The Companies and Intellectual Property Commission (CIPC) is tasked with ensuring that companies comply with the provisions of the Companies Act.

In terms of Section 30 of the Companies Act, a company is required to prepare its annual financial statements within six months of the end of its financial year and file it with CIPC, where applicable.

The auditors of a company’s annual financial statements are required to submit reports of any irregularities, such as failure of a company to comply with the Section 30 requirements, to CIPC through the Independent Regulatory Board for Auditors (IRBA).

In three recent instances, Reportable Irregularity reports were received by CIPC who, in turn, issued Compliance Notices to the respective companies. In all instances, these notices were ignored.

The Companies Act further gives CIPC the power to levy administrative fines against companies for specific, continuous non-compliance with provisions of the Companies Act. Accordingly, CIPC’s Corporate Disclosure Regulation and Compliance Unit applied to Court for an order against each of the non-compliant companies for the payment of an administrative fine equal to 10% of the company’s turnover during the period which the company was non-compliant. These orders were subsequently granted.

This again shows that there are serious consequences for companies who do not comply with the provisions of the Companies Act, and fail to correct their behaviour.

Should you have any questions relating to the Companies Act or related legislation, please contact:

Henning Pieterse | Partner

E: h.pieterse@bissets.com

Areas of Expertise: Corporate & Commercial Law

Land reform is a topic which is legal, political and emotional in nature. It is a topic which is relevant to all South Africans – not only those who currently own land but also for those who are looking to own land in the future. Foreigners who currently own or who are considering purchasing land in South Africa may also be affected by the path chosen by the South African government in their objective of reforming ownership of land. This article will briefly illustrate the legal developments surrounding land reform in South Africa.

In 1996, a land reform policy was formulated and adopted after the apartheid government had systematically excluded the black majority from land ownership and security of tenure. Three pillars, namely redistribution, restitution and tenure reform, currently underpin South Africa’s land reform policy. Each addresses distinct issues faced by many South Africans, yet contains its own set of challenges and limitations. This has led to the introduction of two new pieces of proposed legislation.

The first piece of proposed legislation is the Regulations of Agricultural Land Holding Bill, which will only apply in respect of agricultural land. It seeks to establish a public register containing the information of all owners of agricultural land. In order for agricultural land to be transferred from one owner to another, notification will need to be lodged with a commission to be established and known as the “Land Commission”, before the transfer can be registered. The concept of ‘land ceilings’ will be introduced, which will limit how many hectares of agricultural land may be owned by an individual.

The Bill further seeks to control how foreign owners acquire and dispose of their agricultural land. Foreign owners will be required to give the Minister of Rural Development and Land Reform the right of first refusal. If the Minister declines to purchase the land the foreign owner may then transfer the land, but only to a South African citizen. Foreigners will no longer be able to acquire ownership over agricultural land but will be able to secure long leases.

The second piece of proposed legislation is the Expropriation Bill which, if and when accepted, will replace the current Expropriation Act which was promulgated in 1975. One of the controversial issues of expropriation concerns what is meant by compensation. The current Act states that expropriation may only be done for a public purpose and the meaning of compensation hinges on a willing-buyer-willing-seller model. The Bill seeks to bring the Act in line with the Constitution which states that expropriation may happen if it is in the public’s interest, which is a wider notion than for a public purpose. The Bill states that the meaning of compensation should be what is “just and equitable, reflecting an equitable balance between the public interest and the interests of the expropriated owner”. Arguments about expropriation without compensation and the amendment of the Constitution to allow for as much, have been considered by Parliament and have led to the creation of a Joint Constitutional Review Committee to examine the propositions.

What does this mean for current agricultural land owners and those looking to buy in the future? Despite the introduction of proposed legalisation the current legal landscape regarding agricultural land ownership remains largely unchanged. On 21 May 2018 the ANC National Executive Committee announced that it will not pursue amending the Constitution itself but will rather push forward with amending current legislation through the Expropriation Bill.

Neither of the Bills has been promulgated into law (become Acts), which only then will be binding on the public. It is not clear how long this will take and one cannot be certain as to how exactly the future legal landscape regarding land reform legislation will look like as provisions of the Bills may be added, amended or deleted.

Interested parties can help shape the future of land reform in South Africa as the public may voice their concerns regarding the proposed review of section 25 of the Constitution by delivering written submissions to the Joint Constitutional Review Committee before 15 June 2018.

You might, in future, find yourself in a situation where you will want to cancel a contract. This article sets out the requirements for cancelling a contract and gives basic guidance on what to do.

A contract can be cancelled by agreement between the parties or as a result of a material (serious) breach by one of the parties. Breach of contract is when one party refuses or fails to perform its obligations under a contract.

The law regards breach of a contract as a wrongful act in itself which allows the innocent party to cancel the contract. It is important to remember that cancelling a contract is only an option where there is a cancellation clause or where the breach of contract is material or serious. If the contract is silent on cancellation, the innocent party may still cancel the contract provided that the said breach is material or serious in nature.

When a person wants to cancel a contract, the cancelling party (innocent party) will have a choice to either cancel the contract or to enforce it. This article refers to the ‘innocent party’ and the ‘party in breach’. However, remember that fault it not a requirement for breach of contract.

The point of departure when cancelling a contract is to determine what the exact terms of the contract are, i.e. if the contract has a cancellation clause or not and whether there is a date of performance or not.

If the contract has a cancellation clause, the innocent party will be able to cancel the contract in the event of a breach of a term thereto. The innocent party must however take care not to cancel the contract incorrectly, otherwise the party in breach may interpret the cancellation as a repudiation of the contract, in which case the party in breach will also have the right to cancel the contract.

In the event where the contract does not have a cancellation clause, the innocent party will only be able to cancel the contract if the breach is material in nature. What constitutes a material breach depends on the terms of the contract. According to South African case law, a material breach is one which goes to the root of the contract and constitutes a breach of a vital term thereto.

Depending on the type of breach, the innocent party might have to give the party in breach notice. This will be the case where there is no date of performance specified in the contract. The innocent party must then demand performance by giving the party in breach reasonable notice to perform before he will be able to cancel the contract.

On the flip side, if a date of performance is specified in the contract, and a party does not perform in time and as stipulated, that party will be in breach, otherwise referred to as being in mora. It does however not automatically give rise to the right to cancel the contract. The only instance where there will be an automatic right to cancel a contract is if there is a cancellation clause or a suspensive condition in the contract.

A contract containing a suspensive condition will terminate automatically unless the suspensive condition is fulfilled or waived. If there is not a cancellation clause in the contract and no date of performance, the innocent party must give notice to the party in breach that time is of the essence and give him a reasonable time to perform.

In summary, the requirements for cancelling a contract vary according to the terms of the contract, the type of contract and the circumstances. There are no formalities for cancelling a contract unless the parties otherwise agree and/or a statute (i.e. Alienation of Land Act and the National Credit Act) prescribes such a cancellation.

Other requirements include that the innocent party must give reasonable notice to the party in breach that they are cancelling the contract, which cancellation becomes effective from the time the cancellation comes to the attention of the party in breach.

The consequences of cancelling a contract are that the obligations to perform terminate and the parties are obligated to return what has been performed. If both parties agree to the cancellation, the preferred route would be to enter into a cancellation agreement, setting out what needs to be returned, claims for damages etc.

Considering that each contract and circumstances differ and will be judged and interpreted accordingly, readers are advised to obtain legal advice before cancelling a contract.

For more information regarding contracts, please contact:

• “Contract: General Principles” by Van Der Merwe, Van Huyssteen, Reinecke & Lubbe 2004 (Juta Law)

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)

I have divorced my husband and I am now the primary caregiver of our minor child. I received a job offer in another country and I would really like to accept it. My ex-husband and father of my minor child won’t consent to the relocation of our minor child. Will I get permission from the court to relocate?

In the event that parents separate, the minor children will be placed in the primary care of one parent and the other parent will have rights and responsibilities in respect of the minor child but does not necessarily have to live with the child.

The issue that arises in situations as outlined above is where the primary caregiver wants to relocate to another country and the other parent won’t give consent (hereafter “the opposing party”).

In the case of relocation disputes where the primary caregiver wants to relocate, there are certain factors the court considers before granting the relocation, called the “best interests of the child standard”. These factors are listed in Section 7 of the Children’s Act and include:

• the nature of the personal relationship between the child and the parent (both primary caregiver and opposing party);
• the attitude of the parent (opposing party) towards the child and the exercise of parental responsibilities and rights in respect of the child;
• the capacity of the primary caregiver to provide for the needs of the child, including emotional and intellectual needs;
• the likely effect on the child of any change in the child’s circumstances, including the likely effect on the child of any separation from the other parent or any brother or sister or other child with whom the child has been living;
• the practical difficulty and expense of a child having contact with the other parent, and whether that difficulty or expense will substantially affect the child’s right to maintain personal relations and direct contact with that parent, on a regular basis;
• the child’s physical and emotional security and his or her intellectual, emotional, social and cultural development; and
• any disability that the child may have, or any chronic illness from which a child may suffer.

The difficult part of disputes relating to relocation is that there are numerous competing rights. The Children’s Act regulates and makes provision for those rights.

The rights in dispute would include:

• the primary caregiver’s right to freedom of movement and association;
• the right of the opposing parent to be in contact with the minor child; and
• the rights of the minor child, i.e. the right of the child to maintain personal relations and direct contact with both his or her parents.

Where the dispute cannot be resolved between the parties through negotiation, the parties would rather opt for mediation than litigation because of the nature of the dispute (a family matter involving a minor child). Litigation can be expensive, harsh and traumatic for everyone involved.

Where the court is tasked with making a ruling in a relocation dispute, the court will consider the following:

• the best interests of the child (factors contained in Section 7 of the Children’s Act);
• whether a court order prohibiting the removal of the child from the court’s jurisdiction exists, in the case that the parents are divorced;
• the opposing party’s right to contact with the minor child and the meaning of the word “contact” as used in the Children’s Act (including communications via laptop and/or cell phone);
• the reason for relocation (in the best interests of the child or not);
• the stability in the child’s life (is the child happy where he or she is now and does he or she have family members nearby they visit often); and
• the relationship the child has with his or her parents. If the opposing parent has a great relationship with the minor child and sees the child very often and will now only be able to email the child, the court will have to consider this and the possible influence the absence of the opposing party would have on the minor child, if relocation is granted.

The court will keep the best interest of the child in mind, whilst considering the abovementioned factors. The court in the A.C. v K.C. case also applied the “reasonable person’s test” and the court held that “one must think oneself into the shoes of the proverbial bonus paterfamilias or the reasonable man”. Even though the reasonable person test was used in A.C. v K.C., the best interest of the child is the most important factor.

Kobus Pieterse | Partner

E: k.pieterse@bissets.com

Areas of Expertise: Litigation | Family Law | Curatorship Applications

• Children’s Act 38 of 2005
• A.C. v K.C. (A 389/08) [2008] ZAGPHC 369
• Jackson v Jackson (18/2001) [2001] ZASCA 139

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)

You might, at some point in your life, have lent money to a friend, family member or business associate. It is also quite common for a business to obtain or grant loans in the course of its trade.

In South Africa, in terms of the Prescription Act of 1969 (the “Act”), a debt prescribes (falls away) after a period of three years, unless prescription is interrupted (something happens to stop it temporarily).

The Constitutional Court recently considered the matter of Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd where a company lent funds to another company on the condition that the loan would be repayable on demand.

In terms of a loan agreement entered into in 2007, Trinity and Grindstone agreed that Trinity would lend just over R3 million to Grindstone (the “loan”). In terms of the loan agreement, the loan would be due and payable to Trinity within thirty days of Trinity’s written demand for payment. About six years after the loan was advanced to Grindstone, Trinity demanded repayment of about R4.6 million (the capital amount plus interest). Grindstone denied that they owed Trinity anything.

In 2014 Trinity approached the Western Cape High Court, seeking the provisional liquidation of Grindstone on the basis that Grindstone was not able to repay the loan. Grindstone opposed the application. One of Grindstone’s defences was that the loan in question had prescribed. They argued that, in the absence of the contract providing otherwise, a loan that is “repayable on demand” will become due and payable immediately when the loan is given, and not specifically when demanded by the creditor. Since more than three years had passed after the loan was originally given, and Trinity had failed to take steps to recover the loan within those three years, the loan prescribed.

Trinity, on the other hand, argued that it was not the intention of the parties that the loan would immediately become due and repayable upon the advance of the loan.

The High Court agreed with Grindstone’s argument that the claim (loan amount) had prescribed.

Trinity took the matter on appeal to the Supreme Court of Appeal (SCA) and the SCA agreed with the High Court’s view on the basis that, on the reading of the contract, it did not appear that the parties intended to postpone the repayment of the loan, and accordingly the loan became payable the moment it was advanced to Grindstone.

Trinity took the matter before the Constitutional Court, where the majority held that in considering the wording of the contract, it did not reasonably appear that the parties intended to delay the repayment of the debt nor did the contract specify when the running of prescription would commence.

Accordingly, Trinity’s appeal was dismissed on the basis that prescription had begun to run on the initial advance of the loan and, by the time formal demand was made for repayment, the loan had prescribed.

The Constitutional Court’s ruling is important since similar clauses dealing with the repayment of a loan “on demand” are often found in loan agreements. Your money could be at risk if provision is not specifically made in the loan agreement for when prescription is deemed to start running, or when, specifically, the loan will become due and payable.

It is therefore important to ensure that your loan agreements, or any commercial agreements, are prepared by legal professionals.

Henning Pieterse | Partner

E: h.pieterse@bissets.com

Areas of Expertise: Corporate & Commercial Law

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)

From time to time a body corporate may be required to raise a special levy on its members.  Such a levy would be in addition to the normal monthly levies for which members are customarily responsible.  As the use of the word “special” suggests, these levies would be required to off-set unexpected but urgent expenditure which was not foreseen at the AGM of the Body Corporate and may include re-painting of the common property, repair to the lift or enhanced security.

Under the Sectional Titles Act of 1986 there was no provision whereby these special levies would be pro-rated between a seller and a purchaser of a unit.  In the absence of an agreement to apportion the special levy between the parties to a sale agreement the seller was liable for payment of the entire special levy.  This could be unfortunate for the seller where the special levy has been declared shortly before the sale, resulting in the seller paying for the additional amount when the purchaser would benefit from the improvement.

Happily the Sectional Titles Schemes Management Act, 2011 does shed some light on the issue.  Section 3(3) provides that where a body corporate has raised a special levy the levy can be recovered from the owners of units at the time the resolution to raise the special levy was taken. However, in the case of a change of ownership of a unit the successor in title becomes liable for pro rata payment of such special levy from the date of change of such ownership.  A case can therefore be made that a special levy be apportioned between the parties to a deed of alienation with effect from date of transfer. Nevertheless the parties to a deed of alienation could agree that one of them be exclusively liable for the full amount of the special levy.

Prospective purchasers should therefore always enquire from the seller, the estate agent or even the body corporate whether any special levies are payable and, if so, what amount is outstanding.  The amount could be considerable and have a very real impact on whether the purchaser can afford to purchase the unit.

What if a special levy has been raised and a seller fails to disclose this fact to the purchaser?  Would an uninformed purchaser who has not included such an amount in his estimate of costs for the purchase be able to cancel the contract?  It could be argued that based on the maxim caveat emptor (the buyer beware!) the purchaser should have made enquiry regarding the existence of a special levy or not.  The counter argument, especially where the purchaser is not represented by an attorney (as is most often the case), is that failure by the seller to disclose the existence of a special levy would constitute bad faith.  Were the special levy amount to be reasonably substantial, there may be grounds for an aggrieved purchaser to withdraw from the sale agreement.

For more information regarding property and sectional title schemes, please contact:

Robert Ferrandi  |  Managing Partner

E: r.ferrandi@bissets.com

Areas of Expertise: Property Law & Conveyancing

This article deals with the questions of who can institute litigation on behalf of a trust, as well as with the question of how jurisdiction is determined with regards to trusts.

Who can institute a claim?

A trust is not a legal person and cannot litigate in its own name. The trustees play a vital role in any litigation in which a trust might be involved. There are three overriding principles regarding trust administration:

1. The trustees are obliged to give effect to the provisions of the trust deed.
2. The trustees must perform their duties with the necessary “care, diligence and skill which can be expected of a person who manages the affairs of another”.
3. Any person acting as a trustee must exercise discretion, where allowed, with the necessary objectivity and independence.

Section 6(1) of the Trust Property Control Act (the Act) determines the following: “any person whose appointment as trustee in terms of a trust instrument, section 7 or a court order comes into force after the commencement of the Act, shall act in that capacity only if authorised in writing by the Master”. In Watt v Sea Plant Products Bpk, Judge Conradie interpreted this section to mean that a trustee may not, prior to authorisation, acquire rights for, or contractually incur liabilities on behalf of the trust”. Thus, a trustee can only contract and institute legal proceedings in his/her capacity as trustee once a letter of authority has been issued by the Master of the High Court.

In Nieuwoudt v Vrystaat Mielies (Edms) Bpk), an agreement was held to be invalid and unenforceable because the trustees had not acted jointly nor reached a unanimous decision. The conclusion to be drawn from this is that trustees must act jointly when entering into contracts or when instituting litigation.

A trustee has a duty to vindicate trust property and to collect due debts. This duty goes hand in hand with the duty to conserve trust property and ensures that the trustee is in control of the property which forms part of the trust fund. A trustee further has locus standi to defend actions instituted against the trustee to ensure that the trust property is conserved.

Should all the trustees be joined in an action to enforce a right of the trust?

Judge Cameron held in the Goolam Ally Family Trust case that all the trustees must be joined in suing and all must be sued. Therefore, all the trustees will be joined in their official capacity when instituting legal proceedings.

In Khabola NO v Ralithabo NO, the court quoted the general rule regarding locus standi as follows: Any person who has a direct or substantial interest in the matter has the required locus standi to institute legal proceedings. The learned judge found that the underlying contractual relationship between trustees could be equated to a partnership.

Jurisdiction:

For jurisdictional purposes, a partnership “resides” at the place where its principal place of business is situated, and if the principle set out in abovementioned case is followed – a trust also “resides” where its principal place of business is situated.

In Bonugli v The Standard Bank of South Africa Limited, the court referred to section 5 of the Act  which determines that a person whose appointment as trustee comes into effect after the commencement of this act, shall furnish the Master with an address for the service upon him of notices and process and shall, in case of change of address, within 14 days notify the Master by registered post of the new address. The cause of action arose in Johannesburg, and one of the defendants (a trustee in his representative capacity) was resident in Australia. The address which was used in the summons was the address given to the Master in terms of section 5 of the Act. A special plea with regards to lack of jurisdiction was raised, but the Cape Town High Court found that it had the necessary jurisdiction to hear the matter.

There are considerable differences between a partnership and a trust, but with regards to jurisdiction the general principles applicable to a partnership can also be applied to a trust – namely considerations of convenience and common sense for its conclusion to entertain a claim. The Cape Town High Court had jurisdiction to hear the Bonugli matter because the first defendant was resident within its jurisdiction, and because the address listed in terms of section 5 of the Act was within the jurisdiction. Considerations of common sense and convenience also required that the court should adjudicate the issue between the plaintiff and all the defendants.  It would have been impractical to institute a claim based on the same set of facts in two different courts, because the trustees were resident in different courts’ jurisdictions.

There remains some uncertainty regarding which court should have jurisdiction to hear a claim instituted by a trust or a claim against a trust. There appears to be three possibilities in this regard: Firstly, if the Bonugli judgment was followed, the residency of one trustee should be sufficient to establish jurisdiction. Secondly, the address provided in terms of Section 5 of the Act could be used to establish jurisdiction. Thirdly, the court where the trust’s principle place of business is situated could have jurisdiction. Hopefully the position regarding which court has jurisdiction to hear claims instituted by a trust or against a trust will be properly aired in the courts soon, to provide more certainty regarding this aspect.

Reference List:

Books:

• Lexisnexis Trust Law and Practice, P A Olivier, S Strydom, GPJ van den Berg, October 2017
• Civil Procedure: A Practical Guide, Petè, Hulme, Du Plessis, Palmer, Sibanda, Oxford University Press.

Acts:

• Trust Property Control Act 57 of 1988

Cases:

• Watt v Sea Plant Products Bpk (1998) 4 All SA 109 (C)
• Nieuwoudt v Vrystaat Mielies (Edms) Bpk)
• Goolam Ally Family Trust t/a Textile, Curtaining and Trimming v Textile, Curtaining and Trimming (Pty) Ltd 1989 (4) SA 985 (C) at 988D-E
• Khabola NO v Ralithabo NO (5512/2010) (2011) ZAFSHC 62 (24 March 2011)
• Bonugli v The Standard Bank of South Africa Limited 266/2011) (2012) ZASCA 48 (30 March 2012)

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)

Domestic partnerships, also known as cohabitation relationships, are becoming more common in our modern day society, and it therefore becomes ever more important for parties to understand the different legal implications of being married and merely cohabiting. Parties to a domestic partnership do not enjoy the same legal protection as married couples upon termination of the partnership with regards to maintenance claims, property division or succession.

In the South African legal system, there are three forms of fully legally recognised unions, namely marriages, civil unions and customary marriages. However, in our modern society it is becoming more common for couples to live together in domestic partnerships, without ever getting married. It is important for parties to these partnerships to realise that little to no legal protection is provided upon the termination of such a relationship, either by agreement or due to the death of either party.

The general rule for domestic partnerships was laid down in Butters v Mncora: A domestic partnership does not give rise to any special legal consequences, such as that of a marriage or a civil union.

In 2006, the South African Law Reform Commission acknowledged the need for legal protection to be granted and drafted the “Draft Domestic Partnership Bill.” Parliament has however shown no urgency to pass the Draft Bill, and the legal position in South Africa thus remains unchanged.

Maintenance claims

The Maintenance of Surviving Spouses Act entitles a surviving spouse of a marriage, and a surviving civil partner of a civil union, to institute a claim for maintenance against the estate of the deceased. This provides for a claim of any reasonable maintenance needs that they cannot provide for by their own means, until such time that they remarry or pass away.

Parties of a domestic partnership should note that this protection does not extend to domestic partnerships, and thus no such maintenance claim can be made. Should the Domestic Partnership Bill be enacted in the future, section 28 will offer such an opportunity to claim for maintenance. However, at this stage no such protection is afforded.

Property Division

Parties to a marriage have a choice of two matrimonial property regimes.  Simply put this is to be married either in community of property, or out of community of property. Each property system will have different consequences flowing from it either by law or contractually due to an Antenuptial contract. However, no property regimes exist for domestic partnerships, and thus no joint estate can exist as it would in a marriage.

The Supreme Court of Appeal has recently portrayed an increased willingness to extend contract-based legal protection to parties of a domestic partnerships. Contracts can be concluded by parties in domestic partnerships to govern aspects such as division of property upon termination of the partnership. Although these types of contracts are legally enforceable, they may give rise to potential problems. The contract may be concluded solely for the benefit of one of the parties, or circumstances may occur that the parties had not anticipated when the contract was drawn up. In practice however, it seldom happens that parties to a domestic partnership actually enter into a contract.  This may be due to a mutual decision, or due to the fact that parties did not foresee a need for such contract.

Intestate Succession

In terms of the Intestate Succession Act, a spouse of a marriage will inherit if the deceased spouse dies without making a will. This has been extended to include partners of a civil union and customary marriage. Provision for inheritance by a partner of a permanent same-sex partnership has also been made in terms of this Act. This has however not been extended to the termination of heterosexual domestic partnerships, and thus no claim can be made in terms of the Intestate Succession Act on the estate of a deceased partner of a domestic partnership.

Couples living together in cohabitation relationships do not have similar rights to institute claims against the other party upon termination as they would have in a marriage or civil union. This could leave financially dependent parties in unanticipated vulnerable positions. 

Reference List:

• Butters v Mncora 2012 (4) SA 1 (SCA).
• Barratt A “Private contract or automatic court discretion? Current trends in legal regulation of permanent life-partnerships” (2015) 26 Stellenbosch Law Review 110-131.
• Clark B “Families and domestic partnerships” (2002) 119 South African Law Journal 634-648.
• Intestate Succession Act 81 of 1987.
• Maintenance of Surviving Spouse Act 27 of 1990.
• Skeleton A (ed) Family Law in South Africa (2010), Cape Town: Oxford University Press.
• The Domestic Partnership bill in GG 30663 of 14-01-2008.

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)

With franchises becoming a common phenomenon worldwide and franchisors, traditionally, benefitting from a strong bargaining position when negotiating franchise agreements, regulation of the industry has become inevitable and has South Africa’s legislature initiated this regulation through the Consumer Protection Act No.68 of 2008 (“CPA”), which was signed into law on 24 April 2011.

The CPA has forcibly changed the way franchises operate, in that franchisees are deemed to be consumers in terms of the CPA and now have a whole variety of consumer rights. The CPA and its detailed regulations, regulate the whole franchising process, which includes the “franchisor-franchisee relationship” and more importantly, the franchise agreement itself, which must contain prescribed clauses and information in order to be CPA compliant.

A fundamental change affecting the franchise industry is that every franchise agreement must now contain a cancellation clause, failure of which the agreement may be declared void. In terms of section 7(2) of the CPA, a franschisee may cancel a franchise agreement, without costs or penalty, within 10 business days after signing such agreement. Under this provision, if the franchisee excercises his right to cancel the agreement, the franchisor has no remedy to recover from the franchisee any loss suffered as a result of the cancellation.

In addition to the aforesaid, a franchisor must provide a potential franchisee with a disclosure document, in terms of Regulation 3 of the CPA, at least 14 days before the franchisee signs the franchise agreement. This document is aimed at giving the franchisee all the information required in order to make an informed decision. The document must, as a minimum, contain the following:

• the number of individual outlets franchised by the franchisor;
• the growth of the franchisor’s turover, net profit and the number of individual outlets, if any, franchised by the franchisor for the financial year prior to the date on which the prospective franchisee receives a copy of the disclosure document;
• a statement confirming that there has been no significant or material changes in the company’s or franchisor’s financial position since the date of the last accounting officer, auditor’s certficate or certificate by a similar reviewer of the company or franchisor, that the company or franchisor has reasonable grounds to believe that it will be able to pay its debts as and when they fall due; and
• written projections of potential sales, income, gross or net profits or other financial projections for the franchised business.

Furthermore, the CPA governs the right of a franchisee to select suppliers in terms of section 13 of the CPA. The only platform in which the franchisor can now dictate supply are those goods which are branded or related to the branded products or franchise service.

The CPA also prohibits false or misleading representations concerning the performance, characteristics and benefits of the business, which is regarded as unfair, unreasonable and unjust contract terms. Franchise agreements must also contain provisions that prevent unreasonable fees, prices or other consideration and conduct that is not reasonably necessary for the protection of the legitimate business interests to the franchisor, franchisee or franschise system.

Sections 7 and 51 read together with Regulation 2 of the CPA, very specifically mark the parameters of clauses that must be included, as well as some that may not be included, in a franchise agreement.

Current and future franchise agreements will be largely impacted by the CPA and therefore business owners must acquaint themselves well with the ambit and workings of the CPA before entering into a franchise agreement. If you are a franchisee, it will benefit you greatly to make sure that you understand your rights and that you are not coerced into entering into a franchise agreement.

The practical effects of non-compliance with the CPA when negotiating and concluding franchise agreements have become apparent in rulings and findings by the National Consumer Tribunal, Consumer Court and National Consumer Commission, which do not tolerate any non-compliance with the strict provisions of the CPA. Readers are thus advised to obtain legal counsel before entering into a franchise agreement.

Reference List:

• Consumer Protection Act. No 68 of 2008
• Naudé T & Eiselen S, Commentary on the Consumer Protection Act, Juta, 2014

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)

The article gives a brief overview of what a notarial bond is, the requirements that need to be complied with to register a notarial bond and give tips regarding clauses that will prove to be useful in a notarial bond. It also deals with the situation where a debtor disposes of an asset listed in a notarial bond, contrary to the provisions thereof.

A very useful way of obtaining financing to start a new business, is to register a notarial bond over the movable property belonging to the business. For instance, notarial bonds are regularly utilised in transport companies – a notarial bond is registered over the vehicles forming the core of the business, but the vehicles do not need to be in the physical possession of the creditor, thus the business can fully operate.

What is a notarial bond?

A notarial bond is a general or special bond where the movable assets of a debtor are used as security for a debt. In terms of the notarial bond, the debtor undertakes to pay his debt towards the creditor, failing which the creditor will be entitled to sell these movable assets and to utilise the proceeds thereof to satisfy his claim against the debtor. There are 2 types of notarial bonds: 

• General notarial bond: all the movable assets on the debtor’s property serves as security for the debtor’s debt.
• Special notarial bond: specific movable assets identified in the bond will serve as security for the debt.

How does a notarial bond differ from a pledge?

A pledge requires the delivery of the movable asset pledged. A notarial bond does not require the delivery of the movable assets identified in the bond, but in terms of section 1(1) of the Security by Means of Movable Property Act 57 of 1993, the movable property listed in the notarial bond will be deemed to have been pledged to the creditor as effectually as if it had been delivered to the creditor. The fact that the creditor is deemed to be in possession of the property thus places him on equal footing with that of a pledgee. The creditor, upon registration of the notarial bond in the deeds registry, acquires a real right of security in the movable property specified in the bond.

Requirements:

1. Existence of a principal debt;
2. Assets which serve as security must be movable, including corporeal and incorporeal assets.

Corporeal assets include furniture, vehicles, the goods of a business, animals and the future offspring of animals and stock in trade.

Incorporeal assets include an unregistered long-term lease of immovable property, a short-term lease of immovable property, a liquor license, a water use license, site permit, shares in a company, goodwill of a business, book debts etc.

What if more than one creditor uses the same asset as security for their debt?

A bond which was registered first enjoys priority over a bond registered thereafter.

Important clause to insert in the bond:

To prevent the debtor from disposing of assets which serve as security in terms of the notarial bond, a clause should be inserted disallowing the debtor to sell, alienate, dispose of, transfer or permit the removal of the asset from the debtor’s place of residence or place where he carries on business, without the prior written consent of the creditor.

What happens if a debtor disposes of the asset identified in the notarial bond, contrary to the stipulations in the notarial bond?

The creditor will be able to apply for provisional sentence summons against the debtor, provided that the notarial deed meets the requirement of being a liquid document. A liquid document is a document which indicates, without having to consult extrinsic evidence, an acknowledgement of debt, of which the amount is easily determinable. A notarial bond will in general qualify as being a liquid document.

A creditor will also be able to claim back an asset which has been sold, contrary to the provisions of the notarial bond, to a bona fide third party, from such third party. The reason for that is the fact that a notarial bond, which has been registered in the Deeds Registry, creates a real right, which is a right that attaches to property, rather than a person.

It is not easy to obtain credit in the economic environment in which our country currently finds itself. However, there are ways to get your business off the ground and registering a notarial bond over the property of your business is a recognised method of securing your business’ debt. If notarial bonds can be utilised more frequently, it can help a lot of new businesses get the financing they need to buy equipment, vehicles and machinery necessary for the operation of the business.

Reference List:

• Explanatory Notes Part 1: Course in Notarial Practice, compiled by Gawie Le Roux, Erinda Frantzen and Ilse Pretorius
• The South African Notary, sixth edition, M J Lowe, M O Dale, A De Kock, S L Froneman, A J G Lang

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)

When deciding whether to become an Airbnb host, it’s important for you to understand how the laws work in your city.

According to Brett Herron, the mayoral committee member for transport and urban development at the City of Cape Town, different holiday accommodation land use types, such as B&Bs and guest houses, are regulated by the City’s zoning scheme, called the Development Management Scheme.

If referring to Cape Town, for instance, the city has a Guest Accommodation Policy that sets out the guidelines that have to be considered when applications are made to obtain the necessary planning permissions. According to the Policy, if you wanted to provide a self-catering, flexible accommodation option in line with current trends for transient guests, visitors and tourists, then these are the guidelines that should be followed:

Purpose

• A building or group of buildings consisting of separate accommodation units rented for residential purposes, each incorporating a kitchenette / full kitchen, but may also include an option of meals being provided communally to guests.
• May include communal areas for the exclusive use by lodgers / transient guests.

Scale

• Form and scale of development determined by development parameters of particular zone (i.e. floor space, building lines, height) and the site context.
• No general restriction on number of units, but must be locally appropriate in context of the building/site characteristics and surrounding area.
• Council may determine / restrict the number of units per development in cases and lay down conditions necessary to mitigate the impact thereof.

Location

• Not supported on a single residential zoned property, subject site must have suitable general residential, mixed use or commercial zoning.
• Locational criteria that should be considered, include:
  • proximity to public transport routes, commercial centres and tourist activities.
  • character of the surrounding area;
  • mixed use or commercial locations (including areas designated for high density development) are encouraged.

Conclusion

In many cities, you must register, get a permit, or obtain a licence before you can list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Local municipalities may also vary greatly in how they enforce these laws. However, it is not impossible to list your property on Airbnb, you just have to find out from the local municipality if you have the correct permissions and if the property has the correct zoning.

References:

Guest Accommodation Policy, the City of Cape Town, Department of Planning & Building Development Management.

“Regulating Airbnb in Cape Town”, Jan Vermeulen, MyBroadband. https://mybroadband.co.za/news/government/210884-regulating-airbnb-in-cape-town.html

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)

Over the past few months, we have seen videos being posted on social media of physical altercations, poor service delivery and racial slurs, but the victims of the videos and audible recordings are usually unaware that they are being recorded. The recordings are conducted without their permission and then shared. But is someone allowed to record you without being granted permission and the share those recordings?

Audio recording

Audio recording includes the recording of conversations conducted over the phone, recording someone speaking to a room full of people, and recording a direct conversation, without the other party’s permission. Recording without consent is against the law, unless

• You are party to the communication;
• You have written permission of one of the parties to the conversation;
• The recording is in connection with the carrying on of business.

Direct video recording

This is the recording of a person with whom you are having a face-to-face conversation. The video taping of someone without their consent is permissible because you are party to the conversation, much like audio recordings. Recording an altercation between you and someone else, or recording an altercation at an airport is legal due to where the conversation is occurring – a public place.

Section 4 of the Regulation of Interception of Communications and Provision of Communication-Related Information Act 70 of 2002 (RICA) defines that a person is party to the conversation if they are in audible presence of the conversation. If you are in an altercation in a vicinity where other people can hear you, they are permitted to film because they are party to the altercation, therefore in direct communication with you.

Indirect video recording

Indirect communication is a much wider category, which includes data, speech and moving images. Skype conversations, although they appear to be face-to-face, are included as indirect communication because it is communication through an online telecommunications service. Thus, you would need to either be one of the parties in the engagement, or have been given consent from one of the parties to record the video/messages.

When is it illegal?

• If the recording is through an interceptive method such as “bugging” or a “tapping” a device;
• Hiding to spy on one of the parties for recording purposes, due to the parties being unaware of your presence;
• When you are in no way party to the conversation. Being party to the conversation is if you are the sender, the recipient, or any person included in the communication.

Exception: RICA permits recordings carried out by law enforcement personnel in certain circumstances.

References:

Kevin Illes, A. (2017). Legal implications of secret recording. [online] Moneyweb. Available at: https://www.moneyweb.co.za/archive/legal-implications-of-secret-recording/ [Accessed 15 Jun. 2017].

Writer, S. and Writer, S. (2017). When you can – and can’t – legally record someone in South Africa. [online] Businesstech.co.za. Available at: https://businesstech.co.za/news/general/167107/__trashed-65/ [Accessed 15 Jun. 2017].

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)

Couples who are interested in an antenuptial contract often make the decision to get one before they are married. That is the ideal scenario. However, some couples may have already gotten married in community of property, and later decide to change to another form of marriage contract.

Can it be done?

The Matrimonial Property Act allows a husband and wife to apply jointly to court for leave to change the matrimonial property system which applies to their marriage.

• According to South African law, the parties who wish to become married out of community of property must enter into an antenuptial contract prior to the marriage ceremony being concluded.
• If they fail to do so then they are automatically married in community of property. Of course, many people are unaware of this provision and should be able to satisfy the court that it should change their matrimonial property system if it was their express intention that they intended to be married out of community of property.

What are the requirements?

In order for the parties to change their matrimonial property system, the act mentions the following requirements:

• There must be sound reasonsfor the proposed change.
• The Act requires that notice of the parties’ intention to change their matrimonial property regime must be given to the Registrar of Deeds, must be published in the Government Gazette and two local newspapers at least two weeks prior to the date on which the application will be heard and must be given by certified post to all the known creditors of the spouses.
• The court must be satisfied that no other person will be prejudicedby the proposed change. The court must be satisfied that the rights of creditors of the parties must be preserved in the proposed contract so the application must contain sufficient information about the parties’ assets and liabilities to enable the court to ascertain whether or not there are sound reasons for the proposed change and whether or not any particular person will be prejudiced by the change.

What is the downside?

The downside is that the application is expensive because you and your spouse have to apply to the High Court on notice to the Registrar of Deeds and all known creditors, to be granted leave to sign a Notarial Contract having the effect of a postnuptial contract. You must also have solid grounds for wanting to switch to an antenuptial contract. Therefore, it’s not something you can do on a whim.

References:

The Matrimonial Property Act 88 OF 1984

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)

Renting property in South Africa is a straightforward process. The country has a vast selection of rental accommodation including bachelor flats in apartment blocks, Victorian cottages, stand-alone houses with big gardens, and semi-detached units in modern townhouse complexes.

In South Africa, the right of a foreigner to purchase immovable property was restricted in the past by the Aliens Control Act. These restrictions were uplifted in 2003 by the new Immigration Act (“the Act”) which repealed the Aliens Control Act and many of its restrictive provisions and now clearly defines who a legal foreigner is and who is not. In short, a legal foreigner is a person in possession of a valid temporary residence permit or a permanent residence permit approved by the Department of Home Affairs.

The new Act makes provision for various temporary residence permits to be issued to foreigners, including amongst others:

In principle, a landlord or tenant can legitimately lease or sell immovable property to any person recognised under the Act as a legal foreigner.

That said, foreigners working in South Africa with a legal work permit, are not regarded as “non-residents” by the South African Reserve Bank. They are considered to be residents for the duration of the period of their work permit and are therefore not restricted to a loan of only 50% of the purchase price.

It is also important to take note that the Act criminalizes the letting or selling of immovable property to an illegal foreigner by making this transaction equivalent to the aiding and abetting of an illegal foreigner and is such an act classified as a criminal offence in terms of the Act.

In conclusion, a legal foreigner may let or buy immovable property in South Africa, provided that he is the holder of either a legal temporary residence permit or a permanent residence permit approved by the Department of Home Affairs. Ensure that you enquire from your potential tenant or purchaser whether they are legally present in South Africa and obtain the necessary proof from them before entering into any transaction with a foreigner. Also, take account of the restrictions on local financing, particularly where the procurement of financing is a condition precedent to the agreement.

References:

http://www.expatarrivals.com/south-africa/accommodation-in-south-africa
http://www.avidfirefly.co.za/00000/index.php?option=com_k2&view=item&id=92:can-i-lease-or-sell-my-house-to-a-foreigner?

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)