised.

Fortunately our law has a strong and quick remedy for you – the “Anton Piller” order, by means of which the High Court can authorise a search for, and a seizure into safekeeping of, the relevant evidence until trial.

Surprise raids and fishing expeditions

This is a drastic and draconian remedy. For obvious reasons this is a “surprise raid” on the other party – giving advance notice to the other party of your court application would defeat the whole object.

Which means that the other party suffers an unannounced and substantial invasion of its privacy, leading to all sorts of disruption and potential damage to its business.
Which is why our courts have laid down strict requirements that you must comply with before you will be granted an order. A recent Supreme Court of Appeal (SCA) decision illustrates –

1. A developer and seller of computer software wanted to sue a company it had dealt with for damages on the basis of alleged breaches of contract and for unlawful competition. It obtained in the High Court an Anton Piller order giving access to the Deputy Sheriff, independent attorneys and forensic specialists to search and seize “documents specified in the order, computer equipment or any other storage devices”. This order was subsequently set aside and the developer, attempting to have the order re-instated, approached the SCA for leave to appeal.
2. The Court in refusing leave to appeal analysed and applied the requirements for an order to preserve evidence under three main headings. You must establish (prima facie, in other words “on first appearance” but not definitively at this stage) the following –
   • That you have a cause of action against the other party, which you intend to pursue. The developer had, said the Court, established this.

• • That the other party has in its possession “specific documents or things which constitute vital evidence in substantiation of [your] cause of action…” This, said the Court, required the developer to “identify the documents it sought to preserve with the necessary degree of specificity”. A “blanket search for unspecified documents or evidence, which may or may not exist, is not permitted”. You have to be specific.
  • The major flaw in the developer’s case was, said the Court, its failure in its affidavits to identify or specify which vital information was in possession of [the other party] that needed to be preserved. It proposed a “keyword” search to be used in searching the whole of the other party’s data base that was “invasive and a trawling expedition through every aspect of [the other party]’s business” including sensitive and confidential information to which it could not be entitled.
  • That you have a “well-founded apprehension that this evidence may be hidden or destroyed or in some manner spirited away by the time the case comes to trial…” But in this case, said the Court, the developer had failed to show that the other party was untrustworthy or dishonest, plus it had “failed to set out any factual basis for an objective conclusion to be reached of the well-founded and reasonable apprehension that evidence would be concealed.”

3. This particular order, held the Court, “involves a departure from the basic premise upon which Anton Piller orders are granted, namely that they are to preserve evidence, not search for it”, whilst its execution was “nothing but a fishing expedition” (emphasis added). The software developer could not succeed in re-instating its Anton Piller order.

“A bank is a place that will lend you money if you can prove that you don’t need it” (Bob Hope)

Is your bank entitled to clean out your current account’s credit balance – with neither notice to you nor your permission – to settle a separate debt you owe it?

Banks have always argued that they are allowed to do exactly that in terms of our common law principle of “set-off” – and that having that ability helps us all in the end by giving them more security when lending us money.

The National Credit Regulator however approached the High Court for a determination on whether or not the National Credit Act has changed all that. We discuss the issues at stake and the Court’s ruling.

A recent High Court decision has settled the knotty question of whether your bank can take money it holds for you in one account to cover your debt to it in another, without your permission and without notice to you.

Firstly, what is “set-off”?

To understand how important this new decision is, we need to go back to our common law (unwritten law) principle of set-off. In simple terms, common law set-off allows one debt to be cancelled out by another. So if for example I owe you R1,000 and you owe me R900, I am both your creditor and your debtor, and vice-versa. If we come to blows, I can then set the one debt off against the other with the net effect that I owe you R100.

Credit-lenders, and in particular banks, used to make extensive use of this to collect debt. If for instance you fell behind in your mortgage bond or credit card payments, your bank could, if it was so inclined, take the arrears out of your current account as soon as your salary was paid into it – without your consent and without notice to you.

Banks have always argued that this ability has made it easier for them to lend money to us when we ask for it, as it reduces their risk by giving them more security if things go wrong. Giving notice or asking for consent would, they argue, allow a recalcitrant debtor to quickly withdraw the funds and frustrate the debt collection. But the other side of the coin of course is that you could suddenly find yourself without money to live, let alone to service your other debt payments – a situation particularly hard on lower earners and those struggling with mountains of debt.

Enter the NCA (National Credit Act) in 2005…

How the NCA changed things

In broad terms, the NCA (when it applies – see next paragraph) restricts set-off in such a way as to give the consumer the right to choose whether or not to consent to set-off, which accounts it may be applied to, in respect of which amounts, when it is to be applied, and in respect of which debts.

But does the NCA apply to your particular debt? In most cases, yes. In a nutshell (there are some “ifs” and “buts” here so ask your lawyer for specific advice) the NCA applies to most personal loans, home loans, overdrafts, credit card debt, asset finance agreements, lease agreements and so on. It covers consumers who are individuals and some – not all – “juristic persons” (companies and the like – take advice for details).

Which brings us to the High Court…

Nevertheless at least one bank (which is unlikely to be alone in this practice) has continued until now to apply common law set-off without consent, in other words they would take money from a customer’s account to cover the customer’s debt on a separate credit agreement. The bank argued that the NCA’s set-off restrictions did not apply on its interpretation of the NCA, in its circumstances and to its credit agreements. Importantly, its agreements omitted any mention of set-off (where an agreement does mention set-off, there is no argument – the NCA restrictions definitely apply).

Having received complaints from consumers to this effect, the National Credit Regulator asked the High Court to interpret the NCA’s provisions and to rule on the legality of the bank’s practice.

The High Court’s decision

Common law set-off without your consent as above cannot happen if the NCA applies to your credit agreement.

In a nutshell – you have the choice! Banks and other credit-lenders must ask you before taking money from one account to cover your debts in another.

“Forewarned is Forearmed!” (Wise old saying)

Here’s another warning about cyber-scams in the property industry because the more they increase, and the cleverer they become, the more vital it becomes for you to be aware of them and to protect yourself from them. Remember that you become a prime target when you buy or sell property – the rich pickings on offer when property is involved make sure of that.

So we’ll have a look at how these cyber-scams work, at how you can protect yourself from them and at how, no matter how much security the transferring attorneys may have on their side, you still need to be constantly on guard.

Why yet another warning about cyber-scams in the property industry? It’s because the hard fact is that the criminals are winning this war. In fact we are now reportedly the “second most targeted country in the world with regard to cyber-attacks” (Law Society of South Africa).

Hence, no doubt, the Legal Practitioners Indemnity Insurance Fund report of “over 110 cybercrime related claims with a total value of R70 million” in the period July 2016 to August 2018.

The scammers are using more and more sophisticated techniques to lull their victims into complacency, and your best protection is your own vigilance – forewarned is definitely forearmed!

And remember that property transactions will always remain a firm favourite with online fraudsters for two simple reasons –

• Property sales usually involve large amounts of money.
• Electronic communication between attorneys and clients is a fertile ground for interception and deception.

A seller’s or a buyer’s nightmare – every cent stolen!

As a seller, you’ve sold your property for R5m, transfer to the buyer has been registered but the money doesn’t show up in your bank account (let’s call it “account A”). You phone your conveyancer only to be told “but we did pay you, we followed your instruction to pay into account B.” Of course account B was set up by a fraudster and your R5m is long gone.

Or as a buyer, you have paid the full purchase price into the transferring attorney’s “new bank account C” and are shocked to be told by the attorney that you have actually paid nothing at all to anyone – except to a scamster. Good-bye both money and property!

What happened?

How your money gets taken – 2 main scenarios

Cyber criminals are resourceful, creative and constantly updating their methods so this is by no means an exhaustive list of your risk areas. To date however the two main categories of scam remain –

1. Your attorney’s payments to you: As a seller, when you give the transfer instruction to your attorney you will nominate a bank account – account A in this example – to receive the sale proceeds. Before transfer however (often at the very last minute) the conveyancing firm receives a genuine-looking email “from you” changing your banking details to “my new account, account B”. Your emails to and from your attorney have been intercepted, and your details cleverly spoofed. Your money is gone – forever. Of course if you chose the right attorney to attend to your transfer in the first place this shouldn’t happen to you – but, as we shall see below, the scammers are so sophisticated now that you can never ever let your guard down, no matter how trustworthy the firm.
2. Your payments to the attorney: The main risk here is to the buyer paying the whole or a large portion of the purchase price to the transferring attorney. Of course transfer duty and other costs of transfer can also add up to a tidy sum, whilst as a seller you will be paying for things like bond cancellation costs, rates, agent’s commission and so on.

The scam here is that once again emails are intercepted, and this time you receive an authentic-looking but entirely fraudulent email asking you to pay into “account C”. The email appears to come from the conveyancing firm but of course it is again a clever (often very sophisticated) impersonation, this time of the firm’s branding, details and email address.

The false account details might be in the email itself or in a falsified attachment – nothing is safe. The email may be in the form of a “we’ve changed our banking details” notification, or the criminal may work on the basis that you just won’t notice the change. And of course account C isn’t the conveyancer’s trust account at all, and the minute you make a payment into it your money is – once again – gone forever.

Who can you recover your stolen money from?

By the time you realise you have been scammed, the criminals are long gone and your chances of catching up with them are remote to say the least.

So could the attorney possibly be liable? A recent High Court judgment deals with that very issue…

Court: Attorney negligent, must pay almost R1m

In this case a transferring attorney was ordered to pay her client damages of R967,510-53 for negligence.

In a nutshell, the attorney had attended to a property transfer for the sellers, and a scammer intercepted emails between the sellers and the attorney’s secretary. This was a classic “Scenario 1” operation, and seemingly a sophisticated one – the scammer persuaded the secretary to accept an emailed “my bank account details have changed” instruction and to pay the proceeds into the scammer’s account.

The sellers sued the attorney for damages, the attorney denied any negligence whatsoever, but the Court found that she had indeed failed to carry out her mandate with the “due care, skill and diligence expected of a reasonable attorney and a conveyancer in the circumstances.”

What is important for you is that the Court reached this conclusion on the particular facts of this matter. There were specific factors present here such that a “diligent, reasonable attorney” would, said the Court, have taken steps to verify the information in the fraudulent emails.

That suggests that there are many possible sets of facts which would have left the seller unable to prove any failure of duty by the attorney. Your risk is that if you try to hold the attorney liable you will have to prove that your loss resulted from his/her fault and not from yours – that’s never going to be easy and if you fail, you are left high and dry.

Protect yourself. Be vigilant!

So prevention really is much better than cure here. Litigation will be expensive and risky, and even if you succeed in your damages claim the attorney’s normal indemnity insurance excludes these types of claims so your victory could be a hollow one.

Fortunately there are several common sense steps you can take to minimise your risk –

• If you have the choice of transferring attorney (which you normally would have if you are the seller), choose an attorney you trust to do the job properly, carefully and professionally.
• Having said that, no matter how much security your attorneys have put in place on their side, if it is your system that is vulnerable that is what the criminals will exploit. So keep all your anti-virus, anti-malware and other security software updated, learn all about protecting yourself from malware/spyware/phishing attacks, and generally treat all electronic communications with caution – even those appearing to come from a trusted source like your attorney.
• Read “Is That Sender For Real? Three Ways to Verify the Identity of An Email” on FRSecure’s blog. All the tips given there are important, but at the very least use the methods given to find out where the email really comes from. Then check back to see that it matches in every detail the email address you were given at the start of the transfer process.
• Be suspicious if anything in an email just feels “not-quite-right” – perhaps only a cell phone number is given, or a free generic email address (like Gmail) is used, or the wording is somehow “off”. If the email makes you even the slightest bit uneasy, err on the side of caution and investigate further.
• Most importantly, never accept notification of any supposed change in your attorney’s banking details without visiting or phoning your attorney to check all is in order (don’t of course use the contact details given in the suspicious email, they could also have been doctored!).