Schnetler’s internal news

SCHNETLER’S GIVES BACK

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A1B“Let us sacrifice our today so that our children can have a better tomorrow.”– A. P. J. Abdul Kalam

The Santa Shoebox Project is an initiative of the Kidz2Kidz Trust. The Santa Shoebox Project originated in Cape Town and has grown in leaps and bounds, with the number of Santa Shoeboxes growing from a humble 180 boxes in 2006 to an astounding 109 930 in 2014. The boxes are distributed to more than 1000 recipient facilities.

This year the directors of Schnetler’s vowed to match the number of boxes pledged by the firm’s team. In total, 36 boxes were pledged by us at Schnetler’s. The boxes consisted of educational supplies, toiletries, toys, clothing and the most important item to every child out there – sweets! The boxes were creatively painted and decorated to match the Christmas theme.

We are proud to be part of this fantastic initiative. We truly hope that our spirit of giving is infectious and that all of you give back to your community over the festive season.

Compiled by: Annerine du Plessis

Marriage

HOW TO CHANGE YOUR MARITAL STATUS TO ANOTHER FORM OF MARRIAGE CONTRACT

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Maritial status A3_bSection 21(1) of the Matrimonial Property Act No 88 of 1984 provides that a husband and wife may apply jointly to court for leave to change the matrimonial property system which applies to their marriage.

Requirements

The decision in Lourens et Uxor 1986(2) SA 291 (C) sets out guidelines that the courts follow with regard to applications in terms of section 21(1) of the Matrimonial Property Act.

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

  • There must be sound reasons for the proposed change.

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 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.

  • Sufficient notice of the proposed change must be given to all creditors of the spouses.

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. Moreover, the draft Notarial Contract that the parties propose to register must be annexed to their application.

  • The court must be satisfied that no other person will be prejudiced by the proposed change.

The court must be satisfied that the rights of creditors of the parties must be preserved in the proposed contract. The application must therefore 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 such change. Once the court is satisfied that the requirements have been met it may order that the existing matrimonial property system may no longer apply to their marriage, and authorise the parties to enter into a Notarial Contract by which their future matrimonial property system is to be regulated on such conditions as the court may deem fit.

It should also be stated whether or not either of the applicants has been sequestrated in the past and, if so, when, and under what circumstances. The case number of any rehabilitation application must be furnished.

It further needs to be stated whether or not there are any pending legal proceedings in which any creditor is seeking to recover payment of any alleged debt due by the couple or either of them.

Care must be taken to fully motivate the proposed change in the existing matrimonial property system. Applicants must explain why no other person will be prejudiced by the proposed change. In any event, the order sought, and the contract which it is proposed to register, shall contain a provision which preserves the rights of pre-existing creditors.

The application must disclose where the parties are domiciled and, if they are not resident there when the application is made, where they are resident. If there has been a recent change in domicile or residence it should be disclosed so that the Court can consider whether the application has been brought in the appropriate forum and/or whether or not additional notice of the application should be given. Ordinarily the application should be brought in the Court in whose area of jurisdiction the parties are domiciled and ordinarily resident.

The negative side

Unfortunately, the application is expensive in that both spouses 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 which, after registration, will regulate the new matrimonial property system.

It would thus be cheapest and best to approach an attorney or notary prior to the marriage ceremony being concluded to draft a proper antenuptial contract regulating the matrimonial property of the parties involved, without any confusion.

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)

Legal Pleadings

HOW IMPORTANT IS IT TO READ LEGAL PLEADINGS AND/OR NOTICES?

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Reading leagal pleadings A4_bOften people only become aware of judgments reflecting on their credit records when trying to apply for loans, cell phone contracts, etc.

However, what many of them do not know, is that it is most likely due to their own negligence that they have these judgments against them.

A summons is a document that informs a defendant that he or she is being sued and asserts the jurisdiction of the court to hear and determine the case. A summons can be served for many reasons which include divorce proceedings, traffic fines, outstanding fees, etc.

A simple summons sets out very briefly the details of the case. A combined summons does not set out the details or reasons as to why the action is being instituted, and such details can be found in the particulars of claim. It is important to take notice of the fine print on the summons. This is where you will find the information regarding when and where you should file your Notice of Intention to Defend, should you wish to defend the matter. An attorney usually drafts the notice and files it at court, however, it is not uncommon for people to defend such actions themselves. If you wish to defend the matter yourself it is important to serve it on the opposing attorneys (these details are on the summons) and file it at court.

With regards to any normal summons the time period to file the Notice of Intention to Defend is 10 (ten) days and 20 (twenty) days to file the opposing papers. If the defendant resides or is located in a 160 km radius outside the court, the defendant then has 21 (twenty one) days to file their Notice of Intention to Defend and 20 (twenty) days to file their opposing papers.

Once the ten or twenty days have passed and no Notice of Intention to Defend has been filed, the attorneys will immediately apply for Default Judgment. This may result in a judgment against your name. Once a Judge/Magistrate has granted Default Judgment, a Warrant of Execution can be issued in order to attach property and/or money for the amount as stated on the summons. If the Sheriff finds that there is no property to attach in order to obtain the money, the attorneys will go ahead with a Section 65A (1) Application. This Application requires the debtor to present their income and expenses to the court and provide an amount which can be paid off monthly in order to settle their debt.

A judgment will only be removed from your record once a rescission order is granted and/or proof is provided that the amount cited on the summons has been paid in full. If the amount has been paid in full, you can contact Transunion directly and get the judgment removed for free once proof of payment has been sent.

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)

Housing and property law

RIGHTS CREATED BY HOMEOWNERS’ ASSOCIATION CONSTITUTIONS

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A2_bMany residential estates are governed by homeowners’ associations, which have constitutions requiring anyone owning property in that particular estate to belong to the association.

The association owns communal facilities and operates the estate’s infrastructure, including roads, water, sanitation, telecommunications networks and security services. All these are funded by monthly levies, recovered from residents.

The constitution of such associations include a clause stipulating that no member can transfer his or her property unless the homeowners’ association has certified that the member has fulfilled all financial obligations to the association.  These clauses are inserted to prevent any post-transfer problems in recovering amounts owed by residents.

A complication arises if a resident is sequestrated (or wound up, in the case of a corporate entity owning property in the estate).  The trustee or liquidator is obliged to sell the assets, and utilise the proceeds to the benefit of creditors.  Can the homeowners’ association prevent transfer, in such circumstances, if the amounts due to it are not paid?  This was the problem recently considered by the Supreme Court of Appeal in Willow Waters Homeowners v Koka NO & Others 2015 (5) SA 304 (SCA).  The Court approached the issue by considering whether the embargo on transfer of property, contained in the homeowners’ association constitution, constituted a real right as opposed to a personal right.  Broadly speaking, a real right prevails against the whole world and is enjoyed in respect of specific property, whereas a personal right is relative in the sense that it is only enforceable against a particular person, namely the other party to the obligation.  (Van der Merwe, “Sakereg”, pp 60 – 61).

In the Willow Waters Homeowners matter, the Court pointed out that, to determine whether a right or condition in respect of land is a real right, two requirements must be met, namely:

(a) The intention of the party who creates the right must be to bind not only the present owners but also successors in title; and

(b) The nature of the right or condition must be such that it restricts the exercise of ownership in the property saddled with such right.

The Court held that a clause requiring payment to the homeowners’ association of all monies due to it before transfer is intended to create a general security for the payment of a debt by binding successive owners in the township.  By doing so it restricts the exercise of rights of ownership by limiting an owner’s right to freely dispose of the property.  The provision therefore met both of the aforegoing requirements, and is qualified as a real right.  The court rules that the homeowners’ association was entitled to enforce this right against any party, including the trustee of an insolvent estate, where an owner of property in the estate had been sequestrated.

The judgment clarifies an important legal question.  Homeowners’ associations exercise an embargo on the transfer of property in a residential estate, unless and until all monies owed by the transferor to the homeowners’ association have been paid.

Compiled by Kinney Oosthuizen

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)

Schnetler’s internal news

CASUAL DAY FOR A CAUSE

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A1BSchnetler’s supported Casual Day on Friday, 04 September by purchasing Casual Day stickers and dressing up according to the theme “Spring into Action”.

The aim of Casual Day is to raise funds as well as awareness of persons with disabilities.We decided to combine Casual Day with Heritage Day and held a braai for the firm on the balcony of our kitchen in the afternoon. Much fun was had by all!

The next charity project that Schnetler’s will be taking part in, in October is the “Santa Shoebox Project”. We hope that you too support this worthy cause and pledge your own box in order to realise this charity’s goal of having 100 000 boxes pledged. This can be done online at www.santashoebox.co.za.

Compiled by Laura Ames

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)

Housing and property law

FIXTURES AND FITTINGS

Many transfer attorneys have heard the question from a seller: “May I remove the stove or the curtain rails or the shelves or the … ?”

The most common dispute that arises between a seller and a purchaser is a dispute as to what is regarded as fixtures and  fittings. The simple answer is that this would be what the seller and purchaser agreed on in the offer to purchase, as the law leaves it to the seller and purchaser to make their own arrangements.

Usually the offer to purchase only states that the sale is “voetstoots and includes all improvements and all fixtures and fittings of a permanent nature”. It could also be that the offer to purchase does not refer to fixtures and fittings at all. If this is the case there are three factors that have to be  considered to determine whether a movable item is a fixture or a fitting.

  1. The nature and the purpose of the item

The item should be of a permanent nature and intended to always serve the immovable property. In other words it must be attached to the land or the structure erected on the land. Examples of this are a carport, steel security gates welded to door frames, and an irrigation system.

  1.  The manner and the degree of attachment

The question is whether the item loses its own identity and becomes an integral part of the immovable property or if the attachment is so secure that separation would involve substantial damage to either the immovable property or to the item itself. One must also take into account the method, time and costs involved in removing the item and whether the item could be used elsewhere.

  1. The intention of the owner

One should look at the intention of the owner at the time when the attachment was made.

It is therefore important to address this issue in the offer to purchase and draft a comprehensive list of what is included in the sale. This could save both parties a lot of time and frustration.

The following is a list of items that are usually considered to be permanent fixtures:

Built-in extractor fans; built-in kitchen cupboards; fitted bookshelves; fitted curtain rails; wall mirrors; stoves; existing garden, trees, shrubs, plants; pool filter, pool pump and pool cleaning equipment; fitted carpets; light fittings; towel racks; tap fittings; tennis court net; fireplace; awnings; post box;  alarm system; television aerial (but not satellite dishes) and door keys.

Some estate agents have amended their fixtures and fittings clause since the CPA came into operation, to read as follows: “The property is sold with all fixtures and fittings, including the following … which shall be in good working order on date of transfer.” The words “in good working order” are a very subjective assessment and opens the door to debate. The effect hereof is that the seller will be seen to have promised that all the fixtures and fittings will be in good working order, and to a large extent it will be eroding the protection of the voetstoots clause. Sellers should therefore take caution when signing the fixtures and fittings clause.

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.

Schnetler’s internal news

SCHNETLER’S INC HELD ITS FIRST SEMINAR…

A1,2On Friday, 21 August, we held our first seminar at our offices in Century City. The topic of our seminar was “mediation” which is the latest addition to the vast range of professional services which Schnetler’s has to offer.

A1,1We had as our guest speaker Advocate André Oosthuizen S.C. who has, as well as practising as an advocate for 34 years at the Cape Bar, been involved in many mediations over the past few years.

The subject matter of the seminar opened our guests’ eyes to this brilliant alternative to litigation. The advantages to mediation are countless and far outweigh whatever disadvantages one may uncover.

For a cost-effective & time-efficient dispute resolution, consider negotiation through the process of MEDIATION. Contact our mediator, Annerine Du Plessis, should you wish to resolve a dispute through mediation.

A1,3

Compiled by Laura Ames

Companies

HOW CONFIDENTIAL IS CONFIDENTIAL?

Many businesses devote considerable time and energy to the protection of that business’s trade secrets and confidential information. Many legal issues, some of them far from clear, arise in relation to confidential information. How enforceable is a restraint of trade signed by an employee, in which the employee acknowledges having access to confidential information? When can competitors be sued for misappropriating and misusing confidential information?

As a point of departure, it is necessary to consider the question – what exactly is confidential information? What distinguishes information which belongs to a company, as confidential and secret, from other information which may properly be regarded as generally known in a particular trade and industry, but which, on closer analysis, is information generally known in a particular industry and not protectable at the behest of a specific company or entity in that industry.

Firstly, it needs to be emphasised that information does not become confidential simply because the business using the information labels it as such.  In the case of Alum-Phos (Pty) Ltd v Spatz & Another (1997) 1 All SA (W), “general information about the business does not become confidential because the proprietor chooses to call it confidential”.  In a later case of Petre & Madco Ltd v Sanderson-Kasner & Others 1984 (3) SA 850 (W), “[i]t is trite law that one cannot make something secret by calling it secret”.

Information is confidential when it is not public knowledge, and of economic value to an entity carrying on business in the field to which that information pertains.  It is, however, necessary to add a rider.  A company may have spent time and money training its employees, but if the knowledge imparted during such training is nothing more than knowledge and skills generally known to those operating in that branch of industry, then the information is not confidential and the employees who receive the training cannot be prevented from utilising it, at a later stage, when joining a competitor.

Although the courts have never attempted to draw up an exhaustive list of various categories of confidential information, and have decided the matter on a case-by-case basis, the case of Metre Systems Holdings (Pty) Ltd v Venter & Another 1993 (1) SA 409 (W) is useful.  In that case the Court listed some of the categories of confidential information recognised in our case law (although emphasising that the list was not exhaustive).  The categories thus recognised included: (a) customer lists drawn up by a trader and kept confidential for purposes of his own business; (b) information received by an employee about business opportunities available to an employer, even if such information could be obtained from a source other than the employer or employee; (c) information otherwise in the public domain could become protectable if skill and labour has been expended in gathering and compiling it in a particular useful form; (d) information regarding any marketing proposals and campaigns which a company is contemplated, either in relation to its entire product range or in relation to specific products; (e) information relating to the specifications of a product, the process of manufacture followed in putting that product together, and the results obtained in the development of the product; and (f) Information relating to the prices at which a person has tendered competitively to do work for another.

In conclusion, a crucially important aspect must be emphasised.  In any court proceedings aimed at protecting confidential information or preventing competitors from making use thereof, it is necessary to spell out carefully and in detail why the information sought to be protected is confidential.  Facts must be put up showing that it is not in the public domain, it is different from whatever information trade rivals use in their parallel business activities.  Failure to properly identify the confidential information which a court is asked to protect, and to adequately spell out the facts showing that it is indeed confidential, will mean that litigation instituted to protect the confidential information is doomed to failure.

Compiled by Annerine Du Plessis

Housing and property law

HOW TO EVICT A DEFAULTING TENANT

You are an owner of a residential property and have entered into a lease agreement with a tenant. Unfortunately your tenant is unreliable and falls into arrears with the monthly rental. What is your position now and what legal steps can be taken to claim back your property?

The Prevention of Illegal Eviction and Unlawful Occupation of Land Act, Act 19 of 1998 (more commonly known as PIE) allows for the eviction of unlawful occupiers of land in the Republic of South Africa. PIE applies to an “unlawful occupier” who is any person who occupies land without the express or tacit consent of the owner of such land. The High and Magistrate’s Court has jurisdiction to grant an eviction order under the provisions of PIE. However, for purposes of this article the Magistrate’s Court process for an eviction will be discussed.

The main eviction application is issued by the Clerk of the Court and a case number is then allocated. This case number is then copied onto an Ex Parte application as well as a Notice in terms of Section 4(2) of PIE. The Ex Parte application is not an interim order, but is rather an interlocutory application where the Court is requested to authorise the Notice in terms of Section 4(2) and also give a service directive for this notice. The Court will then consider the facts of the specific case and give a directive as to what the Court deem as sufficient service of the papers on the land occupier.

Once the Ex Parte order has been obtained the main application as well as the Section 4(2) Notice will be served on the Respondent in terms of the service directive provided by the Court. This service directive will include a directive to serve on the local Municipality as well. It is a requirement of PIE that this notice is served 14 calendar days prior to the hearing of the eviction application. Therefore after successful service and lapsing of the required time period the final eviction application will be heard and granted accordingly.  Should the occupant however fail to vacate the premises as directed by the Court Order, the Sheriff of the Court will be authorised by the Court to attend to the eviction of the occupant on or shortly after a specific date.

Compiled by Annerine du Plessis

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.

Housing and property law

IMPLICATIONS OF ESTATE DUTY

Estate duty is charged on the dutiable value of the estate in terms of the Estate Duty Act. The general rule is that if the taxpayer is ordinarily resident in South Africa at the time of death, all of his/her assets (including deemed property), wherever they are situated, will be included in the gross value of his/her estate for the determination of duty payable thereon.

The current estate duty rate is 20% of the dutiable value of the estate. Foreigners/non-residents also pay estate duty on their South African property.

To minimise the effects of estate duty you need to understand the calculation thereof. The following provisions apply in determining your liability:

  1. Which property is to be included.
  2. Which property constitutes “deemed property”.
  3. Allowable deductions: the possible deductions that are allowed when calculating estate duty.

Property includes all property, or any right to property, including immovable or movable, corporeal or incorporeal – registered in the deceased’s name at the time of his/her death. It also includes certain types of annuities, and options to purchase land or shares, goodwill, and intellectual property.

Deemed property

A. Insurance policies

i)  Includes proceeds of domestic insurance policies (payable in South Africa in South African currency [ZAR]), taken out on the life of the deceased, irrespective of who the owner (beneficiary) is.

ii)   The proceeds of such a policy are subject to estate duty, however this can be reduced by the amount of the premiums, plus interest at 6% per annum, to the extent that the premiums were paid by a third person (the beneficiary) entitled to the proceeds of the policy. Premiums paid by the deceased himself/herself are not deductible from the proceeds for estate duty purposes.

iii)   If the proceeds of a policy are payable to the surviving spouse or a child of the deceased in terms of a properly registered antenuptial contract (i.e. registered with the Deeds Office) the policy will be totally exempt from estate duty.

iv)  Where a policy is taken out on each other’s lives by business partners, and certain criteria are met, the proceeds are exempt from estate duty.

B.  Benefits payable by pension and other funds by or as a result of the death of the deceased

C.  Donations at date of death
Donations where the donee will not benefit until the death of the donor and where the donation only materialises if the donor dies, are not subject to donations tax. These have to be included as an asset in the deceased estate and are subject to estate duty.

D.  Claims in terms of the Matrimonial Property Act (accrual claim)
An accrual claim that the estate of a deceased has against the surviving spouse is property deemed to be property in the deceased estate.

E. Property that the deceased was competent to dispose of immediately prior to his/her death (Section 3(3)(d) of the Estate Duty Act), like donating an asset to a trust, may be included as deemed property.

Deductions
Some of the most important allowable deductions are:

  1. The cost of funeral, tombstone and deathbed expenses.
  2. Debts due at date of death to persons who have their ordinary residence in South Africa.
  3. The extent to which these debts are to be settled from property included in the estate. This includes the deceased’s income tax liability (which includes capital gains tax) for the period up to the date of death.
  4. Foreign assets and rights:
    a. The general rule is that foreign assets and rights of a South African resident, wherever situated, are included in his/her estate as assets.
    b.  However, the value thereof can be deducted for estate duty purposes where such foreign property was acquired before the deceased became ordinarily resident in South Africa for the first time, or was acquired by way of donation or inheritance from a non-resident, after the donee became ordinarily resident in South Africa for the first time (provided that the donor or testator was not ordinarily resident in South Africa at the time of the donation or death). The amount of any profits or proceeds of any such property is also deductible.
  5. Debts and liabilities due to non-residents:
    a.  Debts and liabilities due to non-residents are deductible but only to the extent that such debts exceed the value of the deceased’s assets situated outside South Africa which have not been included in the dutiable estate.
  6. Bequests to certain public benefit organisations:
    a.  Where property is bequeathed to a public benefit organisation or public welfare organisation which is exempt from income tax, or to the State or any local authority within South Africa, the value of such property will be able to be deducted for estate duty purposes.
  7. Property accruing to a surviving spouse [Section 4(q)]:
    a.  This includes that much of the value of any property included in the estate that has not already been allowed as a deduction and accrues to a surviving spouse.
    b.  Note that proceeds of a policy payable to the surviving spouse are required to be included in the estate for estate duty purposes (as deemed property), but that this is deductible in terms of Section 4(q).
    c.  Section 4(q) deductions will not be granted where the property inherited is subject to a bequest price.
    d.  Section 4(q) deductions will not be granted where the bequest is to a trust established by the deceased for the benefit of the surviving spouse, if the trustee(s) has/have discretion to allocate such property or any income out of it to any person other than the surviving spouse (a discretionary trust). Where the trustee(s) has/have no discretion as regards both the income and capital of the trust, the Section 4(q) deduction may be granted (a vested trust).

Portable R3.5 million deduction between spouses

The Act allows for the R3.5 million deduction from estate duty to roll over from the deceased to a surviving spouse so that the surviving spouse can use a R7 million deduction amount on his/her death. The portability of the deduction will only apply when the entire value of the estate of the first dying spouse is left to the surviving spouse.

Life assurance for estate duty

Estate duty will also normally be leviable on these assurance proceeds.

Source: Moore Stephens’ Estate Planning Guide.

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.