Is your home builder registered in terms of the Housing Consumers Protection Measures Act 95 of 1998?

The overall purpose of the Housing Consumers Protection Measures Act 95 of 1998 (“the Act“), and its core function, is to protect the public by requiring the registration of home builders.  This will ensure that consumers are not exposed to unscrupulous and incompetent home builders, building contractors and developers or to the potential risk of defective housing.  It is intended to cover all home builders.

The National Home Builders Registration Council (“the NHBRC“) is an organ of State established in terms of section 2 of the Act to regulate the home building industry.

During 2013 an NHBRC inspector, whilst conducting a routine inspection, discovered that the trustees of the Mike’s Trust (“the Trust“) were constructing a Sectional Title housing development on the property of the Trust, for the benefit of the Trust.

Initially the Trust was registered as a ‘home builder’ in terms of section 10 of the Act, for a period of one year,  but later failed  to renew its registration.  The Trust continued with the construction of new homes on the property, whilst not registered as a home builder.  The Trust was served with notices of non-compliance by the NHBRC, but refused to comply. Consequently the NHBRC launched an application against the trustees, claiming that the Trust is in breach of the Act.  The Trust’s primary contention was that a trust is not “a person” and therefore it is not required to register as a home builder in terms of the Act.

The High Court (Muller J) dismissed the application and found that a trust is excluded from the definition of home builder in sections 1 and 10 of the Act, and is not required to register as a home builder in terms of the Act.  The NHBRC took the decision on appeal.

The Supreme Court of Appeal in National Home Builders Registration Council v Michiel Wessel Adendorff & others (406/2018/) [2019] ZASCA 20 (26 March 2019), had to decide not whether the Trust should be afforded juristic personality (it is well established that it is not a person) but whether a trust is included in the ambit of the Act to which registration as a home builder applies.  Section 10(1) of the Act says that no ‘person’ shall carry on the business of a home builder unless that person is registered as a home builder.  Section 10(1) makes no reference to a trust.  Sections 9 and 21 of the Act, however refer to trusts and trustees.

The SCA came to the conclusion that a ‘trust’ is to be included as ‘a person’ in section 10(1) of the Act for purposes of registration and enrolment.

Even if a person is constructing a residential dwelling for his or her own occupation, the Act nevertheless applies unless and until such person is exempted.

The appeal succeeded, and as this appeal is in the public interest, the appellant sought no order as to costs.

By

Lizelle Marx

lizelle@dyason.co.za

Contingency Fee Agreement Explained

  • In terms of the Contingency Fees Act 66 of 1997 (“the Act”) a client can choose to enter into a Contingency Fee Agreement with his/her attorney and/or advocate.
  • Should the client not want to enter into a Contingency Fee Agreement, his/her attorney will have him/her sign a Fee Agreement in terms of which the client will be liable to pay the attorney’s attorney and own client fees (“normal fees”). Normal fees are those fees normally charged by an attorney/advocate to do legal work for a client.  The client may finance his/her litigation themselves or approach Legal Aid South Africa if he/she cannot afford litigation (only clients who qualify for legal aid may apply).
  • In the case of a Contingency Fee Agreement: if the client wins his case, the attorney will be entitled to a portion of the amount that the client has won.
  • In terms of the Act, a contingency fee will be 25% of the amount awarded to a client in a court case, if the client is successful in his/her case OR double the attorney’s normal fees, whichever is the LESSER.
  • For example: If the Court awards the client R100 000, and the client and attorney did NOT enter into a Contingency Fee Agreement, the attorney will deliver his/her normal bill for work done (attorney and own client bill). The attorney’s fee will depend on what work he/she has performed and the client will be charged accordingly.  However, if a Contingency Fee Agreement was entered into, the attorney’s fee will be R25 000 or double the attorney’s normal fee, whichever is the lesser.  The attorney’s fee may not be more than R25 000 (25% of the R100 000), but it may be less than R25 000 if double the attorney’s normal fee is less than R25 000.  The 25% is merely set as the maximum the attorney can charge in a Contingency Fee Agreement.
  • The basis of the Contingency Fee Agreement is a “no-win-no-fee” basis. The attorney will only be entitled to fees for services rendered if the matter is successful (or partially successful) upon conclusion.  Successful means if the responsible party pays any compensation to the client, even only a percentage (partially successful).  If the matter is not successful (no compensation paid to client), the attorney will not be paid and will then not be able to give the client a bill.
  • Should the client lose the case, he/she does not have to pay his/her own attorney any legal fees, however, the client may get a court order against him/her to pay the taxed legal costs on a party and party basis of the winning party.
  • The client may withdraw from the Contingency Fee Agreement within a period of 14 days, calculated from the date of signing the agreement, by giving notice to the attorney in writing. In this instance no fees will be payable to the attorney.
  • Should the client terminate the Contingency Fee Agreement for any reason before its conclusion (after the period of 14 days from signature of the Agreement), the client will be liable to pay the attorney’s costs and expenses to date of withdrawal. The bill of costs will be drafted and taxed in accordance with the attorney’s normal fees.
  • The Contingency Fee Agreement must be in writing and signed by both parties and has to be concluded when the attorney takes on the matter, not later.
  • No contingency fee agreement may be entered into in respect of professional services to be rendered in any criminal proceedings or any proceedings in respect of any family law matter.

By

Lizelle Marx

lizelle@dyason.co.za

Emolument attachments

Emolument attachments: to what extend can a company can interfere with the proceedings: in re: African Development Bank v Nseera; in re Nseera v Nseera (A479/2017) (2018) ZAGPPHC 672 (2018) 3 ALL SA 646 (GP)

 In June 2017, Africa Development Bank brought an unsuccessful Application in terms of Section 28 (2) of the Maintenance Act 99 of 1998. In the Application it sought to rescind and set aside a court order of January 2017, which ordered them to attach and deduct monthly emoluments in respect of Mr Nseera, their employee and pay same over to the Respondent, Mrs Nseera. Their Application was dismissed, which then became the subject of appeal in the High Court.

In the main action on 12 October 2016, an order was made against the Respondent Mr Nseera, for being in contempt of a court order granted against him in June 2016, it further ordered for his arrest and detention for a period of 30 days, postponed for a period of one year on condition that that the Respondent adhere to the court order granted in June. Secondly the court ordered that Mr. Nseera pay maintenance to Mrs. Nseera for herself and their minor child in the amount of R20 000.00, with the first instalment payable on the 28th October 2016.

The Respondent deposed an affidavit and brought same before the clerk of court for an emolument order in terms of Section 26, which provides for the enforcement of maintenance orders and authorises the attachment of emoluments. The order was granted and the Bank was formally notifies in terms of Section 29 of the Act.

The bank brought an application to rescind the order, advancing their claim on three grounds. Firstly that the discrepancies in the date of the order and the letter and notice accompanying the order rendered the whole process irregular. The Court order was granted on the 26 January 2017, however the letter and notice were dated 25 January 2017.Mrs. Nseera clarified that the papers were before the clerk on 25 January, however the order was only granted by the Magistrate on the 26 January 2017.

The court held that there is hardly any harsh consequence, the operative document is the court order which was signed 26 January 2017 and which supports the Respondent’s statement that the papers were drafted on the 25th January 2017 and the order only granted by the Magistrate on the 26 January 2017.

Secondly the Bank contended that it was prejudiced for not being given notice of the application made by the Respondent.

Section 28 (2) of the maintenance Act provides that “. An order under this section may at any time, on good cause shown, be suspended, amended or rescinded by the maintenance court, (b) any person who wishes to make an application for the suspension, amendment or rescission of an order under this section shall give notice in the prescribed manner of his or her intention to make application to the person whose favour that the order was made, which notice shall be served at least 14 days before the day on which the application is to be heard.”  The court held that the section granting the order on ex parte application is justiciable in that it provides both a remedy for rescission but also details how the remedy is to be invoked and therefore the section does not render it peremptory to give the employer notice in advance, otherwise if it were the case, it would not make sense that the legislature devoted so much attention in creating both a remedy and the procedure for an aggrieved employer to invoke  if the intention was to give notice to the employer before making the order.

Thirdly the bank contended that it was prejudiced by not being afforded the opportunity to oppose the Emoluments Order and if it had the opportunity, it would have raised the immunity it enjoys.

The African Development bank was established in terms of an agreement signed on the 4th August 1963 in Khartoum, Sudan by the representatives of various, can government and the agreement affords the Bank immunity. Article 52 states that “The Bank shall enjoy immunity from every form of legal process except in cases arising out of the exercise of its borrowing powers when it may be sued only in a court of competent jurisdiction in the territory of the member in which the bank has a principal office, or in the territory of a member or non-member state where it has appointed an agent for the purpose of accepting service or notice of a process or has issue or guaranteed securities. No action shall, however be brought by member or persons acting or deriving claims from members.”

Article 56 (1) further states that “ all governors, directors , alternators and employees of the Bank and experts and consultants performing missions for the Bank shall be immune from legal process with respect to acts performed by them in their official capacity.”

Article 59 of the Main agreement and Article 12 (4) of the Regional agreement affords the President the rights to waive the immunity of any official in case where in his opinion, the immunity would impede the course of justice and can be waived without prejudice to the Interest of the Bank.

The court held that the agreement read in context and mindful purpose of establishing the Bank, was to advance sustainable economic developments of its regional members. The dispute between its employee Mr. Nseera and Mrs Nseera is hardly a matter that falls within the general business of the bank or the scope of its operation and therefore how the dispute finally gets resolved is no concern for the bank as it does not impact on its operation, efficacy or its ability to discharge its mandate. Held further that giving effect to the court order in terms of section 28 cannot in any way compromise the assets of the Bank. What the Bank is required to do is to attach and pay over, is not its own asset but emoluments due to its employee Mr. Nseera which then cease to be assets of the bank. Invoking the immunity will then precisely be for the private benefit of Mr. Nseera.

The court further noted that the Bank must respect the laws of the Republic and the immunity must be interpreted in context and given this case the immunity must be interpreted within the context of a dispute involving the rights of a minor child to maintenance and therefore in the context of the Republic’s legal system the immunity is not sustainable, more particularly when the courts have consistently expressed themselves on the importance of maintenance obligations being diligently discharged and for the reasons above the appeal was dismissed.

Boitumelo Shongwe.

Permanent Life Partnerships

PERMANENT LIFE PARTNERSHIPS: IS THERE A JOINT ESTATE AND IF SO, HOW WOULD IT BE DIVIDED ON TERMINATION OF THE PARTNERSHIP?

Uncertainty regarding permanent life partnerships and how to divide the joint estate which the partners have built up during the partnership has surrounded the law for many years but have finally been clarified by the Western Cape High Court, in a fair and equitable manner as many would describe it.

Parties who have been living together as permanent life partners, enjoying life together as an unmarried couple and advancing each other’s lives can now enjoy greater certainty in what awaits them if the permanent life partnership ends.

The concept of a universal partnership was briefly identified and confirmed in the Butters1- case where two parties lived together for 20 years without getting married, where one party provided financially and the other cared for their children and maintained the common household.

The judgment handed down by Acting Judge Andrews on the 27th of June 2018 is a landmark judgment intended to provide a fair and equitable manner in which the joint estate of parties who have been living as permanent life partners for an amount of time, should be divided. This judgment especially provides more clarity on the position of each partner in the household. Clarity to the partner as breadwinner and clarity to the other who maintains the household.

In the matter between Booysen and Stander2 the plaintiff, Booysen, instituted a claim against the Defendant, Stander, based on an actio communi dividendo (Judicial division of a joint property) for the termination of the joint ownership of an immovable property, valued at R2,5 million, the repayment of a loan made to the Defendant and return of a motor vehicle which was in the Defendant’s possession. The Defendant, in her counterclaim, sought an order declaring that a universal partnership existed between the parties, the termination thereof and the equal division of the joint estate.

The Plaintiff and Defendant had been living together for 17 years. Both parties started the relationship in an average financial position and had to work hard to make ends meet. The Defendant had a more difficult career and as such was more dependent on the Plaintiff. The Plaintiff paid for the mortgage bond of the immovable property, the medical aid, basic household expenses as well as the repayment of the motor vehicle. The Plaintiff also loaned money to the Defendant to start a business.

According to the Plaintiff, her intention was to recover the expenses and loan from the Defendant and did not intend to forfeit her right to do so. The Defendant on the other hand articulated that she was not in the same financial position as the Plaintiff and relied on her to maintain the household as breadwinner and as such was not under the impression that she had to reimburse the Plaintiff for her portion of the expenses and mortgage bond since they lived together in a permanent life partnership. During cross-examination, the Plaintiff conceded that a joint household had formed but denied that a joint estate had formed as a result thereof.

It is thus evident that the parties conducted a normal joint household where the one cared and provided for the other financially and the other would maintain the household accordingly.

Andrews AJ found that a universal partnership had indeed existed between the parties and that the joint ownership of the immovable property should be terminated. It was further ordered that the Defendant’s half-ownership of the property be transferred to the Plaintiff against payment of a specified amount of money to the Defendant. The Defendant would also keep the motor vehicle as her sole property and each party may retain assets and other property in their possession. The Plaintiff shall be liable for the costs to effect the aforesaid but each party shall pay its own legal costs.

The Court held further that the manner in which the parties conducted their affairs and day to day living was consistent with a universal partnership. Such partnership was similar to that of a marriage in community of property and as such each party becomes joint-owner of everything that either party owned before the partnership.

The aforesaid reinforced the view that the Plaintiff’s claim based on the actio communi dividendo could not be sustained since it would be near impossible to untangle the interwoven threads of the narratives of the life partners and the way they conducted their affairs during the partnership. The fair result to both parties would be to order a hybrid of both the actio communi dividendo and the universal partnership which would result in the division of the joint estate, just as in the event of a marriage in community of property.

By Werner Cilliers

Associate Attorney, Dyason Incorporated

25 March 2019

The call for Bitcoin Regulation

Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us….”

In a climate characterized by the exponential growth in technological innovations resulting in the world moving into the cyber space, the development of digital money was almost inevitable as money evolves with time. History has shown us that money can be anything that enough people agree to trade with and it often reflects the progressive nature of our societies. Hence the construct of money has been expressed in the form of salt, farm animals, gold and diamonds. Then paper money was developed, which remains the most basic form of currency to date. But overtime, it has been supplemented by innovations such as credit-cards, E-money, Paypal and the like. Unlike these innovations, whose function is mainly rooted in the value of fiat currency, Bitcoin is so radical because with enough acceptance, it could eventually substitute fiat currency and become the preferred medium of exchange.

Bitcoin is essentially an encrypted computer file. It was introduced by a programmer known as Satoshi Nakamoto in 2008. Proponents of the crypto-currency argue that Bitcoin is the link between currency and the inevitable technological advancements that the world is subjected to and like every other innovation that initially scared people and brought about skepticism, such as social media platforms, online shopping and online banking etc, the world will catch on and the introduction of a regulatory framework will make the process of “catching on faster and safer”. But before we even divulge in the regulation of Bitcoin, the crypro-currency must first be classified.

Thus far, the classification of Bitcoin remains contentious. Bitcoin has been classified as a commodity since it has similarities with gold, and because of its volatility, it has been regarded as a type of speculative investment. Some jurisdictions classify it as a store of value or an alternative method of payment. Further, the US court in SEC v Shavers explained the function of Bitcoin as an Investment and how it can be used “as money”. Be that as it may, Bitcoin cannot operate in the above classes without any friction. Further, overburdening the Bitcoin Industry with various regulatory frameworks may bring about more anarchy and uncertainty. Hence, it has been suggested by experts in International Banking law that Bitcoin should be classified as a unique asset. Doing so, will not only ensure that Bitcoin is adequately regulated but it will also ensure that participants can realise the optimum benefits offered by the Bitcoin ecosystem with minimum exposure to risk.

Currently, participants in the Bitcoin ecosystem, are subjected to many risks, most of which are inherent in the design of Bitcoin. These risks include price instability to an extent that Bitcoin’s price could plummet from US$17.00 to $0.001 within a few hours. Further, the anonymity provided by the system has proven to attract a lot of criminals. Hence Bitcoin has been associated with crimes such as money laundering, financing of terrorist activities and drug trufficking. Most notably, the Bitcoin ecosystem does not offer adequate protection to its consumers. For instance, Bitcoin consumers are susceptible to security breaches with no recourse, transactions are not reversible, and there are no deposit insurance mechanisms in place to compensate consumers in instances of loss. This means that lost Bitcoins cannot be traced or recovered.

Proponents of Bitcoin argue that the benefits of Bitcoin outweigh the risks; Bitcoin transactions are cheaper and faster since Bitcoin is a peer to peer network, eliminating costly intermediaries and offering participants absolute control of their “currency”. Further, the Bitcoin network is easily accessible because it only requires an internet connection to operate. Unlike fiat currency, Bitcoin has no jurisdictional boundaries, it is independent of any government, and therefore it is not subject to any political influence or monetary policies. Despite its volatility, Bitcoin has proven to be a good investment for most.

In South Africa, the Finance department has made it clear that neither The SARB, the National Treasury nor the  Financial Services Board regulate Bitcoin. A position paper on Virtual Currency was issued in 2014 to this effect. However, the then  Minister of Finance, Melusi Gigaba assured the people of South Africa that the finance department  would continue to monitor and come up with ideas on how to regulate the use of VCs. Following this, in December 2016, a committee tasked with monitoring developments of VCs in SA was constituted and suggestions were put forward regarding adopting an industry-based-approach to the regulation of VCs. In 2017, the SARB made an announcement that it is working with a company called Bankymoon, specialising in Blockchain solution, in order to find the best regulatory framework for the operation of VCs in South Africa. In the same year, the SARB released another statement which expressed a possibility of developing a digital currency, most likely using Distributed Ledger Technology (DLT) and in the beginning of 2019, an announcement was made in which members of the public were requested to suggest ways in which Virtual Currency can be regulated In the country.

Despite the lack of regulation, Bitcoin is growing in SA. This is evidenced by the increase in the number of Exchanges (Luno and ICE X being the largest Exchanges), more merchants, approximately 153, accept Bitcoin, including Takealot, Earth Child and eBay. Furthermore, there has been a multiple of Bitcoin conferences hosted in the country and most notably a Bitcoin ATM was installed in Midrand. This growth should encourage regulators to come up with a framework for Bitcoin and other VCs.

With adequate and effective regulation, Bitcoin could be accepted by a majority of service providers worldwide, and facilitate day-to-day trade. Regulated Bitcoin can also be used to create job opportunities through the process of mining and minimize the risks that consumers are exposed to. Furthermore, Bitcoin has the potential to promote inclusivity by encouraging micropayments in developing countries and reducing the trade friction amongst them. If globally regulated, Bitcoin could become a global trading instrument.

Customary Marriages in South Africa

One of the most widely interpreted and misunderstood Acts in South Africa in my opinion has to be the Recognition of Customary Marriages Act 120 of 1998. This Act provides for the proper governance and procedural structure of the customary law marriages.

Even after years of its promulgation, there is still majority of people living in South Africa being negatively affected by entering into a customary law marriage.

This article provides for the interpretation of the aforementioned Act, case law dealing with the institution of customary law marriages as well as the public opinion around the perception of what constitutes as a valid customary law marriage.

CUSTOMARY MARRIAGES IN SOUTH AFRICA

Section 3(1) of the Recognition of Customary Law Marriages Act 120 of 1998

The understanding of the procedure, stems from the principle of the Act that which deals with the requirements of entering into a valid customary marriage.

However, before we get into the requirements we should first deal with the definition of what customary marriages are. A customary marriage is understood as being entered into in accordance with the traditions and customs of indigenous African customary law.

Section 3(1) of the Act deals with the requirements of entering into a valid customary law marriage and explains it as follows:

  1. The marriage must be negotiated, and entered into or celebrated in accordance with customary law;
  2. The marriage must be entered into in line with the traditions and customs of the parties involved;
  3. The parties involved must be 18 years or older, and if not then consent is required from the minors parent or guardian;
  4. The parties must be competent to marry each other, i.e must not be blood relatives;
  5. Both the parties must consent
  6. The marriage must be lawful.

According to public perception it is a prerequisite for the man getting married to provide lobola or magadi to the woman’s family, or that lobola be exchanged between the parties involved. However we can make out from the above requirements that this is not the case.

SENGADI V TSAMBO (40344/2018) [2018] ZAGPJHC 613 (3 NOVEMBER 2018)

A recent and very popular case that had most of the public ranting was the case of Hip Hop Artist’s wife being restricted from attending and being involved in the funeral arrangements of her late husband married in terms of customary law.

The restrictions were made by the deceased’s family in that alleging that she was not their sons lawful wife in terms with customs and tradition and as a result should be banned from the proceedings as she did  not have  a claim to the deceased’s body or home.

The urgent application to the High Court.

The Applicant/Plaintiff in the above case, Lerato Sengadi, alleges in an affidavit to how her customary marriage to the deceased had been entered into. She makes reference to the deceased, Jabulani Tsambo also known as HHP (stage name), proposing to her and her accepting the marriage proposal. She makes reference to the Tsambo family writing a letter to discuss lobola negations with her family, as this is tradition and custom. The Tsambo family attended the negotiations days later and agreed upon a bride price/lobola to the amount of R45 000 .00. The deceased deposited R30 000.00 into the Applicant’s mothers account and promised to pay the outstanding amount in two instalments.

She further alleges that on the day of the negotiations the two families celebrated as per custom and tradition.

In closing she confirms that according to the Act, and customs she and the deceased entered into validate a lawful customary marriage.

The court agreed and declared that they had been in a valid customary marriage and thus she is entitled to be treated and seen as such by the deceased’s family.

It was submitted that the Applicant was wronged by the Respondents, whom are the deceased’s father and uncle, and they must therefore allow the Applicant to prepare her deceased’s husband funeral as she she’s fit.

This was a very interesting case since the public was convinced that Lerato Sengadi could not be recognized as the lawful wife since her deceased husband failed to pay the outstanding amount of lobola.

As much as it is custom, lobola does not regard a customary marriage valid or invalid.

The court also made reference to the fact that should a “husband” pay his “wife’s” bride price and a celebration in terms of custom and/or tradition not take place. Then the “husband” and wife” move into their “marital” home, this will merely be regarded as cohabitation and not a valid customary marriage.

Therefore what we tend to forget or ignore is that the validity of a customary marriage depends on the negotiation and celebration of the two families at the time of institution.

It is common cause to understand the effects of customary marriage before entering into it, as this will affect the termination thereof either through death or divorce.

Therefore moving forward it is imperative for these requirements and more like them to be interpreted in such a way as to make reference to each custom and culture individually and not generalize or blanket the issue of customary marriage to one meaning.

When does it become a necessity to appoint curator ad litem to protect the interests of children in actions brought against the Road Accident Fund?

Section 14 of the Children Act 38 of 2005 recognises the right of children to be assisted in vindicating their rights in court and this right is also entrenched by section 28 of the Constitution of South Africa. Generally it is accepted that the biological parents or guardians of the of the child will assist the child in actions against the Road accident fund for damages arising from bodily injuries suffered by the child itself or loss of support to which the child is entitled. However it has become routine that an unopposed application will be made in court for the appointment of a curator ad litem to assist and ratify the steps already taken by child in its action and to further proceedings.

Various applications of this nature were stood down by various judges to be decided by the judge in one hearing. In the ex parte application of Thithi Rebecca Molentoa obo of two minors and various other applicants, The court held that a curator ad litem will be appointed to assist the child in an action against the Fund, where the interest of the child require such appointment and each case must be determined based on its own facts. This decision affirmed the finding in Martin NO v Road Accident Fund 2000 2 SA 1023 W, the court held that the nature of the responsibilities of the curator is to represent the child in the case then pending and to watch and protect the interest of the child in the case as a good and prudent parent would have done so and to avoid a conflict of interests between the parent and the Plaintiff child.

Accordingly the court expressed that the appointments of these curators was in itself unnecessary because it created an additional tier of paid professionals who add no value to the work done, but simply duplicate the work done by attorneys of record and advocates who are instructed by the attorneys.  Furthermore the court understood that in some instances the child Plaintiff may be resident far from the seat of the court and obtaining instruction was costly and logistically difficult, however that did not necessitate the appointment of a curator. The court held that the attorneys of record can simply appoint a correspondent and/or investigator to do the work of a local agent.

Further held that attorneys who appointed curators in order to protect themselves against their negligence should the fund question their decision and authority was not a sufficient reason to appoint a curator because in any case an attorney who gives negligent advice whether to a lay client or a curator is still liable for the advice they given and appointing a curator does not protect them against that risk. Further held that in instances where the fund unreasonably refuses to recognise the authority of the attorney of record, the attorney can approach the court for a declaratory order.

Interestingly to note from the judgement in the interpretation of Section 32 of the Children’s Act which deals with the responsibilities of a care giver or anyone other than the biological parents. Most counsels had argued that section 32 was not wide enough in its terms to empower a care –giver who is a family member in relation to the child to assist the child in an action against the Fund. The court held that the intended purpose of the legislature taking into consideration the interest of the child was to recognise the competence of a care-giver in assisting the child in an action against the fund. It would not have otherwise “impose a purely bureaucratic obstacle in the path of the vindication of child litigants’ rights”, given the fact that a nuclear family is no way a universal norm in this country.

The law as it is in terms of this case, care-givers can now assist child Plaintiff’s in vindication of their rights in an action against the fund and a curator ad litem will only appointed when it is necessary and in the interest of the child, with each case determined based on its own facts. The court dismissed all the applicants’ cases after it found on a case by case that it was not necessary to appoint a curator ad litem in an action against the fund.

Your debts – not mine! Victory for new property owners

Jordaan and Others v City of Tshwane Metropolitan Municipality and Others [2017] ZACC 31

This article highlights important points taken from the above mentioned case.

The Constitutional court decision laid to rest the question as to whether historical municipal debt is permitted to be extended and transferred to a new owner who purchases the property.

Held that upon transfer of a property, a new owner is not liable for debts arising before transfer from the charge upon the property under section 118(3) of the Local Government: Municipal Systems Act 32 of 2000, (“the Act”).

What this means is that even thought there might be a historical municipal debt attaching to the property which the previous owner did not pay for, the municipality cannot refuse to supply services , terminate the existing supply of services nor can it transfer the existing debt to the new owners account/property.

Municipalities cannot attach and sell the property of a new owner to settle historical debt whereas previously, a municipality’s claim for municipal debt owing was preferent to any mortgage bond passed over such property.

Real security in property is a limited real right with the purpose of ensuring satisfaction of a debt or obligation to another, usually ahead of other, unsecured creditors. Against this background, what is notable about Section 118(3) is that the legislature did not require that the charge be either registered or noted on the register of deeds. Therefore, there is no indication that the right given to municipalities has third-party effect: no provision is made to fulfil the publicity requirement central to the functioning of limited real rights.

It is respectfully submitted that this oversight feeds the lack of transparency resulting in the unregistered charge being enforceable against the property in as far as the original owner holds the title.

Notwithstanding the above, a municipality is empowered to invoke its debt collection powers to recover any historical debt from the seller both before and after transfer.

Section 118 (1) of the Act prohibits transfer of property without a certificate issued by the municipality certifying that all municipal debts due in connection with that property during preceding two years of application for the certificate have been fully paid.

What this means is that municipal debt must be paid, for the two years before which you intend to apply for the clearance certificate which will then allow you to proceed with the transfer. Notably, this section makes no mention of payment of historical debt owed to the municipality.

In light of the wording and time period stipulated in the above section, it would be unconscionable and unlawful for a municipality to refuse to issue a clearance certificate where there is compliance with this section. Hence, a municipality cannot rely on the argument that historical debt must be paid before the clearance certificate can be issued.

By the same token, Section 118(1) places municipalities on notice that a transfer within their jurisdiction is pending.  This gives the municipality full power, and full opportunity, to enforce the charge against the existing owner for all recoverable debt, even beyond the last two years. In this way, all outstanding debt can be recovered, as a charge against the property, before transfer.

Given these points, the court held that the effect of allowing the historical municipal debt to take effect post-transfer is thus to substantially interfere with or limit the purchasers ownership as well as the mortgagee’s real right of security.

The judgment therefore provides legal certainty on the interpretation of Section 118 (3).

Risk-only life policies with a beneficiary clause

Risk-only life policies with a beneficiary clause, the proceeds thereof do not form part of the deceased’s estate, neither the joint estate even if the deceased was married in community of property.

Upon death, the question of which property formed part of the deceased’s estate during his life time is inevitable, so does the question of which property formed part of the joint estate where the deceased was married in community?

In the matter between Naidoo v Discovery Life Limited & Others (202/2017) ZASCA 88

(31 May 2018), the main issue was whether the proceeds of risk-only policy containing a beneficiary clause, formed part of the joint estate?  And if so, whether the nomination of beneficiaries by the deceased without the consent of the surviving spouse amounted to an alienation of property which is prohibited in terms of section 15 (2) (c) Matrimonial Property Act 88 of 1984 (hereinafter “the Act”)?

It was common cause that the appellant, Ms. Vavanthi Naidoo and the late Merglen Naidoo were married in community of property in 1996. It was also common cause that in 2002, the deceased took out life assurance policy with Discovery Life Limited in terms of which the deceased was the principal life insured and owner thereof.

On the inception of the policy, the deceased nominated the appellant as the beneficiary of the proceeds in terms of the policy. However in 2011, the deceased decided to remove the appellant as a beneficiary, without her knowledge. He substituted her by nominating his parents and siblings as the new beneficiaries. A year later—that was 2012, he passed way.

Pursuant to his death, Discovery Life Limited fulfilled its obligation in terms of the policy by making payment of the proceeds due to the new beneficiaries. It was only then that the appellant learned that the deceased had removed her as a beneficiary.

The appellant formed the view that the proceeds of the policy belonged to the join estate, since she was married to the deceased in community of property. This prompted her to institute legal proceedings in the Gauteng Local Division of the High Court, Johannesburg, seeking an order inter alia to the effect that the proceeds of the policy formed part of the joint estate and that Discovery Life Limited pay such proceed to the joint estate.

In light of the relief claimed against Discovery Life Limited, the new beneficiaries were joined by Discovery as the co-respondents in the matter. It appears that Discovery Health Limited was intending to proceed with a claim for unjustified enrichment against the co-respondents, in the event that the relief against it were to succeed.

The High Court considered the substance of risk-only life policy, with a beneficiary clause and determined that this type of policy constitutes a stipulation alteri contract (a contract for the benefit of a third party).  As such the court held that the proceeds of the policy did not form part of the deceased’s estate, neither the joint estate. The Court held further that the substitution of beneficiaries by the deceased without the written consent of the Appellant did not constitute an alienation in terms of the Act.

The ruling of the High Court was subject to an appeal at the Supreme Court of Appeal (hereinafter “the SCA”).  The SCA confirmed the High Court ruling. It found that the policy holder (“the deceased”) contracted with the insurer to the effect that an offer will be made by the assurer to a third party with the intention that on acceptance of that offer by the beneficiary, a contract will be established between the beneficiary and the insurer.

The SCA also found the following: the proceeds of the policy were payable to the beneficiary upon death of the principal life insured, proceeds were immediately made available to the beneficiaries without the beneficiaries having to wait for the deceased’s estate to wound up, the proceeds did not form part of the deceased’s estate for the purposes of calculating the executor’s remuneration, the policy had no surrender value and the proceeds could have never been paid to the policy holder during his life time.

The SCA, same as the High court, ultimately ruled that the proceeds of the policy did not form part of the deceased’s estate neither the joint estate. Having determined that the policy did not form part of the deceased’s estate neither the joint estate, the SCA held that the nomination of new beneficiaries without the consent of the appellant did not amount to an alienation and as such section 15(2) (c) of the Act was not applicable.

Perhaps an interesting issue which both the SCA and the High court were not call upon to decide is whether the payment of premiums without a spousal consent would have amounted to an alienation in terms of section 15(2) (c) of the Act? In light of the fact that the deceased and the appellant were married in community of property and as such the money utilized to pay for the premiums was part of the joint estate.

By
Jeffrey Maluleke
jeffrey@dyason.co.za

Learn while refueling during your lunch hour!

On the menu

Material Transfer Agreements

Presented by Dr Marietjie Botes

  • On 20 July 2018 SA’s first official MTA was published in Government Gazette no.41781
  • Biological materials previous used exclusively for research purposes – now seen as having direct commercial value
  • MTA’s evolved into hybrid form, including complexities of IP licence agreements

Concern that public funds used to support research institutions are used to indirectly support private biotech companies

 

Book your LAW4LUNCH session now via e-mail and for further info at marietjie@dyason.co.za

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marietjie@dyason.co.za

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