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Beware of non-compliance with the formalities for a valid Last Will

 

A Last Will may be defined as a document in which a person directs how their belongings should be distributed upon their death. An individual who drafts a Last Will (testator/testatrix) has by and large the freedom to choose what to include in their Will and the freedom to decide how and to who their assets should be distributed to (with some safeguards in place for maintenance claims of children and surviving spouses).

 

Legislation

 

The Wills Act 7 of 1953[1] is the statute regulating the process of execution of Wills and related matters and in order for a Will to be valid, the requirements and formalities stipulated in the Act must be complied with.

 

At the outset, the testator/testatrix must have the capacity to execute a Will. According to South African law, any person of age 16 (sixteen) and older has the capacity to make a Will provided he/she is capable of understanding the nature and effect thereof.[2]

 

Section 2(1) of the Wills Act[3] provides for the following statutory requirements and formalities to be complied with for a Will to be valid:

 

  • the Will must be reduced to writing (i.e. written by hand, typed or printed);
  • the Will must be signed at the end of it by the testator/testatrix personally, or in the case of disability by the making of a mark, or the Will must be signed by some other person in the presence and by the direction of the testator/testatrix;
  • the Will must be signed in the presence of two competent witnesses who can attest to the signature of the testator/testatrix, or the mark or signature of the other person signing on behalf of he testator/testatrix, in which case the mark or signature must be effected in the presence of two or more competent witnesses and a commissioner of oaths;
  • the two witnesses must sign anywhere on the last page of the Will, in the presence of the testator/testatrix, or of such person who signed the Will on the testator/testatrix’s behalf;
  • if the Will consists of more than one page, the testator/testatrix must initial each page except the page that she/he had signed with his/her signature (at the end) or by such other person anywhere on the page.

 

The requirements as set out above are peremptory and failure to comply with either one of the requirements will render the Will invalid.

 

There is, however, an exception to this rule, as Section 2(3)[4] of the Wills Act empowers the Court to order the Master to accept an otherwise invalid Will, if the Court is satisfied that the Will was intended by the Testator/Testatrix to be his/her Last Will. This enables the courts to ensure that justice prevails in cases of non-compliance with the prescribed formalities. However, it is important to emphasize that this should not be substituted with properly executing a Will in terms of the requirements set out in Section 2(1) of the Act as the matter must otherwise go to the Courts with added costs for the Estate.

 

The Courts’ approach

 

In the recent case of Dryden v Harrison and Others, Western Cape Division, Cape Town (11912/17),[5] the High Court was approached by the Applicant to order the Master of the High Court, in terms of Section 2(3) of the Wills Act, to accept an email as the Last Will and Testament of her deceased fiancé.

 

In 2006 the deceased had executed a proper Will, complying with all the Section 2 formalities, in which he bequeathed the whole residue of his estate to his then wife (whom he was divorced in 2011). In 2014, the deceased and the Applicant got engaged. The deceased, an accountant, after assisting the first respondent (his sister) with her mother-in law’s deceased estate, sent an email to his fiancé (Applicant) on 4 January 2016, under the subject line “Final Will.” The email read as follows:

 

 “Hi,

This serves as my final will and testament.

If I die, all my assets and investments go to Natasha Dryden. If Natasha’s death precedes mine, the entire estate goes in equal portions to my brother and sister or their children if their deaths proceed me.

My life policies must all g to Natasha.

Sean”

 

The deceased died in September 2016 and thereafter, the Deceased’s 2006 Will was submitted at the Master’s Office and was accepted as the deceased’s Last Will. The Master refused to accept the email as the deceased’s last Will, due to the email’s lack of requisite compliance with Section 2(1) of the Wills Act (not being signed and no witnesses having signed). Consequently, the Applicant approached the High Court for an order recognising the 2016 email as the true will, alternatively revoking the part of his 2006 Will leaving the estate to the deceased’s ex-wife.

 

On the facts, the Court accepted that the email was indeed drafted and sent by the deceased. The Court then turned to what became the central enquiry in terms of Section 2(3) of the Act – whether it was the deceased’s intention for the disputed Will to be his Last Will and Testament. Based on the deceased’s properly executed Will of 2006 (i.e. the deceased’s knowledge of the formalities), and on evidence finding the deceased to be a careful and meticulous person, who in fact created a to-do list where reference was made to the issue of the Will to be dealt with and further correspondence form a financial advisor casting doubts on the validity of the document, the Court found it unlikely that the deceased would have intended the disputed email to be his Last Will and Testament. The Court dismissed the application and held that the deceased’s email was “nothing more than an email in which he was assuring the Applicant that he will make her a beneficiary of his estate” but he never executed a Will to give effect to this.

The consequences

 

It is clear that the deceased intended for his fiancé to be a beneficiary of his estate, but because he never properly executed a Will to give effect to this, he forfeited his right to choose how his estate should be distributed. The consequences of non-compliance with Section 2(1) of the Wills Act were drastic in that the ex-wife inherited everything, and the fiancé was left with nothing. It is thus imperative for one to not just express their intentions, but to enclose them in a properly executed Will, complying with the requirements of the Wills Act, to ensure that one’s intentions are honoured after death. In this regard we can only encourage the public to seek the advice of an attorney.

 

Disclaimer: Although Hildebrand Attorneys is committed to furnishing reliable and accurate information, this article is intended as a general reference guide only and does not constitute legal advice. Hildebrand Attorneys cannot take any responsibility for the accuracy or currency of the information and if you require particular information you are advised to consult with the article’s author or a qualified legal authority. This article may not be reproduced without the express written permission of the author and Hildebrand Attorneys accepts no responsibility for any loss or damage that may be occasioned as a result of the reliance by any person on the information contained herein

 

 

Excerpt: The formalities for the execution of a valid Last Will are not mere guidelines and non-compliance will generally require a court application to show that the document in question intended to be the deceased’s last will and testament. Much heartache and substantial legal costs can be avoided if legal advice is obtained when drafting and executing a Last Will as the recent case of Dryden v Harrison and Others demonstrates.



[1] Wills Act 7 of 1953.

[2] Section 2 Act 7 of 1953.

[3] Section 2(1) Act 7 of 1953.

[4] Section 2(3) Act 7 of 1953.

[5] Dryden v Harrison and Others, Western Cape Division, Cape Town (11912/17).

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Last Will Formalities

Beware of non-compliance with the formalities for a valid Last Will

A Last Will may be defined as a document in which a person directs how their belongings should be distributed upon their death. An individual who drafts a Last Will (testator/testatrix) has by and large the freedom to choose what to include in their Will and the freedom to decide how and to who their assets should be distributed to (with some safeguards in place for maintenance claims of children and surviving spouses).

Legislation

 The Wills Act 7 of 1953[1] is the statute regulating the process of execution of Wills and related matters and in order for a Will to be valid, the requirements and formalities stipulated in the Act must be complied with.

At the outset, the testator/testatrix must have the capacity to execute a Will. According to South African law, any person of age 16 (sixteen) and older has the capacity to make a Will provided he/she is capable of understanding the nature and effect thereof.[2]

Section 2(1) of the Wills Act[3] provides for the following statutory requirements and formalities to be complied with for a Will to be valid:

  • the Will must be reduced to writing (i.e. written by hand, typed or printed);
  • the Will must be signed at the end of it by the testator/testatrix personally, or in the case of disability by the making of a mark, or the Will must be signed by some other person in the presence and by the direction of the testator/testatrix;
  • the Will must be signed in the presence of two competent witnesses who can attest to the signature of the testator/testatrix, or the mark or signature of the other person signing on behalf of he testator/testatrix, in which case the mark or signature must be effected in the presence of two or more competent witnesses and a commissioner of oaths;
  • the two witnesses must sign anywhere on the last page of the Will, in the presence of the testator/testatrix, or of such person who signed the Will on the testator/testatrix’s behalf;
  • if the Will consists of more than one page, the testator/testatrix must initial each page except the page that she/he had signed with his/her signature (at the end) or by such other person anywhere on the page.

The requirements as set out above are peremptory and failure to comply with either one of the requirements will render the Will invalid.

There is, however, an exception to this rule, as Section 2(3)[4] of the Wills Act empowers the Court to order the Master to accept an otherwise invalid Will, if the Court is satisfied that the Will was intended by the Testator/Testatrix to be his/her Last Will. This enables the courts to ensure that justice prevails in cases of non-compliance with the prescribed formalities. However, it is important to emphasize that this should not be substituted with properly executing a Will in terms of the requirements set out in Section 2(1) of the Act as the matter must otherwise go to the Courts with added costs for the Estate.

The Courts’ approach

 In the recent case of Dryden v Harrison and Others, Western Cape Division, Cape Town (11912/17),[5] the High Court was approached by the Applicant to order the Master of the High Court, in terms of Section 2(3) of the Wills Act, to accept an email as the Last Will and Testament of her deceased fiancé.

 In 2006 the deceased had executed a proper Will, complying with all the Section 2 formalities, in which he bequeathed the whole residue of his estate to his then wife (whom he was divorced in 2011). In 2014, the deceased and the Applicant got engaged. The deceased, an accountant, after assisting the first respondent (his sister) with her mother-in law’s deceased estate, sent an email to his fiancé (Applicant) on 4 January 2016, under the subject line “Final Will.” The email read as follows:

  “Hi,

This serves as my final will and testament.

If I die, all my assets and investments go to Natasha Dryden. If Natasha’s death precedes mine, the entire estate goes in equal portions to my brother and sister or their children if their deaths proceed me.

My life policies must all g to Natasha.

Sean”

The deceased died in September 2016 and thereafter, the Deceased’s 2006 Will was submitted at the Master’s Office and was accepted as the deceased’s Last Will. The Master refused to accept the email as the deceased’s last Will, due to the email’s lack of requisite compliance with Section 2(1) of the Wills Act (not being signed and no witnesses having signed). Consequently, the Applicant approached the High Court for an order recognising the 2016 email as the true will, alternatively revoking the part of his 2006 Will leaving the estate to the deceased’s ex-wife.

On the facts, the Court accepted that the email was indeed drafted and sent by the deceased. The Court then turned to what became the central enquiry in terms of Section 2(3) of the Act – whether it was the deceased’s intention for the disputed Will to be his Last Will and Testament. Based on the deceased’s properly executed Will of 2006 (i.e. the deceased’s knowledge of the formalities), and on evidence finding the deceased to be a careful and meticulous person, who in fact created a to-do list where reference was made to the issue of the Will to be dealt with and further correspondence form a financial advisor casting doubts on the validity of the document, the Court found it unlikely that the deceased would have intended the disputed email to be his Last Will and Testament. The Court dismissed the application and held that the deceased’s email was “nothing more than an email in which he was assuring the Applicant that he will make her a beneficiary of his estate” but he never executed a Will to give effect to this.

The consequences

It is clear that the deceased intended for his fiancé to be a beneficiary of his estate, but because he never properly executed a Will to give effect to this, he forfeited his right to choose how his estate should be distributed. The consequences of non-compliance with Section 2(1) of the Wills Act were drastic in that the ex-wife inherited everything, and the fiancé was left with nothing. It is thus imperative for one to not just express their intentions, but to enclose them in a properly executed Will, complying with the requirements of the Wills Act, to ensure that one’s intentions are honoured after death. In this regard we can only encourage the public to seek the advice of an attorney.

 

Disclaimer: Although Hildebrand Attorneys is committed to furnishing reliable and accurate information, this article is intended as a general reference guide only and does not constitute legal advice. Hildebrand Attorneys cannot take any responsibility for the accuracy or currency of the information and if you require particular information you are advised to consult with the article’s author or a qualified legal authority. This article may not be reproduced without the express written permission of the author and Hildebrand Attorneys accepts no responsibility for any loss or damage that may be occasioned as a result of the reliance by any person on the information contained herein

 

 Excerpt: The formalities for the execution of a valid Last Will are not mere guidelines and non-compliance will generally require a court application to show that the document in question intended to be the deceased’s last will and testament. Much heartache and substantial legal costs can be avoided if legal advice is obtained when drafting and executing a Last Will as the recent case of Dryden v Harrison and Others demonstrates.



[1] Wills Act 7 of 1953.

[2] Section 2 Act 7 of 1953.

[3] Section 2(1) Act 7 of 1953.

[4] Section 2(3) Act 7 of 1953.

[5] Dryden v Harrison and Others, Western Cape Division, Cape Town (11912/17).

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Online Fraud: Much greater vigilance required!

Online fraud is an increasingly prevalent scourge and consumers need to be much more vigilant in order to protect themselves against the perpetrators. Many of us are confronted on a daily basis with for example:

  • Unsolicited emails offering loan finance at unbelievable low rates without any affordability checks [here the fraudster attempts to obtain bank account details or more likely payment of a facilitation fee in advance, after which the loan never materialises];
  • Unsolicited emails requesting the consumer to assist with a payment of an inheritance or other million-dollar payments where the fraudster claims to require a bank account to process the payment and promises a share in the proceeds (“the so called “419 scams”, which can usually be recognised by poor spelling and foreign legal terminology – related to these are the scams where the fraudster claims that there is an heir sharing your surname and pretends to be an attorney wanting you to receive the supposed inheritance and asking for your personal details and fees);
  • Emails from supposed suppliers, revenue authorities such as SARS and banks attaching an invoice for payment or proof of payment or a statement [here the aim is for you to open the attachment and then click on a link which will install malware on your electronic device, thus allowing the fraudster access to your files and information].

 

Whilst the first two examples are generally easily identifiable, the other emails require a greater degree of circumspection and the consumer should carefully look at the email address and, if unknown or ending in domain names other than for example .co.za in South Africa or not corresponding to the name of the email in any form, these emails should generally be discarded and marked as junk/spam immediately. For firms it is of utmost importance that all staff know not to open the attachments from these types of emails, which are often .zip files. Since you would normally know from whom to expect an invoice or proof of payment, the first step is thus to examine the email address and compare it to the emails previously received.

 

Another type of fraud which we have witnessed with clients more recently and which can cause huge damage is a scam where:

  • an imposter claims to represent a supplier, having manipulated a genuine invoice/statement from a supplier and simply having changed the banking details thereon. The fraudster is able to obtain confidential information from a supplier, then creates a similar email address and persuades the client to transfer the payment to the “new account”. This scam requires the fraudster to identify a transaction in advance (e.g. in a building project or a property transfer) and then prior to a payment having to be made the fraudster convinces the payee to update the banking details of the supplier or property seller as the case may be. In order to appear legitimate, the fraudster obtains the required info from the supplier and then manipulates the invoice and creates letterheads and bank confirmation letters as supposed validation. Often emails are followed up with telephone calls to put the payee at ease that the change request is legitimate. The account into which payment is then made,is usually that of a person without financial means who is instructed to open an account as the fraudster is allegedly not able to do so for some administrative reason. In return, the account holder is offered a commission for allowing the fraudster to use the account. Once payment is made, the account is cleared immediately and the fraudster obtains the funds from the account holder. In some instances, the “mule” is arrested who opened the account but the money is gone and there is no trace of the fraudster.

 

  • the fraudster obtains your bank account details and a copy of your identification document and then creates a payment instruction to your bank. The bank, acting on the instruction, phones the number provided to confirm the transfer and pays out. The phone number is generally a new number but the bank does not check the number. The email address can be similar to your email address or appear the same when reading the email.

 

The above scams can lead to substantial funds becoming lost. Whilst the banks may be liable at least in part if one can show that a legal duty rested on them to prevent the perpetration of the fraud, in certain cases, litigation is costly and generally uncertain. The following measures should thus be implemented to lessen the risk of falling victim to such type of fraud:

 

  1. Never process a change of bank account request without verifying with the contact person known to you at the supplier or payment recipient that the bank account has been changed, ideally telephonically. In the case of doubt, also check with the bank. Please note that no business will lightly change its bank account and would normally correspond with you timeously and on several occasions beforehand;
  2. Always send proof of payments to the contact person you have been dealing with in the past, as well as other authorised persons in your company, so that immediate action can be taken if the bank account details or the payment requisition are incorrect;
  3. Ensure that your electronic devices have updated anti-virus and anti-malware software which can limit the risk of your confidential information and documents from being accessed;
  4. Ensure that you know if you have given your bank authorisation to effect electronic or telephonic payment requests and obtain confirmation of the security checks in place and your personal information which the bank has on file (in this way, the bank is strictly speaking not allowed to confirm a transaction with a phone number or email address not listed with them).

 

Disclaimer: Although Hildebrand Attorneys is committed to furnishing reliable and accurate information, this article is intended as a general reference guide only and does not constitute legal advice. Hildebrand Attorneys cannot take any responsibility for the accuracy or currency of the information and if you require particular information you are advised to consult with the article’s author or a qualified legal authority. This article may not be reproduced without the express written permission of the author and Hildebrand Attorneys accepts no responsibility for any loss or damage that may be occasioned as a result of the reliance by any person on the information contained herein

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Urlaubsmitteilung

Liebe Mandanten,

manche von Ihnen werden sich bereits seit ein bis zwei Wochen im Urlaub befinden, während andere vielleicht noch die Tage bis dahin zählen – und auch an die weniger Glücklichen, die in keine dieser Kategorien fallen, ist dieses Schreiben gerichtet. Wir von Hildebrand Attorneys gehören zur zweiten Kategorie und möchten Sie auf unsere Öffnungszeiten anlässlich der Feiertage hinweisen und gleichzeitig die Gelegenheit nutzen, Sie über wichtige Entwicklungen in unserer Kanzlei zu informieren.

Die Urlaubszeit ermöglicht es einem oft, über unerledigte Angelegenheiten nachzudenken, sei es eine Erneuerung des Testaments (wir brauchen nicht zu betonen, dass jeder ein gültiges Testament haben sollte um dadurch potenzielle Fallstricke zu vermeiden) oder Überprüfung der Versicherung, so dass Sie im Schadensfall adäquat versichert sind.

Sollten Sie 2017 vor besonderen finanziellen oder andersweitigen Herausforderungen stehen oder einfach nur größere Planungssicherheit im Alltag erzielen wollen, so bietet es sich an, nachzudenken, wo man das größte Konfliktpotenzial vermeiden kann. Aus juristischer Sicht  besteht die naheliegenste Lösung darin, die wichtigsten Lebensbereiche, sofern möglich, vertraglich abzusichern (zum Beispiel, um nur einige zu nennen: einen Arbeitsvertrag, wenn  Sie sich in einem Angestelltenverhältnis befinden; einen Gesellschaftsvertrag, wenn Sie an einem Unternehmen beteiligt sind; einen Lieferantenvertrag, wenn Sie eine wichtige Beziehung zu einem bestimmten Lieferanten haben, wo es nötig ist, dass eine genügend  langfristige Kündigungszeit festgelegt ist, einen Bauvertrag, wenn Sie wichtige Verbesserungen oder Änderungen an Ihrem Eigentum vornehmen wollen). Hierdurch können Sie unglaublich viel Geld und Zeit einsparen, da es auf lange Sicht immer zu Situationen kommen kann, wo Unstimmigkeiten über das Vereinbarte auftreten. Sie sollten außerdem sicherstellen, dass Ihre persönlichen und geschäftlichen Dokumente vernünftig organisiert und gesichert sind: Erstellen Sie Dateien mit allen wichtigen Dokumenten (Testament, Versicherungspolicen, Einzelverträge, Geburtsurkunden, Eheverträge, usw.) und Anweisungen mit weiteren Informationen für den Fall, dass jemand einmal in ihrem Namen handeln muss, sollte Sie diesbezüglich verhindert sein. Stellen Sie zudem sicher, dass Sie von allen Dokumenten elektronische Kopien haben für den Fall, dass die Originale verloren gehen oder zerstört oder gestohlen werden.

Zu unseren Öffnungszeiten: Hildebrand Attorneys wird vom 23. Dezember 2016 bis zum 03. Januar 2015 geschlossen sein.

Wir haben inzwischen eine Facebook Seite eingerichtet, abrufbar unter https://www.facebook.com/Hildebrand-Attorneys-1667591370217904. Anfang des Jahres werden zudem ein bis zwei neue Referendare zu unserem Team dazustoßen.

Christmas Greeting
Wir wünschen Ihnen angenehme Feiertage, eine verdiente Pause und, das Wichtigste, eine besinnliche Zeit mit den Menschen, die Ihnen nahestehen.

staff photo 2016

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Feastive Season Greeting, Holiday Advice and Closure Notice

Dear Client,

 

Some of you have already embarked on your holidays for a week or two whilst others may be counting the days until the start of their break – and for the less fortunate who fall in neither category, this letter will nonetheless also be of value to you. We at Hildebrand Attorneys fall in the second category and would like to advise you of our opening times until close of the office during the public holidays and use this opportunity to update you on some important developments within our firm.

 

The holiday season often allows you to reflect on some unfinished business, whether it is updating your Last Will and Testament (we need not emphasize that every person should have a valid Will drawn up as it can avoid many potential pitfalls) or reviewing your insurance policy to ensure that you are adequately insured in the event of a loss.

 

As you contemplate the challenges and opportunities ahead in 2017, you should also be looking at budgeting for the likely expenses to be incurred and required cash flow. The best way to limit your risk exposure from a legal point of view is to have the necessary contracts in place that govern your important areas of life (e.g. just to name a few: an employment contract if you are a salaried employee; a shareholder agreement if you are a co-owner of a business, a supplier agreement if you have an important relationship with a specific supplier that requires you to secure a commitment for a certain period, a building contract if you plan to make important improvements or alterations). This can save you an incredible amount of money in the long term should ever a situation arise where there is disagreement about what has been agreed. Also ensure that your personal and business documents are properly organised and secure: create a file with all the important documents (Last Will, insurance policies, investment statements, specific contracts, birth certificates, antenuptial contract, etc.) and instructions with relevant further information should the need arise for someone having to attend to your affairs in the event of your disposition. Also ensure that you have an electronic copy of these documents if ever the originals get lost, damaged or stolen.

 

Our closing times: Hildebrand Attorneys will be closed from the 23rd December 2016 until the 3rd January 2017.

Christmas Greeting

We wish you a wonderful festive season, a well-deserved break, and most importantly, quality time with your loved ones.

staff photo 2016

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Cohabitation: The Perils and Pitfalls

The term “Cohabitation” or entering into a domestic partnership refers to the living arrangements of partners who are unmarried, who live together in one household in an emotionally intimate relationship which is intended to be permanent. People may live together for a number of reasons; it could be financial, where money saving is the motive; it could also be for convenience. Critically though, cohabitation, which is sometimes called a “de facto marriage” or “common law marriage”, is becoming more and more of a substitute for a conventional marriage.

 

Illustration

 

John and Jane have been living together for a few years. “Why get married when we are already in a normal, loving relationship? In any case, we are as good as married.” This illustration seems to show that in respect of costs and convenience, cohabitation is better than marriage. This is not necessarily true from a legal point of view.

 

A recent Case . . .

 

The Supreme Court of Appeal in McDonald v Young 2012 (3) SA 1 (SCA) ruled that those who live together, without a marriage and written contract cannot rely on the duties and rights of a married couple in the event of a dispute. While legally, cohabitants do not have the same rights as partners in a marriage or a civil union, the South African courts have on occasion come to the assistance of couples by deciding that an express or implied universal partnership exists between them.

 

Legal Position in South Africa

 

The legal position in South Africa in respect of cohabitation is that there is indeed no legislative protection available to parties in a cohabitant household. The Domestic Partnership Bill 2008 is still only in draft form. The abovementioned illustration of John and Jane has a fundamental caveat: persons living together do not have the same rights as married persons. Cohabitation is not recognized as a legal relationship in South African law. There is, therefore, no law that regulates the rights of parties in a cohabitation relationship. This is irrespective of the length of time a cohabitant couple has been living together.

 

Legislation

 

While marriage offers specific laws that will regulate the relationships, cohabitation offers none of the sort. Cohabitants are unable to rely on inheritance laws in terms of the Intestate Succession Act if a cohabitant dies without leaving a Will. Furthermore, they are unable to rely on the Maintenance of Surviving Spouses Act to secure maintenance on the death of a partner. In addition to this, South African banks do not allow for the opening of joint bank accounts.

 

 

Possible Remedies?

 

This however, does not mean that persons who choose not to get married are without remedy. There are options available to protect the rights of the cohabitants and determine the consequences if the relationship comes to a halt. In cases where the relationship breaks down and the parties had decided to pool their resources for the achievement of a common purpose, the court may award a share of the assets acquired during the relationship to each party if the existence of a universal partnership can be proved.[1] In such instance, certain requirements must be satisfied:

 

  • Each party must contribute to the enterprise of the household;
  • The partnership must benefit each party;
  • The aim of the partnership must be to make a profit and there must be a legitimate purpose.[2]

 

 

Conclusion – A Trend Beats the Caution?

 

Cohabitation in South Africa has become more common over the past 10 years and since then, the number of cohabitants increases by almost 100 per cent each year.

 

Cohabitating partners can also choose to have a cohabitation agreement executed in which their respective rights and obligations are stipulated. This allows for upfront discussion of concerns and issues and provides valuable certainty with regard to the consequences of the relationship. However, the document is not binding on third parties and if the relationship does not work out, a division of these joint households will often require expensive litigation, depending on how well the agreements have been drafted.

By Mokgatle R Mokgatle


[1] Ponelat v Schrepfer 2012 (1) SA 206 (SCA)

[2] Pezzuto v Dreyer and Others 1992 (3) SA 379 (A)

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New Bill Prohibiting Foreign Land Ownership In South Africa

Legislation

On 12 February 2015, while delivering his State of the Nation address, Jacob Zuma, the President of the Republic of South Africa declared that land ownership by foreigners will be prohibited. As it stands, just under 8% of land in South Africa is owned by foreigners. This piece of Legislation in its draft form, known as the Regulation of Land Holdings Bill will be submitted to Parliament during the course of 2015[1].

In addition, the Bill sets a ceiling of land ownership that restricts the amount of land that any individual — regardless of nationality — can own to 12,000 hectares. Here, if an individual owns land in excess of 12,000 hectares, the government will purchase and redistribute such land.

There is no White Paper yet on this legislation as the bill has not yet been sent to cabinet for approval and only after this step will there be a process of public consultation.

 

Remarks of South African President

South Africa tightened rules over foreign ownership of its agricultural land amidst concerns that it is losing control of its own food security, slashing the amount beyond which land purchases would require regulatory approval.

“Foreigners will not be allowed to own land in South Africa,” President Jacob Zuma stated. He said they would instead be eligible for long-term leases.

The Presidency said the new Bill will address the problem where highly valued agricultural land has instead been used for luxury and leisure facilities, while environmentally-sensitive land has also been inappropriately developed.

 

Limitation

Under the proposed Bill, “foreign nationals and juristic persons […] as well as juristic persons whose dominant shareholder or controller is a foreign controlled enterprise, entity or interest” will be prohibited from owning agricultural land land and instead only eligible to lease land for periods of between 30 to 50 years. Ownership of residential, commercial and industrial property is not restricted in the Bill.

 

Aims

The aim here is to address injustices of the past by allowing local empowerment and ownership. Furthermore, the new Bill aims to redress the problem of “land injustice of more than 300 years of colonialism and apartheid”[2]

According to the Presidency, the problems that this policy seeks to address include[3]:

1. The need to secure our limited land for food security and address the land injustice of more than 300 years of colonialism and apartheid.

45% of the population (23 million South Africans) live on or below the poverty line. 58% of these poverty stricken people live in    rural areas. Access to a land allotment for households and rural entrepreneurs and enterprises has shown to go a long way in addressing equity and poverty (two parts of the country’s “triple challenges”).

2. Furthermore, in many instances high value agricultural land has had its use changed to luxury and leisure uses and environmentally sensitive lands have also been inappropriately developed;

3. In some parts of the country escalations in prices have been experienced which have made land in these areas inaccessible to citizens;

4. The proposed policy makes provisions for exemptions to access lands in classified areas based on certain conditions, primarily developmental.

 

Initial Response

South African Property Owners Association (SAPOA) are of the opinion that such a Bill will reduce foreign investor confidence in South Africa. This means that there will be a knock-on effect on the South African economy.  General remarks also state that such land reforms will be negative as the policy is discriminatory and will most likely impede foreign direct investment and job creation.

Dr Andrew Golding, chief executive of the Pam Golding Property group, says every time this issue rears its head, it further serves to erode confidence in the country as an investment destination[4] – mainly as a consequence of issues of uncertainty.

 

What to Expect

If this Bill is passed, foreigners may only own land in a business capacity, if the dominant shareholder of an enterprise is controlled from abroad. Furthermore, the Right of First Refusal will apply in favour of another South African citizen in freehold or the State if the land is deemed strategic.

The Bill is not likely to have a retrospective effect so the consequence will either be a run on South African properties before the restrictions are implemented or a disinvestment by foreigners who feel that property prices will decline. The further development of this Legislation is sure to attract much interest and debate. Hildebrand Attorneys specialises in property law amongst others and we suggest you contact us should you require more information.

 

Disclaimer: Although Hildebrand Attorneys is committed to furnishing reliable and accurate information, this article is intended as a general reference guide only and does not constitute legal advice. Hildebrand Attorneys cannot take any responsibility for the accuracy or currency of the information and if you require particular information you are advised to consult with the article’s author or a qualified legal authority. This article may not be reproduced without the express written permission of the author and Hildebrand Attorneys accepts no responsibility for any loss or damage that may be occasioned as a result of the reliance by any person on the information contained herein

 

This article was written by Mokgatle R. Mokgatle, of Hildebrand Attorneys


[1] The Presidency, Publications & Documents, Pretoria

[2] Farrell. G, South African People, News & Views, 2015

[3] The Presidency, Publications & Documents, Pretoria

[4] Limiting foreign ownership of land in SA, Market News, 2015

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Why purchasers should not shy away from the costs of hiring an expert to inspect the property to be acquired

In the recent case of Banda v van der Spuy 2011 JDR 1272 (GSJ), the court was presented with an all too familiar set of facts pertaining to the acquisition of a residential property. The property had a thatch roof which had previously suffered a leak and at the time of concluding the sale agreement, the purchasers failed to conduct an inspection by an expert after noticing certain repair works and instead relied on a statement made by the sellers that they would ensure that the guarantee for the contract work done to the thatch roof in respect of the previous leak would be passed over to them. The sale agreement contained a voetstoots clause which protected the sellers from any claims for latent defects (save for instances where the sellers new of those defects) and after the transfer of the property when the next rain came, the leak resurfaced and the purchasers discovered to their horror that there were in fact structural problems with the thatch roof which required significant costs to remedy. In addition, they had never called for the guarantee and drink show have we given a one-liner from the previous contractor in terms of which the guarantee had already expired and excluded wind and rain damage.

The purchasers then tried to hold the sellers liable on the basis of their alleged knowledge of the defects, alternatively on the basis of their fraudulent/negligent misrepresentation that a guarantee with regard to the structural soundness of the thatch roof was in place and that the defects had been rectified, which allegedly induce them to enter into the contract.

The purchasers failed on both claims as they could not prove on a balance of probabilities that the sellers had knowledge of the defects at the time of concluding the sale agreement (here they relied on the previous contractor, proved to be an unreliable witness) nor that they suffered the damages claimed as a direct result of the fraudulent misrepresentation (the judge did find that fraudulent misrepresentation occurred) inasmuch as they had never called for the guarantee prior to transfer which guarantee did not cover structural work pertaining to the roof. The difficulties in succeeding with such a claim for summarised by the judge as follows:

it is a trite legal principle that absent proof of designed or active concealment of the defects, the voetstoots clause would exclude liability for any latent defects such as those that exist in the present case (see Van der Merwe v Meads, supra, and cases there cited, especially Knight v Trollip, Forsdick v Young and Glastenhouse (Pty) Limited v Inag). I have already found that the defendants as a probability were not aware that the thatch roof suffered from a fundamental structural defect relating to the pitch of the roof and therefore could not have known or foreseen that an inspection of the roof by an expert might lead to the disclosure of the latent defects. The defendants could not have made the misrepresentations relating to the guarantee with the intention of designedly or craftily concealing or preventing the plaintiffs from discovering the existence of the latent defects. The defendants are thus entitled to rely upon the voetstoots clause in order to resist the plaintiffs’ claims”.

 

We therefore urge clients to consider the relatively minor costs of obtaining expert advice when negotiating a sale agreement and to seek the advice of an attorney when formulating the relevant clauses in the sale agreement providing for an inspection by an expert to verify certain facts regard to the property.

 

Disclaimer: Although Hildebrand Attorneys is committed to furnishing reliable and accurate information, this article is intended as a general reference guide only and does not constitute legal advice. Hildebrand Attorneys cannot take any responsibility for the accuracy or currency of the information and if you require particular information you are advised to consult with the article’s author or a qualified legal authority. This article may not be reproduced without the express written permission of the author and Hildebrand Attorneys accept no responsibility for any loss or damage that may be occasioned as a result of the reliance by any person on the information contained herein

 

 

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Security for costs when instituting proceedings in a South African court

In terms of South African common law, a plaintiff who is not resident within the court’s jurisdiction (a “peregrinus”) may be required in the case of a foreign plaintiff, to furnish security for the costs of the local defendant or respondent in opposing the proceedings (also in respect of claims in reconvention or counter-application). This rule is aimed at protecting the South African party from having to recover costs orders it may be granted in the proceedings against the foreign plaintiff abroad. A foreign natural person is generally not required to furnish security were such person has unencumbered immovable property within South Africa.

 

Factors such as hardship to the peregrinus and its financial ability to provide security, the particular circumstances of the case and considerations of equity and fairness to both parties are taken into account by a court in exercising its discretion whether to grant an order for security.

 

Similarly, an insolvent (where the action is vexatious or reckless) or any other person (where the action is considered vexatious) and Close Corporations (in terms of Section 8 of the Close Corporations Act if it appears that there is reason to believe that the corporation or, if it is being wound up, the liquidator thereof, will be unable to pay the costs of the defendant or respondent, or the defendant or respondent in reconvention, if the latter is successful in its defence) can be called upon to furnish security.

 

With regard to South African companies, the position was previously regulated in section 13 of the Companies Act of 1973, which was similar to the current position in respect of close corporations. The new Companies Act of 2008 does, however, not include a similar provision. This issue recently came under the spotlight in the case of Siemens Telecommunications (Pty) Ltd v Datagenics (Pty) Ltd 2013 (1) SA 65 (GNP) where it was held that in the absence of a provision in the Companies Act regulating the provision of security, the common law must be resorted to. According to this judgment, South African companies cannot be called upon to furnish security merely on the basis of their financial position.  This case criticised the decision in Haitas and Others v Port Wild Props 12 (Pty) Ltd 2011 (5) SA 562 (GSJ) where it was held that Section 173 of the Constitution enabled the court in terms of the court’s inherent power to regulate its own processes). The Judge remarked that extending the common law grounds on which security for costs can be granted was equal to creating substantive law and not merely regulating the court’s own processes. The development of the common law pertaining to security for costs was not discussed in the aforesaid case and should preferably be left to the legislature.

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Conducting disciplinary enquiries – when do you not need to counsel an employee for poor work performance and what knowledge can the chairperson have of the dispute prior to the enquiry?

In a recent case [now reported as Boss Logistics v Phopi and Others 2012 (3) SA 409 (LC)], an employer challenged the finding of the CCMA, which held that the employee was unfairly dismissed both procedurally and substantively. The CCMA found that the employee, who was dismissed within his first month at the new company, should have been properly performance managed and given training where necessary and that the chairperson, who had received an e-mail prior to the enquiry detailing the employer’s complaints against the employee, should not have chaired the meeting.

In a review application to the Labour Appeal Court, the ruling of the CCMA was reversed and the court made some important remarks in its judgement on the aspect of poor work performance and the role of a chairperson:

  • Where an employee misrepresents his level of competence, skills and experience, he or she cannot reap the benefit thereof when it comes to poor work performance. An employee cannot demand training and performance counselling or other assistance, if he was placed into a position based on a misrepresentation of his skills and experience.
  • The standard of performance required, depends amongst others “upon the nature of the job and the complexity of, the volume or ambit of the work that had to be mastered, the nature and complexity of the employer’s operations, the qualifications and experience of the employee, the level of stress which is inherent in the position, the extent to which the employee is required to exercise his/her own initiative and the extent of the training or induction that may be required”.
  • The courts will not second-guess the time period which is reasonable to evaluate employees’ performance, except where there are indications that the employer “acted in bad faith or in a manner which was otherwise unfair to the employee”.
  • The “measure of instruction, counselling and guidance which an employer has to provide in order to enable an employee to meet the required standard of performance, is dependent on the level of seniority of the employee, his or her qualifications and experience”.
  • Different standards will apply to a manager or senior employee whose knowledge and experience qualify him or her to judge whether he or she is meeting the employer’s performance requirements. The employer in those cases is not required to draw the employee’s attention to the required standards and explore options how to remedy the situation by means of for example further training.
  • With regard to a chairperson, it is desirable for the chairperson not to have any knowledge of the matter prior to the disciplinary enquiry. If, however there are no grounds creating an apprehension that the chairperson was biased (in the Boss Logistics case, the employee only raised this matter at the CCMA for the first time and not at the disciplinary enquiry), having been influenced by the employer, then the mere sight of an e-mail detailing the employers intentions to have the employee dismissed and the complaints levelled against the employee, is not sufficient to render the disciplinary enquiry procedurally unfair.

Whilst the case is good news to employers, it also highlights that it is imperative to give the employee as little scope as possible to challenge disciplinary actions. In the instant case, the employer had to challenge the CCMA decision, most probably at considerable cost.  The manner in which labour law is applied by the different forums can also very considerable, as the present case shows. Employers, especially smaller employers with fewer managerial staff who could act as chairpersons in a disciplinary enquiry, should be careful when deciding upon the person to chair the disciplinary enquiry and should ensure that the person is not appraised of the facts prior to the disciplinary enquiry. It may be in the best interest of the company to appoint an outsider, such as an attorney or labour consultant to act as the chairperson in those instances and the costs thereby incurred will in most instances be far less than conducting a matter in the CCMA and thereafter in the labour courts.

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