Economy
Res non verba is the motto of our family crest of arms, which my old man was desperate to perpetuate and I, probably the least suitable in our family (heck, my sister was bigger than I!), am the only surname bearer to produce sons (explained by the 1-sock method; if interested, ask me for instructions) was his last hope. Follow through on promises is what we need desperately: our country is teetering on failed-state status, our national debt has skyrocketed dramatically, debt servicing is crowding out deserving projects and one would certainly be an optimist if convinced that we would pull out of the debt spiral that we are in. The result of all this is that those, who hold dear the paradise of central-state governance, is reduced to seeking funds and assistance from the private sector, be it through tax or participation. Pragmatism, driven by need.
Implicitly, Mboweni is trying to strike a social compact to pull us out of our fiscal nosedive. The difficulty is that those at the trough (think politicians and Cosatu leading the push-back against salary freezes – ignoring the fact that everyone else has taken a serious haircut) will resist, our tax morality is becoming increasingly questionable and public/private partnerships (given our rather dismal SOE track record) are at best doubtful investments. A difficult ask, as failure will undoubtedly lead to deserved ratings downgrades, increased emigration, and the flight of the capable.
The increasing desperation in generating state revenue, already leading to more aggressive collection, the criminalisation of tax default (even if not intentional), all set against the background of an a broken justice system, spells little good for the few who generate wealth.
One’s take on all this boils down to whether one believes that promises will be made good on by our state, leadership, and results. The essential question is why, given past promises, this time will be different – Bloomberg’s faith is lacking: “The National Treasury has been making bold promises to restore the public finances since 2017, only to kick the can down the road later. This reflects the difficulty of reining in the wage bill and reducing transfers to state-owned enterprises. Given the limited options available to implement the envisioned consolidation plan, this time is likely to be no different.” Unfortunately, I, of late, agree.
Res non verba – deeds not words, is what we need.
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Oh yes, lest you think that our economy is a black-induced phenomenon: it is not – democratic South Africa inherited a virtually bankrupt state in 1994. Things got better and then worse: ours is a regrettably common leadership and vision/belief issue. I confess that I despair when I listen to some of the idiots leading us – how can a barely coherent person develop and implement an inherently complicated, broad all-encompassing vision of state and government. Yet, things could be worse – one has only to listen to Mr Malema’s defence to an assault to understand that he is a stranger to reason – g*d help us if he ever came to power.
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Moneyweb ran an article on the JSE top 40 index: in Rand terms it’s performance over the last 10 years looks reasonable. In dollar terms, miserable. https://www.moneyweb.co.za/news/companies-and-deals/why-the-jse-is-walking-backwards-compared-with-offshore-markets/
Business
So, if my somewhat glum sentiments above resonate, why stay (and this applies, I believe, to everyone, irrespective of race)?
One, somewhat underappreciated reason, is that if you have scarce skills and knowledge, local competition, even if aided politically, is soft; big fish/small pond-sort of thing. The difficulty in selling these to entities that buy, is that, especially those non-technical/skilled (political) persons in charge, often don’t have the capacity to recognise their organisation’s needs and shortcomings.
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Business news highlights of the week are:
- LiveScience published an article holding that a functioning fusion reactor could be constructed by 2025;
- wind-turbine blades kill some two birds per megawatt i.e. in South African terms. 500 birds annually because of motion-smear. Painting a single blade black, reduces the total fatality of birds by 71%, with 100% success rate for eagles;
- Total has discovered a major natural gas field off our West coast;
- which cars are most affordable? https://businesstech.co.za/news/motoring/444042/the-most-affordable-cars-to-own-in-south-africa/;
- more BEE laws are in the offing: a bill empowering the Minister of Employment and Labour to set sector targets for representation of designated groups is under consideration. And yes, I received notice that the Legal Practice Council has embarked on a similar exercise;
- it appears that the N2 Transkei corridor road project is forging ahead – albeit slowly;
- take a look at the definition of parametric insurance: https://www.fasken.com/en/knowledge/2020/10/global-insurance-trends-parametric-insurance
- New Zealand voted to adopt euthanasia laws.
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Having been repeatedly mauled by my rabid staff and similarly suffering (clients have been sending me knives) an article on mental health in legal practices appeared a good read… Much of what is said applies to any business; take a look (go 2/3s down): https://www.golegal.co.za/well-being-lawyer-mental-health/
Property
When is an estate agent the effective cause in sale: http://www.derebus.org.za/a-look-at-the-effective-cause-requirement-with-estate-agent-commission/
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Publishing average house prices says little other than who is buying. A much better statistic would be, by way of example, an average purchase price for first-time buyers – which at present, is R1 08 2 857. A further useful statistic is that such buyers make up 54% of bond applications in our third quarter and a statement by Ooba that the volume home loans applications processed by them in that quarter stood at the highest level in 13 years. The average deposit, as a percentage of the purchase price, is down to 8.6%.
BusinessTech.
Practice
There are a number of court cases which may warrant a look:
- can security for costs be released, following on a material change in the legal and factual position of the parties involved? Yes: http://www.saflii.org/za/cases/ZASCA/2020/81.pdf
- of late there have been several cases in which shareholders claim against directors and/or auditors for damages, related to a diminution of value of shares. This is one: http://www.saflii.org/za/cases/ZASCA/2020/83.pdf
- corporate opportunities are an opportunity to profit which is not disclosed by the official acting on behalf of a corporate body (for want of a briefer definition)
- in the world of trusts: http://www.saflii.org/za/cases/ZASCA/2020/97.pdf
- in the world companies – also does prescription run against such a claim? http://www.saflii.org/za/cases/ZASCA/2020/112.pdf
- whilst on prescription –
- a universal partnership is our courts’ roundabout way of dealing with the claim of a jilted lover – does such a claim prescribe? Yes: http://www.saflii.org/za/cases/ZASCA/2020/108.pdf
- do payments in terms of an agreement between parties interrupt prescription? Yes: http://www.saflii.org/za/cases/ZASCA/2020/104.pdf
- an option to renew may fail if the parties cannot reach agreement on the rental and the determination thereof by a third is not done timeously: http://www.saflii.org/za/cases/ZASCA/2020/85.pdf
- does a body corporate have the power to pursue a claim against a developer, for design and construction defects, or does a resolution need to be taken first?: http://www.saflii.org/za/cases/ZASCA/2020/107.pdf
- last week I had mentioned a case in which a same-sex partner was granted succession rights (the reference was provided to me by several persons – thank you!): http://www.saflii.org/za/cases/ZAWCHC/2020/111.html
- in company law, one cannot take a round-robin resolution if all directors do not sign – the reason is that the opinion of each must be heard – a similar situation applies in trust law: http://www.saflii.org.za/za/cases/ZAFSHC/2020/160.html
- on the formalities of a deed of sale of land (courtesy of STBB): http://www.saflii.org.za/za/cases/ZAFSHC/2020/160.html
Quotables
“Madam Speaker, we must be careful to avoid the fate of countries like Argentina and Ecuador that defaulted on their debt this year. Countries that find themselves in default see sharp GDP contractions and currency depreciations.”
Mboweni
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The far left: “Looting rejects the legitimacy of ownership rights and property, the moral injunction to work for a living, and the ‘justice’ of law and order.. Ownership of things—not just people—is innately, structurally white supremacist.”
Osterweil
Comment
I have yet to come across a workable solution to the race dilemma that we have in South Africa. Well-intentioned or not, AA has not meaningfully improved the financial position of most South Africans. I had believed that the market place would eventually move businesses to employ PDIs to their benefit (our market is not white) – the difficulty with this take, is that it is premised upon an acceptance, that a population group would prefer to deal with its own. Discrimination, be it based on skin colour, class/money or education will probably be with us for ever.
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“To be moral is to hold yourself or your group to standards of behaviour and to acknowledge when you or that to which you belong does not live up to them. To moralise is to piously condemn others, triggering a warm and fuzzy feeling and a sense of superiority. Morality improves behaviour, moralising leaves it unchanged or makes it worse.”
Freidman & Eliseeva
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Humour results, they propose, when a person simultaneously recognizes both that an ethical, social, or physical norm has been violated and that this violation is not very offensive, reprehensible or upsetting.
Mcgraw & Warren
Lighten up
Immediately when I got medication for schizophrenia, my friends won’t talk to me anymore.
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Do not disturb? I need a sign that says already disturbed – proceed with caution!
Author: Dr Daan Steenkamp
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