Author Archives: Delport van den Berg Inc.

Shortfall liability after vehicle repossession can catch you off guard

Credit Providers play a vital role in the functioning of our economy as they provide financial assistance to consumers. Most consumers make use of short-term vehicle finance, which falls within the ambit of the National Credit Act. If a consumer breaches the credit agreement, the risk arises that the Credit Provider may repossess the vehicle, and hold the consumer liable for the shortfall on the outstanding balance once it has been sold. In the case of vehicle repossession, there are two ways in which the Credit Provider can repossess a vehicle:

1) Litigation – to obtain a court order to repossess the consumer’s vehicle

The Credit Provider must send a Section 129 Notice to the consumer, prior to instituting legal action. Once a period of 10 days has lapsed, a summons will be served on the consumer, whereafter the consumer will be given the opportunity to defend the matter. If the consumer decides not to defend the matter, the Credit Provider is entitled to apply for default judgment against the consumer. In this instance, the court will then grant a court order which the Credit Provider can enforce to repossess the vehicle by means of a warrant of execution, enforced by the sheriff. Once the vehicle has been repossessed, the Credit Provider may auction off the vehicle.

2) Voluntary surrender in terms of Section 127 of the National Credit Act

A consumer can voluntary surrender the vehicle to the credit provider by giving written notice to terminate the credit agreement and thereby agrees to return the vehicle to the Credit Provider. The Credit Provider is then obligated to provide the consumer with a Section 127(2) notice to provide details of the value of the vehicle and estimated sale price. Once a period of 10 Days has lapsed the vehicle may be sold at auction. Once the vehicle has been sold, the Credit Provider is obligated to send a notice to the consumer in terms of Section 127(5) of the National Credit Act to notify the consumer that the vehicle has been sold, the nett proceeds of the sale and the remaining amount still to be settled.

The shortfall amount basically refers to the remaining obligation of the consumer to settle the outstanding balance with the Credit Provider, even though the consumer no longer has the vehicle in his possession. If the consumer fails to make payment of the shortfall amount, the Credit Provider is entitled to obtain default judgment against the consumer. Subsequently, the court will grant a court order in favour of the Credit Provider, who may then enforce it. This basically means that the Credit Provider may instruct the sheriff to attach your movable property and sell off same to settle the outstanding balance (Remaining Obligation).

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Access to his children – A father’s right

Section 28(1)(b) of the Constitution of the Republic of South Africa guarantees that :

“Every child has the right to family care or parental care, or to appropriate alternative care when removed from the family environment”.

The Children’s Act 38 of 2005 (herein referred to as the Children’s Act) has been promulgated to improve and define the rights of children in line with our country’s Constitution. According to Section 18(1) of the Children’s Act, ”A person may have either full or specific parental responsibilities and rights in respect of a child.

In legal terms, “full parental responsibilities and rights” refers to the responsibility and right to care for the child; to maintain contact with the child; to act as guardian of the child and to contribute to the maintenance of the child.

A father has the same rights and responsibilities as the biological mother of a child, provided that he is married or was married to the child’s mother, at the time of the child’s conception, or at the time of the child’s birth or anytime between the child’s conception and birth.

In instances where the father does not meet one of abovementioned requirements, Section 21 of the Children’s Act provides that: “The biological father of a child can also acquire full parental responsibilities and rights in respect of the child –

  • if at the time of the child’s birth he is living with the mother in a permanent life-partnership;
  • if he, regardless of whether he has lived or is living with the mother –
    • consents to be identified or successfully applies in terms of Section 26 to be identified as the child’s father or pays damages in terms of customary law.
    • contributes or has attempted in good faith to contribute to the child’s upbringing for a reasonable period; and
    • contributes or has attempted in good faith to contribute towards expenses in connection with the maintenance of the child for a reasonable period.

This basically means that the relationship status of the biological parents is of no relevance in instances where the parents have automatically acquired full parental rights and responsibilities in terms of the Children’s Act, as both parents are responsible for that child, unless a court orders otherwise.

In cases where a dispute arises between the biological parents, regarding the parental rights and responsibilities, the matter is referred for mediation, of which in most cases, is to a family advocate. The Family Advocate will evaluate the parties’ background and circumstances in light of the best interests of the child and will make a recommendation to the Court. The outcome of such mediation proceedings is not final and parties may still approach a court to enforce their rights or clarify their position.

It is evident that the new Children’s Act does indeed provide some protection and also secures the rights of fathers and children in a more adequate way as compared to the old dispensation. It is also important that both parents familiarise themselves with the basics, pertaining to rights and obligations, which could one day assist them, as the Children’s Act defines parental responsibilities and rights.

If you have any further queries, please do not hesitate to contact our family law department.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

General guidelines for the authentication of conveyancing documents signed outside of South Africa

It is not always possible for a client to sign their transfer and bond documents within South Africa.  Certain circumstances necessitate that a client sign documents outside our borders. Definitive rules have been formalised to ensure that documents signed overseas, can be used in South Africa. The country of signature will determine which rules / formalities must be followed.

According to Rule 63(1) of the UNIFORM RULES OF COURT (High Court Rules), the terms “document” and “authentication” are defined as being:

‘document’ means any deed, contract, power of attorney, affidavit or other writing, but does not include an affidavit or solemn or attested declaration purporting to have been made before an officer prescribed by section eight of the Justices of the Peace and Commissioners of Oaths Act, 1963 (Act 16 of 1963);

 ‘authentication’ means, when applied to a document, the verification of any signature thereon

Rule 68(2) specifies that any document executed in any place outside the Republic shall be deemed to be sufficiently authenticated for the purpose of use in the Republic, if it is duly authenticated at such foreign place by the signature and seal of office “of the said foreign place.

The official procedures can be summarised as falling into one of three categories:

  1. Notary Public – Rule 63 (2)(e):

Documents signed in the United Kingdom of Great Britain and Northern Ireland or in Zimbabwe, Lesotho, Botswana or Swaziland can be signed (authenticated) in front of a Notary Public;

  1. Countries not forming part of the Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (“Apostille Convention”)

Rule 63 of the UNIFORM RULES OF COURT (High Court Rules) will apply. The documents can be signed in front of

  • the head of the South African diplomatic or consular mission; or
  • a person in the administrative or professional division of the public service serving as a South African diplomatic, consular or trade office abroad; or
  • any Government authority of such country charged with the authentication of documents under the law of such country; or
  • the consul-general; consul; vice-consul or consular agent of the United Kingdom.

An example hereof would be, signing at the South African Embassy, in that foreign country.

  1. Countries which are parties to the Hague Convention:

Both countries need to be part of the Convention. The Convention aims to simplify the procedure for legalization of documents, to verify their authenticity, in order to be valid internationally.

The required documents must be:

  1. Signed by the signatories;
  2. Authenticated, by either placing an Apostille certificate on the document or attaching it thereto;
  3. The Apostille must be in the form prescribed form – as set out in the Convention and
  4. be issued and signed by, and bearing the seal of office of, the competent authority of that country.

Who the competent authority is will vary from country to country. A list of competent authorities for each country, can be found on https://www.hcch.net/en/instruments/specialised-sections/apostille  as well an example of the prescribed form of the Apostille. A full list of the participating countries can be found on https://www.hcch.net/en/states/hcch-members.

It is advised that the client obtain legal advice, when they require documents to be authenticated. This would avoid unnecessary delays in the conveyancing process, resigning of documents, and to ensure that all the required formalities are adhered to.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

New South African plug standard is mandatory

The South African Bureau of Standards recently, after much deliberation, amended the standard wiring code for the installation of new plug sockets in new buildings. These amendments have been formalised in the amended SANS 10142/1 – 2017 wiring of premises standards.

In terms of the amended wiring standards, which came into effect in January 2018, the old South African plug with the three prongs, known as the SANS164-1(the old plug), will gradually be phased out and replaced with the SANS164-2 (new plug) in all new installations for low voltage usage. This means that each plug point installed in a new building must have at least one socket that can accommodate the new plug.

The new plug has the same hexagonal profile as the Euro plugs on cell phone chargers, but it will include a third earth pin. The illustration below indicates how the new plug must look, setting out the old plug, Euro plug and new plug.

The reason for the change is the fact that the new plug is much safer than the old plug and it was intended to comply with a universal, international standard.  However, only South Africa and Brazil has opted to accept the new plug standard. South Africa will therefore again have a plug standard different to that of the rest of the world. However, the euro plug will be compatible with the new South African plug.

The SANS10142-1- 2017 amendment relating to the new SABS wiring standards states as follows:

“16.5 Outlets

Except where otherwise specified in this part of SANS10142-1 single phase socket outlets for general use (also 14.1.4) shall :

  1. a) be of the two- pole earthing contact type
  2. b) comply with SANS164-0
  3. c) effective from January 2018, all socket outlet points for new electrical installations must include at least one socket outlet complying with the dimensions of SANS164-2 (new plug).  Socket outlet points may also include socket outlets complying with the dimensions of SANS164-1 (old plug).

It is accordingly suggested that the socket as set out below, or a socket similar thereto be installed in new buildings:

Non-compliance with the new wiring code

We are of the opinion that non-compliance with the new wiring code constitutes a direct non-compliance with the Occupational Health and Safety Act (Act No. 85 of 1993) hereinafter referred to as the ÓHS Act. The OHS Act is administered by the Chief inspector of Occupational Health and Safety of Department of Labour, which requires that electrical installations comply with the requirements of SANS10142-1. It also requires that a registered person, as defined (master installation electrician, installation electrician or electrical tester for single phases), will issue a certificate of compliance (known as an electrical compliance certificate) together with a test report.  The certificate shall be in the form of the certificate of compliance published in the electrical installation regulations, 2012, and the test report shall be in the form of the test report in that part of SANS10142.

It is our view that new buildings erected after January 2018, as well as renovations and upgrades to buildings, must comply with the new standard and that the minimum requirements of the SANS10142 as set out above relating to the new plug must be adhered to.

Should the new standard not be adhered to an electrical compliance certificate cannot be issued. Non- compliance may also cause the local building inspector not to issue an occupation certificate for new buildings. By not being in possession of the aforesaid certificates the effect shall be that a new building can possibly not be sold or transferred into a new owners’ name unless compliance is reached.

For old building and existing sockets the new norm need not be complied with retrospectively and the new wiring code is only applicable with regards to new plugs and installations for new buildings and renovations from January 2018.

Non-compliance may have dire consequences on especially residential property developers.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Aspects to consider when buying a business or a company

There are many aspects to be considered when buying a particular business to ensure that you are making the correct (and hopefully profitable) decision.

In the commercial world transactions for the acquisition of a business takes the form of either a sale of business agreement or a sale of shares agreement.  The transactions are distinct from each other and have different legal consequences.

Purchasing a business means that you are acquiring ownership from an individual or a company of assets which generates an income as well as liabilities (debts) which were incurred in generating that income.  Generally, the seller will be liable for all debts of the business until take over by the purchaser.  The sale may also include aspects regarding contracts entered into with suppliers and customers, intellectual property rights (designs or trade marks), accounts receivable and cash in the bank.

Purchasing shares in a company means that you are acquiring ownership of a legal entity which has separate legal personality and which owns and operates a business (or several businesses).  The purchase of shares in a company will include all the debts incurred by the Company before the shares are transferred (i.e. suppliers, SARS, or third parties).  This is generally why purchasers usually insist on a proper due diligence investigation into the affairs of the company concerned.

A sale of business agreement may be more appropriate if there is uncertainty about undisclosed liabilities, if all shareholders of the company are unwilling to sell their shares, or if the company conducts more than one business.

A sale of shares agreement may be more appropriate if important agreements are entered into by the company (i.e. license or supply agreements) which are incapable of transfer, the shareholders of the company insist on selling their shares rather than selling the business out of the company, or tax considerations would be more favorable.

It is always advisable to obtain comprehensive legal and tax advice to avoid unforeseen and unwanted legal consequences after acquiring your business.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Protection of primary residence during the foreclosure process

The main purpose of the insertion of Rule 46A in the Rules of the High Court is to try and obtain a constitutional balance between the rights of execution creditors and judgment debtors, especially as access to housing is a fundamental human right entrenched in the South African constitution.

The insertion effective from 22 December 2017 has had the implication that the foreclosure process for execution creditors (credit providers) has become more intricate. This rule is applicable in instances where an execution creditor applies to Court for an order to sell the property at a sale in execution due to the judgment debtor’s mortgage bond account being in arrears.

The Court will assess all information in order to make an informed decision as to whether execution against the property is warranted, which includes the following :

  • Whether the property is the primary residence of the judgment debtor.
  • Whether the Application was served personally on the judgment debtor, unless the Court orders service in any other manner.
  • The execution creditor needs to provide the Court with the market value of the property, the local authority valuation, all amounts owing on the mortgage bonds registered over the property, all amounts owing to the local authority and to a body corporate or home owners association (if applicable).

A judgment debtor or any interested party on which the Application has to be served i.e. the municipality, body corporate, home owners association or tenant, is allowed to oppose the Application and to address the Court on relevant information that needs to be considered before a Court grants the order applied for by the execution creditor.

The Court has a discretion to order that the property be sold with a reserve price or without a reserve price.

A Court will not grant an order that the execution creditor may sell the property at a sale in execution if it is of the opinion that the debtor can satisfy the debt in an alternative manner.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Rates and taxes vs water and electricity

Did you know that there is a difference between rates and taxes charged on property and the utility you pay for water and electricity? Often these phrases are used interchangeably, and it is important for a property owner to know and understand the difference.

Rates and taxes are financial liabilities borne by the owners of immovable property which are paid on a monthly basis for basic services that are provided by the local municipality. These services include maintenance of roads, street lighting, storm drainage, sidewalks, refuse, sewerage, firefighting, etc. in other words, property rates help fund services that will improve the lives of those living in that particular community.

Property rates are based on the market value of the property as determined by a township appointed property valuer. Generally the higher the value of your property, the higher the rates you will pay.

Utilities such as water and electricity however, do not fall under property rates and are charged separately. They are based on the consumption of water and electricity, which data is collected from meter readings which should be conducted at regular intervals.

In terms of the Prescription Act read with various cases on the issue, it is trite (accepted) law in South Africa that rates and taxes charges prescribe after a period of 30 years; whereas water and electricity service charges prescribe after a period of 3 years.

In the Argent Industrial Investments v Ekurhuleni Metropolitan Municipality case, the High Court found that a consumer who receives a utility bill for electricity or water for any period older than 3 years cannot be held liable for payment of the amount once it has prescribed.

In conclusion the municipality has a duty to take reasonable steps to provide the homeowner with an accurate calculation of the utilities that it charges which are generated from meter readings that must be conducted on a regular basis– this duty exists for the benefit of both the consumer and municipality!

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Is a nude prohibition in a will enforceable?

THE LAST WILL AND TESTAMENT OF JOHN SMITH

I bequeath my farm to my son on condition that he will never be allowed to sell or encumber the farm.

This burdens the property with a condition that the heir can never sell the property. This bequest amounts to a nude prohibition or nudum praeceptum. It must be noted that such a provision cannot be registered against the property.

We often find provisions in wills that are not enforceable due to the nudum praeceptum principle. In order for the bequest to succeed the Testator should provide for a “gift-over” should the heir not adhere to the condition.

Several authors have commented on the nudum praeceptum principle:

  • Cameron, De Waal and Wunsh1;
  • Pace and van der Westhuizen2;
  • Olivier, Strydom and van den Berg3

All the authors indicate the need for the testator to include a “gift over” provision.

Accordingly, for the bequest as mentioned above to succeed, the Testator would have to include a “gift over” provision:

I bequeath my farm to my son on condition that he will never be allowed to sell or encumber the farm. Should he endeavour to sell or encumber the farm, it will devolve upon my daughter.

This transfer of ownership, should the heir act contrary to the condition imposed, is referred to as a “gift over”. A restriction on an heir who is the owner of a property does not bind the heir unless a gift over provision is included.

Pace and van der Westhuizen4:

“…Should the testator fail to appoint a further beneficiary on the condition being fulfilled, the resolutive condition is considered to be a nudum praeceptum and will be disregarded.”

The rule of nude prohibition is not itself a rule of construction but rather a rule imposed in the interests of the freedom of owners to deal with property as they choose.5 This does not mean that the bequest must be considered invalid but that the heir receives the inheritance free of the condition.

Olivier, Strydom and van den Berg6 succinctly summarises the nudum praeceptum principle:

“A testator who attempts to deprive his fully contractually competent legatee or heir of the right to control, or to dispose of the property bequeathed to him, by placing the property in the hands of an administrator, or by imposing a restriction on alienation, will not normally bind the beneficiary. Such restrictions are regarded as nude and not enforceable.

Such restrictions can be binding if provision is made for a successive beneficiary if the first taker should fail to abide by the imposed restrictions.”

It is clear from the above that all the authors indicate the need for the testator to include a “gift over” provision.

Some Testamentary Trusts created in wills can also be unenforceable if, for instance, the assets are bequeathed to children on condition that, should they be under the age of 25, the assets must be administered in Trust by trustees on their behalf. If there is no provision for a “gift over”, the children may, upon reaching majority, in terms of the nudum praeceptum principle, insist on receiving the inheritance, notwithstanding any other provisions in the will.

We are able to assist and ensure that your Will gives effect to your wishes.

Do not hesitate to contact us for expert advice.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

1 Cameron et al Honoré’s Law of trusts 154;
2  Pace and Van der Westhuizen Wills and trusts A55.
3 Olivier, Strydom and Van den Berg Trust law and practice 2-11.
4 Pace and Van der Westhuizen Wills and trusts A55.
5 Cameron et al Honoré’s Law of trusts 154;
6 Olivier, Strydom and Van den Berg Trust law and practice 2-11.

New owner not responsible for previous owner’s debt

The Application of Section 118(3) of the Municipal Systems Act by the municipalities had the implication that in some cases new owners had their electricity cut off, or have been unable to open a municipal account, because they have been held responsible for debts, sometimes adding up to hundreds of thousands of rands incurred by a previous or multiple previous owners.

Section 118(3) states that “An amount due for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties is a charge upon the property in connection with which the amount is owing and enjoys preference over any mortgage bond registered against the property”. Section 118(3) creates a charge over the property in favour of the municipality.

The days of uncertainty concerning the inheritance of historical debt from previous owners and the worry of municipal services being suspended are over following the Constitutional Court Judgement delivered on 29 August 2017 in Chantelle Jordaan and Others v City of Tshwane Metropolitan Municipality and Others.

In order to avoid unjustified arbitrariness in violation of Section 25(1) of the Bill of Rights which prohibits arbitrary deprivation of property which would happen if debts without historical limit are imposed on a new owner of municipal property, the Court held in an unanimous judgement that section 118(3) must be interpreted so that the charge it imposes does not survive transfer to a new owner.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Can a divorce order be refused?

Many victims of a divorce will tell you that divorce is a traumatic experience and one which, litigants finding themselves in such a position, want to finalize as quick as the initial marriage ceremony passed. A question which regularly surfaces during divorce consultations is whether a divorce order can be refused, either by the court hearing the divorce alternatively by the other spouse?

Section 3 of the Divorce Act 70 of 1979 (hereinafter referred to as “the Act”) provides that a court may grant a divorce order on the ground of irretrievable breakdown of a marriage if it is satisfied that the marriage relationship between the parties to the marriage has reached such a state of disintegration that there is no reasonable prospect of the restoration of a normal marriage relationship between them. Section 4(3) of the Act, however, reads that if it appears to the court that there is a reasonable possibility that the parties may become reconciled by way of marriage counselling, the court may postpone the proceedings in order that the parties may attempt reconciliation.

It is the word “may” in section 3 of the Act which caused uncertainty to whether a divorce order may be refused by a court hearing the divorce. There have been conflicting judgements delivered by our courts in this regard. In the case of Schwartz v Schwartz the court a quo (the court hearing the divorce) refused a divorce order and found that the parties’ marriage has not irretrievably broken down and that the parties should ‘try again’. As one can expect, the husband was not satisfied with the order of the court a quo and the matter was taken on appeal. The Supreme Court of Appeal [Schwartz v Schwartz 1984 (4) SA 467 (AD)] found that a court does not have the discretion to refuse a divorce order, subsequent to finding that a marriage has irretrievably broken down. The Judge argued that if it was the intention of the legislature to impose such a discretion on a court hearing the divorce, the legislature would have made provision for certain circumstances under which a divorce may be refused. The aforesaid principle was confirmed in the Supreme Court of Appeal judgment of Levy v Levy 1991 (2) SA 614 (AD).

There is, however, one exclusion to the general rule set out supra, which is contained in section 5A of the Act. In terms of the aforesaid section a court may refuse a civil divorce if it becomes clear to the court that one party to the divorce may not be able to remarry as a result of their religion which provides that such a marriage must be dissolved in a certain manner. Under these circumstances a court may refuse the civil divorce until the court is satisfied that the person whom has the power to dissolve the religious marriage, has taken all necessary steps to have such a marriage dissolved.

Section 5A of the Act was specifically promulgated to come to the assistance of spouses (mostly the wife) whom are married in terms of Jewish or Muslim religion and in which only the husband can agree to a divorce.

Lastly, the question of whether your spouse can refuse a divorce. The case law in this regard read that if one party refuses to uphold the status quo (being married), it is prima facie proof of the fact that the marriage has irretrievably broken down and consequently a court cannot under such circumstances refuse a divorce order.

For any divorce queries, do not hesitate to contact our offices on (012) 361 5001.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)