Category: Legal

The perception which exists that once your family trust has been registered with the Master of the High Court it is valid, is wrong! Even though the Master is considered being the ‘watch dog’ over trusts, it is not the Master’s duty to check the validity of the trust deed upon the “registration” of the trust or the validity of subsequent amendments to the deed. The validity is usually only challenged when the trust enters into a dispute with, for example, a party contracting with the trust. Furthermore, due to the fact that a trust is considered to be “a creature of document”, a trust can only be as good as the document in which it is founded, allows it to be. From the legal audits done on trust deeds at our firm, an alarming 85% plus of trust deeds from all over South Africa may not stand the test of validity. In more than 60% of trusts, the parties to the trust could have been structured better. It may be worth the while to do a DIY basic check on your own family trust deed, and if any of the following does occur, it may be more than wise to urgently seek professional advice:

The power (also called a general power of appointment) given to the trustees to select (at random) beneficiaries from outside a defined group or class of beneficiaries. This can cause the object of the trust to become too vague which is a ground for invalidity.
The power (another form of a general power of appointment) given to the trustees to create new or “roll over” trusts on terms and conditions as they (the trustees) may decide upon and without any indication who the trustees of this new or “roll over” trust should be.
A unilateral act by the founder when creating the trust or no agreement between the founder and the trustees when the trust is created.
No divesting of his/her property by the founder when the trust is created. The trust deed should explicitly state that the founder creates the trust by donating a specific amount to the trustees of the trust for the benefit of the beneficiaries.
When the trust deed is amended, it is now since a recent Supreme Court of Appeal judgment, compulsory that all beneficiaries who have accepted benefits from the trust (from its origin until the amendment) be made a party to such an amendment, otherwise the amendment will be invalid. This can cause many amendments to trust deeds where for instance beneficiaries were added or removed and where beneficiaries who have accepted benefits were not a party to the variation, to be invalid.
Excessive powers such as the power to “hire and fire” trustees, veto rights, testamentary reservation, etc. can all have negative implications with regard to tax, divorce and insolvency matters and caution should be taken when exercising these powers.
The reference in the trust deed to those “related by blood or affinity” as part of the beneficiaries can cause an amendment of the deed by agreement between the trustees and the “beneficiaries” to become impossible without a much more expensive court application.

Therefore, prevention is always better than cure. Rather establish beforehand whether your trust was indeed validly created or amended and whether it gives adequate powers and discretion to the trustees to utilise the trust effectively, than to discover the deficiencies when a dispute ensues or a specific power is needed by the trustees to act. This can be done by way of a legal audit which entails inter alia the checking of the validity of the trust, tax and other implications thereof, protection of beneficiaries against financial and other risks as well as the protection of the trust assets and beneficiaries in the event of divorce, as well as to what extent the rights of the beneficiaries may be affected by a possible amendment of the trust, to name only a few aspects.

Mosdel Parma & Cox
ppam@mpc.law.za
044 533 1101

The protection of privacy in South Africa has undergone intense investigation over the last decade. In late 2005 the South African Law Reform Commission found that there wasn’t adequate protection and that a new, separate piece of legislation was needed for the proper protection of one’s personal information. This paved the way for the long process which is now finally coming to an end with the Protection of Personal Information Act (“POPI”) recently passed by the National Assembly and now awaiting enactment.

POPI will have as its main aim the protection of personal information. It has been stated that POPI has been designed to protect personal information given the fact that in today’s digital age there are serious implications in how this type of information is handled. Should an organisation or “responsible party” as named by POPI, request your personal information, they can only capture and use it with your consent. Organisations will further have to ensure that it is kept up to date and that they have put in place, reasonable security measures which are in line with industry standards. This in itself can be quite a tall order for many organisations that handle personal information of their clients. As soon as POPI is signed into law all public and private organisations that process personal information will have a transition period of one year to address their compliance. The onus rests on the organisation to comply and compliance failure cannot only bring about reputational damage but can also lead to fines of up to R10 million or imprisonment of up to 10 years. POPI restricts how personal information can be collected and used and to this end sets out eight principles of compliance for organisations:

1. Accountability

All responsible parties which range from the man on the street to corporate giants must adhere to all of POPI’s principles.

2. Processing limitation

Lawfulness is key. The method of information collection must be lawful and not infringe on one’s right to privacy. Processing must be adequate, relevant, not excessive, relative to the purpose for which the processing was undertaken and only done with the consent of the individual (barring a few exceptions). Personal information must always be collected directly from the data subject, unless the POPI provides otherwise.

3. Purpose specification

Collection of personal information must be for a specific, explicitly defined and lawful purpose of which the individual must be aware. The purpose for which your information is going to be used must be explicitly stated and only kept until the desired result for which it was collected has been achieved.

4. Further processing limitation

Further processing of the information must be in accordance or compatible with the purpose for which it was originally collected.

5. Information quality

The organisation must take all reasonable steps to safeguard personal information while making sure it is accurate, complete, not misleading and updated whenever it so demands. When taking these steps, regard must be had as to the purpose for which the information was gathered or would be used for further processing.

6. Openness

The responsible party must at all times disclose to the individual all reasons behind the collection of their personal information. This includes for example the source, application and the individual’s rights in respect of such information and who will have access to the information.

7. Security safeguards

A responsible party must secure the integrity and confidentiality of personal information in its possession or under its control by taking appropriate, reasonable technical and organisational measures to prevent loss of, damage to or unlawful access to personal information.

8. Data subject participation

An individual can at any time, free of charge request from an organisation whether they hold any of their private information. Upon provision thereof, the individual may demand correction or deletion of information that is inaccurate, out of date, misleading or that was obtained illegally. Organisations need to take note of these principles and assess to what extent these principles will apply to them. Proactively obtain help to assess the compliance of your business and start putting measures in place to ensure your compliance with POPI as compliance will not be an overnight exercise and will require planning and understanding on your part. •

Mosdel Parma & Cox ppam@mpc.law.za 044 533 1101

The confusion that has existed for years between employers and employees over the scope of what the term “benefits” in section 186(2)(a) of the Labour Relations Act entails has finally been resolved by the Labour Appeal Court in Apollo Tyres SA (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration (2013) 34 ILJ 1120 (LAC).

This case also dispelled the fallacy that in order to have an unfair labour practice claim against an employer there has to be an employment relationship in existence at the time that the employee declared and referred an unfair labour practice dispute to the CCMA.

Until very recently, the position in South African labour law was that the Labour Relations Act only allowed an employee to refer an unfair labour practice dispute relating to employment benefits to the CCMA if such benefits were provided for in the employee’s contract of employment, the employer’s conditions of employment, collective agreement or any applicable legislation. If the benefits in dispute could not be traced back to any one of these categories, such a dispute would be classified as a dispute of mutual interest which could only be pursued by way of industrial action, and the CCMA would not have the necessary jurisdiction to arbitrate such a dispute except to conciliate it. A dispute of mutual interest is a dispute where an employee wishes to assert a right which he does not have in terms of any legislation, policy or employment contract, for example, an increment or bonus when there is no provision for such in the contract of employment. The reason for this distinction is based on the view that a wider definition of the term “benefits” could undermine the employees’ right to strike which is constitutionally entrenched.

The issue for determination in the Apollo case at the CCMA was whether an employee’s entitlement to claim benefits under an early retirement scheme fell within the ambit of the unfair labour practice provisions. Due to a decline in trade Apollo Tyres was forced to start with an early retirement scheme for monthly paid staff between the ages of 46 and 59 years. After being told that she did not qualify for the scheme, Ms Hoosen resigned and referred a dispute to the CCMA, claiming that the company’s refusal to pay her the amount specified in the voluntary retrenchment scheme amounted to an unfair labour practice relating to the provision of benefits. Apollo Tyres argued that the CCMA lacked jurisdiction to arbitrate the matter as the voluntary retrenchment scheme was not a “benefit” as contemplated by the Labour Relations Act. The commissioner however ruled that the company had committed an unfair labour practice by not admitting Ms. Hoosen to the scheme, and ordered Apollo Tyres to pay her the specified severance package.

The Labour Appeal Court considered the matter and held that the retirement benefit in Apollo Tyres had been offered to all monthly paid employees between the ages of 46 and 59. The employee was 49 and was paid a monthly wage. Apollo Tyres also had a discretion as to whether or not to grant the benefit. The issue was whether that discretion had been exercised unfairly, for example, whether the employer had acted arbitrarily, capriciously or for no justifiable reason. The Labour Appeal Court concluded that Appollo Tyres had shifted the goal posts and had provided no credible reason for not granting the employee an early retirement package. The court accordingly held that Apollo Tyres had perpetrated an unfair labour practice by excluding the employee from the early retirement scheme and dismissed the appeal with costs.

In arriving at its decision the Labour Appeal Court enunciated the following important legal principles:

A proper approach is to interpret the term “benefit” to include a benefit to which an employee is entitled (from contract or from legislation, including rights judicially created) as well as an advantage or privilege which the employee has been offered or granted in terms of a practice subject to the employer’s discretion. Those judgments in which a contrary approach was adopted are accordingly wrong.     Employees who wish to use unfair labour practice jurisdiction to claim a right to be promoted, receive training or be granted employment benefits, do not have to prove a right to be promoted or trained if the fairness of the employer’s conduct is challenged.     The concern that a wide definition of “benefit” will undermine the right to strike is no longer justified.     Disputes over the provision of benefits fall into two categories. Where the dispute is not based on an allegation that the grant or removal of a benefit is unfair, strike action is the remedy. Where the dispute concerns the fairness or otherwise of the employer’s conduct, it can be adjudicated through arbitration.

The Labour Appeal Court went further and held that there are at least two instances of conduct by an employer relating to the provision of benefits that may be subjected to scrutiny by the CCMA under its unfair labour practice jurisdiction:

The first instance is where an employer fails to comply with a contractual obligation that it has towards an employee. In this instance, an employee would still only be able to refer a dispute to the CCMA for adjudication if such a dispute is based on a right or benefit contained in the contract of employment, or alternatively in law.     The second situation is where the employer exercises a discretion that it enjoys under the contractual terms of a scheme conferring a benefit. In this instance, even where the employer enjoys a discretion in terms of a policy or practice relating to the provision of benefits, such conduct can be scrutinized by the CCMA.

As a result, the term “benefit” in the Labour Relations Act has now been expanded to include not only existing advantages or privileges to which an employee is entitled to as a right, but also those advantages and privileges granted in terms of a policy or practice over which the employer has a discretion. Employers should thus exercise extra care when exercising their discretion and implementing policies relating to benefits.

This judgment may also be seen to have potentially opened the floodgates for referrals by unsatisfied employees to the CCMA regarding privileges and advantages awarded by an employer at its discretion. Importantly thougth, the unfair labour practice jurisdiction cannot be used by employees to assert an entitlement to new contractual terms such as new benefits, new forms of remuneration or new policies not previously provided for by the employer.

It is clear that employers faced with having to exercise a discretion as to whether to grant certain benefits or not must exercise such discretion in a fair, transparent and justifiable manner to avoid falling foul of the unfair labour practice provisions of the Labour Relations Act.•

Mosdel Parma & Cox ppam@mpc.law.za 044 533 1101

Mary was over the moon when she heard that she had received the position and could not wait to start her new job. Into her second week however, she became aware of her supervisor taking a special interest in her. She tried to ignore this, but the interest became more overt, unwelcome and threatening, despite her attempts to politely rebuff his advances and eventually directly informing him that she was not interested. After noticing the supervisor in the vicinity of her home, she reported the conduct to a senior manager, but no action was taken. The situation steadily deteriorated until Mary felt so afraid of her supervisor that she felt she had no choice but to resign.

Mary, like many others in a similar situation, often feel helpless and without protection or the means to defend themselves. However, in the Protection from Harassment Act 17 of 2011 (“the Act”) which came into operation on 27 April 2013, there is now very specific legislation aimed at providing legal remedies to people like Mary.

In terms of the Act, harassment includes both direct and indirect conduct that the offender knows or ought to know causes mental, psychological, physical or economic harm or inspires the reasonable belief that such harm may be caused to the complainant (i.e. the person who is being harassed) or a related person (i.e. any member of the family or household of a complainant, or any other person in a close relationship to the complainant). Harassment includes:

Following, watching, pursuing or accosting a complainant, or loitering outside or near the place where the complainant or a related person resides, works, carries on business, studies or happens to be;     Engaging in verbal, electronic or any other communication aimed at the complainant or a related person, by any means, whether or not conversation ensues;     Sending, delivering or causing the delivery of letters, telegrams, packages, facsimiles, electronic mail or other objects to the complainant or a related person or leaving them where they will be found, given to, or brought to the attention of, the complainant or a related person;  or     Any conduct that amounts to sexual harassment of the complainant or a related person.

The Act further specifically defines sexual harassment as any:

Unwelcome sexual attention from a person who knows or ought reasonably to know that such attention is unwelcome;     Unwelcome explicit or implicit behaviour, suggestions, messages or remarks of a sexual nature that have the effect of offending, intimidating or humiliating the complainant or a related person in circumstances, which a reasonable person having regard to all the circumstances would have anticipated that the complainant or related person would be offended, humiliated or intimidated;     Implied or expressed promises of reward for complying with sexually oriented requests;  or     Implied or expressed threats of reprisal or actual reprisals for refusal to comply with sexually oriented requests.

The Act affords protection by enabling the complainant to apply for a protection order against any form of harassment. The Act does not differentiate between different complainants and any person who believes that they are being harassed can apply for a protection order under the Act. If the court is satisfied that a case of harassment has been made, it will order that the offender be served with the application advising them of the date on which the matter will be heard. An interim order can also be made without the knowledge of the alleged offender wherein the court, if satisfied that the complainant is being harmed or will be harmed if the protection order is not granted immediately or the protection will not be achieved if notice is given to the offender, may grant an interim order in favour of the complainant.

The protection order will be forwarded to the relevant police station of the complainant’s choice together with a warrant of arrest. The protection order will remain in force for five years (or longer if the court so determines). In the protection order the court can prohibit the offender from –

engaging in or attempting to engage in harassment;     enlisting the help of another person to engage in harassment;  or     committing any other act as specified in the protection order.

The court can impose any additional conditions which it deems reasonably necessary to protect and provide for the safety or well-being of the complainant or related person and may even order the SAPS to seize any weapon in the possession or under the control of the offender or to accompany the complainant to assist with the collection of his/her personal property.

The SAPS must immediately arrest an offender if there are reasonable grounds to suspect that the complainant is suffering harm or may suffer imminent harm as a result of the alleged breach of the protection order by the offender. The complainant can also lodge a criminal complaint against the offender of crimen injuria, assault, trespass, extortion or any other offence which has a bearing on the person or property of the complainant or a related person.

The complainant may on any day and at any time, in the prescribed manner, apply for a protection order at the Magistrate’s Court where the complainant or the offender resides, or where the act of harassment occurred. A legal professional can also be consulted to assist in bringing the necessary applications on behalf of the complainant.•

The dismissed employee however benefits from this pragmatic view and if there are criminal proceedings instituted against the employee the attitude adopted by the employer is normally lax, often because criminal proceedings take time to be finalized without any guarantee as to whether the dismissed employee will be found guilty or not.

The Labour Court recently ruled on the situation when it confirmed an employer’s counterclaim for breach of contract against two former senior employees and ordered the employees to pay their erstwhile employer R8 million in damages for losses suffered as a result of their misconduct.

In the case, two employees were charged with and found guilty of misconduct by an independent chairperson of an internal disciplinary hearing and dismissed after the chairperson found that their misconduct caused R7.8 million losses to their employer. Both dismissed employees challenged their dismissals at the CCMA and the Director of the CCMA transferred their referrals to the Labour Court.

The employer then instituted a counterclaim for damages against the employees in terms of the Basic Conditions of Employment Act. The employer claimed damages against both dismissed employees on the basis that the fraud committed by them resulted in damages suffered as a result of the failure of the employees to honestly and faithfully serve the employer and their failure to exercise due and reasonable diligence as was required by their contracts of service.

In the evidence presented, it was clear that the employees had actively participated in fraud against the employer in return for bribes which resulted in a loss to the employer in the amount of R8 million.

The court further held that both dismissed employees not only had the express duty to maintain the highest level of ethics and transparency but, as senior employees, they had a fiduciary duty to ensure total honesty and integrity when goods and services were procured.

In the end the Labour Court accepted that the employer had established that both former employees caused the losses and that there was a causal link between the breach and the damages suffered by the employer. The employee’s dismissal was held to be fair and the dismissed employees were held liable for the amount of R8 million and criminal charges were also laid against both employees by the employer.     Mosdel Parma & Cox ppam@mpc.law.za 044 533 1101•

We have become accustomed to the fairy tale endings we so often see in the movies – boy meets girl, they fall in love, get married, have kids and live happily ever after. Unfortunately, the reality of modern society is not always as romantic with a dramatic increase in the number of single and unmarried parents and children born out of wedlock every year. This raises questions as to whether the biological father of a child born out of wedlock is obliged to contribute to the mother’s pregnancy and birth related costs and pay maintenance for his child even if not married to the mother.

In legal terms, a child born to a mother and father who are not married to each other is referred to as a child born out of wedlock, or, more correctly, as an extra-marital child.

Our law recognises that all children irrespective of the marriage status of the parents are entitled to financial support from both of their biological parents, with the degree of contribution by each parent dependant on their respective means.

Child maintenance is a periodic payment made to the caregiver of a child for basic amenities such as food, shelter, clothing, education and medical care. According to the Maintenance Act 99 of 1998 a maintenance order can be obtained to enforce the common law duty of parents to support their children. An unmarried mother who claims maintenance for her child must however prove paternity. If she can prove that she and the man from whom she claims maintenance had sexual intercourse at any time during which the child could have been conceived, that man is, in the absence of evidence to the contrary, presumed to be the father.

The Maintenance Act regulates all maintenance related claims. This Act provides that if there is no maintenance order in place, a Maintenance Court should make an inquiry into the situation and can, after considering the relevant evidence, order the father of the child to pay the mother a sum of money as well as interest thereon. The amount will reflect what the court believes the mother is entitled to in respect of the relevant expenses incurred by the mother in connection with the birth and maintenance of the child, from the date of birth to the date of the inquiry.

An application for maintenance can be brought at a Maintenance Court located in the area where the person to be maintained resides or where the person in whose care that person is, resides. All Magistrate’s Courts in South Africa serve as Maintenance Courts.

Our courts have also recognised a woman’s right to claim maintenance for herself immediately before, during, and after birth and this right to maintenance is regarded as a part of the “lying-in expenses” which are expenses closely connected with the actual birth. These expenses include –

Doctor’s care before and after the birth,
Hospitalization, and
Certain necessities for the baby.

A maintenance order can thus be made with regards to the birth and the maintenance of the child, but the order will only be granted once the child has been born. Both parents must contribute to the lying-in expenses according to their respective means.

Should you find yourself in an uncertain situation regarding the maintenance of your child born out of wedlock, seek legal advice from an attorney specialising in maintenance matters to assist you.

Mosdel Parma & Cox
ppam@mpc.law.za
044 533 1101•