NEWSLETTER // OCTOBER 2014
NEWSLETTER // OCTOBER 2014
LITIGATION / CONVEYANCING Turnbull-Jackson v Hibiscus Coast Municipality and Others (CCT 104/13 [2014] ZACC 24) putting an end to the WaleleTrue Motives disputes on approval of building plans Chazanne Grobler
The Constitutional Court on 11 September 2014 delivered judgment in the Turnbull-Jackson case involving an 11-year long legal dispute regarding the approval of building plans by the Hibiscus Coast Municipality. The case reached the Court as an appeal against an order of the KwaZulu Natal High Court. Pearl Star Investments 14 CC obtained approval from the Hibiscus Coast Municipality to build a three-storey block of flats. On previous occasions, Mr Turnbull-Jackson succeeded to have the approval set aside, but in 2006 he failed to set aside the most recent building plans. He instituted a review application in the High Court, but failed once again. On appeal to the Constitutional Court he based the review of the approval on various grounds including, amongst others, bias of the building control official as well as the fact that the necessary level of compliance with section 7(1)(b)(ii) of the Building Standards Act was not met. Section 7(1)(b)(ii) specifically deals with refusal of the approving building plans if certain disqualifying factors, such as the fact that a building can be unsightly or will derogate from the value of the adjoining or neighbouring properties, is present. Madlanga J (with whom Moseneke ACJ, Skweyiya ADCJ, Dambuza AJ, Jafta J, Khampepe J, Majiedt AJ and Zondo J concurred), dismissed each of the grounds on which Mr Turnbull-Jackson relied. The central dispute, however, addressed the two different interpretations of section 7(1)(b)(ii) of the Building Standards Act. Mr Turnbull-Jackson in his grounds for review, relied on the interpretation given to section 7(1)(b)(ii) in the Constitutional Court case of Walele v City of Cape Town and Others 2008 (6) SA 129 (CC). The municipality in turn relied on the Supreme Court of Appeal (SCA) case True Motives 84 (Pty) Ltd v Mahdi and Another 2009 (4) SA 153 (SCA) where the SCA expressly did not follow the Walele case. The True Motives interpretation states that the local authority must only refuse to grant approval of building plans if satisfied that the disqualifying factors will in fact or probably
eventuate. This differs from the Walele case’s approach requiring the local authority to approve plans only if it is satisfied that the disqualifying factors will not eventuate before granting approval. At the core of the Walele-True Motives dispute is the principal of judicial precedent, a core component of South African law. This principle entails that courts must follow and are bound to decisions of higher courts. Only the ratio decidendi, or the reason for the judgment, needs to be followed and not any remarks that have been made in passing. The question is raised whether the SCA in True Motives erred by not following the judgment of Walele. The Constitutional Court had to determine whether the interpretation of section 7(1)(b)(ii) in Walele was made in passing, and if not, whether the interpretation was incorrect. Only in those two instances the SCA could depart from the Walele decision. Madlanga J held that the interpretation of section 7(1)(b)(ii) in Walele formed part of the rationale behind the decision. The decision itself in Walele took into consideration the possibility of harm to the owner and occupants of the property to be developed, and the fact that a development may have adverse effects on the rights of owners of neighbouring properties. It is for this reason that in Walele the court interpreted section 7(1)(b)(ii) to mean that local authority can only approve plans if it is satisfied that the disqualifying factors will not eventuate. As a result Madlanga J upheld the decision as being correct and stated that in the particular set of facts of Turnbull-Jackson there was no improper exercise of section 7(1)(b)(ii). The reasons advanced by the SCA for its departure from Walele did not justify the course adopted. The SCA erred in not following the Walele decision. Madlanga J made it clear that all courts, including the SCA, are bound to follow decisions of the Constitutional Court and only in specific instances are lower courts allowed to depart from judgments. The importance of precedents was emphasised when the Constitutional Court quoted Judge Cameron who stated, “Without precedent there would be no certainty, no predictability and no coherence.”
// +27 (0)12 362 5787 // www.jjrinc.co.za // Woodpecker Place, Hillcrest Office Park, 177 Dyer Road, Hillcrest, Pretoria
// 01
NEWSLETTER // OCTOBER 2014
LABOUR
Fixed term contracts – justifiable or not? – Ané Kotzé
Since the Labour Relations Act 66 of 1995 (“LRA”) first came into action, the essence of the fixed term contract of employment and its existence have been questioned by both the CCMA and the Labour Court. Many Employers employed employees on a fixed term basis due to the fact that it seemed like the “easier way out” NEWSLETTER //meant OCTOBER 2014 had the power to and that it supposedly that Employers somehow boycott the workings of the LRA, Schedule 8 of the LRA as well as the Basic Conditions of Employment Act 75 of 1997.
same and or similar terms and more specifically on a permanent basis, unless there is once again a “justifiable reason” for the different treatment. A grace period of three (3) months after the commencement of the Labour Relations Amendment Act 2014 will be granted to all Employers to remedy their existing fixed term contracts of employments with employees that are not in accordance with the subsection referred to.
Employers also used these supposed fixed term contracts to their advantage by continuously renewing the contracts upon its termination, sometimes on a month-to-month basis, only to inform employees on the last day of a month that their services are not required anymore and that they should have been aware of the fact that this termination could have happened on any given time due to the nature of their employment contracts.
It is also noted that an employee employed on a fixed term basis for a period exceeding 24 months, upon expiry of the contract, has to be paid one week’s remuneration for each completed year of the contract calculated in accordance with Section 35 of the Basic Conditions of Employment Act 75 of 1997.
The Labour Relations Amendment Act (“LRAA”) however, tells a different story.
Based on the new amendments it is therefore made abundantly clear that fixed term contracts need to be entered into mindfully by Employers, as it appears as if they are here to stay and will not easily be hoodwinked.
The Labour Relations Amendment Act was assented by President Jacob Zuma on the 14th of August 2014 and so it proposed that the Act will be in full force before the end of 2014. The LRAA, in Section 198B, defines a fixed term contract as a contract of employment that terminates on the “occurrence of a specified event, on the completing of a specified task or project, or on a fixed date other than an employee’s normal or agreed retirement age”. The LRAA specifically states that in the event that a fixed term contract is entered into between an employer and an employee, a justifiable reason has to be given for the nature of the contract. The LRAA refers to the following reasons as being justifiable: 1.
Replacement of another employee who is temporarily absent from work 2. A temporary increase in workload (not exceeding 12 months) 3. Student / recent graduate employed for training purposes or to gain work experience; 4. Project specific work with a limited duration; 5. Non-citizens with working permits for a specified period; 6. Seasonal work 7. Official public works and or public job creation schemes; 8. Positions funded by an external source for limited periods; 9. After the normal / agreed retirement age has been reached; 10. Any other justifiable reason.
These justifiable reasons however, are not the only factor that needs to be considered when regard is being given to the new legislation for fixed term contracts. The offer, renewal and or extended offer for fixed term contracts must be in writing and must contain specific reference to the reasons as to why this is a fixed term contract, the essence of which has to be justifiable. Inference is also drawn to Section 198B(8)(a) of the LRAA wherein it is stated that an employee who is employed in terms of a fixed term contract for a period longer than three months, must not be treated “less favourably” than an employee employed on the
CONVEYANCING / COMMERCIAL / LITIGATION
What you need to know about suspensive conditions – Chantel Kritzinger
Most sale agreements contain the ever popular ‘suspensive condition’ and too many sellers and buyers are left wondering what these clauses actually mean. A suspensive condition is inserted into a sale agreement to the benefit of a buyer. This condition affords the buyer the opportunity to obtain bond approval within the time frame mentioned in the suspensive condition. Should the buyer be unsuccessful in obtaining bond approval, the sale agreement will lapse and become null and void. The buyer can therefore not be held liable to the seller for breach of contract if he could not comply with the suspensive condition timeously. However, if the buyer did comply fully with the suspensive condition and then decides to withdraw from the agreement, he can be held liable for damages suffered by the seller. Both the seller and buyer should therefore take care as to the proper wording contained in the suspensive condition. The clause should make mention of the loan amount the buyer wishes to apply for, as well as the date on which such bond approval should be in place. If the buyer intends to utilise funds from the sale of his current property for the purchase of the new property, he may insert the successful sale and registration of his current property as a suspensive condition into the terms of the new sale agreement by which new property is purchased. It is further important to note that should the buyer not comply timeously and the agreement has lapsed, but both parties still wish to proceed with the transaction, the parties must then enter into a new agreement for the purchase of the property.
// +27 (0)12 362 5787 // www.jjrinc.co.za // Woodpecker Place, Hillcrest Office Park, 177 Dyer Road, Hillcrest, Pretoria
// 02
NEWSLETTER // OCTOBER 2014
LITIGATION/COMMERCIAL
The obligation of creditor providers to inform customers of their default - what constitutes proper delivery? – Chazanne Grobler
The National Credit Act 34 of 2005 (“NCA”) determines that any credit provider that wants to enforce a credit agreement must, under section 129, deliver a notice to a consumer setting out the consumer’s default and drawing the consumer’s attention to his or her rights in terms of the NCA. In the case of Kubyana v Standard Bank of South Africa Ltd [2014] ZACC 1 the parties entered into an instalment sale agreement for the purchase of a motor vehicle. After Mr Kubyane fell into arrears Standard Bank informed him of the default by sending a notice in terms of section 129 by registered post. The letter was specifically sent to the postal address that Mr Kubyana indicated in the agreement Mr Kubyana, however, failed to collect his registered post. Five weeks later the notice was returned to Standard Bank uncollected and Standard Bank continued to institute summons against Mr Kubyana. Mr Kubyana raised a special plea stating that Standard Bank had not discharged all its obligations in terms of section 129 of the NCA, as he was only made aware of the default after receiving the summons. Mr Kubyana specifically relied on the case of Sebola and Another v Standard Bank of South Africa Ltd and Another 2012 (5) SA 142 (CC) where, similarly, a section 129 notice was sent by registered post but was returned to the credit provider unclaimed. Mr Kubyana based his argument on the fact that if the post is unclaimed the creditor provider has failed to fulfil their obligations in terms of the NCA. The Constitutional Court in Mr Kubyana’s case had to determine what constitutes proper delivery if a consumer elected to receive notices by way of post. In general, in order to effect delivery, the credit provider must take those steps that would bring the notice to the attention of a reasonable consumer. The Sebola case can be distinguished from the facts of Mr Kubyana’s as Sebola was suc-
cessful in challenging the delivery of the notice because it was sent to the wrong post office. The notice in the Sebola case would never have reached Mr Sebola. Mr Kubyana on the other hand merely refrained from collecting his registered post. The Constitutional Court held that when a consumer has elected to receive notices by way of post, a credit provider must prove 1. 2. 3.
the notice was sent by way of registered mail; that the notice reached the correct branch of the Post Office; and that the notification from the Post Office requesting that the consumer collect the section 129 notice was sent to the chosen address.
If a creditor provider ensures that the above steps have been taken, the credit provider would have fulfilled its obligations to bring the notice to the intention of the reasonable consumer. It will then be for the consumer to provide reasonable explanations as to why the notice still did not reach the consumer. Mr Kubyana was unable to provide a suitable explanation for his failure to collect his registered post, there was therefore no evidence before the Court showing why it was reasonable for Mr Kubyana not to have taken receipt of the section 129 notice. Standard Bank was under no obligation to employ additional means to ensure that Mr Kubyana received his notice. The Constitutional Court determined that it is sufficient if the notice is reduced to writing and made available to the consumer at his or her nominated address. If the nominated address is a postal address the delivery must be by registered post to the correct post office. If the consumer then fails to respond to the notice, the credit provider is allowed to proceed with legal steps against the consumer.
Change is the law of life. And those who look only to the past or present are certain to miss the future.
John F. Kennedy
// +27 (0)12 362 5787 // www.jjrinc.co.za // Woodpecker Place, Hillcrest Office Park, 177 Dyer Road, Hillcrest, Pretoria
// 01
LITIGATION / CONVEYANCING Turnbull-Jackson v Hibiscus Coast Municipality and Others (CCT 104/13 [2014] ZACC 24) putting an end to the WaleleTrue Motives disputes on approval of building plans Chazanne Grobler
The Constitutional Court on 11 September 2014 delivered judgment in the Turnbull-Jackson case involving an 11-year long legal dispute regarding the approval of building plans by the Hibiscus Coast Municipality. The case reached the Court as an appeal against an order of the KwaZulu Natal High Court. Pearl Star Investments 14 CC obtained approval from the Hibiscus Coast Municipality to build a three-storey block of flats. On previous occasions, Mr Turnbull-Jackson succeeded to have the approval set aside, but in 2006 he failed to set aside the most recent building plans. He instituted a review application in the High Court, but failed once again. On appeal to the Constitutional Court he based the review of the approval on various grounds including, amongst others, bias of the building control official as well as the fact that the necessary level of compliance with section 7(1)(b)(ii) of the Building Standards Act was not met. Section 7(1)(b)(ii) specifically deals with refusal of the approving building plans if certain disqualifying factors, such as the fact that a building can be unsightly or will derogate from the value of the adjoining or neighbouring properties, is present. Madlanga J (with whom Moseneke ACJ, Skweyiya ADCJ, Dambuza AJ, Jafta J, Khampepe J, Majiedt AJ and Zondo J concurred), dismissed each of the grounds on which Mr Turnbull-Jackson relied. The central dispute, however, addressed the two different interpretations of section 7(1)(b)(ii) of the Building Standards Act. Mr Turnbull-Jackson in his grounds for review, relied on the interpretation given to section 7(1)(b)(ii) in the Constitutional Court case of Walele v City of Cape Town and Others 2008 (6) SA 129 (CC). The municipality in turn relied on the Supreme Court of Appeal (SCA) case True Motives 84 (Pty) Ltd v Mahdi and Another 2009 (4) SA 153 (SCA) where the SCA expressly did not follow the Walele case. The True Motives interpretation states that the local authority must only refuse to grant approval of building plans if satisfied that the disqualifying factors will in fact or probably
eventuate. This differs from the Walele case’s approach requiring the local authority to approve plans only if it is satisfied that the disqualifying factors will not eventuate before granting approval. At the core of the Walele-True Motives dispute is the principal of judicial precedent, a core component of South African law. This principle entails that courts must follow and are bound to decisions of higher courts. Only the ratio decidendi, or the reason for the judgment, needs to be followed and not any remarks that have been made in passing. The question is raised whether the SCA in True Motives erred by not following the judgment of Walele. The Constitutional Court had to determine whether the interpretation of section 7(1)(b)(ii) in Walele was made in passing, and if not, whether the interpretation was incorrect. Only in those two instances the SCA could depart from the Walele decision. Madlanga J held that the interpretation of section 7(1)(b)(ii) in Walele formed part of the rationale behind the decision. The decision itself in Walele took into consideration the possibility of harm to the owner and occupants of the property to be developed, and the fact that a development may have adverse effects on the rights of owners of neighbouring properties. It is for this reason that in Walele the court interpreted section 7(1)(b)(ii) to mean that local authority can only approve plans if it is satisfied that the disqualifying factors will not eventuate. As a result Madlanga J upheld the decision as being correct and stated that in the particular set of facts of Turnbull-Jackson there was no improper exercise of section 7(1)(b)(ii). The reasons advanced by the SCA for its departure from Walele did not justify the course adopted. The SCA erred in not following the Walele decision. Madlanga J made it clear that all courts, including the SCA, are bound to follow decisions of the Constitutional Court and only in specific instances are lower courts allowed to depart from judgments. The importance of precedents was emphasised when the Constitutional Court quoted Judge Cameron who stated, “Without precedent there would be no certainty, no predictability and no coherence.”
// +27 (0)12 362 5787 // www.jjrinc.co.za // Woodpecker Place, Hillcrest Office Park, 177 Dyer Road, Hillcrest, Pretoria
// 01
NEWSLETTER // OCTOBER 2014
LABOUR
Fixed term contracts – justifiable or not? – Ané Kotzé
Since the Labour Relations Act 66 of 1995 (“LRA”) first came into action, the essence of the fixed term contract of employment and its existence have been questioned by both the CCMA and the Labour Court. Many Employers employed employees on a fixed term basis due to the fact that it seemed like the “easier way out” NEWSLETTER //meant OCTOBER 2014 had the power to and that it supposedly that Employers somehow boycott the workings of the LRA, Schedule 8 of the LRA as well as the Basic Conditions of Employment Act 75 of 1997.
same and or similar terms and more specifically on a permanent basis, unless there is once again a “justifiable reason” for the different treatment. A grace period of three (3) months after the commencement of the Labour Relations Amendment Act 2014 will be granted to all Employers to remedy their existing fixed term contracts of employments with employees that are not in accordance with the subsection referred to.
Employers also used these supposed fixed term contracts to their advantage by continuously renewing the contracts upon its termination, sometimes on a month-to-month basis, only to inform employees on the last day of a month that their services are not required anymore and that they should have been aware of the fact that this termination could have happened on any given time due to the nature of their employment contracts.
It is also noted that an employee employed on a fixed term basis for a period exceeding 24 months, upon expiry of the contract, has to be paid one week’s remuneration for each completed year of the contract calculated in accordance with Section 35 of the Basic Conditions of Employment Act 75 of 1997.
The Labour Relations Amendment Act (“LRAA”) however, tells a different story.
Based on the new amendments it is therefore made abundantly clear that fixed term contracts need to be entered into mindfully by Employers, as it appears as if they are here to stay and will not easily be hoodwinked.
The Labour Relations Amendment Act was assented by President Jacob Zuma on the 14th of August 2014 and so it proposed that the Act will be in full force before the end of 2014. The LRAA, in Section 198B, defines a fixed term contract as a contract of employment that terminates on the “occurrence of a specified event, on the completing of a specified task or project, or on a fixed date other than an employee’s normal or agreed retirement age”. The LRAA specifically states that in the event that a fixed term contract is entered into between an employer and an employee, a justifiable reason has to be given for the nature of the contract. The LRAA refers to the following reasons as being justifiable: 1.
Replacement of another employee who is temporarily absent from work 2. A temporary increase in workload (not exceeding 12 months) 3. Student / recent graduate employed for training purposes or to gain work experience; 4. Project specific work with a limited duration; 5. Non-citizens with working permits for a specified period; 6. Seasonal work 7. Official public works and or public job creation schemes; 8. Positions funded by an external source for limited periods; 9. After the normal / agreed retirement age has been reached; 10. Any other justifiable reason.
These justifiable reasons however, are not the only factor that needs to be considered when regard is being given to the new legislation for fixed term contracts. The offer, renewal and or extended offer for fixed term contracts must be in writing and must contain specific reference to the reasons as to why this is a fixed term contract, the essence of which has to be justifiable. Inference is also drawn to Section 198B(8)(a) of the LRAA wherein it is stated that an employee who is employed in terms of a fixed term contract for a period longer than three months, must not be treated “less favourably” than an employee employed on the
CONVEYANCING / COMMERCIAL / LITIGATION
What you need to know about suspensive conditions – Chantel Kritzinger
Most sale agreements contain the ever popular ‘suspensive condition’ and too many sellers and buyers are left wondering what these clauses actually mean. A suspensive condition is inserted into a sale agreement to the benefit of a buyer. This condition affords the buyer the opportunity to obtain bond approval within the time frame mentioned in the suspensive condition. Should the buyer be unsuccessful in obtaining bond approval, the sale agreement will lapse and become null and void. The buyer can therefore not be held liable to the seller for breach of contract if he could not comply with the suspensive condition timeously. However, if the buyer did comply fully with the suspensive condition and then decides to withdraw from the agreement, he can be held liable for damages suffered by the seller. Both the seller and buyer should therefore take care as to the proper wording contained in the suspensive condition. The clause should make mention of the loan amount the buyer wishes to apply for, as well as the date on which such bond approval should be in place. If the buyer intends to utilise funds from the sale of his current property for the purchase of the new property, he may insert the successful sale and registration of his current property as a suspensive condition into the terms of the new sale agreement by which new property is purchased. It is further important to note that should the buyer not comply timeously and the agreement has lapsed, but both parties still wish to proceed with the transaction, the parties must then enter into a new agreement for the purchase of the property.
// +27 (0)12 362 5787 // www.jjrinc.co.za // Woodpecker Place, Hillcrest Office Park, 177 Dyer Road, Hillcrest, Pretoria
// 02
NEWSLETTER // OCTOBER 2014
LITIGATION/COMMERCIAL
The obligation of creditor providers to inform customers of their default - what constitutes proper delivery? – Chazanne Grobler
The National Credit Act 34 of 2005 (“NCA”) determines that any credit provider that wants to enforce a credit agreement must, under section 129, deliver a notice to a consumer setting out the consumer’s default and drawing the consumer’s attention to his or her rights in terms of the NCA. In the case of Kubyana v Standard Bank of South Africa Ltd [2014] ZACC 1 the parties entered into an instalment sale agreement for the purchase of a motor vehicle. After Mr Kubyane fell into arrears Standard Bank informed him of the default by sending a notice in terms of section 129 by registered post. The letter was specifically sent to the postal address that Mr Kubyana indicated in the agreement Mr Kubyana, however, failed to collect his registered post. Five weeks later the notice was returned to Standard Bank uncollected and Standard Bank continued to institute summons against Mr Kubyana. Mr Kubyana raised a special plea stating that Standard Bank had not discharged all its obligations in terms of section 129 of the NCA, as he was only made aware of the default after receiving the summons. Mr Kubyana specifically relied on the case of Sebola and Another v Standard Bank of South Africa Ltd and Another 2012 (5) SA 142 (CC) where, similarly, a section 129 notice was sent by registered post but was returned to the credit provider unclaimed. Mr Kubyana based his argument on the fact that if the post is unclaimed the creditor provider has failed to fulfil their obligations in terms of the NCA. The Constitutional Court in Mr Kubyana’s case had to determine what constitutes proper delivery if a consumer elected to receive notices by way of post. In general, in order to effect delivery, the credit provider must take those steps that would bring the notice to the attention of a reasonable consumer. The Sebola case can be distinguished from the facts of Mr Kubyana’s as Sebola was suc-
cessful in challenging the delivery of the notice because it was sent to the wrong post office. The notice in the Sebola case would never have reached Mr Sebola. Mr Kubyana on the other hand merely refrained from collecting his registered post. The Constitutional Court held that when a consumer has elected to receive notices by way of post, a credit provider must prove 1. 2. 3.
the notice was sent by way of registered mail; that the notice reached the correct branch of the Post Office; and that the notification from the Post Office requesting that the consumer collect the section 129 notice was sent to the chosen address.
If a creditor provider ensures that the above steps have been taken, the credit provider would have fulfilled its obligations to bring the notice to the intention of the reasonable consumer. It will then be for the consumer to provide reasonable explanations as to why the notice still did not reach the consumer. Mr Kubyana was unable to provide a suitable explanation for his failure to collect his registered post, there was therefore no evidence before the Court showing why it was reasonable for Mr Kubyana not to have taken receipt of the section 129 notice. Standard Bank was under no obligation to employ additional means to ensure that Mr Kubyana received his notice. The Constitutional Court determined that it is sufficient if the notice is reduced to writing and made available to the consumer at his or her nominated address. If the nominated address is a postal address the delivery must be by registered post to the correct post office. If the consumer then fails to respond to the notice, the credit provider is allowed to proceed with legal steps against the consumer.
Change is the law of life. And those who look only to the past or present are certain to miss the future.
John F. Kennedy
// +27 (0)12 362 5787 // www.jjrinc.co.za // Woodpecker Place, Hillcrest Office Park, 177 Dyer Road, Hillcrest, Pretoria
// 01
