Walkers Attorneys

A year of much change is coming to a close. Those that have survived and indeed picked up valuable lessons have generally done so because of a focused strategy being followed through. From Walkers’ point of view, we continue to aim to be a class niche legal service provider within key commercial areas of endeavour. We place emphasis on providing a personalised service and of course as importantly at a reasonable cost. These we think are key attributes which we know have worked also for you, our clients. So as the year draws to a close, I thank you for your support and trust.

Please enjoy the articles which we have kept again on the lighter side in view of the serious part of the year being behind us!

by Renier Kriek

Readers of our newsletter will know that we are tracking the Companies Act (2008) tenaciously. Trade and Industry Minister Rob Davies recently published a Notice announcing that the effective date of both the Companies Act and the Consumer Protection Act will be 1 April 2011. The vast scale of changes introduced by these Acts is bound to cause disruption in SA’s economy during the early parts of the new year. Most companies provide goods and services within the ambit of the Consumer Protection Act, and so readers will be wise to seek guidance on its provisions and impact as soon as possible in the new year.

In preparation for the coming into operation of these Acts, the dti has further published a set of draft regulations for each of the two Acts.. The latest draft of the Companies Regulations is lengthy and thorough, but is markedly simpler than its predecessor. We are keeping an eye on developments, and will provide detailed analysis once the content is settled.

A storm is brewing over certain of the provisions of the Companies Act which have remained in unsatisfactory form despite the Companies Amendment Act, on which we have already commented. The banks have, for instance, pointed out that section 22, which prohibits companies from trading when they are factually insolvent, is unrealistic.

Many companies trade despite, and probably because, their liabilities exceed their assets, fairly valued. A simple example is a typical young SME, which depends on large loans from shareholders or financial institutions for capital, and it usually takes a while before companies boast a positive balance. The Law Society and other role players have added their voice to the chorus, and it is generally regarded probable that further amendments, and consequent postponements of the effective date, are in the offing.

Currently, the conduct of attorneys is governed by the Attorneys Act and the Rules of the Law Society. Good news for consumers of legal services is that the much anticipated Consumer Protection Act (“the CPA”) will also apply to the attorneys profession. Consequently, attorneys will now be subject to the same stringent standards applicable to all other service providers governed by the CPA, which becomes fully operational on 1 April 2011.

The CPA states that it applies to every transaction occurring in the Republic… and to the supplier of any goods or services, within the Republic.

A “transaction” includes the performance by a person of any services for or at the direction of a consumer for consideration.

The CPA defines service as: “the provision of any education, information, advice, or consultation, except advice that is subject to regulation in terms of the Financial Advisory and Intermediary Services Act. It is clear therefore that the CPA will apply to the attorneys profession.

An interesting impact of the CPA on the attorneys profession can be found in section 19, which states that it is an implied condition of every transaction that the supplier is responsible to perform the services on the agreed date and at the agreed time or otherwise within a reasonable time after concluding the transaction or agreement, failing which the consumer may either accept the delivery or cancel the agreement without penalty, treating any performed services as unsolicited. In terms of section 21, a consumer has no obligation to pay a supplier for unsolicited services.

It could therefore be argued that where an attorney fails to perform at an agreed time, a client may reject such performance and will not be obliged to make payment in respect of the services already rendered. There is no such provision in either the Attorneys Act or the Rules of the Law Society.

Another important impact the CPA will have on the attorneys profession concerns a consumer’s right to be heard and obtain redress. Whereas the proceedings in terms of the rules of the Law Society are aimed at investigating complaints concerning the ethical behaviour of attorneys over whom it has jurisdiction, the CPA contemplates more than just unethical behaviour – it also contemplates administrative fines as well as potential claims for damages, which are not provided for in the Attorney’s Act or Rules.

It must be noted however that the Law Society can apply for an exemption from one or more sections of the CPA. Such an exemption will, however, only be granted in circumstances where the particular provision in the Attorneys Act or the Rules of the Law Society provides equal or better protection than a corresponding provision in the CPA. Although there are some provisions in the Attorneys Act and the Rules of the Law Society that do indeed offer equal or better protection than corresponding provisions in the CPA, there are many provisions which fall far short of the protection offered by the CPA and, consequently, the Law Society will probably not be able to obtain an exemption from the operation of those particular provisions.

Attorneys will clearly have to be on best behaviour from April 2011!

A friend of many years informed me that his daughter had secretly upped and married her American boyfriend in Cape Town! The presumption by all concerned was that the happy couple were thus married in community of property and liable for each other’s debts. Both parents being entrepreneurs of note themselves were concerned with this marital regime. A celebration of magnificent proportions at the family home restored the balance, whereafter the bridal couple left for America.

I then pondered on whether the proprietary consequences of the couple’s marriage was indeed governed by South African Law in that the couple wanted to be residents of Florida, where they intended to settle. I researched the position and concluded that the proprietary consequence of the marriage would be governed indeed by the “domicile” (place of ordinary residence) of the couple i.e. Florida. Under Florida law, the consequences of marriage would be similar to an Antenuptial Contract with Accrual in South Africa. A relieved father thanked us for our lateral thinking (rendered without charge) and in the fullness of time will no doubt assist his daughter entrepreneurially!

Little did he know that our probe took into account the complex concept of renvoi whereby in order to determine which country’s laws applies, one looks first to the law of the place where the marriage took place (the Lex Fori), which may require the law of the domicile of the husband to apply. The State referred to however may return the question to the Lex Fori on the basis that its laws require the Lex Fori’s laws to solve the thorny conundrum. The lesson for lawyers is to question the obvious!