EY Suart Attorneys

This newsletter is for our valued clients and is intended to inform them of recent developments in our law and of other matters of interest. This newsletter and other articles are available on our website. Kindly advise should you not wish to receive this newsletter in future and feel free to distribute it to your friends or other interested parties if you so wish. Contributions are made by our directors and professional assistants.  Please also refer to our disclaimer at the bottom of this newsletter.

 

THIS MONTH:

(1) THE CONSTITUTIONAL COURT RULES ON IDENTIFYING CHILD VICTIMS, CHILDREN WHO ARE WITNESSES TO A CRIME AND CHILD OFFENDERS AFTER THEY TURN EIGHTEEN

(2) SET-OFF: MAY YOUR BANK DEDUCT FUNDS FROM YOUR ACCOUNT TO SETTLE A DEBT OWED TO IT?

(3) QUESTIONS RAISED CONCERNING BODY CORPORATE FINANCE AGREEMENTS

(4) THE USE OF POLYGRAPH TESTS IN THE WORK ENVIRONMENT

(5) IN MEMORIAM

(6) ABOUT US

1) THE CONSTITUTIONAL COURT RULES ON IDENTIFYING CHILD VICTIMS, CHILDREN WHO ARE WITNESSES TO A CRIME AND CHILD OFFENDERS AFTER THEY TURN EIGHTEEN

In November 2018 I discussed the ruling by the Supreme Court of Appeal (SCA) on the question of whether child victims of crime, children that are witnesses of a crime and child offenders can be identified and named in public after they turned eighteen.

In short, the SCA ruled that all child offenders, victims and witnesses may be named and be identified in the media once they have turned 18.

The SCA did however rule that sections of the Criminal Procedure Act which did not protect the identity of child witnesses in criminal cases, had to be declared unconstitutional.

The Centre for Child Law (CCL) was not satisfied with the ruling of the SCA and referred the matter to the Constitutional Court.

The CCL was victorious in that the Constitutional Court in a majority ruling ordered that the protection given to children who are victims of a crime, witnesses to crime and to child offenders, must be extended beyond the age of eighteen.

Thus, the identity of children that are victims of a crime, witnesses to crime and child offenders may not be made public once they turn eighteen.

The Constitutional Court afforded Parliament 24 months to amend and correct the Criminal Procedure Act to extend and provide the additional protection to child victims, child witnesses and child offenders.

Justice Nonkosi Mhlantla who wrote the majority judgment said a delicate balance is required to balance between various constitutional rights, such as the right to freedom of expression and interests such as open justice and the best interest of the child.

Justice Nonkosi Mhlantla stated further that the right to freedom of expression and open justice are important rights and interests to be considered, however the serious harm caused to children involved in the criminal justice system outweigh the minimal harm that may be done to open justice and freedom of expression.

Juanné Bester - Associate

[1] Where the legal processes is characterized by openness and transparency and there is a promotion of transparency such as letting the public see and hear trials

2) SET-OFF:  MAY YOUR BANK DEDUCT FUNDS FROM YOUR ACCOUNT TO SETTLE A DEBT OWED TO IT?

Banks have argued that, in terms of the common law “right to set-off”, they are entitled to take money from one account held with them, without any notice or permission to the account holder, in order to settle a separate debt you owe them.

Set-off may be explained by way of the following example: A customer has a cheque account with a credit (positive) balance and a credit card account with a debit (negative) balance. The common law right to set-off finds application in such a scenario, in that the account with a credit balance will be automatically set-off against the overdrawn credit card account. In other words, set-off will operate automatically and the obligation will be extinguished without either party having to physically perform.

The National Credit Regulator approached the High Court in order to clarify whether the National Credit Act allows banks to apply the common law right to set-off where the credit agreement is silent on this aspect. The Court in National Credit Regulator v Standard Bank of South Africa Limited (44415/16) [2019] ZAGPJHC 182 (27 June 2019) has clarified the issue and ruled that section 124 of the National Credit Act (herein after the “NCA”) stipulates the only conditions under which set-off may apply and that the Act was adopted to break with the past regulation of consumer protection.

Standard Bank, as the respondent argued that where the right to set-off has been omitted from a credit agreement, such right continued to apply. 

The court held, that in terms of section 90(2)(n) of the NCA, set-off is an unlawful provision in a credit or loan agreement, except to the extent that it is permitted in terms of section 124. 

Section 90(2)(n) stipulates

“(2)      A provision of a credit agreement is unlawful if-

(n)       it purports to authorise or permit the credit provider to satisfy an obligation of the consumer by making a charge against an asset, account, or amount deposited by or for the benefit of the consumer and held by the credit provider or a third party, except by way of a standing debt arrangement, or to the extent permitted by section 124;

In terms of section 124 set-off will only be permitted where the consumer to the credit agreement has given his prior express consent to apply set-off against a specific account and subject to notice of such intention by the credit provider (bank or financial institution).

A financial institution or credit provider, such as a bank can therefore not use the “set-off” principle by default where the credit agreement is silent on this aspect and only applies where the account holder of the bank account has given express permission in terms of the facility agreement.

In short, banks and other credit providers, are prohibited from utilising the common law right to set-off where the agreement is silent on this aspect and is only entitled to do so where the credit agreement complies with the statutory provisions of Section 124 of the NCA. 

         Thomas Wood - Candidate Attorney

3) QUESTIONS RAISED CONCERNING BODY CORPORATE FINANCE AGREEMENTS

THE FACTS:

A Body Corporate requires loan financing for their operations.

 A financier has offered to buy the arrear levies due by members to the Body Corporate at a discounted rate, alternatively to lend funds to the Body Corporate in terms of a Loan Agreement.

THE QUESTIONS:

The Trustees require advice on the following:

1. Can they write-off arrear levies (by selling/ceding the arrear levy book at a discounted amount)?

2. Can they write-off interest and/or legal fees incurred with regard to the collection of arrear levies?

3. What Resolutions are required to write-off levies and/or interest or legal fees?

4. Who must authorise this action?

RELEVANT PROVISIONS OF THE SECTIONAL TITLES SCHEMES MANAGEMENT ACT (“the Act”)  AND MANAGEMENT RULES:

The functions and powers of a Body Corporate are performed and exercised by the Trustees. 

In terms of Section 4(e) of the Act, a Body Corporate may borrow monies required by it for the performance of its functions and in terms of Section 4(f), the Body Corporate may secure the re-payment of monies borrowed by it by Notarial Bond over unpaid contributions.

There are no provisions in the Act or prescribed rules that authorise the writing off of levies, interest and costs.

CONCLUSION:

Trustees can only do what the Act authorises a Body Corporate to do.  The Trustees may therefore enter into a Loan Agreement with a financier, provided that such action is authorised by Special Resolution of the members of the Body Corporate and the Trustees can secure the re-payment of monies so borrowed and payment of interest thereon, by Notarial Bond over unpaid contributions (arrear- and future levies).

Trustees are not authorised to write-off or re-pay levies which were duly raised.

Trustees are empowered to collect arrear levies, interest (if raised) and legal fees in accordance with the provisions of the Act and Management Rules.  The interest was duly raised, and legal costs incurred.  Interest and legal costs are a debt due by the defaulting member to the Body Corporate and can likewise, in my opinion, not be written-off.

Levies, interest thereon and legal fees incurred by the Body Corporate in collecting arrear levies and interest are to be collected by the Trustees on behalf of the Body Corporate and the Trustees cannot, by way of Trustee Resolution, sell the arrear outstanding levies to a financier at a discounted rate or write-off levies, interest and/or legal costs, unless authorised by a Unanimous Resolution of the members of the Body Corporate.

There are circumstances where a Body Corporate, by operation of law, takes a loss and where all arrear levies, interest and legal fees are not recovered where, by example the Estate of a Unit owner is sequestrated and the proceeds of the Unit is insufficient to cover the costs of sequestration, the outstanding bond on the Unit, arrear levies, interest and legal fees incurred by the Body Corporate.  Under such circumstances the loss to the Body Corporate is not as a result of an authorisation by the Trustees, but due to legislation such as provisions of the Insolvency Act, 24 of 1936

Elmo Stuart - Director

4) THE USE OF POLYGRAPH TESTS IN THE WORK ENVIRONMENT

Although there is no legislation in South Africa that regulates polygraph or lie detector testing, it’s usage as an investigative tool during disciplinary process is becoming widespread in the work environment by employers.  The polygraph test comes in handy for employers in cases where employees are accused of misconduct (e.g. cases of fraud, willful damage to property, dishonesty, theft) whilst internal investigations are underway. The test is devised to determine the truthfulness of the person being tested based on a set of questions posed by the specialist conducting the test known as a polygraphist.

Consider this scenario:

XYZ company has a pool car at the disposal of its employees who are from time to time tasked with company delivery and collections errands. However, there is neither monitoring of use of this pool car nor logbook entries to record trips vis-à-vis the driver details.  On one given day, the pool car is found parked in its bay accidentally dented/scratched and not a single employee admits liability to causing damage to the pool car.  Can polygraph testing be a viable option to the employer to pinpoint the culprit?  

Nothing prohibits or precludes employers to use polygraph tests to investigate specific incidents such as where employee(s) had access to the property which is the subject of the investigation where there is a reasonable suspicion that the employee was involved in the incident and that there has been economic loss or damage to the company property.

It is however important to understand that it remains unlawful to compel an employee to undergo a polygraph test without prior written consent, which consent can also be included in a contract of employment concluded with an employee. 

I now proceed with the assumption that prior written consent exists.

Employers should caution against attempting to build a case for disciplinary action solely the results of the polygraph test. It has been found many times in courts of law that polygraph testing, although admissible, standing alone cannot prove guilt. In the case of Food and Allied Workers Union obo Kapesi and Others v Premier Foods Ltd t/a Blue Ribbon Salt River; Premier Foods Ltd t/a Blue Ribbon Salt River v Food and Allied Workers Union obo Kapesi and Others (CA7/2010), AC Basson J held as follows:

“I am in agreement that polygraph testing, as they presently stand, can do no more than show the existence of non-existence of deception….. By no means can it be used as conclusive proof of guilt of a crime or misconduct. At best the polygraph test can prove that a person lied, not that he is necessarily guilty of a crime or misconduct.”

In DHL Supply Chain (Pty) Ltd and Others v National Bargaining Council for the Road Freight Industry and Others [2014] 9 BLLR 860 (LAC), the Labour Appeal Court (per Sutherland AJA, Ndlovu JA and Molemela AJA) held that the mere fact that an employee fails a polygraph test is not in itself sufficient to find an employee guilty of dishonesty.

Employers should take heed when making use of polygraph tests results as the grounds for disciplinary action.  The thrust is that the results of the polygraph test cannot on their own be conclusive of the finding of guilt, there must be evidence other than polygraph results to support such a finding.  Polygraph tests may also potentially lead to a complete breakdown in trust and communication in the workplace if the suspected employee in question passes the test.  

Ednah Museva - Candidate Attorney

5)  IN MEMORIAM – HENRIËTTE VAN DER WALT (16.12.1959 – 22.01.2020)

It is with sadness that we announce the passing of Henriëtte van der Walt, who was a loyal employee of EYS for a period of ten years.

We extend our heartfelt condolences to her family and friends.  

Bianca van Wyk - Director

6)  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.