Dont Be Caught Out By Tax Laws

Dont Be Caught Out By Tax Laws

[vc_row][vc_column][vc_column_text]The Consumer Protection Act (CPA) No: 68 of 2008 was promulgated on the first of April 2011.For some not quite an April fools joke… and this is the gist of this article.

Many consumers are relieved that finally they have recourse to, and remedies against unscrupulous businesses or in many cases very large corporates where their impassioned pleas for better warranties, services, refunds, fending off unwarranted marketing, cooling off clauses, damages or just basic help have fallen on deaf ears!

Whilst the CPA has many positive aspects for consumers and is a great piece of legislation the CPA introduced a seismic shift in our litigation system.

This massive change in our litigation landscape has been achieved through the introduction of section 61 of the CPA. Basically, the section stipulates that any person that provides good or services to a consumer that results in losses, damages or consequential economic losses to a consumer as a result of the provision of the goods or services shall be liable to such consumer.

Section 61 may appear to be fair but it has replaced the previous system of having to prove negligence to secure damages or losses where goods or services have been provided, which was a more objective standard due to an element of reasonableness being required.

If you are a landlord and lease any premises or in the event that you even just provide accommodation to a consumer you will fall within the ambit of section 61 of the CPA and may face a major claim!!

The CPA goes further and also includes any party in the supply chain to be liable for damages, losses or economic losses. The CPA can be very broadly applied and a myriad of issues are at play when a tenant rents a property that may cause a tenant (or their family, friends, invitees etc) damages or losses, so BEWARE!

This begs the question: how do I protect myself from a claim that I may not have fathomed or secured or insured against?

As a point of departure, it is crucial that you always insure against potential claims (no-one wants to shirk their obligations) BUT how much insurance is enough? Will the underwriter always pay out? Will the claim be repudiated?

Secondly: is it fair that you lose all your assets a result of such a claim?

The solutions to the above dilemma are as follows:

  1. Ensure that the properties are structured in either a trust or a company owned by a trust. This will ensure limited liability and will not expose all your assets to a potential claim!
  1. You can draft a robust lease agreement that will limit your liability. The lease must have a comprehensive indemnity clause that will limit or secure the landlord against losses or damages that may be suffered by the tenant as a result of the lease in terms of the CPA. It is imperative that the indemnity clause must comply fully with the provisions of the CPA, failing which it will be invalid and will result in no indemnity or protection.
  1. The structure that houses the properties must subscribe for adequate insurance to hopefully cover any and all claims.

We trust that the severity of the repercussions of the principle of strict liability has been clarified and that as a landlord / lessor you heed the advice and take swift and proper action to ensure that you are not a victim of strict liability!





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