Economic review

It has been reported that investors find better value amongst banks and insurers in emerging markets, which are achieving growth rates as much as 20 times faster than their peers in developed countries.

Bond sales of R30bn this year, a tripling of such sales over the same period, is an indication that investors’ faith in South African financial institutions has been restored somewhat.

Why is the Africa Rising narrative unimpressive? It is been suggested that the reason is that, whilst impressive, African growth per capita is lower than that of Asia. This means we need much faster growth to keep up with a population growth in order to produce wealth.

Business review

Good intentions: You will recall that our Department of Education had planned to introduce Mandarin as a 3^rd language option. The problem is that there is currently only one teacher in the whole of South Africa…

A mass exodus of nurses and doctors from public health facilities in Johannesburg has led to staff shortages. The reason for this appears to be increased workloads, an escalating burden of diseases and better pay overseas.

It is most interesting to see the politics around local steel manufacturing. Our Minister has now said that all stops are being pulled out to ensure the sustainability of the local steel manufacturing sector. This followed several steel mills having closed down. Yet, about a year ago, this very sector was pleading with the Minister to prevent cheap steel imports in order to ensure its survival.

Nomophobia : an addiction to smart-phones, derived from no-mobile-phone-phobia.

The recent statistics produced by Stats SA highlights a growing problem in education. One of the symptoms is our failure, as a country, to benefit from the so-called demographic dividend: a term used to denote burgeoning economic growth on the back of a large group of young persons coming of age and entering the market. The percentage of black youths in skilled jobs in South Africa has been static for the past 20 years. This is indicative of a problem which is going to worsen as these persons grow older without finding work.

Property review

The emergence of slower year-on-year house price growth has resulted in a 4, 3% property price inflation which translates to negative growth in real terms. Despite this, homes are becoming less affordable, owing primarily to a rise in the household debt-service ratio.

The drop in the Rand exchange rate has made our properties ridiculously inexpensive for those earning hard currency. This has resulted in an increase in expatriates purchasing here.

Iol says that home owners, planning on renovating, face a greater risk of over capitalisation than before. The reasons for this are that the unprecedented change in automation, technology, style and design has resulted in a shorter shelf-life of fittings than before. A declining residential property market may prevent a full the redemption of the capital outlay of an upgrade.

South Africa is reported to have the sixth highest number of shopping centres globally. Hyprop, one of our blue-chip owner investors has admitted that new malls are not returning profits as expected. It would be interesting to see how the massive new Mall of Africa performs.

RDP housing is reported to be making inroads into the housing backlog with a number of elements citizens living in informal settlements falling from 17% in 2002 to 11% 2 years ago.

Practice review

“Ethical leadership is not an option but a national imperative because when you are a leader, you have the authority to influence those who lead.” Mogoeng

When appointed as chief justice it was insinuated that his appointment was protective of our president. He, perhaps, is owed an apology.

The Traditional Courts Bill is back on the table.

Trusts and taxes: SARS has proposed that the use of interest-free loans as payment for the transfer of assets to trusts to be arrested by including such transferred assets in the evaluation of the estate of the founder at death. Furthermore the proposal is that such loans are regarded as donations and appropriately.

The 2016 conveyancing fees tariff and provincial and interprovincial apportionment guidelines have been published.

The Chief Masters Directive 2/2060 dealing with estate duty is available. Ask me for a copy of this if of interest to you.

Cases

Sale of business and implied restraint of trade

A business was sold as a going concern, inclusive of goodwill. A restraint of trade was included. The purchaser sold the business on. One of the parties to the original contract commenced trading against the purchaser. The case was dismissed as the new purchaser was not a party to the original contract.

Grainco SCA case 20693/14

Surety: be careful what you sign

A complainant had signed a surety. The contract contained a clause to the effect that she had read and understood the document. She claimed that the document had not been explained to her. She was held bound.

Herselman [2016] ZAFSHC 39

Prescription of claim after litis contestatio

Normally prescription which extinguishes a claim, is halted on the issue of a summons in respect of that claim. In this case, the claimant had ceded right to action to another after the close of pleadings following on a summons. The defendant argued that the effect of the session was to substitute the original creditor for another. When the order for substitution was made the 1^st creditor ceased to pursue the claim and it took a further 3 years for the new creditor to do so. This was tantamount to a fresh action. As a result the halting of the prescription effected by the service of the summons fell away. It was adjudged that the debt remained the same throughout and that the identity of the person enforcing the claim had merely changed.

Fisher SCA 20640/14

The rule in Foss versus Harbottle

A shareholder is precluded from suing in own right in respect of a wrong done to a company causing it to suffer the loss, if the company itself has decided not to pursue that loss. What I found interesting was the judge’s comment that we are asked to apply rule of ancient origin that has been abolished in the country of his birth. For purists only.

Gihwala SCA 20760/14 at 107 et seq

Prescription of claim against developer where development does not progress

This case is not of particular interest save to reinforce that one should consider prescription if a sale of agricultural land, destined for development, stalls owing to the necessary consents not being obtained.

Nuance [2015] ZAGPPHC 683 Z

Quotables

“Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen.” Churchill

“Music with dinner is an insult both to the cook and the violinist.” Chesterton

Weird and wonderful

Forever mysteriously smiling: A new report states that Mona Lisa is an androgynous amalgamation (half man and half woman) of two different persona, one of whom is presented as a half picture of da Vinci’s probable gay lover. Now we know why he/she smiles.

Lighten up

If women didn't exist, all the money in the world would have no meaning. Aristotle Onassis

I never married because there was no need: I have three pets at home which answer the same purpose as a husband – I have a dog which growls every morning, a parrot which swears all afternoon, and a cat that comes home late at night. Marie Corelli

The attorney tells the accused, “I have some good news and some bad news.”

“What’s the bad news?” asks the accused.

“The bad news is, your blood  is all over the crime scene, and the DNA tests prove you did it.”

“What’s the good news?”

“Your cholesterol is 130.”