Economic update

It is going to be most interesting to see what happens to import restrictions of steel. On the one hand, local steel mills are calling for protection. On the other, consumers of steel wish to buy at cheaper imported prices and thus resist the artificial pushing up of prices. This dilemma is economy 101 at its best. Logically one should allow, so the simplistic version of the theory holds, prices to find their own levels and, if it is cheaper to buy from elsewhere, then one must allow the consumer to do so. The difficulty with this is that, aside from certain producers being more effective than others, some are assisted by the governments in order to bolster employment and so on. This muddies the water no end it all.

A similar discussion is playing itself out regarding the Agoa chicken import discussions. Playing chicken with the USA is a very dangerous game and one wonders whether our State has the sophistication to do this.

You will recall that Piketty’s visit imparted impetus to the wealth tax debate. Judge Davis has commented that such a tax would be investigated, but that the process to design such a tax would take time. Hence, the immediate focus was on other instruments, such as estate duties. The latter is an easy tax to pay and collect… the former hurts much more. Both are bad news.

New taxes invariably result in prattle about tax revolts, resistance, and so on. This subject was dealt with by Blom recently, who opines that the conditions for such a revolt does not exist: our bourgeoisie simply does not have the stomach for it and egalitarian demand for participation is not there. For a revolution to be authentic, its benefits must be universal. Blame the constitution: it gives us rights that deprives a minority of participation in the determination of its lot.

Business review

On coal exports: “It is no longer a good idea to export large amounts of coal. We can use our coal locally, as, internally, we get better prices and there is better utilisation. The more we export, the more the price drops … and the price we are getting is less than what it costs to produce coal. XMP consulting coal analyst, Prevost.

Fais has launched a project to eradicate its 2000-plus property syndications complaints backlog. The suspension in its investigations was brought about by a pending Sharemax case in which its jurisdiction to issued determinations on such conditions was questioned.

Beware those who sell you software, promising that you can outperform the stock market. These practices have led to the JSE issuing a warning that “there is a lot more to becoming a successful trader than a piece of software.”

Our Teflon banks: both FirstRand and ABSA have been fined in the US for fixing the prices of corn and soybean futures. Especially the latter bank, in its Barclays guise, has repeatedly fallen foul of international regulation but never seems to be punished by client disenchantment.

The following statement, coming from Estonia after the EU had called up its loans to the Estonian national carrier, might well be applicable to SAL: “The European Commission has concluded that aid measures … in favour of national flag carrier Estonian Air, gave the company an unfair advantage over its competitors in breach of EU state-aid.” Is SAL not acting un-competitively?

Much has been said about the anti-competitive (really?) behaviour of Uber. WesBank saw an opportunity and partnered with wanna-be drivers to provide them with vehicles. Of everyone it embraced the new technology and will probably do well from it.

“The rights issue shows how insane things are in South Africa. Lonmin could not make money when the platinum price was $1800 an ounce, how are they going to make money at $900 an ounce? I cannot see how Lonmin will survive this.” Cadiz

Property update

The DTI has published proposals for new sectoral codes for BEE, applicable to property owning companies. These have a black ownership target of 27%. This is in recognition of the fact that there is a need to make capital available in the sector to enable black-owned companies to develop and acquire properties. Another feature is an economic development element which seeks to stimulate property development in under resourced areas.

Growthpoint and Investec has launched a management business focused on property investment in Africa. The intent is to hold 80% of income-producing real estate assets in strategic territories across Africa, excluding South Africa.

Practise update

The University of Pretoria has found that no more than 15% of companies placed under business rescue emerge as an operating entity. One of the problems is poorly trained practitioners. Another was extremely high levels of conflict between business-rescue practitioners and existing company directors. Business rescue was also not really affordable for small companies, given the charges by such practitioners.

Until now arbitrations have been largely private affairs. Recently a writer on constitutional law, has called for arbitrations to be public. The reasoning is that, especially in the case of disputes of which the public has knowledge, it is entitled to insight in the process and result.

Our Pietermaritzburg Registrar of Deeds has started enforcing an old ruling that titles should be cleaned up of defunct conditions. Generally speaking, you are particularly these conditions are in favour of old companies and pop prevalent in the Durban area. The conveyancer should ensure that such conditions are expunged where the company, in which favour of which the condition is registered, is defunct. Proving the death of an individual, where a condition was created a hundred years ago, is virtually impossible.

Cases

Suretyships; set off by principal debtor

If a principal debtor fails to apply set off, is the surety prejudiced and entitled to a release from the suretyship? No. The failure to apply set off (generally speaking) does not constitute a breach of the terms of the agreement.

Dominick SCA 20463/14

Title conditions to build expire

It is very common for a municipality to insert a condition in title deeds of new developments that the purchaser shall build within a certain time and, on failure to do so, to demand a re-transfer the erf at, usually, the original purchase price. The KZN Local Division, Durban, has ruled that these conditions are subject to a three-year prescription period, which commences running on the condition becoming enforceable. Referring to my comments on practice above, I doubt whether the Deeds Office will expunge conditions on this basis!

Ethewini [2015] ZAKZNDHC 78

Competition law: order against a self-confessed member of a cartel

The position of a leniency applicant, which admits culpability in anti-competitive conduct, is similar to that of a witness under the Criminal Procedure Act, where immunity from prosecution can be granted, if the witness a fulfils certain criteria.

Premier foods SCA 20147/14

Bonuses and lack of money

One of the excuses proffered by a DG for not paying bonuses, was that funds therefor were not available. The court made short shrift thereof. Make sure your employment contracts are properly worded.

PSA [2015] JOL 34433 (LC)

Acceptance of offers to follow form

If an offer sets a form for the acceptance of thereof, the offeree should follow that form or face the would-be contract being struck down.

Bosch [2015] JOL 34290 (GP)

Quotables

Ex the Mercury: We can easily forgive a child who is afraid of the dark; the real tragedy of life is when men are afraid of the light. Plato

No one ever says “It’s only a game” when their team is winning.

Weird and wonderful

A recent article seeks to establish that Zuma is the most expensive president in the world quoting extensive expenditure on spousal support and so on. The fact that only Obama will have a better jet than Zuma has, seems to confirm this…

With the athletics scandal in full swing, Semenya may well receive a gold medal some years after her very brief appearance and consequent disappearance. Those who lost against her might be forgiven for wondering whether, given the scandal that erupted later, she is a worthy recipient?

We knew that in VW was in trouble; we did not know it was this bad: a VW franchise in Durban was advertising a buy-2-get-1-free deal on VW’s!

Robert Mugabe on corruption and graft in Kenya: high praise from someone in the know: “Those people of East Africa shocked me with their wizardry in stealing. You can even think that there is a subject in their universities called Bachelor of Stealing.”

Zuma on dissent: “ANC branches must make it impossible for any counter-revolutionary grouping to mobilise our people and lead them astray.”

Lighten up

Aartappels wat net reg gekook is, is soos n ou hardloper; gaar maar ferm. Nathaniël

“Cleavage is like the sun. You can look at it only for a second. But if you are wearing dark glasses you can look for much longer.”

Retirement is the best thing that has happened to my brother-in-law.

"I never know what day of the week it is," he gloated. "All I know is, the day the big paper comes, I have to dress up and go to church."

The day after visiting a fair, my wife was in agony. "You know you’re past your prime," she said, "when you hurt all over and all you rode was the massage chair."