Owing high amounts of debt and not being able to pay it off is one of the most demoralising things a person can experience. You feel you are dangling out of control as you watch your debt grow month on month. You know it’s unsustainable but what do you do?

Try the “snowball method”

In the United States people with various types of debt like a mortgage, motor vehicle instalments, some credit cards and, say, an unpaid hospital bill have started to pay off the smaller debts first. These smaller debts are usually credit cards where the interest rate is the highest. They pay off these credit debts one by one and then move to the next highest interest rate debt which is probably the medical bill which they systematically pay off – until just the motor car and mortgage bond are left.

This makes financial sense paying off the higher interest rate amounts first.

It is called the “snowball method” as by paying off the credit card debt, then moving to the medical owing, you start to build up a momentum of paying debt off. As you keep paying debt, so the reduction in your debt is likened to a snowball rolling down a hill and getting bigger as it speeds up. Paying off debt thus becomes a habit and the feeling of helplessness progressively eases off.

Be careful, as not all indebted people are suited to the “snowball” concept. For example, if your credit card debt exceeds your mortgage, it doesn’t follow that you should pay the mortgage off first – remember the credit card interest rate is usually double that of the bond.

Our South African situation  

Consumer debt to disposable income stands at just below 73%. This means that only 27% of net income (the amount of salary after income tax) is not spent on paying debt. This is growing over time (the prior year’s figure was 72%). This greatly increases the risk that consumers are facing debt restructuring or insolvency – hence the feeling of helplessness alluded to above. The consumer is also more at risk when interest rates rise which is a highly likely outcome if Moodys put South African debt on junk status.

As 60% of the South African economy is dependent on consumer spending, this partly explains the low growth situation the country currently is experiencing.

If you are an employer, why not encourage any staff members who are heavily in debt to look at the “snowball method”? Lifting the cloud under which many South Africans operate will improve their peace of mind and help put the economy back on a growth path. It will assist employees and makes sound business sense all round.

“If I were not a physicist, I would probably be a musician. I often think in music. I live my daydreams in music. I see my life in terms of music.” (Albert Einstein)

Music, science tells us, really can help us work, and learn, and be creative.

Earphones mean you can listen to your favourite tunes all day with zero disruption to your fellow employees (and clients waiting in Reception!), and you’ll never be short of new music with a streaming service and a high-memory smartphone. But what should you listen to?

“Create the perfect playlist for productive work” on Quartz discusses how music can enhance workplace performance (employers take note!), and what musical tempo (beats per minute) can help induce the alpha state in your brain so that your mind becomes calm and alert, with heightened concentration.

Different types of music, it turns out, are ideal for particular tasks in four categories –

• Simple tasks
• Learning
• Work you love
• Creative work.

Happy (and productive) listening!

The monetary jurisdiction of Small Claims Courts has been increased from R15,000 to R20,000 from 1 April 2019.

Not all claims can be pursued in a Small Claims Court –

• Claims over R20,000 must be pursued in the ordinary courts (you can if you like reduce a larger claim to the R20k to avoid having to do that).
• Only individuals can sue in a Small Claims Court, i.e. not companies, close corporations etc.
• The State and local authorities can only be sued in the ordinary courts. Other than those exclusions, you can sue anyone including companies and the like.
• Certain types of claim (such as divorce matters, some damages claims, interdicts, will disputes etc) must also go to the ordinary courts.

Even if your claim qualifies for the Small Claims Court, think of asking your lawyer for guidance on whether it is your best course of action. Sometimes even seemingly minor claims can have wide ramifications, and there is no substitute for professional advice!

“The one thing that unites all human beings, regardless of age, gender, religion, economic status, or ethnic background, is that, deep down inside, we all believe that we are above-average drivers” (humourist Dave Barry)

AARTO (the Administrative Adjudication of Road Traffic Offences Act) has been partially in force for years, but its demerit provisions have been on ice for so long now that many of us have lost sight of just how seriously it will impact both ourselves as individuals, and our businesses.

Every individual and every business is at risk

Law-abiding motorists will no doubt welcome the crackdown on serial traffic offenders, but we also need to manage the risks. 

Every motorist, every vehicle owner, every professional driver and every transport operator will be at serious risk of losing their licences/permits/operator cards.  Even businesses outside the transport sector will need to manage this – what happens if your sales people are grounded or your office staff can’t drive to work?

The wheels are turning fast now, with amendments to the Act at long last passed by Parliament, and set to come into law when signed by the President.

Will it be delayed yet again?

The demerit proposal has been bouncing around for a decade, with several false starts and there is talk of court challenges, plus the commencement date may or may not be delayed.

But at long last the wheels are definitely turning, and turning fast.

Be prepared!

Unlucky 13 – easier to reach than you thought

The demerit system is complicated, but in a nutshell you will in addition to paying a fine incur demerit points for a whole range of offences.

And anyone with 13 or more demerits will have their driver’s licence/professional driving permit/operator card automatically suspended (3 months’ suspension for every point over 12).  And 3 suspensions will result in full cancellation. 

Don’t think that 13 demerits will necessarily take the average driver a long time to accumulate. Consider the demerit points applicable to some sample offences (there are many thousands of them – the table below gives just a few examples).

Reducing demerit points, and discounts on fines

You are also rewarded for obeying the law –

1. Any demerit points you have picked up are reduced by one point per 3 month period you remain offence-free.
2. Early payment of fines will earn you a 50% discount. Set up a payment control system so you don’t miss payment deadlines.

Businesses and employers – manage your risks

Think now about how you will manage the risk of your employees (especially those employed as drivers) repeatedly offending –

• How will you monitor your drivers’ demerit points?  Although for many offences both driver and operator will incur demerits, some driver offences will apply to the driver only.  
• Are your employment contracts correctly structured to ensure you have access to your employees’ demerit points’ status? And to deal with the consequences if they have their licences suspended or cancelled?
• Check your insurance policies – must you disclose any changes in your employees’ demerit status?  Are you at risk of losing cover?

“You can be a good neighbour only if you have good neighbours” (Howard Koch, “Invasion from Mars” author)

Your neighbours apply to the municipality for approval of building plans. You object strongly – if allowed, you say, the new building/addition/alteration will seriously impact on your property’s appeal and value. It will be unsightly and objectionable. It will ruin the neighbourhood.

How must the municipality’s “decision makers” assess the plans in light of your concerns? A long-running legal fight over just that question has finally been resolved by the Constitutional Court.

The Court’s decision is a vitally important one for all property developers and owners planning to build, as well as for their neighbours, for the simple reason that no construction work can proceed without municipal approval of the building plans (although note that some categories of “minor work” may not require plan approval – ask your local authority for details).

Passed plans and blocked off balconies

• The owners of a seventeen story city building had been allowed to build balconies right up to the neighbouring four story building’s boundary.
• The neighbouring building’s owners applied for approval of plans to add another four stories. The problem was that the balconies on three floors of the first building would touch the top stories of the new additions.
• Predictably, strenuous objections to the building plans were lodged, but in the end result the municipal decision makers approved the plans, and building commenced.
• Had the plans been properly approved? A string of court battles later, the highest court in our land has had its (final) say on the matter.

3 disqualifying factors and the “legitimate expectation” test

Central to this decision is a statutory protection for buyers and neighbours in regard to various “disqualifying factors”. The proposed building cannot be (our emphasis) “erected in such manner or will be of such nature or appearance that–

1. The area in which it is to be erected will probably or in fact be disfigured thereby;
2. It will probably or in fact be unsightly or objectionable;
3. It will probably or in fact derogate from the value of adjoining or neighbouring properties”.

The Court’s decision – the building plans had not been properly approved. They must go back to the municipality for re-assessment, and the developer is accordingly back to square one. Presumably a demolition order will be on the cards if they are ultimately unsuccessful in having their plans passed.

A decision maker must, held the Court, in assessing the 3 factors above consider the impact of the building proposal on neighbouring properties, from the perspective of a “hypothetical neighbour”. In a nutshell, will it probably, or in fact, be so disfiguring of the area, objectionable or unsightly that it would exceed the neighbour’s “legitimate expectations”?

And whilst it has always been clear that neighbours have to be considered in regard to the “derogation of value” (i.e. reduction of value) aspect, this decision for the first time confirms that their viewpoints are relevant, and must be considered, in regard to all three aspects.

Stronger rights – but not for “sensitive neighbours”

That certainly doesn’t mean however that neighbours can willy-nilly object to plans and expect the municipality to back them regardless of the facts. On the contrary, the Court made it clear that “The legitimate expectations test is not a subjective test determined by the whim of a sensitive neighbour.  The test is objective and based on relevant facts, which would, in the ordinary course, be placed at the disposal of the decision maker”.

The important thing remains that your rights as the “non-building neighbour” just got a lot stronger. Protect them!

“Ignorance is Bliss Dangerous” (Internet meme)

Our law will generally hold you liable for damages only if someone else can prove that you caused them loss/damage/injury through your “fault” (intent or negligence). That seems fair and logical – if it’s your fault, you pay.

If however the loss was caused by your animal/s, you are in a much more dangerous position – you can be sued on a “no fault” or “strict liability” basis. And that’s a sobering prospect. It means that bad behaviour by Maxie the Mongrel, Skollie the Cat, Daisy the Cow, or even (per an old 1926 case) your “domesticated” swarm of bees, could leave you with a bill for millions without your being in any way careless or at fault.

Ignorance of that risk is very definitely dangerous rather than bliss.

A recent High Court case illustrates.

R2.3m claimed by a dog attack victim

• The claimant was walking down a public street, minding his own business and with every right to be where he was, when three large “Pitbull type” dogs attacked him, viciously and without provocation.
• He was very seriously bitten and ultimately had his left arm amputated at the shoulder. He escaped more serious injury or even death only through the courage of a passer-by who fought the dogs off (and was himself attacked for his trouble).
• The victim claimed R2,341m in damages from the dogs’ owner.
• The dogs had no history of biting or attacking people and were treated as house dogs. They had the run of the owner’s house and garden/yard, which was walled and fenced off from the street. Access to the street was via a gate which was (said the dogs’ owner) normally kept locked, and was on the day in question double-padlocked.
• An intruder, claimed the owner, had in his and his family’s absence broken the gate open and left it open – giving the dogs access to the street and to their victim.

Liability and the law

• The victim was unable to prove that the dogs’ owner rather than an intruder had left the gate open, so had failed to show that the owner had been negligent in any way. 
• But, held the Court, the owner was still accountable on the basis of an old Roman law – the “pauperian action” or actio de pauperie – which makes you strictly liable for the consequences of your domesticated animal’s behaviour. The thinking behind this ancient law incidentally was that “an animal (being devoid of reasoning) is incapable of committing a legal wrong” and there have been suggestions that it be scrapped in our modern law. But as of now it is still very much enforced by our courts, and you remain at risk.
• Pauperian liability is a complicated subject (involving much Latin and learned judicial interpretation of ancient laws) and you will need specific legal advice if you find yourself on either side of a claim. But in a nutshell you are liable only if your domesticated animal (different rules apply to wild animals) acted from “inward excitement or vice” and against its natural behaviour.
• You do also have several defences available to you, such as the victim contributing to his/her loss through their own actions (provoking an attack or trespassing for example) or – the defence raised in this case – where the loss results from the negligence of another person. Again, a complicated subject needing specific legal advice, but out of interest let’s have a look at how the Court in this case dealt with the particular defence raised.
• The defence in question is available if you can prove that a third party had control of the animal but negligently failed to exercise that control properly. The dog owner in this case asked the Court to extend that defence to cover his situation where the intruder had no control over the dogs, but negligently gave them the opportunity to attack the victim.
• The Court refused, holding that the defence only applies where the third party has control of the animal. The dog owner must therefore pay the victim whatever level of damages he can prove. So – bottom line – you are liable even when the fault lies with someone else, and even when you are completely without fault, unless that other person had control of the animal at the time.

Protect yourself!

First step obviously is to reduce the risks your animals pose to others. Then check that your insurance will cover you if you are sued. Disclaimers of liability need careful wording to afford any hope of protection.

A criminal record, even for a minor offence from decades back, comes with very serious and lifetime consequences. It will hang around forever, just waiting to ambush you when you apply for a job, or a travel visa, or a firearm licence.

So acquiring a record inadvertently is the stuff of nightmares, and the question is whether you can land yourself in that position by paying an admission of guilt fine? The reality is that we are beset by so many laws and regulations covering every aspect of our lives that most of us have paid admission of guilt fines at one time or another. Usually it’s just to avoid having to defend ourselves in the unpredictability and delay of an over-burdened court system. Sometimes it’s the more serious matter of avoiding a stay in a police cell.

A remedy, but it’s not ideal

The remedy, once you do have a record, is to apply for “expungement” of the record to remove it from the CRC (SAPS’ Criminal Record Centre)’s database. Expungement is however only available to you after 10 years and for certain “minor offences” – plus your application will take a long time to process (“20 – 28 weeks” per SAPS). Note that some specified minor convictions fall away automatically after 10 years – ask for specific advice.

All in all, prevention is very definitely better than cure.

When are you at risk?

• You will acquire a criminal record if you are arrested, if the police open a docket and take fingerprints, and if you are thereafter convicted of a crime.  
• Does that apply to admission of guilt fines? Firstly, with traffic offences find out what section of the Criminal Procedure Act (CPA) is involved. Minor offences – speeding, licence offences, illegal parking and the like are normally “Section 341/Schedule 3” offences, where there is no actual prosecution and therefore no criminal record to end up in the CRC.
• Other offences however will likely be dealt with as “Section 57/57A” offences. An admission of guilt in those cases lands you with a “deemed” conviction and sentence, and until recently, that deemed conviction and sentence could well have ended up in the CRC database. In practice you would probably still have been in the clear if you weren’t actually arrested and fingerprinted, but several years ago there was talk of convictions being captured with just a name and ID number. If you want to be sure, apply for a clearance certificate – see “Applying for a Police Clearance Certificate (PCC)” on the SAPS website.
• A “Section 56 Written Notice to Appear in Court” may also give you the option of paying an admission of guilt fine to avoid appearance in court – in which event section 57 would apply as above.
• The point though is that a recent High Court decision means that any admission of guilt fine – even a section 57/57A one and even after an arrest and fingerprinting – should not lumber you with a “permanent conviction”.

In other words, the new position is that while a court-imposed conviction and sentence will end up in the CRC, an admission of guilt fine should not.

Let’s illustrate with a look at the case of the roadside grass seller…

A grass seller’s R500 admission of guilt fine comes back to haunt him

• In 2010 a roadside seller of instant grass quarreled with another grass seller about use of a particular spot on the road. The other seller laid assault charges against him, alleging he slapped her twice and pushed her.
• Arrested, detained and fingerprinted, the accused paid a R500 admission of guilt fine when given the option to do so. Per standard procedure a magistrate then “examined” the documents and the accused’s “deemed” assault conviction and sentence were entered firstly into the court’s record books and then into the CRC database.
• The accused learned of his criminal record for the first time when in 2018 he applied to become an Uber driver (a police clearance certificate being an Uber requirement).
• He turned to the High Court to set aside his conviction and sentence on the basis that he thought signing the admission of guilt was his only way of obtaining release from custody and that his rights had not been explained to him. Effectively he denied the assault, and took the chance that the State might still decide to pursue the prosecution in court.
• The Court set aside our grass seller’s conviction and sentence, characterising this type of admission of guilt as “not a verdict” but rather “essentially an agreement between the State and the accused” intended only for “trivial offences”, and involving no consideration as to “whether the accused was in fact and in law guilty of the offence”.
• The Court: “A conviction and sentence following an entry into the admission of guilt record book by the clerk of the criminal court in the magistrates’ court is not a conviction whose record is permanent” nor “to be entered in the Criminal Record System”.

The bottom line

The Court found that this accused had been pressured into admitting guilt and ordered that the Minister of Police be served with a copy of its order with a view to taking advice from the Commissioner of Police in “devising policy to address the criticism that the SAPS use arrest and detention to force vulnerable members of society who fear being locked up, to admit guilt on petty crimes using arrest and the threat of continued detention.”

“Animosity and difference of opinion are not sufficient to have a trustee removed from office and/or for the majority of trustees to unilaterally force another to vacate his/her office…” (Extract from judgment below)

When family infighting impacts a family trust, an early casualty is often the relationship between the appointed trustees and beneficiaries, and/or between the trustees themselves.

And if that results in irreconcilable differences and conflict between the trustees, the only answer may be for one or more of the trustees to be replaced. First prize of course will always be to achieve this with a voluntary resignation – but what happens if a trustee refuses to resign? Can the majority forcibly remove him/her?

A recent High Court decision dealt with just that question.

3 professionals v the beneficiary’s mother

• A “valuable property” in Knysna is owned by a trust created for the benefit of a couple’s daughter (11 years old at the time, now 30). There are four trustees appointed by the Master of the High Court (“the Master”) issuing “letters of authority” to two auditors and an attorney (“the professionals”), and to the beneficiary’s mother. The father farms the property through a company and a close corporation. Although no family feud is specifically mentioned in the judgment, it seems clear that the father is in one camp, and the mother and daughter in the other.
• The trust deed contained this clause – “The office of a TRUSTEE shall be vacated if …. the majority of TRUSTEES request a TRUSTEE to resign.” 
• The trustees fell out in a dispute over the father’s loan account, with the professionals proposing that the trust should pay the father interest on his loan, and the mother objecting on the basis that payment of interest had never been agreed to.
• This was discussed in a telephonic trustees’ meeting, and resulted in the professionals writing to the mother to say she was removed as trustee for three reasons – “1) all items discussed were either rejected or opposed; 2) she made false allegations against the applicants and 3) she admitted that she did not have sufficient knowledge to fulfil her duties as trustee”. The Master then pointed out to the professionals that they could not resolve to remove the mother, only to request her to resign. They did so in a second letter to the mother.
• The mother refused to resign and the professionals asked the High Court to order that the mother “has lost her office as trustee”. Their attitude was that they were acting in terms of the trust deed, no reasons for the decision had to be given, and the Master had no option but to issue new letters of authority. 
• The clause itself might seem pretty clear, the professionals clearly believed that they were acting entirely within their mandate and they presumably commenced their litigation with high hopes of success. But it was not to be…
• The Court, for the reasons we discuss below, held for the mother, who accordingly remains a trustee.

Ambiguity, showing good cause, and ubuntu

The Court’s reasons for its decision contain some important principles that anyone involved in a trust would do well to take note of (with some thoughts on how to deal with each issue in brackets) –

• The trust’s removal clause, held the Court, was ambiguous when it provided that a request (involving a choice) for resignation shall (peremptory – no choice) lead to vacation of office. The clause, said the Court, “must be interpreted to read that there must be good cause for such a request and that the trustee shall vacate his/her office only in the event of an acceptance of the request”. (Make sure the trust deed is clear and unambiguous).
• Secondly, an implied term should be read into the clause requiring good cause to be shown – to allow trustees to remove another without producing reasons “would be against public policy and the principles of ubuntu, reasonableness and fairness”. (Make sure you can show fairness and good cause for decisions).
• Thirdly, the professionals had failed to prove any justification for their action. They could not rely on the clause without giving reasons for their decision and proving that they took their decision “based on the discretion of a good person acting reasonably”. (Make sure you can justify your actions as reasonable).
• Fourthly, the resolution to request the mother’s resignation “should have been taken on a properly constituted trustees’ meeting and upon proper notice of their intention”. Instead, they took decisions “secretly and without notifying [the mother] in advance.  They also “failed to give proper notice in compliance with the provisions of the Trust Act.” (Comply with all procedural formalities).
• Finally, said the Court, there was no deadlock between the trustees – “Decisions in the interests of the trust and trust beneficiary can be taken by the majority of trustees during a properly convened meeting on condition that sufficient notice of all matters to be considered is given.  It is not necessary to remove the first respondent in order to conduct the business of the trust in a lawful manner.” (Be sure that removal is actually necessary).

Here’s yet another warning from our courts to take seriously the building deadlines commonly imposed on buyers of plots in residential estates. Failure to comply with them could expose you to heavy fines, recurring penalties and even the risk of losing your plot altogether.

• A Home Owners Association (HOA) imposed “double levy” penalties totalling R105k on the owners of a plot when they failed to start development before deadline.
• Taken to court, the owners challenged the validity of the penalties on a variety of technical and other grounds, but failed on every count.
• The end result is they must now pay the penalty levies, late payment penalties, and attorney-and-client legal costs for both the original magistrates’ court hearing and for the unsuccessful appeal to the High Court.

3 lessons for HOAs and buyers

The HOA’s victory in this case highlighted several important factors that both HOAs and buyers would do well to take note of –

1. The HOA’s power to raise “recurring penalties” was upheld only because of the wording of its articles of association. They specifically gave the HOA the power to “impose a system of fines or other penalties”.  Had the wording only allowed “a fine”, its attempt to impose a recurring penalty would have been shot down (exactly that happened to another HOA in an earlier case).
2. Penalties must be proportionate to the prejudice suffered by the HOA, but courts are unlikely to interfere unless “the penalty is unduly severe to an extent that it offends against one’s sense of justice and equity”.  Here, the double-levy penalties were upheld because the “ongoing delay in developing their property in accordance with their obligation … prejudiced the underlying rights of other owners … to enjoyment of a fully developed estate.”
3. The title deed gave the HOA the right to claim the plot back for breach of the building clause, but, held the Court, that right did not replace the right to claim penalties; it was an additional right available to it.

The bottom line for “buy to build” plot purchasers is this – make absolutely sure before buying that you will actually be able to build by deadline.

Artificial Intelligence (AI) is being rolled out in many guises throughout business. One instance of this is voicemail with some amusing results. One person recalls getting a voicemail message which said “I’m a user music to reach an audience” and, another example, ” — working with the Russian” but “I got killed”.

As the person said it’s hard to feel your career will be threatened by AI when you come across examples such as these.

In another irritating situation, a colleague recently got a call from a cell phone company which asked “will you pay your arrears in three days. Press 1 if this is correct.” When the person tried to say “what arrears?”, he was told that this is not a valid response. The colleague then phoned the company only to find a robot answered the phone. At this stage you feel you are probably having an Orwellian nightmare.

Will AI get “intelligent”?

There can be little doubt it will rapidly advance and predictions as to where it will go vary widely – some say that by the end of the next decade, robots will be as smart as humans.

Another school of thought maintains that as AI will not be able to learn creativity, real human emotion or have a human personality, so it will never replace humans. 

AI relies on mountains of high quality data for it to be able to effectively run its algorithms. There is a relative dearth of this data at present. 

Effectively, the sceptics say AI will always just be software and don’t be fooled by your robot declaring its love for you. It is software trying to mimic human behaviour. 

It must also be remembered that there are many tasks that don’t need human intervention.

So, what happens to our jobs?

AI is one of the drivers of the fourth industrial revolution and it is instructive to look at the first three industrial revolutions to understand what we can learn.

The first one came in the late eighteenth century when man began mechanizing factories and agriculture. Urbanisation began to develop rapidly (from displaced farm workers) and there was social unrest as many jobs were lost and professions weakened. This led to substantial inequality of incomes as a few industrialists made fortunes, a middle class began to slowly emerge but the vast majority remained in poverty.

The second industrial revolution came a hundred years later and was led by inventions that made the ordinary person’s life much easier – electricity, the aeroplane, the washing machine, the vacuum cleaner and many more that created a surge in living standards. Universal franchise and recognition of unions also came into existence in the developed world. So significant were these changes, such as housewives spending 42 hours less a week on household chores, that they enabled women to enter the jobs market. In turn this rapidly grew the middle class and inequality decreased substantially. Clearly this second revolution grew employment and living standards. 

Another important aspect is that the second industrial revolution was a work enabler whilst the first industrial revolution was a job replacer.

The third industrial revolution began in the 1980s with the rise of digitization and it has been similar in some areas to the first industrial revolution – the middle classes have regressed in the developed world whilst the top 1% has become wealthier. However, in developing countries, mainly Asia, hundreds of millions of jobs have been created as industrialization has rapidly rolled out there.

The fourth industrial revolution is expected to automate just under half of the jobs in the United States and thus be similar to the third revolution. How it will fare in places like China and India is difficult to predict. In South Africa business will benefit from the new technologies but the poorer communities will not have the skills to take advantage of opportunities offered by AI. Thus, inequality will continue and may get worse.  

Overall, the last two hundred and fifty years has seen a massive upward change in the number of jobs created. The problem lies in the uneven timing of these changes – it took three generations in the nineteenth century for there to be real progress in growing jobs.  

Whilst AI may sometimes seem comical at the moment, it is going to reduce and/or eliminate many jobs. But it will also create new employment opportunities. As a business owner, upskill your workers so they can be prepared for the changes that are already happening.