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Commercial Mediation: The long-awaited arrival of mainstream mediation
ABC Grocers has an agreement with Joe Fruit for the supply of apples to ABC Grocers for a year. When the first delivery of apples arrives from Joe Fruit, they are over-ripe and cannot be sold. The second and third batches are no better. ABC Grocers refuses to pay Joe Fruit for these deliveries arguing that the quality was unacceptable and that his company had suffered damages from clients wishing to purchase apples which he could not supply because of Joe Fruit’s failure. Joe Fruit insists that ABC Grocers cannot withhold payment and threatens legal action. ABC Grocers does not want a lengthy litigation process and as a well-known community store wishes the dispute to remain out of the eyes of the media. But what solution besides litigation is available to address this dispute?
In short, mediation could present ABC Grocers with a useful alternative to formal litigation for the following reasons:
• Mediation is an informal and voluntary process, which is convened once both parties to the dispute agree that it is the best course of action to resolve the matter amicably.
• The paramount principle of mediation is confidentiality, meaning that the parties and the mediator may not disclose any information that is discussed during the process. In addition, the mediator may not reveal the discussion points raised in private sessions with one party to the other, unless specifically mandated to do so.
• Mediation is without prejudice, which means that should the mediation fail, whatever offer, admission, or concession that is made during the mediation process may not be used in later court or arbitration proceedings.
• The parties must have settlement authority to help ensure the success of the mediation. For example, ABC Grocers should authorise their representative with a letter of authority to represent the company at the mediation. This is to avoid situations of concessions being made by a representative that a company may later reject.
• The outcome is self-determined by the parties, which differentiates mediation from litigation or arbitration processes which are determined by a presiding officer.
• Mediation is non-binding, in that it only becomes binding once both parties reach and sign a settlement agreement.
It should be noted that an essential feature of mediation, different from litigation and arbitration, is that mediation assists parties in resolving their dispute in an expeditious and cost-effective manner, meaning that a matter could potentially be resolved in as little as one day.
Prior to mediation, parties must agree and sign an agreement to mediate. This agreement sets out amongst other things, the when and where mediation shall take place, the mediator’s fees and payment terms as well as allowing parties the opportunity to furnish the mediator with written statements to allow the mediator to gain a better knowledge of the background of the dispute.
Mediation commences with the mediator confirming the signing of the agreement to mediate and explaining the procedure of the mediation. Thereafter, parties are given the opportunity to make their respective opening statements. This usually takes place in what is known as a joint session. The mediator has the discretion to break the joint session into private or side sessions when he or she deems it fit and where the mediator may speak to each of the parties individually in order to explore the interests of the parties and analyse the dispute in a more meaningful way. Such side sessions are also confidential. However, a party may grant the mediator an express mandate to carry certain information over to the other party. This assists the process to reach an option generating stage where the parties begin to negotiate terms of how their dispute may be resolved. Should this be successful, the mediation shall conclude with the parties finalising a settlement agreement with the help of the mediator.
The purpose of the mediator is to facilitate the mediation. The mediator does not adjudicate, judge, advise or decide the outcome of the mediation. The mediator is an impartial and neutral person to the dispute, whose main duty is to assist both parties to reach the best possible solution to their dispute. In this regard, the mediator explores the issues and options with the parties rather than influence the outcome of the mediation. Ultimately, the mediator controls the process by using his or her experience and discretion to assess when to engage in joint or private sessions with the parties.
During the course of 2014, new and exciting rules regulating the conduct of proceedings of the Magistrates’ Courts of South Africa were published and which provides for the voluntary submission of civil disputes to mediation in selected courts, referred to as court-annexed mediation. At this stage, however, court-annexed mediation has only been implemented in Gauteng and North West Provinces, but the implementation will circle out to all other Provinces in due course. These rules apply to the voluntary submission to mediation of disputes by parties prior to commencement of litigation as well as after litigation has commenced, but before trial. In addition, a court may, prior to or during a trial but before judgment is handed down, enquire into the possibility of mediation and afford the parties an opportunity to refer the dispute to the clerk or registrar of the court to facilitate mediation.
If mediation is successful, the parties conclude a settlement agreement setting out the terms and conditions of their settlement and to which they must adhere to. If summons was issued prior to the mediation, the parties may agree to have their settlement agreement made an order of court.
Mediation, although in its infancy in South Africa, has proven internationally to provide a valuable alternative to litigation for parties embroiled in a dispute. In South Africa the option of mediation can only be welcomed, and the inclusion of court-annexed mediation in the rules of court confirms that this form of dispute resolution is here to stay.
Disclaimer: The above article, procedures and commentary are general in nature and may differ from case to case. No reliance should be placed on the procedures described above and legal advice should be obtained before embarking on any process of mediation to determine the appropriateness thereof to the specific dispute in question.
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Be wary of prescription – don’t drag your feet to collect your debt
Posted on 14 April 2015
Prescription is a term used to indicate that the time period to institute legal proceedings against a debtor has lapsed. It is thus not a legal term that should be easily ignored, as having your claim prescribe might mean the end of the road for any legal proceedings against a debtor.
‘Debt’ for purposes of prescription can be broadly interpreted as arising from and being due or owing under a contract, but also includes delictual debts. Prescription will usually start to run as soon as the debt becomes due. Should the debtor intentionally prevent the creditor to gain knowledge of the debt, the debt will start to run once the creditor becomes aware of the existence of the debt. A debt shall also not be deemed to be due until the creditor is aware firstly of the identity of the debtor and secondly of the facts from which the debt arises. It is however expected of the creditor to obtain the identity and the facts by exercising reasonable care. Our courts have confirmed that prescription starts to run as soon as all the facts necessary to support a claim in law have arisen.
A debt will be extinguished by prescription after the lapse of the period of prescription which applies to such debt. There are different periods of prescription of debts. Should you have a claim for debt arising from a mortgage bond, judgment debt, taxation imposed or levied by or under any law, or any debt owed to the state for share of profits, royalties or any similar consideration payable in respect of the right to mine minerals or other substances, then your claim will prescribe after a period of thirty years.
With debt owed to the state arising out of an advance or loan of money or for the sale or lease of land by the State to the debtor, a shorter period applies, namely 15 years. When debt arises from a bill of exchange or other negotiable instrument or from a notarial contract, a debt will prescribe after six years. In most other cases, a debt will prescribe after three years unless an Act of Parliament provides otherwise.
It is possible for the period of prescription to be delayed or interrupted. Prescription will be deemed to have been delayed where:
The creditor is a minor, insane or a person under curatorship.
The debtor is outside the Republic.
The debtor and creditor are married to each other.
The debtor and creditor are partners and the debt arose from their partnership.
The creditor is a juristic person and the debtor is a member of the governing body of that juristic person.
The debt is the object of a dispute which is being arbitrated.
The debt is the object of a claim filed against the estate of a debtor who is deceased, or against the debtor’s insolvent estate, or against a company in liquidation.
The creditor or debtor is deceased and the executor of the estate has not yet been appointed.
If one of these circumstances is present, the period of prescription will not expire before a year has lapsed since the day on which any of the above impediments ceased to exist.
The running of prescription can also be interrupted in two ways. Firstly, when the debtor acknowledges his liability, and secondly, by the service of a process on the debtor wherein the creditor claims payment of the debt, for example by serving a summons on the debtor.
Where a debt is owed by an organ of state, one should note that despite the various prescription periods applying, it remains necessary for the creditor to inform the organ of the state of his intention to institute legal proceedings against the organ of state within six months from the date on which the debt became due. This should be done by giving the state organ a formal written notice. Should one fail to inform the organ of state of your intention to institute legal proceedings or your written notice is faulty, one may still proceed with legal action against the state organ if the state organ consents to this in writing. Should the state organ refuse to provide consent to institute legal proceedings the creditor may apply to court for condonation for the failure to notify the state organ of his intention to institute legal proceedings. The court will condone the failure to notify the state organ if the court is satisfied that the debt has not been extinguished by prescription, good cause exists for the failure by the creditor and there exist no unreasonable prejudice towards the state organ for this failure.
The important consequences of prescription is that the creditor may no longer institute legal action against the debtor for the debt and the debtor will no longer be liable to the creditor for debt after the prescribed time period has lapsed. It is therefore of paramount importance to ensure that you institute legal proceedings within the stated timeframes for prescription and consult your lawyer timeously in this regard.
voice of the child
Does a child have a voice in its parents’ legal battle?
Posted on 14 April 2015
It is often said “parents know best” – but when parents become embroiled in litigation against each other and children are involved, it can become very difficult for them to set their own interests aside and allow the interests of the child to take preference over their own. This also raises the question of whether a child involved in such a situation, has a voice and a say in decisions being made.
The principle of ‘in the best interest of a child’ provides a framework for addressing a broad range of issues affecting children. This principle is regarded as of such importance that it was included in our Constitution. Section 28(2) of the Constitution provides that:
“A child’s best interests are of paramount importance in every matter concerning the child.”
Our Children’s Act 38 of 2005 also gives practical effect to this and lists the various factors which must be taken into consideration whenever a Court needs to decide what is in the best interest of a specific child. It is clear that every child’s specific needs, personal relationships and emotional maturity must be considered when determining what is in that child’s best interest. The facts and circumstances differ however from case to case, resulting in different orders being made in different matters.
Importantly, Section 10 of the Children’s Act provides a child with the opportunity to participate in the process when a decision affecting him or her is to be made. This section explicitly recognises a child’s inherent rights in any matter affecting him or her, and provides that:
“Every child that is of such an age, maturity and stage of development as to be able to participate in any matter concerning that child has the right to participate in an appropriate way and views expressed by the child must be given due consideration.”
Section 31 continues to reinforce the role of the child, by providing that:
“Before a person holding parental responsibilities and rights in respect of a child takes any decisions involving the child, that person must give due consideration to any views and wishes expressed by the child, bearing in mind the child’s age, maturity and stage of development.”
It is here that the family advocate plays an important role in protecting the interests of minor children. The family advocate is assisted by qualified and experienced social workers who are able to assist children in voicing their views. When conducting an inquiry, the family advocate will have interviews with the parents and the child, especially where the child is old and mature enough to express a view. After considering the evidence of all the interviewed parties as well as the child, the family advocate will compile a report with recommendations to the Court. Where necessary the child may also be assessed by other professionals and their reports will then be considered by the family advocate and included in its report and recommendation.
In Meyer v Gerber, a 15 year old boy decided to stay with his father and not his mother. Two psychologists, a family counsellor and the family advocate conducted interviews with him, during which he persisted in his decision to stay with his father. This view of the child was considered and included in the family advocate’s report. The Court decided that it was satisfied that in the circumstances the child was endowed with enough intellectual and emotional maturity to have made a calculated and intelligent decision and that the Court should attach due weight to his stated preference and choice. The child’s position was clearly not something which had become established overnight and bore the stamp of an important decision about which he had thought and contemplated for a long period of time and in which he had conducted himself as a mature and responsible young man.
To enable a child to effectively convey his or her view, it is important to allow the child the appropriate opportunity to do so. Professionals such as psychologist, counsellors and the family advocate are best suited to assist the Court in this regard rather than expecting a young child to express an opinion in the intimidating environment of a court room.
A child therefore does have a say in matters which affect them and where they are at such an age and stage of maturity and development to be able to express their views and wishes. However, even where a child’s opinion qualifies to be taken into consideration, the child’s best interest remains the deciding factor which our courts will ultimately weigh when considering the appropriate course of action in litigation which involves a child.
Can you cancel a contract by email?
Posted on 16 March 2015
Your agreement is signed, sealed and delivered! You know that in the agreement a non-variation clause stipulates that no variation or consensual termination of the agreement shall be of any force or effect unless in writing and signed by both parties thereto. This clause seems simple enough…. If you want to cancel the agreement, all you have to do is ensure that it is in writing and signed. What can possibly go wrong?
We live in a day and age where electronic technology has become the primary platform for communication. Emails, Twitter, Facebook, Instagram and instant messaging services such as Whatsapp and BBM are electronic platforms we are all familiar with. The question that now arises, however, is whether an email would meet the standard requirements of a non-variation clause requiring any variation or cancellation of an agreement to be reduced to writing and signed by both parties to the agreement.
This question came into focus in the Supreme Court of Appeal case of Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash & Another. Here the court found that the exchange of emails between parties to an agreement, with each of the parties typing their first names at the end of the emails, was sufficient to cancel an agreement, which could only be cancelled in writing and signed by both parties.
In this case the court relied on the Electronic Communications and Transactions Act 25 of 2002 (“the Act”) and found that the requirement that an agreement had to be cancelled in “writing”, is satisfied if it is in the form of data messages and in this case the email met this requirement. With regards to the “signed” requirement, the court had to consider whether the parties’ names at the end of the emails, constituted a signature in terms of the Act, which provides that where an electronic signature is required by the parties and the parties have not agreed on the type of electronic signature to be used, that requirement is met if –
• ‘a method is used to identify the person and to indicate the person’s approval of the information communicated; and
• having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated.’
A signature is commonly understood as a person’s name written in a distinctive way and serves as a form of identification. Our courts have generally adopted a practical rather than a formalistic approach to signatures. The question which remains, however, is whether the method of the signature used fulfils the functions to authenticate the identity of the signatory, rather than insist on the form of signature used. In terms of the Act, an electronic signature is defined as ‘data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature’. In the case above, the court held that the typed names of the parties at the end of the emails were intended to identify the parties and therefore constituted data that was logically associated with the data in the body of the email correspondence and accordingly constituted an electronic signature and this satisfied the requirement of a signature.
While our courts treat email communication in a similar manner to written communication, we cannot help but wonder whether a court will also be comfortable with a Tweet, Facebook, Whatsapp or BBM message whereby a cancellation message is sent merely with a typewritten name at the end.
It is evident from the above, that a non-variation clause is not necessarily that simple. Contracting parties should be cautious of their communications with each other, especially when using emails and messaging platforms such as Twitter, Facebook, Instagram, Whatspp and BBM. In order to avoid disputes and ambiguity in the future, it is advisable to stipulate in the agreement that electronic signatures will either not apply to amend or cancel an agreement or alternatively to regulate clearly in the agreement how electronic communications will apply. If you are unsure of what your contract says or unsure as to how to incorporate/exclude the position regarding electronic signatures and electronic communication in/from your agreements, contact a commercial specialist that can assist you to address your concerns. The reality is, electronic communication cannot be ignored and it is prudent to ensure that you understand how to safely orientate yourself contractually within our digital age.