Economic review

Reality bites: The Reserve Bank yesterday cut its growth expectations for South Africa to zero. Our real GDP is expected to expand by 1.1% this year and 1.5% next year and the year thereafter. Eina. One must accept the view that a steady and rapid rise in our standard of living is a pious hope.

Borrowing from Peter to pay Paul: Zimbabwe is seeking a financier to lend it money to repay the IMF so that it can borrow more from the IMF… I do not understand the subtleties of these things but, if I were the IMF, I would certainly not lend to someone who had to borrow to repay me. Would you?

An interesting comment, which flies in the face of warnings that a national minimum wage will have a deleterious impact on employment, is new research from Applied Development Research Solutions that holds that such a policy would have a positive impact on the wage rate, prices, employment, household income and consumption. The truth of the matter is probably that one is dealing with a trade-off and that taking a fully justified position on either side of the argument is virtually impossible. One is dealing with vested interests and a status will change will probably be difficult.

Business review

Inexhaustible expectations: NUMSA has said that it will call a motor sector strike if its demands for a 20% wage increase, medical benefits and a R5000 monthly housing allowance, is not met. It is a safe bet that the strike is going to happen.

Peter Leon, a mining law expert, says that the draft Mining Charter will probably not pass Constitutional Court muster in that its inflexible racial quotas will probably see it falling foul of legitimate affirmative action interpretation.

A Pyrrhic victory: students won an abated fees increase for this year on the back of protests. The problem now is that funding for university activity is insufficient. Rhodes University is said to be on the verge of bankruptcy. Insourcing, which became a side-tissue of the protests, will cost universities between R400m and R2bn a year. The number of students at universities has burgeoned but university income has not kept pace. This must inevitably lead to the general deterioration of our universities. In turn, those who wish to obtain a South African education, will be trapped in South Africa as our degrees will increasingly become worthless elsewhere.

Property review

The rising cost of home ownership is driven primarily by the rising cost of electricity with a yoy increase of 11.3% and that of municipal services at 9.8%. Our real house-price deflation is 0.45%. first-time home buying is starting to slow, presumably because of rising interest rates and a weakening economy. This in turn pushes up the demand for rentals, although at a lower level than before. Loos.

Further, IOL Property says that estate agents expect very little near term strengthening in residential activity levels.

The Ethekwini Municipality has announced that, owing to a system change, some electricity, water and rates records are held on its new system and some on the old. If one applies for an assessment, it will take 90 days to obtain this at best, which time he municipality regards as the normal time for obtaining an assessment. Transfers simply aren’t going to happen quickly for Durban properties.

Practice review

The SABC has fired some of its journalists, who had been suspended for discussing the contracts with the media. Whilst their initial suspension was probably almost certainly unfair, the further conduct of those journalists makes the outcome of the court case less predictable (I discussed the matter briefly with our Labour Department). The primary issue was press freedom; a laudable goal. Factually the preliminary litigation will undoubtedly obscure the primary issues.

The class action that is being brought against current and former gold-mining companies, is a first of its kind. Ironically one of the participants acting for those suffering from silicosis, has opined that the suit that is to be brought, is probably too varied for a class action. If this is correct, then this milestone in South African legal history may well turn out to be a lesson in what not to do.

Tax review

I had previously reported on the changes in the tax treatment of trusts: the ability to make interest-free loans to trusts, that can be written off over a number of years and so save on the estate duty on donations tax, will change in March next year, if the proposed amendment to the Income Tax Act is legislated. Another, and one wonders whether this was intended, result will be that dividends received from a BBE company into a BEE trust, will be taxed as income and not dividends. This amounts to a double taxation and will make such schemes, less attractive and less used.

The following link will take you to a LexisNexis page which summarises the draft amnesty which will be extended to those who hold undeclared monies overseas.

http://lexis.hosted.inet.co.za/inews/news/story/b95d48f2-5e3b-437d-aa82-cb677f6bf927/withrelated/4

Cases & such

Execution sales and the ability to pay:

Is it possible that one could stay an execution sale because, subsequent to the warrant of execution being obtained, one manages to secure finance to pay the debt? Possibly, but in principle, no.

Van der Vyver http://www.saflii.org/za/cases/ZAECGHC/2016/47.html

Duty to act in good faith: directors

Directors have a fundamental duty to act in the best interests of the company they represent. The measure of this is known as the business-judgement rule. If this interests you, contact me for an article by Van Tonder. Note that I shall not be in office for a week and may take some time to respond.

Spoliation and self-help

Self-Help is frowned upon, legally speaking. This is expressed as “spoliation” which holds that a court would generally reinstate the parties to the position they were in before any action occurred if one of the parties took the law into his own hands. Thereafter the matter would then be dealt with in the usual manner. The reason is to discourage people from taking the law into their own hands. The latest case in this respect was the spoliation of advertising signs.

Strawberry Worx http://www.saflii.org/za/cases/ZAGPPHC/2016/547.html

Personal liability of members of a close corporation

The provisions of the erstwhile section 26 (5) of the Close Corporations Act says that if a corporation is deregistered whilst having outstanding liabilities, the members thereof shall be jointly and severally liable for those liabilities. That section was replaced by another which does not bring to bear personal liability of a member of a close Corporation, purely on the basis of its deregistration.

Motor Industry Bargaining Council versus Khan [2016] JOL 36158 (LC)

Comment

Election insanity albeit on a light-hearted note: “If you just give me six months to be a dictator, things will be straight. Right now to make a decision you need a resolution, decision, collective, petition.” The Prez

Boris Johnson was made UK Foreign Secretary. Why him? His comments on Africa and, indeed, most of the world, makes him singularly unqualified for the job.

On liberal white guilt: “Whites.. knew that the apartheid government did bad things, but refused to accept that it was done on their behalf. They knew they were advantaged, but refused to accept that this was as a result of a deliberate programme of legislation and kragdadigheid committed in their names. Above all, they refused to acknowledge and engage with people who had lived with and survived the trauma committed in their name. Telling people to get over it, because they are now citizens of an imaginary Rainbow Land, is massaging salt into the wound. All too often, white South Africans believe that the growth of the black middle class is evidence that they have overcome the pain of apartheid. "

A clash of cultures: in Switzerland there is a practice that students, on and leaving classrooms, shake the hands of their tutors. Muslim immigrants want to be exempted. The Swiss see this custom as a gesture of respect and a part of their tradition. Muslims see this as a religious no-no. The question is whether one should prevent immigration on issues such as these.

He moves in mysterious ways: the South African Council of Churches said yesterday that church leaders who endorse political parties are just like the Dutch Reformed Church of yesteryear. What it neglects to do is called to account politicians who rope in the Lord has supporter of the calls.

If you think corruption is a South African/African thing; take a look at this: http://us5.campaign-archive1.com/?u=1eb94755813093b86cb8f73be&id=35cccf1ff1&e=fdfbfcf048

Lighten up

In the hardware store, a  clerk asked, “Can I help you find  anything?”

“How about my misspent youth,” joked my husband.

The clerk shot back, “We keep that in the back, between world peace and winning lottery tickets.”

Son: "Mom can I get twenty bucks" Mom: Does it look like I am made of money Son: "Well isn't that what M.O.M stands for?"

Never lend money to a friend. It's dangerous. It could damage his memory.

- Sam Levenson

You don't have to marry for money; hang around the rich and marry for love.

- the mother of Barbara Walters