Economic review

The BETI report shows that, in real terms, economic activity in South Africa is down on last year’s numbers. As a layman, this accords with my own observations and tales told by my peers that times are hard at present. Financial reports confirm that consumers are tightening up on spending. Our only constant is uncertainty.

The Association of Chartered Certified Accountants says that our shadow economy is expected to rise to 24% of GDP by 2020. That economy is defined as the production of and trade in legal goods and services that is deliberately hidden from the authorities. The rise in this sector of our economy is owing to persistent unemployment, low bureaucratic quality and inefficient provision of law and order.

The Economist tracks the economies of some 43 countries; our economic performance was 4th worst in 2016 and is currently worst.

Greece is financially on the mend: the EU’s Executive Commission has recommended that the so-called excessive deficit procedure be closed down.

The Big Mac index is a rough and ready index of relative currency values based on purchasing-power parity. Our Rand, according to this, is some 57% undervalued against the dollar.

Business review

Emirates: one might rightly say that very few South African low-cost travellers have not been to Europe via Dubai. The impression that I had was that cheap fuel enabled this airline to expand very aggressively in a time when many others floundered. It is reported that Emirates has frozen hiring and is scaling back on staff, and is seeking to maximise income by our charging for seat selection, lounges and the like. It would be interesting to see how this pans out over time.

Our National Gambling Board has not functioned since 2014 and is still under administration. Remarkable.

The latest vehicle manufacturers, under the spotlight for emissions cheating, are Porsche, Suzuki, and Fiat Chrysler.

Property review

The Western Cape continued to have the fastest average house price growth in Q2 2017. That market is the most expensive in South Africa with an average transaction price estimated at R1.4m. It’s price growth since2010, has been some 80% compared to 49% in KZN and 41% in Gauteng.

Despite this, the Atlantic seaboard residential market is slowing.

One of the interesting duties of the owner of a sectional scheme is that he is obliged to notify the body corporate of any change of ownership or occupancy in his section and of any mortgage registered against that [S13(f)]. In more intimate schemes this seems logical. In larger schemes, I suspect that this provision is mostly not complied with. The reason why one needs to notify the body corporate of mortgages registered against one’s unit is that when dealing with common property the trustees of a body corporate must, in certain instances, inform the mortgagees of all units and obtain their consent.

If you need to calculate the CGT payable on the sale of your property, consider the following link: https://www.taxtim.com/za/calculators/capital-gains-tax

Practice review

The sessions of leases and real rights: when one registers a long lease against land, no rate certificate is required. When one cedes such a registered lease, one must lodge a rate certificate. This anomaly is caused by the provisions of section 118 of the Local Government: Municipal Systems Act, which requires a rate certificate for the transfer of property (which include rights to land). Ethekwini has a blanket certificate exempting such transactions. Ask me for a copy.

One of the perennial problems our agency department experiences is how the value of a portion of inherited property is dealt with. In essence, the transfer duty [of for instance a section 45(1) application to endorse a title held in community of property] receipt has to reflect, in the description of the property dealt with that only a share of the property will be transferred. The value of the share, and not the whole, must be reflected on the receipt. The consideration portion of the receipt should be blank. The value must accord with both the power of attorney and the draft deed. If you have a problem with these, give me a call.

Cases

ESTA and the responsibility of providing accommodation

In a Constitutional Court judgement last week, a case was heard which dealt with occupiers of private land and their eviction. The owner of the land argued that it had obtained prior orders for eviction and that the local municipality needed to provide accommodation for the evictees. The local municipality offered accommodation but the evictees were not happy with the situation or quality of thereof. What is of interest is that the court dealt with the problem of homelessness versus the rights of a landholder. It urged give on the part of both and imposed a positive obligation on the local authority to provide accommodation in such an event.

Baron v Claytile CCT241/16. Ask me for a copy.

Oppressive and unfair conduct: corporate law

Section 252 of the old Companies Act provides a remedy for members of a company in the case of oppressive or unfairly prejudicial conduct of other members. The member who seeks relief under this section, must show that the conduct complained of is objectively unjust or unfair. The test may be summarised as whether a reasonable bystander would regard the complained-of conduct as unfairly having prejudiced the complainant’s interests. In the case at hand, the court found that the majority shareholders had recklessly conducted the affairs of the company in such a way as to jeopardise the value of the complainant’s shares and to reduce the dividends payable to him. The majority shareholder was ordered to purchase the plaintiff’s shares and a referee was appointed to determine the value thereof.

De Sousa v Technology Corporate Management

http://www.saflii.org/cgi-bin/disp.pl?file=za/cases/ZAGPJHC/2017/109.html&query=%20de%20sousa

As an aside, our SCA had decided, a few months past, that a claim under section 252 was not a debt and therefore did not prescribe.

Off-Beat Holiday Club

http://www.saflii.org/cgi-bin/disp.pl?file=za/cases/ZACC/2017/15.html&query=OFF-BEAT%20HOLIDAY%20CLUB

Labour brokers

Last week the Labour Appeal Court, in the case Numsa v Assign Services, handed down a judgement in which it addressed the effect of section 198A(3)(b)(i) of the LRA. After three months of continuous work, an employee of a labour broker may be deemed to be employed by the client company only. Labour broker workers can now look to the client company as their employer, who must teat a them not less favourably than any other worker in that company. A partner of mine expressed this as follows: the labour broker becomes a glorified payroll administrator after three months.

Quotables

Confusing civility with comity is a grave mistake in human or international relations. Summers; US Treasury Secretary

Comment

Moeletsi Mbeki says that both the ANC and National Party are/were national movements driven by grievance against the British. “The complaint was not so much against British colonialism….but rather that the British regime excluded them from also enjoying the fruits of colonialism produced by the exploitation of cheap black labour as well as” ..minerals. He says that the difficulty with both of these is the exclusion of the majority of citizens from such economic benefits. In the case of the nationalists, the blacks, and in the case of the ANC, simply the vast majority of South Africans. He says that our extensive social welfare programme has bought time for our government but, given the mismanagement of are macro economy our government will fail. Our consumption-driven economy has led to a feast in which enterprises have created a massive and overpaid managerial class which is not sustainable. He says that, in order to industrialise, we need a political coalition that will include the underclass. All of this is true but his solution would appear to be virtually unattainable.

https://www.businesslive.co.za/bd/opinion/2017-07-13-new-power-coalition-needed-to-include-poor-and-rich/

Lighten up

There are two rules for success: 1) Don't tell all you know.

Non-discriminatory ad aired in Australia: a herder required for 4000 sheep who speak English.

Q: What do you get if you cross an angry sheep and a moody cow? A: An animal that's in a baaaaaaaad moooooood.

A story is told of a Jewish man who was riding on the subway reading an Arab newspaper. A friend of his, who happened to be riding in the same subway car, noticed this strange phenomenon. Very upset, he approached the newspaper reader. "Moshe, have you lost your mind? Why are you reading an Arab newspaper? "Moshe replied, "I used to read the Jewish newspaper, but what did I find? Jews being persecuted, Israel being attacked, Jews disappearing through assimilation and intermarriage, Jews living in poverty. So I switched to the Arab newspaper. Now what do I find? Jews own all the banks, Jews control the media, Jews are all rich and powerful, Jews rule the world. The news is so much better!"