ESTATE AGENT’S COMMISSION: “EFFECTIVE CAUSE” IS NOT ENOUGH

Both property sellers and estate agents need to know the downside of not recording, clearly and in writing, the exact circumstances in which a seller must pay commission to an agent.

The agent’s claim: R500k

To illustrate – in a case recently before the High Court, an agent claimed to have a verbal mandate from the seller of an industrial property to sell it for R5m.  The agent believed that if he found a buyer for R5,5m he would be paid the excess R500,000 as commission.  He duly found a buyer at R5,5m but the buyer and seller cut him out – they concluded their own sale agreement at R5m with no provision for commission.  The agent duly sued the seller for R500,000 commission.

The law ……

The agent was able to convince the Court that he was indeed the effective cause of the sale, but his claim for commission failed because he was able to prove neither the basis of his “entitlement to commission” nor “the manner in which such commission was to be calculated”.

So although you might think it enough for you as an agent to prove that you were the “effective cause” of a sale that is not so.  There are still grey areas in our law here, and each case will be different, but as a general rule you are going to have to show that –

You have a mandate from your principal (usually the seller)

You have performed that mandate

You are the “effective cause” of the sale

The commission you claim is set or calculated as agreed.

…..the risks…..

Uncertainty is your enemy here.  As an agent, you risk receiving no reward for your hard work.  As a seller, you risk paying commission you didn’t budget for (even perhaps double commission if multiple agents have been working on your property).

….. and the remedy

Whether you are the seller or the agent – avoid the risk, delay, cost and aggravation that this sort of dispute will always cause you.  Ensure that a written, clear and comprehensive mandate agreement is signed by both of you before any marketing takes place.

ALCOHOL AND YOUR EMPLOYEES – A TOXIC MIX WITH A TWIST OF LAW

The “Silly Season” is upon us, and as always alcohol will play a big part in many of the festivities.

But as a responsible employer what do you do about an employee who turns up for work drunk (or on drugs)?  Apart from safety concerns (important in all businesses, absolutely critical in some), the mix of alcohol and employees is a toxic recipe for reduced productivity, poor work performance, absenteeism, loss of earnings, low staff morale, poor employee health, and bad public relations.

A case in point

A recent Labour Court decision illustrates the legal position (what follows is of necessity a summary of the applicable principles only – take specific advice on your particular circumstances).

An employer had in place an Alcohol and Drug Dependence Code requiring employees with a dependency problem to seek assistance from the employer, and a zero tolerance policy towards alcohol-related misconduct. The Code stressed the necessity of safety in the workplace (in this case a diamond processing business).

A senior employee with full knowledge of the zero tolerance policy reported for work whilst intoxicated and a disciplinary enquiry was duly convened.

The employee pleaded guilty at the enquiry but claimed to have an alcohol dependency problem.  He was dismissed for failing to adhere to company policies and procedures, the employer’s disciplinary code providing for summary dismissal for even a first offence of this nature.  Critical factors were the employee’s failure to produce any medical evidence in support of his claim to have a dependency problem, and the fact that he had not, as required by company policy, raised the alleged problem with his employer before being caught.

The employee took the matter to the CCMA, which found that the dismissal was unfair on the basis that the disciplinary hearing should have been adjourned for investigation into the possibility of rehabilitation.

On review, however, the Labour Court found the dismissal to have been fair in all the circumstances.  The Court stressed the employee’s knowledge of the zero tolerance policy, the importance of safety in the workplace, the fact that incapacity was not an issue at the hearing (not having been raised by the employee), and the lack in any event of any proof of alcohol-related incapacity.

Employers:  Incapacity or Misconduct?

Alcoholism and drug abuse are regarded as being forms of “incapacity” in our law, requiring that counselling and rehabilitation be considered before dismissal or disciplinary action.  It is therefore essential always to distinguish between cases of “misconduct” and cases of “incapacity”.  Have in place an alcohol and drug dependency code with clear procedures for reporting of problems and provision of assistance, together with disciplinary policies appropriate to your business.

Make sure that all your employees are aware of, and confirm knowledge of, these policies and codes.

If an employee is found to be under the influence of alcohol or drugs at work, proceed by way of either disability procedures or a disciplinary enquiry for misconduct as appropriate.  Take advice in doubt!

Employees: Get help!

If you think you may have an alcohol or drug dependence problem, seek help from your employer before you get hauled into a disciplinary enquiry.

BUSINESS RESCUE – ARE SURETIES AT RISK?

“With surety stronger than Achilles’ arm” (Shakespeare)

Creditors of a company in business rescue can, per a recent High Court decision, still sue the sureties.  Although the company itself is protected from legal action by its creditors, there is no similar protection for sureties.

The R16.6m claim, and the sureties’ defences fail

The facts of this particular case are perhaps typical of suretyship disputes –

A creditor (often, as here, a bank), finding itself unable to recover its money from the “principal debtor” (usually a company), sues the sureties (normally the company’s directors and/or related companies/trusts).

The sureties then – unsurprisingly – raise every possible defence they and their legal advisors can think of to the claim.

But only occasionally do they actually manage to wriggle off the hook because most suretyships are drawn in a tried and tested, tightly-worded format designed to survive any possible attack.

Usually, as in this case, the surety also signs as a “co-principal debtor” – important because that allows the creditor to sue the surety direct, without first proceeding against the principal debtor.

The end result in this case – all the sureties (a couple married in community of property and two companies) were held jointly and severally liable for the full principal debt of R16.6m, interest, and costs on an attorney and client scale.

Directors beware

Plan for this when considering business rescue.  Understand that it’s your company being rescued, not you personally!

DOMESTIC WORKERS – WAGES UP 1 DECEMBER

The minimum wage for domestic workers increases on 1 December – details on The Herald site at http://www.peherald.com/news/article/21355.

THE DECEMBER WEBSITES: YOUR SCIENTIFIC GUIDE TO EXPERIENTIAL GIFT-GIVING

Science tells us that experiences make us happier than possessions (see PsyBlog’s article on why this is at http://www.spring.org.uk/2008/01/experiences-beat-possessions-why.php).

So think about giving an “experiential” gift this year.  Anything you can think of really – motor racing, chocolate tasting, a canopy tour, skydiving, fine dining, family quad biking, a spa treatment, shark cage diving, beach picnic, a spin in a helicopter, “Extreme 19th Golf”  – the list of possibilities is endless.  And the good news is that we South Africans really are spoilt for choice here.

For some ideas, go to sites like –

Adventure Bookings at http://www.adventurebookings.co.za/

Celestial Gift Experiences at http://www.celestialgifts.co.za/ (go to the “Activity Gift Vouchers” section)

EGOS at http://www.egos.co.za/scripts/home.asp

Gift Experience South Africa at http://www.giftexperiencesouthafrica.co.za/

Gift Out The Box at http://www.giftoutthebox.co.za/

There’s plenty more – Google something like “activity gifts site:za” or “gift experiences site:za”.

P.S. Science also tells us that “experiential” gifts are best accompanied by “an inexpensive additional gift that’s related to the experience” (“The Science of Gifts” at http://www.davenussbaum.com/the-science-of-gifts/).  Perhaps a disposable underwater camera for an intrepid shark cage diver, or a bird identification guide for a bush adventure (the Sasol eBirds app for smartphones – available at http://www.sasolbirds.co.za/mobile-app.php – comes highly recommended; print out a voucher).

And don’t forget to send a personalised card (customised with photos, videos and music if you like) with Smilebox at http://www.smilebox.com/card.html.