across the bar

google adwords decision expected next week

by Steve - Posted 19 March 2010

Online advertisers will be waiting anxiously for the decision of the EU's Court of Justice next week in the Google Adwords case. The court will rule on whether or not a company that buys Google adwords for a rival's trade marks are committing trade mark infringement. Google's adWords system currently lets the highest bidder choose any search term to display its ads.

The case involves luxury brand, Moët Hennessy Louis Vuitton (LVMH), who noticed that adverts for counterfeit product suppliers were being displayed on Google when searching under various LVMH trade marks.

The case will have major repercussions for online advertising that is based on a context-sensitive ad model. It will also provide some much needed clarity on the application of traditional trade mark protection into the online world.

Watch the space.

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The impact of divorce on a Trust

by Nicci - Posted 16 March 2010

The primary reason why a person forms a Trust is to separate assets from his personal estate.   This could be for estate planning purposes or to keep assets out of the reach of creditors.

There are three different role players in a Trust:  the Founder, the Trustees and the Beneficiaries.  The Founder of the trust divests himself of ownership of assets when they are transferred to a Trust and the assets do not form part of his personal estate.  The status of a Trust in law was confirmed in Land and Agricultural Bank of SA v Parker 2005 (2) SA 77 (SCA), where it was held that a trust  can only act through its Trustees, who have to act independently and in the best interests of the beneficiaries of the Trust.

What happens if the Founder is married and gets divorced?  Can his wife lay a claim to Trust assets which were acquired during the marriage and put into the Trust?

This is exactly what the Court had to consider in Badenhorst v Badenhorst (07/2005) ZASCA 116.  Could the assets belonging to the husband which had been transferred to a Trust during their marriage be taken into account in making a redistribution of assets ito Section 7 of the Divorce Act?  Briefly, Section 7 empowers a Court to award a redistribution of assets accumulated during the marriage as it deems just and equitable (for marriages out of community of property, solemnized before 1984), given the contribution of the parties to the marriage during its subsistence.

The Court held that in order to succeed, the wife would need to prove 1) that the husband controlled the Trust and that  2) but for the creation of the Trust, he would have acquired and owned the assets in his own name.

An investigation would include:

a)The Trust Deed must be examined with regard to who the Trustees are and what their powers are.

b)Each asset transferred to the Trust must be examined as to when and how such asset was acquired and the circumstances surrounding the transfer of that asset to the Trust.

c)How the Trust is administered between the time of its creation and the date of divorce.

A Trust should be managed and controlled as an independent entity.  If it is shown that the founding spouse controlled the Trust and administered it as if it were his own assets, the Court can and will redistribute Trust assets in a divorce.

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Family Trusts vs Testamentary Trusts

by Nicci - Posted 16 March 2010

A Trust can be formed in one of two ways:  either while you are alive (inter vivos) where an individual wants to place assets in a trust for specific beneficiaries or in terms of a Will (mortis causa).

Trusts are used primarily in Wills to protect the inheritance of minors and only come into effect after the death of the testator.  The bequeathed assets are then protected until the beneficiaries are old enough to inherit, i.e. 18 years old.  This is also a useful tool if the testator wants to prolong the time period before the actual asset transfers to the beneficiary, as the testamentary trust can be structured in such a way that the inheritance only passes to the beneficiary at an age older than 18, i.e. when the beneficiary turns 30.

Any asset can be placed in an inter vivos trust - immovable property, cash or shares and the asset, once transferred, belongs to the Trust and will not be taken into account for the purposes of valuing your personal estate.  This type of trust works well when the asset held by the trust is a family beach house or farm.

All trusts have to appoint trustees, who manage the assets of the trust on behalf of the beneficiaries.  In a testamentary trust, the Will itself is the trust deed and contains instructions on how the trust is to be managed and the powers and duties of the trustees.  In an inter vivos trust, a trust deed is drafted and registered with the Master of the High Court and sets out the powers and duties of the trustees.  The trustees can only act on behalf of the trust once the Master has issued Letters of Authority to do so.

It is recommended that at least three trustees are appointed in a family trust and at least one of these trustees should be an independent party, eg. an attorney, accountant or a trust company.  A separate bank account in the name of the trust must be opened and all financial transactions relating to the trust must be recorded through this bank account.   SARS also requires all trusts to be registered for income tax purposes, so careful record keeping is a prerequisite for trustees.

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Affirmative action in the spotlight

by Ashley - Posted 15 March 2010

Affirmative Action is still a hotly contested topic in South Africa. In the recent case of Solidarity obo Barnard and Another v South African Police Services the Labour Court had to consider the issue of Affirmative Action and employment equity in the South African Police Service (SAPS).

Mrs. Barnard commenced service with the SAPS in 1989 as a constable. In 1997 she was promoted to the rank of Captain. After many years she was transferred to the National Inspectorate, formerly known as the National Evaluation Service (NES), at the rank of Captain.

During 2005 the SAPS created a new post of Superintendent of the NES. Mrs. Barnard applied for the position twice but was denied the promotion. Mrs. Barnard brought this application based on unfair discrimination and the allegation that she was denied the promotion solely for being white.

During the interview process for the position  Mrs. Barnard obtained the highest scores out of all the candidates and the panel agreed that the appointment of Mrs. Barnard would definitely enhance service delivery. Despite these factors, the Divisional Commissioner decided to leave the post vacant based on the sole reason that Mrs. Barnard was white and her appointment would frustrate the representivity status.

In 2006 the same post was again advertised. Mrs. Barnard applied and was short-listed. She was once again the top candidate for the position and recommended by the panel.

The National Commissioner refused to approve Mrs. Barnard's appointment on the basis that she was white and her appointment would not address representivity. The post was left vacant.

After due deliberation the Court reiterated that where a post cannot be filled by an applicant from an under- represented category because a suitable candidate from that category cannot be found, promotion to that post should not ordinarily and in the absence of a clear and satisfactory explanation be denied to a suitable candidate from another group.

The Court held that the failure to promote Mrs. Barnard was a decision based on her race and was indeed discrimination. The fact that other suitable black candidates were not appointed did not make the non- appointment fair.

In light of SAPS decision not to promote a black candidate, the Court concluded that it was unfair not to appoint Mrs. Barnard, who was a member of a designated group in the Employment Equity Act and the best candidate for the job.

The Court directed the SAPS to promote Captain Barnard to the post of Superintendent with effect from 2006.

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first decided case involving ISP liability for copyright infringement

by Steve - Posted 11 February 2010

Judgment was handed down by the Austrailian Federal Court on 4 February 2010 in the landmark case of Roadshow Films (Pty) Limited v iiNet Limited. 

The case raised the question whether an internet service provider or ISP authorises the infringement of copyright by its users when they download copyrighted movies and TV shows on the internet. The general principle In Australian copyright law is that a person who authorises the infringement of copyright is treated as if they themselves infringed copyright directly.

The court found that the ISP did not authorise copyright infringement for the following reasons:

• The infringement of copyright was done using the BitTorrent system and not simply from the internet services provided by the ISP. The ISP did not create or control the BitTorrent system.
• The ISP did not have the relevant power to prevent those infringements occurring.
• The ISP did not sanction or approve copyright infringement.

The judge said that he could not be compelled to make a finding against the ISP simply because "something had to be done" about internet piracy, which on the evidence presented appeared to be occuring on a large scale worldwide.

He also said that an ISP provides a legitimate communication facility which is not intended to infringe copyright. It is only when users choose to make use of file sharing tools such as BitTorrent that copyright infringements take place.

This judgment will have persuasive authority if a similar case comes before a South African court. Although copyright holders may be disappointed by the outcome, it looks like common sense has prevailed in a situation which could have had dire consequences for the ongoing development of the internet if the decision had gone the other way.

A summary of the case is available here (we are trying to access the full judgment which is a 200page monster).

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tell me lies tell me sweet little lies

by Steve - Posted 11 February 2010

Do you remember that stint working at the Kentucky drive thru in high school which became "a high-powered customer service position" in your CV. Yes, we all tend to pad the gaps in our resumes a little from time to time. Good  marketing - isn't that what its all about? But what happens when your little white lies take on a much darker hue?  

There is a line between trying to show ourselves in the best possible light to get a job, and outright deception. The consequences of crossing the line can be severe. In a case last year in the UK, an ex-employee of a local council was sued for lying on her CV about her health. The employee had suffered from depression over a long period of time and was being treated with anti-depressant medication. However, when she filled in a job application form for the council, she stated that she was in good health.

The council sued for damages based on numerous days of sick leave it had to pay out, GBP 175 000 worth! They based their claim on the fact that the employee had lied when she filled out the job application.

Giving incorrect or untruthful information to an employer can also be grounds for disciplinary action. If the lies  dilute the whole relationship of trust between employer and employee, the employee could be fired. It will always depend on how serious the dishonesty was. Lying about professional qualifications that are essential for doing the job would be gross misconduct. Fibbing that you got an A instead of a B on your grade 1 report might just be okay.

In the current economy, the job market is saturated with people looking for work. Job applicants will be tempted to pad their CV's. If you are hiring, look out for exaggerated nose growth! 

 

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don't lose face on facebook

by Steve - Posted 10 February 2010

Word from the social media experts is that you need to be open and honest on sites like Facebook and MySpace to win friends and influence people. Personally I think its like being in a big room with loads of people standing on their own individual soapboxes seeing who can be the wittiest, most interesting or the loudest. But in striving for social media stardom, remember that while all these sites laud their privacy policies, they are still public websites where what you say can come back to haunt you.

Tokyo Sekwale's niece recently landed in hot water over comments she made about our good president's extra-curricular activites on her Facebook page.

Thinking that her comments were private, they were leaked by someone on her friend list to the media causing huge embarrassment for Uncle Tokyo who is a member of the president's cabinet.

If you are not yet a member of a social media site, you are probably reading this in Kleindorpfontein (picture tumble weed, skew teeth and banjo's)  If you do hail from one of these places, just be very careful what you say about your beloved town or its good people.

Take the case of Cynthia Moreno, a small town girl turned university student. Not being content with simply moving away from the metropolis of Coalinga, California, Ms Moreno proceeded to dis her hometown on her MySpace page, saying how much she despised it and listing a number of reasons why it was a dump.

Her rant, which only stayed on her page for 6 days, was read by the headmaster of her old school.

Mr Grumpy, obviously not taking kindly to the criticism, decided to make an example of Morena by alerting the local newspaper to her comments. The editor of the newspaper published the rant verbatim in the next edition.

Unfortunately, Moreno's family, who still lived in the town, started receiving death threats and were eventually forced to close down their business and leave town.

Moreno sued the principal who leaked the rant to the paper for infringement of privacy. However, because she had posted the rant on a public website, she had no legitimate right to privacy and her claim failed.

This serves as a warning about being too honest on social media sites.

It may not lead to you or your family being railroaded out of town. But you could lose your job or even some friends.

For more information on the legal risks of social media, give us a call on (021) 465 9175.

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Annual Returns for CIPRO

by Nicci - Posted 15 January 2010

All Companies and Close Corporations have to complete and lodge annual returns to CIPRO on the anniversary month of its Incorporation.    If you don't lodge in time, a penalty charge of R150.00 is payable and failing to comply within 6 months may lead to the Registrar concluding that the entity is no longer in business and refer it to be deregistered.  

Registrar's fees payable (based on turnover):

Private Companies:            less than R10m                                     R  450.00

                                                above R10 less than R50m                   2500.00

                                                above R50m                                              4000.00

Close Corporations:           less than R50m                                          100.00

                                                above R50m                                              4000.00

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State needs to cough up within 30days

by Steve - Posted 19 November 2009

The government has said that all current and future judgments against it would be settled within 30 days.  This follows the constitutional court ruling last month that confirmed that moveable assets belonging to the state could be attached in execution of a judgment against it. 

In the past, the only leverage you had to get an unpaid judgment paid by the state was to charge interest. But this wasn't really a major deterent. The 30 day promise is great news for litigants if the government can deliver on it.    

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Proposed tax breaks for primary residences

by Nicci - Posted 06 October 2009

Individuals who own their primary residence in a Company, CC or Trust, can transfer their property into their own name/s without having to pay Capital Gains Tax, Transfer Duty or Secondary Tax on Companies from 11 February 2009 to 31 December 2012.   

The Taxation Laws Amendment Bill has now been extended to include Trusts as well.  The amended section includes the transfer from a Trust to a beneficiary of that Trust if the beneficiary is resident in the home and had contributed to the cost of acquisition and maintenance of the home.

The requirement for an individual to qualify is that they must personally have resided in the home from 11 February 2009 to the date of transfer.  Tenanted properties or holiday homes would therefore not qualify.

For more information, contact Nicci on (021) 465 9175

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