LAW LETTER - NOVEMBER 2011
Published: 16 Nov 2011
In this edition of Law Letter we use our probing searchlight to illuminate rights – rights of children, parents and grandparents; rights to a fair trial; rights to equal treatment; rights to appeal court decisions; contractual rights. Please remember that the contents of Law Letter do not constitute legal advice. For specific professional assistance, always ensure that you consult your attorney. We welcome your comments and suggestions
FROM THE COURTS ----»
Family Law ----»
Matrimonial Law ----»
Criminal Law ----»
Law of Property ----»
Seller Beware ----»
The commencement of the new Companies Act 71 of 2008 with effect from 01 May 2011 has brought profound changes to the legislation governing companies in South Africa. This has had a far-reaching impact not only on the legal profession dealing with commercial, corporate and tax structures in our economy, but also on directors, shareholders, company secretaries, auditors and many others who engage in commercial dealings with companies on a daily basis. The introduction of business rescue provisions has already made its mark on the law of insolvency.
This comprehensive publication by Professor Richard Jooste, co-author of the acclaimed Commentary on the Companies Act, is a welcome guide to assist all concerned in making the transition from the Companies Act 61 of 1973 to the new Companies Act. It provides a variety of reference tables, comparing provisions of the old and new Acts, as well as a number of quick guides to enable the reader to easily establish whether a section of either Act has a comparable provision in the other and where it is to be found.
There is also a comprehensive list of reported judgments decided under the old Companies Act to assist with research as well as a guide linking regulations promulgated with the comparable new sections.
The author and publisher are to be congratulated on producing what is likely to become an indispensible handbook to everyone with professional and business responsibilities in the corporate sector. Despite running to over 1,000 pages, the layout is particularly well planned and designed for quick and easy reference to every nook and cranny of both Acts.
The parties to litigation are entitled to expect that the judge will reach a decision without bias. If a litigant believes that a judge is biased, and this fear is well-founded, the litigant has the option of making an application to court for recusal of the judge.
A recent High Court action related to a contingency fee agreement. This involves an agreement between an attorney and a client, in which an attorney agrees to represent the client and to only charge fees (generally at a higher rate) if the client wins.
When the dispute regarding the contingency agreement reached the courts, Mr Ndlovu discovered that the presiding judge had delivered a lecture and written an article on the issue of contingency fees claimed by attorneys. In his lecture and article the judge had expressed the view that the system of contingency fees requires safeguarding to prevent its exploitation by litigants who see contingency fees as an opportunity to enrich themselves. He also pointed out that, to some extent, the system did not serve the purpose of providing access to justice but operated to enrich lawyers.
Mr Ndlovu launched a recusal application. He argued that the judge held a fixed and settled view on the issue and this view was in essence a pre-judgment of the exact same point he was required to decide in the course of Mr Ndlovu’s case.
Judge Wallis confirmed that the test is whether a reasonable, objective and informed person would, on the correct facts, reasonably think that the judge will not bring an impartial mind to bear on the adjudication of the case. In answering this question the court applied the yardstick of the reasonable reader. The court’s view was that a reasonable reader would understand that the judge had concerns about the use of contingency agreements, but would not conclude that the judge would deliberately deny Mr Ndlovu any legal relief to which he was entitled. There is also a body of well-established authority that binds a judge in reaching a decision on costs. While ultimately the decision is a matter of discretion, it is a discretion that is circumscribed by well-established principles.
Mr Ndlovu’s application for recusal was dismissed and the judge continued presiding over the matter.
Ndlovu v. Minister of Home Affairs and Another 2011 (2) SA 621 (KZD).
top
The best interests of the child are of paramount importance and the High Court, as upper guardian of all children, is expected to act with these best interests of the child in mind.
A child, C, was born to Mr S and Ms R, who were living together at the time of the birth of their child. They had intended to marry but, sadly, Ms R died from a congenital heart defect shortly after the birth of C. A bitter custody battle ensued between the mother of Ms R and Mr S. Numerous court applications were made during the first five years of C’s life and custody was awarded – by various High Courts – to the grandparents and her father at various stages of the litigation. As a result, the early years of C’s life were extremely disrupted.
After much to-ing and fro-ing, the Supreme Court of Appeal was finally asked to determine the best interests of the child, the rights of the unmarried father and the extent to which grandparents have rights in respect of their grandchildren. By the time the matter came to be heard in the Supreme Court of Appeal, the child was living with her father, his wife and her half-brother, and had been doing so happily for eighteen months.
At the time the litigation first arose, the law did not automatically grant custody or guardianship rights to the father, even in the event of the mother’s death. Grandparents also had no inherent rights in respect of their grandchildren. Only the High Court had the power to grant these rights. However, the Children’s Act of 2005 changed this. The biological father of a child now has rights and responsibilities in respect of the child if, at the time the child is born, he is living with the mother in a permanent life partnership. The fact that Mr S had been living with the mother of his child, and that they intended to get married, was enough proof that they were involved in a permanent life partnership. This resulted in Mr S automatically acquiring parental rights. Under the Act, grandparents may also apply to court for the right to custody and guardianship as persons having an interest in the care, well-being or development of the child. The court will make an assessment with regard to the rights of the biological parents of the child.
The Supreme Court of Appeal determined that the best interests of the child would be served by having her continue to live with her father, with her maternal grandparents being allowed regular contact. The court stated that in matters involving the interests of the child, where it is practical, an attempt should be made to settle conflicts through mediation so that the child is not subjected to further traumatic litigation. At the end of the day, protracted and bitter litigation over issues involving a child leads to a tug-of-war in which the child is the loser.
FS v. JJ 2011 (3) SA 126 (SCA).
top
The Civil Union Act of 2006 has its roots in the Constitution. It aims to provide, for the first time in South African history, an opportunity for homosexual persons to enter into what amounts to the equivalent of a marriage between heterosexual persons. The Act, however, has been criticised for not achieving its principal aim of placing long-term homosexual relationships on an equal footing with long-term heterosexual relationships. There are various shortcomings in the Act that impede its ability to offer homosexual couples equal protection. One of these is the uncertainty regarding whether the parties to a civil union are entitled to be divorced under the Divorce Act of 1979.
There are very few reported cases dealing with this Act, but a recent case in the Western Cape High Court raised the question whether a spouse to a civil partnership that was entered into in the United Kingdom under the UK Civil Partnership Act of 2004, could file for a divorce in terms of the South African Divorce Act. The two main issues before the court were whether it had jurisdiction to grant a decree of divorce in respect of same-sex partnerships which were registered in a foreign jurisdiction under foreign law and secondly, whether local civil unions can be dissolved under the existing South African Divorce Act.
Judge Pat Gamble looked at the UK Civil Partnership Act and the rights it aimed to afford to homosexual partnerships. In terms of the UK Act, homosexual civil partnerships are equal in law to heterosexual marriages. They can therefore be entered into and dissolved in the same way as ordinary marriages. The court accepted the principle that, if a marriage is duly concluded in accordance with the legal requirements for a valid marriage in a foreign country, the marriage will be recognised by a South African court. This allows for a civil partnership, which was lawfully concluded in the UK, to be accepted as a valid and binding civil partnership in South Africa, provided that it did not offend South African public policy.
On the second issue, the court considered whether South African civil unions were capable of being dissolved under the existing Divorce Act. The court considered the Civil Union Act, read with the Divorce Act, and concluded that any reference to “marriage” in any law (other than the Marriage Act of 1961 and the Recognition of Customary Marriages Act of 1998) now includes a civil union. This means that the Divorce Act does allow for a divorce to be granted between spouses in a civil partnership.
AS v. CS 2011 (2) SA 360 (WCC).
top
On 17 October 2007 Stephen Romer shot three people in the streets of Port Elizabeth, killing one of them.
Romer had been admitted to St Mark’s Clinic in East London six years previously and had been diagnosed with adjustment disorder – a stress related, short term, non-psychotic disturbance. In 2007 he had moved to Port Elizabeth where he stayed with his son, who testified that there had been a marked deterioration in his father’s mental state from the end of 2000. Romer would stay in bed for periods of up to a week and suffered from frequent nightmares and violent tremors. He then went to stay with a relative in Sardinia Bay as his son could no longer manage living with his father.
Romer pleaded not guilty, raising the defence of sane automatism. This is a defence available to persons who commit an offence when not conscious of what they are doing due to the influence of external factors, such as offences committed when under the influence of drugs. A clinical psychologist testified that Romer’s conduct was the result of prescribed anti-depressant medication. The depression began when Romer had caught his wife with her lover, ending their marriage. The psychologist’s view was that when Romer fired the shots he was not acting rationally because he had taken the anti-depressant medication, as well as four sleeping pills. This resulted in Romer not being aware of his actions.
The State countered this argument by pointing out that Romer had been able to direct his actions to the level of driving a distance in peak traffic, obeying the traffic rules and attempting to evade the police.
The High Court concluded that Romer had been in a state of diminished responsibility, but not acting as an automaton, at the time of firing the shots. As a result he was convicted and sentenced to ten years imprisonment, wholly suspended for five years, as well as three years correctional supervision.
The State appealed the decision on the grounds that the sentence imposed was “disturbingly lenient given the seriousness of his conduct”. It argued that the judge had overemphasised the personal circumstances of the accused at the cost of the seriousness of the crimes, and the interests of society and the victims.
The Supreme Court of Appeal disagreed. Acting Judge of Appeal Petse said that the sentence was not disturbingly inappropriate in the light of Romer’s diminished responsibility at the time of firing the shots. The State’s appeal against the sentence was dismissed.
The State v. Romer (412/10) [2011] ZASCA 46.
top
Acting Judge Peter in the Johannesburg High Court recently considered the factors to be taken into account in ordering that a property used for a domestic residence could be sold in execution, thereby effectively evicting the occupants. The judge pointed out that Section 26 of the Constitution provides that:
“(1) Everyone has the right to have access to adequate housing.
“(3) No one may be evicted from their home, or have their home demolished, without an order of court made after considering all the relevant circumstances. No legislation may permit arbitrary evictions.”
The right to levy execution against the assets of a judgment debtor is not absolute. It has its limitations. Certain assets necessary for the maintenance and sustenance of a debtor, and the means of earning a livelihood are beyond the reach of execution. This includes:
• The necessary beds, bedding and wearing apparel of the execution debtor and of his family, the supply of food and drink in the house sufficient for the needs of such debtor and family during one month, tools and implements of trade, professional books, documents or instruments necessary for use by the debtor in his profession up to a certain value, in terms of the Magistrates Court Act of 1944.
• Certain insurance benefits in terms of the Long-Term Insurance Act of 1998.
• Certain pension benefits in terms of the Railways and Harbours Service Act of 1912, the General Pensions Act of 1979, the Aged Persons’ Act of 1967, and the Blind Persons Act of 1968.
• Compensation for work-related injuries or illnesses in terms of the Occupational Diseases in Mines and Works Act of 1973 and the Compensation for Occupational Injuries and Diseases Act of 1993.
• Unemployment insurance benefits in terms of the Unemployment Insurance Act of 2001.
However, a residential home is not placed beyond the process of execution. Before that is permitted however the court must consider the relevant circumstances which include how the debt was incurred, the amount of the debt, and the existence of reasonable alternatives for the satisfaction of the judgment debt without resort to execution.
Where the judgment debt is unrelated to the property, or the amount is relatively insignificant, a greater degree of enquiry and closer scrutiny are called for. In such event, consideration is likely to be given to postponing the request or application for execution until after the debtor has been summoned to a financial enquiry in the Magistrates Court where his or her financial circumstances might be fully ventilated. Regard will be had to attempts by the debtor to pay off the debt, the debtor’s resources and employment status.
Nedbank Ltd v. Fraser & Another and 4 Other Cases 2011 (4) SA 363 (GSJ). top
As the impact of the worldwide recession increased and spread, so did the numbers of foreclosures. A case in the Durban High Court has dealt with the liability of a buyer of a property at a sale in execution by a public auction, where monies are owed on the property to a municipality for outstanding rates, electricity and water.
The Biyelas defaulted on their bond repayments and the bank foreclosed on their home loan. The bank, having obtained judgment, sold the property at a sale in execution. The property was sold to Mr Msomi, and a portion of the purchase price was refunded to the Biyelas after their mortgage loan had been settled.
The conditions of sale provided that the buyer was liable to pay for all arrear rates and service charges. Msomi ended up paying pay over R70 000 to the municipality.
When Msomi heard that the Biyelas had received portion of the purchase price, he took them to court, arguing that they should refund him the amount he had paid to the municipality to settle arrear rates and service charges. Msomi argued that the Biyelas were legally indebted to the municipality for the outstanding amounts. He had, said Msomi, merely effected payment on behalf of the Biyelas so that the transfer of the property could take place.
The Biyelas claimed that they were not liable as the conditions of sale provided that the buyer would pay all arrear rates and service charges. Msomi should have known, argued the Biyelas, that if he purchased a property at a sale in execution, there would probably be arrear rates and service charges.
Acting Judge Cele ruled in favour of Msomi. He was not indebted to the Biyelas and so could not be expected to discharge their obligation to the municipality. Msomi had no choice but to pay the arrear amounts, as transfer would not have been possible if these were outstanding. The Biyelas had to reimburse Msomi for the monies paid to the municipality in respect of the property.
Msomi v. Biyela and Others 2011 (2) SA 311 (KZD). top
FROM THE COURTS ----»
Family Law ----»
Matrimonial Law ----»
Criminal Law ----»
Law of Property ----»
Seller Beware ----»
BOOK REVIEW
The Complete Guide to the Old and New Companies Acts
By Richard Jooste, Professor of Law at the University of Cape Town
(Publisher Juta & Co Ltd, www.jutalaw.co.za)
(Publisher Juta & Co Ltd, www.jutalaw.co.za)
The commencement of the new Companies Act 71 of 2008 with effect from 01 May 2011 has brought profound changes to the legislation governing companies in South Africa. This has had a far-reaching impact not only on the legal profession dealing with commercial, corporate and tax structures in our economy, but also on directors, shareholders, company secretaries, auditors and many others who engage in commercial dealings with companies on a daily basis. The introduction of business rescue provisions has already made its mark on the law of insolvency.
This comprehensive publication by Professor Richard Jooste, co-author of the acclaimed Commentary on the Companies Act, is a welcome guide to assist all concerned in making the transition from the Companies Act 61 of 1973 to the new Companies Act. It provides a variety of reference tables, comparing provisions of the old and new Acts, as well as a number of quick guides to enable the reader to easily establish whether a section of either Act has a comparable provision in the other and where it is to be found.
There is also a comprehensive list of reported judgments decided under the old Companies Act to assist with research as well as a guide linking regulations promulgated with the comparable new sections.
The author and publisher are to be congratulated on producing what is likely to become an indispensible handbook to everyone with professional and business responsibilities in the corporate sector. Despite running to over 1,000 pages, the layout is particularly well planned and designed for quick and easy reference to every nook and cranny of both Acts.
Judges.
View Review
The parties to litigation are entitled to expect that the judge will reach a decision without bias. If a litigant believes that a judge is biased, and this fear is well-founded, the litigant has the option of making an application to court for recusal of the judge.
A recent High Court action related to a contingency fee agreement. This involves an agreement between an attorney and a client, in which an attorney agrees to represent the client and to only charge fees (generally at a higher rate) if the client wins.
When the dispute regarding the contingency agreement reached the courts, Mr Ndlovu discovered that the presiding judge had delivered a lecture and written an article on the issue of contingency fees claimed by attorneys. In his lecture and article the judge had expressed the view that the system of contingency fees requires safeguarding to prevent its exploitation by litigants who see contingency fees as an opportunity to enrich themselves. He also pointed out that, to some extent, the system did not serve the purpose of providing access to justice but operated to enrich lawyers.
Mr Ndlovu launched a recusal application. He argued that the judge held a fixed and settled view on the issue and this view was in essence a pre-judgment of the exact same point he was required to decide in the course of Mr Ndlovu’s case.
Judge Wallis confirmed that the test is whether a reasonable, objective and informed person would, on the correct facts, reasonably think that the judge will not bring an impartial mind to bear on the adjudication of the case. In answering this question the court applied the yardstick of the reasonable reader. The court’s view was that a reasonable reader would understand that the judge had concerns about the use of contingency agreements, but would not conclude that the judge would deliberately deny Mr Ndlovu any legal relief to which he was entitled. There is also a body of well-established authority that binds a judge in reaching a decision on costs. While ultimately the decision is a matter of discretion, it is a discretion that is circumscribed by well-established principles.
Mr Ndlovu’s application for recusal was dismissed and the judge continued presiding over the matter.
Ndlovu v. Minister of Home Affairs and Another 2011 (2) SA 621 (KZD).
top
Tug of War
“There are two kinds of blood, the blood that flows
in the veins and the blood that flows out of them.”
– Julian Tuwim (1894 - 1954)
in the veins and the blood that flows out of them.”
– Julian Tuwim (1894 - 1954)
The best interests of the child are of paramount importance and the High Court, as upper guardian of all children, is expected to act with these best interests of the child in mind.
A child, C, was born to Mr S and Ms R, who were living together at the time of the birth of their child. They had intended to marry but, sadly, Ms R died from a congenital heart defect shortly after the birth of C. A bitter custody battle ensued between the mother of Ms R and Mr S. Numerous court applications were made during the first five years of C’s life and custody was awarded – by various High Courts – to the grandparents and her father at various stages of the litigation. As a result, the early years of C’s life were extremely disrupted.
After much to-ing and fro-ing, the Supreme Court of Appeal was finally asked to determine the best interests of the child, the rights of the unmarried father and the extent to which grandparents have rights in respect of their grandchildren. By the time the matter came to be heard in the Supreme Court of Appeal, the child was living with her father, his wife and her half-brother, and had been doing so happily for eighteen months.
At the time the litigation first arose, the law did not automatically grant custody or guardianship rights to the father, even in the event of the mother’s death. Grandparents also had no inherent rights in respect of their grandchildren. Only the High Court had the power to grant these rights. However, the Children’s Act of 2005 changed this. The biological father of a child now has rights and responsibilities in respect of the child if, at the time the child is born, he is living with the mother in a permanent life partnership. The fact that Mr S had been living with the mother of his child, and that they intended to get married, was enough proof that they were involved in a permanent life partnership. This resulted in Mr S automatically acquiring parental rights. Under the Act, grandparents may also apply to court for the right to custody and guardianship as persons having an interest in the care, well-being or development of the child. The court will make an assessment with regard to the rights of the biological parents of the child.
The Supreme Court of Appeal determined that the best interests of the child would be served by having her continue to live with her father, with her maternal grandparents being allowed regular contact. The court stated that in matters involving the interests of the child, where it is practical, an attempt should be made to settle conflicts through mediation so that the child is not subjected to further traumatic litigation. At the end of the day, protracted and bitter litigation over issues involving a child leads to a tug-of-war in which the child is the loser.
FS v. JJ 2011 (3) SA 126 (SCA).
top
Same Sex Divorces
“As it will be the right of all, so it will be the duty of some,
definitely to prepare for a separation, amicably if they can,
violently if they must.”
– Josiah Quincy (1772 - 1864)
definitely to prepare for a separation, amicably if they can,
violently if they must.”
– Josiah Quincy (1772 - 1864)
The Civil Union Act of 2006 has its roots in the Constitution. It aims to provide, for the first time in South African history, an opportunity for homosexual persons to enter into what amounts to the equivalent of a marriage between heterosexual persons. The Act, however, has been criticised for not achieving its principal aim of placing long-term homosexual relationships on an equal footing with long-term heterosexual relationships. There are various shortcomings in the Act that impede its ability to offer homosexual couples equal protection. One of these is the uncertainty regarding whether the parties to a civil union are entitled to be divorced under the Divorce Act of 1979.
There are very few reported cases dealing with this Act, but a recent case in the Western Cape High Court raised the question whether a spouse to a civil partnership that was entered into in the United Kingdom under the UK Civil Partnership Act of 2004, could file for a divorce in terms of the South African Divorce Act. The two main issues before the court were whether it had jurisdiction to grant a decree of divorce in respect of same-sex partnerships which were registered in a foreign jurisdiction under foreign law and secondly, whether local civil unions can be dissolved under the existing South African Divorce Act.
Judge Pat Gamble looked at the UK Civil Partnership Act and the rights it aimed to afford to homosexual partnerships. In terms of the UK Act, homosexual civil partnerships are equal in law to heterosexual marriages. They can therefore be entered into and dissolved in the same way as ordinary marriages. The court accepted the principle that, if a marriage is duly concluded in accordance with the legal requirements for a valid marriage in a foreign country, the marriage will be recognised by a South African court. This allows for a civil partnership, which was lawfully concluded in the UK, to be accepted as a valid and binding civil partnership in South Africa, provided that it did not offend South African public policy.
On the second issue, the court considered whether South African civil unions were capable of being dissolved under the existing Divorce Act. The court considered the Civil Union Act, read with the Divorce Act, and concluded that any reference to “marriage” in any law (other than the Marriage Act of 1961 and the Recognition of Customary Marriages Act of 1998) now includes a civil union. This means that the Divorce Act does allow for a divorce to be granted between spouses in a civil partnership.
AS v. CS 2011 (2) SA 360 (WCC).
top
Bad Day
“The pendulum of the mind oscillates between sense and nonsense,
not between right and wrong.”
– Carl Gustav Jung (1875 - 1961)
not between right and wrong.”
– Carl Gustav Jung (1875 - 1961)
On 17 October 2007 Stephen Romer shot three people in the streets of Port Elizabeth, killing one of them.
Romer had been admitted to St Mark’s Clinic in East London six years previously and had been diagnosed with adjustment disorder – a stress related, short term, non-psychotic disturbance. In 2007 he had moved to Port Elizabeth where he stayed with his son, who testified that there had been a marked deterioration in his father’s mental state from the end of 2000. Romer would stay in bed for periods of up to a week and suffered from frequent nightmares and violent tremors. He then went to stay with a relative in Sardinia Bay as his son could no longer manage living with his father.
Romer pleaded not guilty, raising the defence of sane automatism. This is a defence available to persons who commit an offence when not conscious of what they are doing due to the influence of external factors, such as offences committed when under the influence of drugs. A clinical psychologist testified that Romer’s conduct was the result of prescribed anti-depressant medication. The depression began when Romer had caught his wife with her lover, ending their marriage. The psychologist’s view was that when Romer fired the shots he was not acting rationally because he had taken the anti-depressant medication, as well as four sleeping pills. This resulted in Romer not being aware of his actions.
The State countered this argument by pointing out that Romer had been able to direct his actions to the level of driving a distance in peak traffic, obeying the traffic rules and attempting to evade the police.
The High Court concluded that Romer had been in a state of diminished responsibility, but not acting as an automaton, at the time of firing the shots. As a result he was convicted and sentenced to ten years imprisonment, wholly suspended for five years, as well as three years correctional supervision.
The State appealed the decision on the grounds that the sentence imposed was “disturbingly lenient given the seriousness of his conduct”. It argued that the judge had overemphasised the personal circumstances of the accused at the cost of the seriousness of the crimes, and the interests of society and the victims.
The Supreme Court of Appeal disagreed. Acting Judge of Appeal Petse said that the sentence was not disturbingly inappropriate in the light of Romer’s diminished responsibility at the time of firing the shots. The State’s appeal against the sentence was dismissed.
The State v. Romer (412/10) [2011] ZASCA 46.
top
On the Street
“But all that I could think of, in the darkness and the cold,
Was that I was leaving home and my folks were growing old.”
– Robert Louis Stevenson (1850 - 1894)
Acting Judge Peter in the Johannesburg High Court recently considered the factors to be taken into account in ordering that a property used for a domestic residence could be sold in execution, thereby effectively evicting the occupants. The judge pointed out that Section 26 of the Constitution provides that:
“(1) Everyone has the right to have access to adequate housing.
“(3) No one may be evicted from their home, or have their home demolished, without an order of court made after considering all the relevant circumstances. No legislation may permit arbitrary evictions.”
The right to levy execution against the assets of a judgment debtor is not absolute. It has its limitations. Certain assets necessary for the maintenance and sustenance of a debtor, and the means of earning a livelihood are beyond the reach of execution. This includes:
• The necessary beds, bedding and wearing apparel of the execution debtor and of his family, the supply of food and drink in the house sufficient for the needs of such debtor and family during one month, tools and implements of trade, professional books, documents or instruments necessary for use by the debtor in his profession up to a certain value, in terms of the Magistrates Court Act of 1944.
• Certain insurance benefits in terms of the Long-Term Insurance Act of 1998.
• Certain pension benefits in terms of the Railways and Harbours Service Act of 1912, the General Pensions Act of 1979, the Aged Persons’ Act of 1967, and the Blind Persons Act of 1968.
• Compensation for work-related injuries or illnesses in terms of the Occupational Diseases in Mines and Works Act of 1973 and the Compensation for Occupational Injuries and Diseases Act of 1993.
• Unemployment insurance benefits in terms of the Unemployment Insurance Act of 2001.
However, a residential home is not placed beyond the process of execution. Before that is permitted however the court must consider the relevant circumstances which include how the debt was incurred, the amount of the debt, and the existence of reasonable alternatives for the satisfaction of the judgment debt without resort to execution.
Where the judgment debt is unrelated to the property, or the amount is relatively insignificant, a greater degree of enquiry and closer scrutiny are called for. In such event, consideration is likely to be given to postponing the request or application for execution until after the debtor has been summoned to a financial enquiry in the Magistrates Court where his or her financial circumstances might be fully ventilated. Regard will be had to attempts by the debtor to pay off the debt, the debtor’s resources and employment status.
Nedbank Ltd v. Fraser & Another and 4 Other Cases 2011 (4) SA 363 (GSJ). top
“Justice is the constant and perpetual wish
to render to every one his due.”
– Justinian 1 (482 - 565 AD)
to render to every one his due.”
– Justinian 1 (482 - 565 AD)
As the impact of the worldwide recession increased and spread, so did the numbers of foreclosures. A case in the Durban High Court has dealt with the liability of a buyer of a property at a sale in execution by a public auction, where monies are owed on the property to a municipality for outstanding rates, electricity and water.
The Biyelas defaulted on their bond repayments and the bank foreclosed on their home loan. The bank, having obtained judgment, sold the property at a sale in execution. The property was sold to Mr Msomi, and a portion of the purchase price was refunded to the Biyelas after their mortgage loan had been settled.
The conditions of sale provided that the buyer was liable to pay for all arrear rates and service charges. Msomi ended up paying pay over R70 000 to the municipality.
When Msomi heard that the Biyelas had received portion of the purchase price, he took them to court, arguing that they should refund him the amount he had paid to the municipality to settle arrear rates and service charges. Msomi argued that the Biyelas were legally indebted to the municipality for the outstanding amounts. He had, said Msomi, merely effected payment on behalf of the Biyelas so that the transfer of the property could take place.
The Biyelas claimed that they were not liable as the conditions of sale provided that the buyer would pay all arrear rates and service charges. Msomi should have known, argued the Biyelas, that if he purchased a property at a sale in execution, there would probably be arrear rates and service charges.
Acting Judge Cele ruled in favour of Msomi. He was not indebted to the Biyelas and so could not be expected to discharge their obligation to the municipality. Msomi had no choice but to pay the arrear amounts, as transfer would not have been possible if these were outstanding. The Biyelas had to reimburse Msomi for the monies paid to the municipality in respect of the property.
Msomi v. Biyela and Others 2011 (2) SA 311 (KZD). top