EY Suart Attorneys

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THIS MONTH:

(1) SPARE THE ROD, OR YOU MIGHT JUST END UP IN JAIL

(2) CAN YOUR RIGHT TO CLAIM TRANSFER OF IMMOVABLE PROPERTY IN TERMS OF A DEED OF SALE PRESCRIBE?

(3) LIABILITY OF A FINANCIAL ADVISOR WHERE INVESTMENTS TURN SOUR

(4) DRESS CODE AND RELIGIOUS FREEDOM IN THE WORKPLACE

(5) ABOUT US

1) SPARE THE ROD, OR YOU MIGHT JUST END UP IN JAIL

In my previous newsletter of October 2017, I discussed the judgment that was handed down by Honorable Justice Raylene Keightley in the case of YG v S (A263/2016) [2017] ZAGPJHC 290. The Honorable Justice Raylene Keightley ruled that the defense of “reasonable chastisement” is unconstitutional and the use of physical punishment by parents unlawful and that religious beliefs does not justify the use of physical punishment.

This judgment was challenged by Freedom of Religion South Africa (FOR SA) in the Constitutional Court. The civil society group FOR SA asked that the ruling made by the Honorable Justice Raylene Keightley be set aside and argued that parents should be allowed to decide for themselves as to what is in the best interest of their children, specifically relating to discipline in accordance with religion.

The highest court in the land, on 18 September 2019 ruled in a majority decision that reasonable chastisement in the home is not in line with the constitution, as there are other “less invasive” ways to punish children.

The decision of the High Court was confirmed in the above-mentioned ruling, that parents can no longer rely on the common-law defense of reasonable chastisement when spanking their children (or other children). In other words, spanking your child is now illegal.

Delivering the judgment Chief Justice Mogoeng Mogoeng said any form of violence, including reasonable and or moderate chastisement against a child, had always constituted a criminal act known as assault and parents can be convicted of assault. He however noted that law enforcement agencies will have to deal with each child abuse case on a case-to-case basis. [1]

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[1] “How law enforcement agencies would deal with reported cases of child abuse flowing from this declaration of unconstitutionality is a matter best left to be dealt with on a case-by-case basis” Freedom of Religion South Africa v Minister of Justice and Constitutional Development and Others (CCT320/17) [2019] ZACC 34 (18 September 2019) par 75

Juanné Bester - Associate

2) CAN YOUR RIGHT TO CLAIM TRANSFER OF IMMOVABLE PROPERTY IN TERMS OF A DEED OF SALE PRESCRIBE?

The simple answer is:  “Yes”.  This can be explained in terms of the Constitutional Court Judgment in the matter of eThekwini Municipality v Mounthaven (Pty) Ltd (CCT 05/18) [2018] ZACC 43 (31 October 2018).

What the Constitutional Court had to consider:

• Can a Title Deed condition creating a reversionary right allowing for re-transfer of a property, prescribe? 

eThekwini Municipality sold vacant immovable property to a private company called Mounthaven Proprietary Limited on 24 May 1985.

Clause 5 of the Deed of Sale made the sale subject to specified additional conditions in favour of the Municipality and these conditions were subsequently incorporated in the Deed of Transfer as clauses C(1), C(2) and C(3) when the property was transferred to Mounthaven on the 4th of August 1986. These conditions of title were stipulated and incorporated as follows:

‘Subject to the following special conditions in favour of the Town Council of the Borough of Verulam as Local Authority:

(1) The Purchaser shall erect, or cause to be erected on the property, buildings to the value of not less than ONE HUNDRED THOUSAND RAND (R100 000, 00) and failing the erection of buildings to that value within two (2) years from date of sale, then, for the purpose of levying the general rate and sewer rate payable to the Verulam Town Council by the Purchaser or his successors in title, there shall be deemed to be buildings to such required value on the property and all valuation and rating provisions of Section 157 of Ordinance 25 of 1974 or any amendment thereof shall apply to the property and be binding upon the Purchaser or his successors in title.

(2) If at the expiry of a period of three (3) years from the date of sale the Purchaser has failed to complete buildings to the value of not less than ONE HUNDRED THOUSAND RAND (R100 000, 00) on the property, ownership of the property shall revert to the Seller which shall be entitled to demand re-transfer thereof to it from the Purchaser who shall be obliged to effect transfer thereof to the Seller against payment by the Seller to the Purchaser of all payments made on account of the purchase price less any costs incurred by the Seller in obtaining re-transfer of the property into its name, including costs as between attorney and client, all costs of transfer, transfer duty, stamp duty and the like.

(3) The Seller shall have a pre-emptive right to re-purchase the property at the price paid by the Purchaser, if the Purchaser desires to sell the property within five (5) years from the date of sale, provided that this condition shall not apply where buildings to the value of not less than ONE HUNDRED THOUSAND RAND (R100 000, 00) shall have been erected on the Lot within three (3) years from the date of sale.’

Mounthaven failed to develop the land and to erect any such buildings on the property within a three (3) year period as were required in terms of the above conditions and this entitled the Municipality to claim re-transfer.

Consequently, on 23 May 2012, the Municipality wrote a letter to Mounthaven in which letter the Municipality invoked the reversion clause as stipulated above in Clause C(2) and demanded re-transfer of the property. Despite this demand, such re-transfer was not effected by Mounthaven, which lead the Municipality to launch an Application in the High Court of South Africa, KwaZulu-Natal Division, Durban on 19 February 2014, for re-transfer of the property from Mounthaven to eThekwini Municipality.

Mounthaven had raised prescription in terms of the Prescription Act 68 of 1969 as one of its defenses. The Municipality argued that (1) its claim is not a “debt” under the Prescription Act; (2) the reversionary right under the deed of transfer is a limited real right in the property, not subject to prescription; and alternatively; (3) it is a claim secured by a mortgage bond that only prescribes after 30 years under the Prescription Act.

The court of first instance looked at the dictionary meaning of “debt” as accepted in previous constitutional jurisprudence, which includes an obligation to pay money, deliver goods, or render services. A “debt” would prescribe within three years as provided for in the Prescription Act. Delivery in the case of immovable property, refers to registration of transfer in the deeds office. The court therefore found that a claim to re-transfer constitutes a debt and as such the claim by the Municipality prescribed after three years.

The Municipality argued that the obligation to deliver the immovable property flows from a real right and not a personal right. Real rights give rise to competencies and not correlative personal obligations that translate into a debt for the purposes of prescription. Because of that, real rights cannot prescribe within three (3) years.

The Municipality’s argument however fails in the court of first instance on the basis that the right in question is a personal right and not a real right. The court of first instance used a test to determine whether a right is real, as opposed to being personal, and this test has two requirements: (1) the person who created the right must have intended the present owner as well as successors in title to be bound; and (2) the right must result in a subtraction from the dominium of the land(burdening the land) against which it is registered. Clearly, in the present matter, the condition in C(2) contains no provision that it is binding on successors-in-title (unlike the express provision to that effect in clause C(1)). Further, the mere registration of a reversionary right as in C(2) is in no way elevated from a personal right to a real right.

The Constitutional Court accordingly upheld the High Court’s decision.

Often parties conclude agreements of sale in respect of immoveable property and where the purchaser fails to demand transfer within three (3) years from date of the agreement. 

BEWARE – Your right to claim transfer can prescribe.

Quraisha Dawood - Associate

3) LIABILITY OF A FINANCIAL ADVISOR WHERE INVESTMENTS TURN SOUR

What recourse is available where one follows the advice of their financial advisor in making an investment, only to have such investment fail? Liability largely depends on, amongst other factors, negligence on the part of the financial advisor.

In the case of Atwealth (Pty) Ltd and Others v Kernick and Others 2019 (4) SA 420 (SCA) a disgruntled client sought damages against its financial advisor for advice given on an investment which ultimately failed. The court found that the Plaintiffs in this matter had failed to establish the liability of their financial advisor in that the Plaintiffs had failed to present evidence on (i) what kind of research and due diligence a reasonably skilled financial advisor would have done in the circumstances, and (ii) whether a reasonably skilled financial advisor would have made different investment recommendations, after having conducted adequate research.

The approach adopted in Durr v Absa Bank Ltd 1997 (3) SA 448 (SCA) has remained the preferred approach of the courts in determining the liability of a financial advisor. In essence liability in such cases are determined with reference to whether the reasonable financial advisor, in the position of his client, would have acted otherwise. If the above question is answered in the affirmative, then our courts may grant an ill-advised client damages against its negligent financial advisor. 

The case of Symons NO and Another v Rob Roy Investments CC t/a Assetsure2019(4)SA 112 (KZP) highlighted another important factor that courts take into account. The court in Symons decided that the financial advisor was not liable due to the fact that the disgruntled client had experience in and had received independent advice on the type of investment scheme which his investment advisor had proposed. The deciding factor here was that the client was considered to be well versed in the risks associated with the investment concerned.

Case law indicates that there is no hard and steadfast rule. Every case is dealt with according to its own facts and merit. Investors are therefore advised to select a reputable advisor and to follow their financial advisor’s advice with caution and should furthermore attain knowledge of and investigate the risk associated with the type of investment.

Thomas Wood - Candidate Attorney

4)  DRESS CODE AND RELIGIOUS FREEDOM IN THE WORKPLACE

A question which often arises relates to the extent to which freedom of religion can be expressed in the workplace. The critical question is how the employer is expected to balance and maintain an orderly, disciplined and efficient workplace whilst accommodating an employee’s right to religious freedom.

The case of Department of Correctional Services v Police and Prison Civil Rights Union (“POPCRU”) 2011 32 IU 2629 is one where the employer’s application of rules relating to the dress code of employees impacted on the religious beliefs and practice of five staff members.

The central issue in the POPCRU case was whether the dismissal of five employees was automatically unfair on the basis that the employees had been dismissed as a result of their religious beliefs, when they refused to cut off their dreadlocks after being ordered to do so.

A prohibition against unfair discrimination is set out in Section 187(1)(f) of the Labour Relations Act, 66 of1995 (“LRA”) and section 6 of the Employment Equity Act 55 of 1998 (“EEA”). The LRA provision provides that discriminatory dismissal, being those based on listed or arbitrary grounds, are automatically unfair. The EEA provision, on the other hand, prohibits discrimination contained in employment policies or practice such as dress code on listed or arbitrary grounds.

The facts in the POPCRU case were that the Area Commissioner was dissatisfied with the discipline at the prison, which he attributed to poor compliance with security policies and poor adherence to the dress code. The employers were issued with written instructions to comply with the dress code in particular by attending to their hairstyles. However, the employees in question refused to carry out the instructions as the employees argued that they wore dreadlocks because of their religious and/or culture believes. Despite this the employees were dismissed. The employer on the other hand argued that the employees were dismissed as they failed to adhere to departmental policies and not because of their religious beliefs, and therefore their dismissals were not automatically unfair.

The labour court found that the dismissal of the employees amounted to direct, unfair discrimination on the ground of gender in terms of section 6 of the EEA and further found that the dismissals were automatically unfair in terms of section 187(1)(f) of the LRA.

The matter was referred to the Labour Appeal Court (“LAC”) in terms of which the court looked at Section 187(2)(a) of the LRA: ”a dismissal may be fair if the reason for dismissal is based on an inherent requirement of the particular job”. The employer in the POPCRU case was required to establish that short hair not worn in dreadlocks was an inherent requirement of the job. It was argued on behalf of the employer that the rational for the dress code was to maintain discipline, uniformity and neatness amongst the correctional offices.

LAC ruled in favour of the employees and found that they had been discriminated against based on religion, culture and gender, stating that the department was aware of the requirements of the principle of reasonable accommodation, yet opted for the imposition of a blanket prohibition, irrespective of the unfair impact upon the rights and dignity of the employees.

The case of Dlamini v Green Four Security 2006 11 BLLR 1074 (LC) was another important case that looked at the inherent requirements of a job. In this case security guards were dismissed for refusing to shave or trim their beards, as it was against their religious conviction to do so. In this matter it was held that the security guards had not proven that the prohibition against beard-trimming was a central tenet of their religion nor had they proved that they would suffer some significant penance if they broke the rule. The Labour Court noted that in terms of the LRA a workplace rule is justified if it is an inherent requirement of the job. The employer had a workplace rule which expressly prohibited the grooming of beards. The purpose of the rule was to ensure neatness and hygiene. The labour court held that the rule requiring guards to be clean shaven was being applied equally to all employees and was consistently applied.

This finding is in contrasts with the decision of the SCA in POPCRU, where it was finally held that: “A policy is not justified if it restricts a practice of religious belief – and by necessary extension, a culture belief - that does not affect an employee’s ability to perform his duties, nor jeopardise the safety of the public or other employees nor cause undue hardship to the employer in a practical sense”.

However it is important to note that the employer in the POPCRU case was unable to illustrate a rational connection between the purported purpose of the discrimination and the measure taken, and the appeal was dismissed as no rational connection was established between the purpose of the discrimination and the measure taken. 

The role of the court is to determine the extent of this obligation. The court is required to evaluate "any impairment to the dignity of the complainants, the impact upon them, and whether there are less restrictive and less disadvantageous means of achieving the purpose". Thus there has to be a rational and proportional relationship between the measure and the purpose it seeks to achieve.

It will be advisable for employers to first seek legal advice prior to suspend or dismiss an employee on religious belief for not complying with internal policies on dress code set out in the workplace.

Quintin Badenhorst - Associate

5)  ABOUT US

 

To view our previous newsletters, please visit our website on http://www.eyslaw.co.za.

Kind regards,

EY STUART INC.

 

Disclaimer: The information disclosed herein is not intended to constitute legal advice and is not guaranteed to be correct, complete, or up-to-date. You should not act or rely on any information emanating from this Newsletter without seeking the advice of an Attorney, as the facts relating to your circumstances may influence any advice or information conveyed herein. Should you require legal representation, then please do not hesitate to communicate with us for further information and our standard mandate terms.