Gentle reader

This will be the last newsletter for this year.

May you have a relaxing and peacefull festive season

Daan

Economic review

All 3 of our business confidence indexes have plunged. The BER index is stable at 34 points which is 10 points lower than the long-term average and 8 points lower than the figure recorded in the 4^th quarter of last year. Things really are not looking good.

To drive the point home: the Merchantec CEO confidence index has seen a record decrease to 41 points in the 4^th quarter of this year. This is the lowest score recorded since its inception in the 2^nd quarter of 2009.

Business review

An opinion poll by Transparency International has it that South Africa is ranked Africa’s most corrupt nation followed by Ghana and Nigeria. Better than Nigeria?

Early on in the development of web searches Yahoo was the search engine to use. The news has it that its core business might well be disposed of. This heralds the demise of a giant of our time.

New vehicle sales are substantially down. Yet it is said that new passenger-vehicle prices are likely to rise between 5 – 10% in January.

China has undertaken to reduce emissions from “major pollutants” by 60% over the next 4 years. So it says. Frankly, I would be surprised; that is a particularly ambitious target.

Iata says that air fares are falling and have done so by some 5% over the first eight months of this year. Ryanair, Europe’s largest low-cost carrier has predicted a price war during the Northern hemisphere winter. Buy now…if you can afford to take Rands out at the current exchange tares!

Property review

Whilst listed property has done well in terms of overall performance this year, reports hold that South African (and indeed African) property prices per square metre costs significantly higher than similar investments in developed markets such as the US, Canada and Spain.

Another report, this time by John Loos, says that our average real house price levels are 17% lower than the record high reached in December 2007. Despite this, the average real price level for house prices, is 65% above the July 2000 level. If one ignores consumer price inflation, this equates to a 290% rise above the July 2000 price levels. All this sounds very nice but, in real terms, after adjustment for the CPI, the average rate of house price growth rose by 2.3% year-on-year in October.

The bad news is that he believes that our house price growth will be short lived. Based on the Reserve Bank’s leading business cycle indicator, a 5.5% decline for the coming year is predicted. This is the most rapid year-on-year decline since July 2009. Eina.

Practice review

The United Ulama Council of South Africa and the Muslim Women’s Association have asked to intervene in a case directed at preventing the Muslim Marriages Bill made law. They argue that Islamic law provides more protection to women than does Western law. Speaking for myself, I believe that, should they succeed, this might well be a step backwards.

Why can a private person institute private prosecution and not a juristic person? In the final analysis, private prosecutions in terms of section 7 of the Criminal Procedure Act, are only permitted on the grounds of direct infringement of human dignity. Human dignity is a foundational value of our Constitution. A company has no such passions and therefore this is not allowed.

National Society for the Prevention of Cruelty to Animals SCA 20781/14

Cases

Tlokwe by-elections

The Constitutional Court handed down a judgement on the issues surrounding the elections in Potchefstroom. What I found unsettling was that the respondent was the Electoral Commission which refused to acknowledge the irregularities that had been allowed by it. One wants to believe that this body is impartial and competent. There is, after this case, certainly doubt in my mind as to the above.

Xolile Kham v Electoral Commission CCT 64/15

Salary sacrifice scheme

In order to be successful in structuring a valid salary sacrifice scheme, one needs to show that remuneration packages are structured in a manner that employees receive their remuneration partly by way of cash and the balance by way of a fringe benefit and that the employees unconditionally assumes liability for payments and contributions for (as was the case here) the motor vehicles that are part of the scheme. In this case an employee would choose to participate in the scheme, select a vehicle of his choice and have it registered in his name. The employer, however, owned the vehicle until the employee had settled the finance obligations and paid the related fringe benefit tax on it. The cost of the purchase was recovered from the employee, that being the portion of the salary that he had to forego in return for the use of the vehicle. The running costs was also obtained from the salary sacrifice and not directly from the employee. In return, the employee received a taxable benefit, i.e. the use of the vehicle. So far so good. The difficulty arose as a result of a supplementary account that was run, showing notional interest, running expenses and so on. If there was a shortfall on this account the employee paid this. If there was a surplus, the employee was entitled to withdraw that money from time to time. If this sort of thing interests you:

Anglo Platinum Management Services/SARS SCA case 20725/2014

Search warrants

Where a search warrant relates to a statutory offence, as opposed to a common-law crime, the warrant should pertinently referr to the specific statute and the section or subsection thereof. The affidavit upon which the search warrant is based must accompany that warrant when executed.

Goqwana SCA case 20668/14

Textbook availability

The Department of Basic Education had adopted a policy that each learner must be provided with a textbook for each subject before commencement of the academic year. This was not adhered to in Limpopo. The Department argued that it had substantially complied. The court held that this was not good enough and that its conduct was in breach of previous court orders.

Minister of Basic Education SCA case 20793/14

Is it equitable to tax ratepayers who receive no services?

The City of Tshwane taxes all within its area, irrespective of whether one provides certain services for one-self. In this case, a home owners’ association presiding over some 600 ha with329 stands provided its own water and sewerage services as these were not available from the Municipality. The City concluded that property tax is not payable for the provision of basic services and therefore all property owners had to pay property taxes, irrespective of receiving a direct benefit from the payment thereof or not. The homeowners’ association was not successful as the municipality had approved the township on the understanding that the Municipality would not be burdened by an increased demand for services, while retaining its right to levy rates.

Blair Atholl Home Owners’ Association SCA Case 20634/14

Business rescue proceedings

Is one entitled to challenge the appointment of a business rescue practitioner if the company concerned does not properly comply with the terms of section 129 (3) & (4)? These sections provide that a company must publish a notice of the resolution to go into business rescue, appoint a business rescue practitioner and file a notice,, which should also be published. This the company had done but not within the appropriate time limits. It had also not published a notice of the resolution to commence business. Section 129 (5) provides that, if a company fails to comply with any provision of the above, its resolution to begin business rescue proceedings and place the company under supervision lapses and is a nullity. The court found that, as long as the resolution to commence business rescue, has not been set aside, the standing of the business rescue practitioner, appointed on the strength of that resolution, cannot be challenged on the ground of non-compliance with the procedural requirements set out in section 129 of the Act.

Newton Global Trading SCA case 104/15

Quotables

“I am not one of those who in expressing opinions confined themselves to facts.” Mark Twain

For your New Year's resolutions: "We need men who can dream of things that never were." John F. Kennedy

Weird & wonderful

A recent scandal emerging from KZN, was the promotion of a police provincial commissioner who was promoted to lieutenant-col. What I found interesting was the basic requirements for the job: a National’s Matric certificate and a driver’s license. Setting the bar a bit low? And the incumbent did not even meet these.

Really good news is not much reported on: an Eastern Cape farming project, launched by PG Bison in Ugie, has been such a success that it is set to quadruple in size. I have seen several comparable attempts made by especially forestry companies come and go. Such successes should be imitated.

Lighten up

For your holiday enjoyment: