NEWSLETTER – ISSUE 02

NEWSLETTER
July 2019
Issue 02


FEATURED ARTICLES THIS MONTH
DEVIATION DUE TO CHANGED CIRCUMSTANCES WHEN EXERCISING A REAL RIGHT OF EXTENSION 

BY ALLEN WEST 
The deviation from the section 25(2)(a) and (b) plans when exercising a real right of extension has been a matter that has been deliberated on at length by our Courts and Registrars of Deeds.  Recent case law, in my opinion, has now finally put this thorny issue to rest

Background
In the case of Dolphin Whisper Trading 10 (PTY) LTD v The Registrar of Deeds and another (20645/08) [2009][ZAWCHC] dated 3 March 2009, it was held that if there is not sufficient evidence of changed circumstances, the real right of extension has to be exercised strictly in accordance with the section 25(2)(a) and (b) plans.  This case literally put the cat among the pigeons and developers had to approach the Court when any deviation from the section 25(2) plans occurred.  In the judgement of Roseparkadmin CC and others v Registrar of Deeds (WCHC) Case No 5522 dated 17 May 2011, it was held that section 25(13) of the Act allows the Developer to deviate, in instances of changed circumstances, from the section 25(2) plans and an owner who feels prejudiced may alone apply to court.  It was further held that the Act does not require the developer to first obtain the courts sanction for such deviation.  Two conflicting decisions on which Registrars had to implement a uniform practice

Registrars Ruling
Registrars of Deed at their annual conference in 2011 took cognizance of the Roseparkadmin-case, but felt it prudent to expand on the decision and to usurp the duty to ensure that the exercising of the real right of extension is within the physical boundaries of the reserved right (RCR12 of 2011).
The Chief Registrar furthermore issued a directive providing that proof must be submitted that the real right is exercised within the “foot print” on which the reservation took place, which proof must be in the form of a certificate from a surveyor or architect (see CRC 2 of 2012).

Recent Case Law
In terms of the most recent case in this regard, namely the unreported case of Hartenbos Woonwapark CC v Registrar of Deeds and others, Case No 3273/2017 dated 29 May 2017, the court held as follows:
“I cannot agree that the developer’s failure to divide the sections strictly according the site development plan due to the changed circumstances amounts to non-compliance with the provisions of the Act.  Although the Act requires the sections to be divided according to the site development plan, the Act does envisage that there may be situations where it is not possible to divide the sections strictly according to the site development plan due to “changed circumstances”.  The Act, in those instances, provides remedies to the owners of the units who may be affected by the deviation to approach the court.  I agree with the applicant’s submission that section 25(13) of the Act relates to situations where an owner of a unit in a scheme takes issue with a deviation, and approaches the court for an order obliging the developer to properly comply with the terms of the reservation or any other relief which the court may deem fit, including an award for damages.  It is clear from the reading of section 25(13) of the Act that this section is not concerned with the power of the Registrar of Deeds to refuse to register the transfer nor the court’s approval of the transfer of a unit which is subject”

Conclusion
Where the real right is clearly defined on a diagram, the exercising of the real right may not exceed the boundaries or encroach on other common property in the scheme. However, where no diagram exists, but merely a sketch plan, it is not incumbent on the Registrar of Deeds to police the foot print.


CALCULATION OF INTEREST OF A DEBT  

Carma Prinsloo

BY CARMA PRINSLOO 

The calculation of interest on a debt is governed by the Prescribed Rate of Interest Act 55 of 1975 (hereinafter “the Act”). The Act has been divided into two parts relating to the calculation of interest, being:
(1)  the rate at which interest on debt  is calculated in certain circumstances, and
(2)  interest on a judgment or unliquidated debt.

Interest on debt in certain circumstances
Section 1 of the Act applies in circumstances where the calculation of interest is not governed by any other law, agreement or trade custom.  In these circumstances, the rate of interest shall be calculated by using the repo rate as determined by the South African Reserve Bank, plus 3,5 % per annum.

Interest on a judgment debt
Interest on a judgment debt will become due from the day on which such judgment debt is payable.  As of 1 January 2019, the prescribed rate of interest is 10.25% per annum.

Interest on unliquidated debt
An unliquidated debt shall bear interest as per section 1 of the Act, stating that interest will be calculated by using the repo rate plus 3.5% per annum.

Interest on an unliquidated debt shall run from the date on which payment of the debt is claimed.  Payment of interest may be claimed by the service of a demand or summons.

Should damages claimed include an estimation of a loss (in whole or in part) which will occur in the future, interest on that part of the debt will only commence to run when quantum is determined by judgment or agreement.  Thereafter, the amount will be deemed to be a judgment debt.

The interruption of interest can occur where a debtor offers to settle a debt (whether by tender or making a payment into court).  The interruption will occur from the date of the payment into court or date of the offer made until the date of acceptance of the offer by the creditor.


THE LIABILITY OF THE ARCHITECT IN THE SOUTH AFRICAN LAW

Sumari Benade

BY SUMARI BENADE

McKenzie’s “Law of Building and Engineering Contract and Arbitration 7th Edition, p 129” defines

an architect as “a duly qualified professional person whose function it is to design and supervise the erection of buildings, or in the words of The Shorter Oxford English Dictionary: One whose profession it is to prepare plans of edifices and exercise a general superintendence over their erection.”  A person may only practise as an architect in South Africa if he is registered as such in terms of the Architectural Profession Act 44 of 2000.  Section 27 of this Act stipulates that the South African Council for the Architectural Profession must draw up a code of conduct for registered persons.  All registered persons must comply with the terms as included in this code and failure to do so constitutes improper conduct.

The preamble of the Code of Professional Conduct, issued under BN 154 of 2007, Government Gazette 32731, 27 November 2009, states that “it is an overriding obligation under the rules that, in carrying out professional work, a registered person is expected to act with due skill, competency and integrity”. Once an architect is appointed by the employer, a binding contract will be in existence between the parties.  Usually included in the tacit terms of the agreement is that the architect does in fact possess the required skill and ability to be reasonably proficient in his calling.  It is, however, important to be cognisant of the fact that the architect may be also held liable in respect of a delictual claim in the absence of any contractual agreement between the parties.

It is a well-established fact in the South African Law that a person who does not practice with the due skill and diligence will be regarded as negligent.  In the Supreme Court of Appeal matter, Goliath v MEC for Health, Eastern Cape 2015 (2) SA 97 (SCA), the Court referred to the matter of Van Wyk v Lewis 1924 A.D 438 in which the test for negligence has been defined as “the failure of a professional person to adhere to the general level of skill and diligence possessed and exercised at the same time by the members of the branch of the profession to which he or she belongs would normally constitute negligence.”  In the English matter of Nye Sanders & Partners v Alan E Bristow (1987) 37 BLR 92 (CA) the Court stated the following with reference to the position of an architect: “Where there is a conflict as whether he has discharged that duty [to use reasonable skill and care], the courts approach the matter upon the basis of considering whether there was evidence that at the time a responsible body of architects would have taken the view that the way in which the subject of enquiry had carried out his duties was an appropriate way of carrying out the duty, and would not hold him guilty of professional negligence merely because there was a body of competent professional opinion which held that he was at fault.”

Should it therefore be found that an architect’s conduct falls short of the conduct that would have been reasonably exercised by another person of the same profession, the architect will be held liable in damages to his employer.

In the matter of Bentel Associate International (Pty) Ltd v Loch Logan Waterfront (Pty) Ltd 2015 JDR 0323 (FB) the Court had to decide inter alia whether the defendant’s claim in reconvention, alleging that it has suffered damages as a result of the plaintiff’s failure to perform its obligations in a professional and workmanlike manner and without negligence, should be upheld.  The Court stated that “the architect’s liability is not absolute in the sense of being liable for whatever occurs. The architect is liable for substantial negligence (Dodd v Estate Cloete and Another 1971 (1) SA 376 (ECD)).”  It further referred to the matter of De Wet v Steynsrust Municipality 1925 OPD 151 in which it was held that “an architect must exercise the general level of skill and diligence exercised by other persons exercising the same profession, being skilled and experienced persons.”  The Court referred with approval to the position in international law pertaining to the liability of the architect and quoted John R. Heisse from his article “The Measure of Malpractice” Journal of the American College of Construction Lawyers Vol 5, Nr 2, 2011: “Noting that architects and engineers deal in somewhat inexact sciences and are continually called upon to exercise their skilled judgment in order to anticipate and provide for random factors which are incapable of precise measurement the courts have reasoned that the indeterminate nature of these factors makes it impossible for professional service people to gauge them with complete accuracy in every instance.”

The benchmark regarding the standard of care that should be applied by an architect in the law of the United States has been defined in the Maine Supreme Court matter of Coombs v Beede 89 Me. 187 A 104 (1896).  The Court held that the responsibility of the architect is the same as a doctor to patient or lawyer to his client, which is that the architect possess “some skill and ability in some special employment and offers his services to the public on account of his fitness to act in the line of business for which he may be employed.”  The Court further held that the undertaking of the architect implies that he consequently possesses the “skill and ability, including taste, sufficient to enable him to perform the required services at least ordinarily and reasonably well; and that he will exercise and apply, in the given case, his skill, ability, judgment and taste, reasonably and without neglect.”  The Court then attempted to define the exclusions from the architect’s duty of care, submitting that “the undertaking does not imply or warrant a satisfactory result.  It will be enough that any failure shall not be the fault of the architect.  There is no implied promise that miscalculations may not occur.  An error in judgment is not necessarily evidence of want of skill or care, for mistakes and miscalculations are incidents to all business of life.”  Negligence should therefore be evident from the conduct of the architect and it will not suffice to simply state that a mistake was made by the architect.

When the architect enters into an agreement, it is implied that he is able to perform the work with reasonable skill and diligence.  It does however not warrant that the result will be without fault and the architect therefore will not be held liable for the fault arising from defects in the plans because he does not imply or warrant a satisfactory result.


LATEST DEVELOPMENTS IN CASE LAW
NATIONAL HOME BUILDERS’ REGISTRATION COUNCIL & ANOTHER V XANTHA PROPERTIES 18 (PTY) LTD (780/2018 and 784/2018) [2019] ZASCA 96 (21 June 2019)

The respondent, Xantha Properties 18 (Pty) Ltd embarked upon the construction of a property development in Cape Town

consisting of a number of shops and 223 residential apartments.  It averred that it had no intention of selling these apartments or developing them under a sectional title scheme but with the sole intention to rent them to tenants. Although registered as a ‘home builder’ as defined in the Housing Consumers Protection Measures Act 95 of

1998, it disputed being  obliged to enroll this development project with the NHBRC or to
pay the prescribed enrolment fee under section 14(1) of that Act, arguing that the section did not require a home builder to
enroll houses being constructed solely for the purposes of being let.

The NHBRC and the Minister of Human Settlements, contended otherwise and insisted upon the respondent’s development being enrolled and that it pay the necessary enrolment fee, a sum in excess of R1.5 million. The respondent paid that sum under protest but proceeded to seek a declaratory order in the High Court, Cape Town to the effect that it was obliged neither to enroll its development nor to pay such fee. The respondent’s application succeeded but with the leave of the court a quo, the two appellants appealed against the decision.

The Supreme Court of Appeal allowed the appeal. In doing so it held that the fundamental underlying premise of the Act is to guard against builders constructing sub-standard homes.
Moreover the definition of a home builder’s business was amended specifically to include building homes for purposes of being let or rented out, and there was no reason why the legislature would have decided that homes build for leasing purposes should be treated differently from those constructed for resale. It held that the court a quo had incorrectly reached the conclusion that section 14 did not apply to homes being built for lease and rental purposes. The Supreme Court of Appeal therefore allowed the appeal and granted an order dismissing the respondent’s application with costs.


PUZZLES AND PUNS

If you can’t convince them, confuse them

-Harry Truman


Exciting development at AM Theron Inc!

AM Theron inc is excited to announce a new development within the firm. As of January 2018, Mr Anton Theron has stepped into the shoes of director at AM Theron Inc and has taken the wheel from Hendrik and Amelia Markram, the founders of the firm. Hendrik and Amelia Markram retain a close working relationship with the firm and continue to provide their valuable insights and assistance as expert consultants to the firm. Anton Theron, who is an admitted attorney, notary and conveyancer and the director of Tonkin Clacey Pretoria, brings some 35 years’ worth of experience to the firm. Anton has extensive litigation experience from over ten years spent with the State Attorney’s office. Anton is also a property law expert, and specialises in all aspects of conveyancing. He is currently the convenor for the conveyancing examination, vice-chairperson of the Gauteng Law Council and current member of the central committees and property committees of the Pretoria and Johannesburg Attorneys’ Association, as well as the Gauteng Law Council and the Law Societies of South Africa. Anton is also the drafter and examiner of the conveyancing national exam in South Africa. AM Theron Inc looks forward to the future and development of the of the firm under the careful and diligent guidance of Anton Theron.

 

Annelize Hefer

 +27 12 346 1278


 annelize@AM Theroninc.co.za
  add to my contacts >> 


Annelize obtained her LLB degree cum laude from the University of Pretoria where she was awarded the Vice Chancellor & Rector Medal for Best Law Student of the University for all four years of study

She completed her articles at one of the largest law firms in the country.  She was then appointed as legal advisor of an underwriting agency, writing business on behalf of, inter alia, a leading insurance company in South Africa.  She gained extensive experience in insurance, more specifically Professional Indemnity Insurance for a variety of professions, including attorneys, advocates, engineers, architects, estate agents and brokers.  She completed various insurance examinations and was registered with the FSB as both a Key Individual and Representative.

Annelize discovered early on in her career that she had a preference for Medical Malpractice and she completed a Certificate in Medical Law through UNISA.  Throughout her career as legal advisor, she dealt with Medical Malpractice involving hospitals, clinics, nurses and various medical professionals (including Allied Healthcare Practitioners).  She decided to return to practice where she can focus on Medical Law.     

Disclaimer

The articles displayed on this website are provided for general information purposes only and do not constitute legal advice. Each situation is based on unique circumstances which require assessment  in order to form an opinion of merits. AM Theron Incorporated will not accept responsibility for any loss or damage that may arise from reliance on information displayed on this website.

Sandra Bester – Associate

 012 346 1278 

 sandra@AM Theroninc.co.za
  add to my contacts >>

 

Sandra was admitted as an attorney in May 2011. She obtained her LLB degree cum laude and qualified for the Dean’s List of Merit for each year of her studies.  During her articles of clerkship she gained experience in general and commercial litigation.  She is now focussing on medical law.

Amanda Strauss – Professional Assistant

 012 346 1278 

 amanda@AM Theroninc.co.za
  add to my contacts >> 

 

Amanda was admitted as an attorney in September 2011.  She shows a special interest in the JBCC suite of agreements and is often commended for her proficiency in document management skills in major matters.  She was involved recently in the successful conclusion of a major JBCC contract arbitration (with a value of R30 million).  

Amelia Markram – Director


 +27 12 346 1278


 082 410 7369

 amelia@AM Theroninc.co.za 
  add to my contacts >> 

Amelia joined AM Theron Inc in 2010 after practising as partner in a property practice in Johannesburg for 9 years.  She holds three degrees, including a masters degree in Law of Contract. 

She is a conveyancer with experience in a wide range of property work.  Amelia heads up the firm’s property practice and has a strong focus on Contract and Property Development advice.

Alternative Dispute Resolution

Construction and Engineering disputes are often complex. The complexity arises not only from intricate contractual terms and relationships, but also sophisticated technical facts, all of which must be understood and analysed.

These matters often involve large volumes of documentation to be assessed in order to develop a comprehensive and accurate factual matrix for evaluation.

Disputes in the Construction and Engineering fields may be handled through the conventional litigation processes, but are often the subject of arbitration agreements. Parties to construction agreements usually anticipate that disputes arising from a construction contract would be significant and therefore provide for the use of alternative dispute resolution procedures such as arbitration, mediation or adjudication. This allows a party to state its case to a presiding officer with suitable technical expertise.

We are uniquely placed to provide clients with professional service in this regard.

Our recent exposure includes:

    • Acting for a prominent property developer in a payment dispute against a JSE listed contractor concerning a high end apartment development in Sandton, Johannesburg (claim value of R 30 million).

Engineering Law

Engineering law includes product and design failures.  The assessment of the root cause of failures is, in most cases, a critical aspect of our work. Our specific expertise allow us to assist clients with innovative and often unique solutions to these challenges.  We also work closely with highly skilled local and international technical experts.

The impact of the new Consumer Protection Act is now also part of the legal considerations to be taken into account in matters of this nature. 

Some of our recent engineering law exposure includes: 

  • The successful resolution of a claim concerning the collapse of a tubular space-frame structure in the Saldanha harbour on behalf of a major International (German) manufacturer and its insurer (claim value of R 210 million);
  • The successful resolution of a claim against a fire engineering consultant and its insurer concerning the total destruction of a building (claim value of R 170 million);
  • Acting for a chemical manufacturer and supplier and its insurer in defence of a claim related to the alleged failure of a six hectare concrete warehouse floor (claim value of R 17 million);
  • Acting for a chemical manufacturer and supplier in defence of a claim concerning alleged product deficiencies incorporated into catalyst products used in the motoring industry (claim value of R 18 million); and
  • The successful resolution of a claim against a major International Authorised Inspection and Certification Agent concerning the alleged failure of pressure vessel equipment used by a global brewery in Morocco, Benin and Burkina Faso (claim value of R 12 million).

Hendrik Markram – Director

 +27 12 346 1278


+27 83 675 3458

 hendrik@AM Theroninc.co.za 
  add to my contacts >> 

Hendrik is a qualified Civil Engineer who completed his legal studies while working as Engineer.  He completed his articles at one of the largest law firms in the country and practised at the same firm for four years as a construction lawyer.  He soon recognised that specialist legal services offer significant benefit to clients and, with this in mind, founded AM Theron Inc in 2005. 

He is a Construction and Engineering Law specialist. He is involved in the formulation of significant delay and disruption claims.  He also has a strong focus on all aspects of both product liability and construction insurance aspects related to his main field of practice.

Hendrik is a member of The Arbitration Federation of Southern Africa, The Chartered Institute of Arbitrators and serves on the current committee of its South African branch. He has also been appointed as a member of the Construction Industry Development Board’s panel of adjudicators for construction contracts.

Careers

We are always keen to meet ambitious professionals and persons interested in joining our dynamic team. We offer excellent opportunities for career growth. We do not only offer comparative remuneration, but also opportunities for further study and personal growth. Individuals who are serious about making the most of these opportunities will be rewarded with exciting career prospects.

Applicants who wish to become expert attorneys and play a role in the development of our firm are welcome to submit applications online.

 

 

 

 

 

 

 

Product Liability

Product Liability risks have seen significant changes as a result of the introduction of the final stage of the Consumer Protection Act, 68 of 2008, which came into operation on 31 March 2011.

The main objective of the above Act is to protect consumers from hazards and to provide effective remedies for consumers who buy defective or unsafe products.

The Act opens new avenues for consumers to institute product liability claims against producers, importers, distributors, retailers or installers of goods. Such claims may arise from the supply of unsafe goods, product failures, defects in goods, and failure to provide adequate instructions or warnings to consumers about hazards arising from or associated with the use of the product.

Product liability claims may now be instituted by a variety of persons, not only the person who has suffered direct harm as a result of the product, and there is no restriction on the kind of loss that may be recovered.

The wide application of the Act holds serious risks for all persons or businesses in the supply chain. These risks include limited opportunity to raise traditional defences as the Act contemplates “strict” liability.  It is therefore no longer necessary for consumers to prove negligence or fault, and consumers may hold any person or business in the supply chain liable for any damage suffered.

Our client base includes local and international insurers and underwriters exposed to product liability risks carried by producers, importers, distributors and retailers in the chemical, construction, engineering, industrial, mining and quality assurance and certification sectors.

Some of our recent exposure includes:

  • Acting for a chemical manufacturer and supplier and its insurer in response to a claim related to the alleged failure of a six hectare concrete warehouse floor (claim value of R 17 million); and
  • Acting for a chemical manufacturer and supplier in response to a claim concerning alleged product deficiencies incorporated into catalyst products used in the automotive industry (claim value of R 18 million).

Medical Law

We established a specialist medical law department and assist clients with legal advice in a wide range of medical malpractice matters as both prosecution and defence attorneys.  These matters involve both civil claims where professional negligence is alleged, as well as complaints against professionals lodged with their medical or professional bodies.

These professional bodies include, amongst others, the HPCSA (Health Professionals Council of South Africa), the SACSSP (South African Council for Social Services Professionals) and SAASWIP (the South African Association of Social Workers in Private Practice).

We also act for professional indemnity insurers who carry the professional negligence risks of professionals in a wide range of medical fields. 

We also advise medical professionals as direct clients in all fields of medical law directly, outside insurance arrangements. 

Law of Contract

We advise on all aspects of contracts in the construction, building and engineering industry and share our in depth knowledge of the standard form construction and building contracts (including FIDIC, NEC, GCC and JBCC Agreements) with our clients.

We assist clients with contractual interpretation, contract notification and cancellation procedures, as well as claim prosecution strategies. In doing so, we develop and implement appropriate claim preparation or defensive strategies. We assist clients with the assessment and formulation of delay and disruption claims.

We also offer advice on contractual aspects in Insurance Contracts, including Construction Guarantees.

Our client base includes property developers in need of advice in relation to the legal evaluation of contractual relationships required for successful developments.  We assist with drafting and vetting of such contracts and advise clients on all aspects of implementation.

Property Law

We act on behalf of home builders, property developers, contractors, project managers and housing consumers in disputes with the National Home Builders Registration Council.

We also act for property owners, potential property purchasers and developers offering a full range of property related services.  Some of our services include drafting of all forms of property related agreements and strategic planning advice to property developers (in consultation with town planners and land surveyors).