Gentle Reader

I spent last weekend in the Rhodes area rattling around on an off-road motorbike. The snow was deep, the beer was cold and the locals, well, interesting.

If this interests you, ask me for the GPS route for the Baster Voetpad pass in the Ugie area as well as the Wartrail Pass which runs across Tiffendell from Lundin’s Neck through to Tenahead.

Economic review

Curates egg economics: The Beti is showing a dramatic slowing of our economy. In the same breath, manufacturing seems to be picking up. Opinions hold that the relief gained may well be short lived.

The Sake 24 consensus of July 2016 holds the following predictions:

• GDP for the full year 0.1%

• R/€ average exchange rate for the last quarter 16.7

• R/$ average exchange rate for the last quarter , 15.3

• CPI for the year 6.6

Reading commentators on the economy, it would appear that the current strength of the Rand against the US $ is a result of four unexpected windfalls which cannot be expected to last. Generally speaking, the implications of a downturn in the economy are all there and one cannot but wonder whether we will see out this year without sliding into recession.

In line with the volumes of new-car sales dipping some 22% this year is a rise in the demand and price of used cars.

Globalisation and its discontents: Stiglitz says that globalisation was intended to benefit all but, as a result of policies which advanced the interests of the rich and powerful at the expense of workers, globalisation actually left most Americans worse off than before. Big business must love this guy.

The Rand has been trading at very strong levels of late and this should bring down the cost of imported goods and oil. If this continues we will shortly hear how a weaker Rand will favour manufacturing and so on, in circles. There is always someone who thinks that he or she should benefit but doesn’t.

Business review

As an emerging economy, we simply cannot afford all that we aspire to: tertiary education is a prime example. University fees have been curtailed by the State following on the #uprising. This has resulted in nine universities running short of the funds required to properly run their establishments. Yet students still cannot afford the tuition and have become quite vociferous about this.. There is no real answer to this other than fairly unpalatable options. In fact, the latest suggestion that the rich pay ten times as much as the poor for the same education, will simply lead to the rich educating their children elsewhere. Factually our universities are not held in the same standing of late as they were wont to.

An interesting development is that Namibia wants also to adopt empowerment legislation which, until now, has been conspicuously absent in that country. The proposed legislation refers to PDP’s i.e. previously disadvantaged peoples.

NGOs are facing massive cuts in government funding. One understands that the State is not obliged to assist NGOs in social upliftment or care, but the equivalent State service is mostly cumbersome and inadequate.

The top-selling vehicle of all time (37 million sold through 11 generations) is the Toyota Corolla.

Monetisation: WhatsAp has taken over the world; how to turn this to profit without flooding users with advertisements, is the challenge.

And this irrelevant snippet which interested me, was greenies urging us to use timber for furniture rather than metal or plastic; as such furniture has a lower carbon emission footprint than does other materials.

Property review

Two thirds of homeowners are reportedly paying only the minimum amount on their mortgages for primary residences as a result of significantly increased financial strain.

It costs 28% cheaper to have bought an existing house than to purchase a new one in the second quarter of this year.

Both Nedbank and Barclays have reported “increased impairments” of home loans. That of Barclays is reported to be 77% up. This is ascribed to consumers being financially stressed. This situation reflects in the FNB estate-agents survey, which indicates that upgrade-related selling has declined to about 12% of total home sales

A number of real estate groups, the GTC group, the EPP and Hammerson will list on the JSE later this year.

FNB reports that fewer foreigners are buying residential property in South Africa. The estimated level of foreign buying is currently 2% of total purchases down from a peak of 5.77% at the end of 2014. This is ascribed to the global loss of influence of property as an asset class.

Practice review

It is expected that more South African businesses are expected to fail this year as a result of the usual: uneasy Labour relations, political instability, we can international commodity prices, China’s slowdown, drought etc et cetera.

The latest Registrar’s (of Deeds) circular is available at http://bit.ly/29YYe08

The American Bar Association has rules similar to ours, which provides for a commitment to diversity and inclusion. The difficulty encountered by Americans law schools is that, in accepting candidates which are not necessarily academically compliant, they risk being penalised for low pass rates.

http://taxprof.typepad.com/taxprof_blog/2016/07/strongrevised-bar-passage-accreditation-standard-316-bar-passage.html

The Government Employees Pension Fund has been taken to court by the Public Servants Association after the fund had a revised the actuarial values of members’ pension returns downwards. One wonders what brought this about: if a genuine error this will surely be explained. If this is attributable to investment in dubious projects (which one has seen of late) then matters might be different. However, can one compel a fund to pay more money than it has?

Invalidity of S11(1)(a) of the Drugs and Drag Trafficking Act.

The Constitutional Court has struck down the above section on the basis that warrantless searches should not be authorised when there is no urgency, as it constitutes an unjustifiable limitation on the right of privacy.

Minister of Police v Kunjana, case 235/15

Cases

Construction company not an organ of state when building low-cost housing

The City of Cape Town sought to hold a construction company, which was subcontracted to a developer, liable for construction defaults on the basis that it became an organ of State when erecting low-cost housing. The argument ran that section 8 of the Bill of Rights applied to non-State parties and that a private party attracts constitutional obligations in the context of socio economic housing. The court rejected this, saying that, whilst the Constitution provides expressly that those institutions and individuals who exercised public power or engaged in a public functions, in terms of underlying legislation, can be characterised as organs of State, in this case the developer might be held accountable but not the subcontractor. Whilst this was a negative result contractors might be wise to keep this finding in mind when contracting for low-cost housing.

City of Cape Town versus Khaya case 158/15

Trusts and fiduciary duties

Trustees are expected to comply with so-called fiduciary duties, when acting as trustees. The nature of the duties are discussed by Nel in a relatively recent article in Obiter. If this interests you, ask me for a copy.

Execution sales and the ability to pay:

Is it possible that one can 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

Vat and sales in execution

If a Sheriff sells property on which VAT should be paid at an auction, is the purchaser liable to pay VAT? Yes. Our High Court decided that a purchaser, at a sale in execution, must establish this himself and that a sheriff only has to extend his enquiries to what the real rights are that are attached to the property that is sold. I confess that I find this a bit steep.

Sheriff Piketberg v Lourens: http://www.saflii.org/za/cases/ZAWCHC/2016/93.html

Quotables

Fear is the main source of superstition, and one of the main sources of cruelty. To conquer fear is the beginning of wisdom.

Comment

The penalty dished out to SAA by the Competition Tribunal made the news repeatedly. Cynically, at a cost of R106m, the removal of a serious competitor could well be said to be a bargain?

Gap funding? Our deputy minister of Co-operative Governments and Traditional Affairs has attributed the disappearance of R615m from the revenue streams of North West to a policy gap… What will happen is that the Public Protective will, in due course, report on what is allegedly a looting of that fund. Wait and see.

South Africa has been rated as the third most miserable country of 74 economies surveyed by Bloomberg. The happiest is Thailand. Perhaps, but I think that this is exaggerated.

Lighten up

Mijn vrouw zegt dat ik nooit naar haar luister... of zo iets.

Poor: Adj; When you have too much month at the end of your money.

Wagner’s music is better than it sounds. Nye

We used to kiss on the lips, but it’s all over now.