Housing and property law, Insurance

WHAT HAPPENS AFTER YOUR HOUSE HAS BEEN BURNT TO THE GROUND?

There are definite steps that a homeowner will need to take if he ever has the traumatic experience of having his house burnt to the ground.

Over and above all the emotional and financial tension it causes in a person and his family, there will be several steps that a homeowner will need to take before the problems accompanying such an experience will be resolved.

The first step that needs to be taken by the homeowner is to report the matter to the nearest police station. The reason for this is twofold. Firstly, by reporting the matter the homeowner will receive the necessary case number as required by most insurance companies. Secondly, the conduct of the third party may turn out to be a crime, for example, arson. Thereafter the complaint will be investigated by the police and handed over to the prosecuting authority that will decide if the third party should be prosecuted or not.

The second step is to report the matter to the insurance company together with the abovementioned case number. Thereafter the insurance company will investigate the claim and decide whether it is going to accept or reject the claim. The insurance policy will determine the ambit of the insurance company’s discretion in deciding whether to accept or reject the insured’s claim. The reason for this is that the insurance policy will determine the rights and obligations between the insurance company and the insured. If the insurance company decides to reject the insured’s claim the insured will have two further options at his disposal. The insured will be able to take the matter to the ombudsman for determination, or he may dispute the matter in a civil court based on breach of contract by the insurance company.

The third step will be to indemnify the insured if the claim is accepted by the insurance company. The amount that the insurance will pay out to the insured will once again be determined by the terms and conditions of the insurance policy. If the insurance company rejects the insured’s claim or if the insured decides not to claim from the insurance company, then the insured will be able to institute action against the third party if he can prove that the house was burned down as a result of the intentional or negligent conduct or omission by the third party or, alternatively, that the house was burned down as a result of a breach of a contractual obligation between the homeowner and the third party, had a contract been in place.

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.

Wills and Esates

THE LIVING WILL

Most  people are familiar with a will or testament and understand the importance of having this legal declaration drafted, by which the testator nominates an executor to manage his or her estate and provide for the distribution of his or her property to beneficiaries when he or she dies.

But how many people have considered drafting a living will?

A living will does not deal with assets, heirs and beneficiaries, but with the philosophy of death and dying, and should be considered carefully and drafted by a professional.

A living will is a legal document expressing a person’s wishes regarding life-prolonging medical treatment when that person can no longer voice his or her wishes.  It is also referred to as an advance medical directive.

A typical clause in a living will would read as follows:

If the time comes when I can no longer take part in decisions for my own future, let this declaration stand as my directive.

If I suffer from physical illness or impairment expected to cause me severe distress, rendering  me incapable of rational existence, from which there is no reasonable prospect of recovery,  I withhold my consent to be kept alive by artificial means and do not give my consent to any form of tube-feeding when I am dying; and I request that I receive whatever quantity of drugs and intravenous fluids as may be required to keep me comfortable and  free from pain  even if the moment of death is hastened. I withhold my consent to any attempt at resuscitation, should my heart and breathing stop and my prognosis is hopeless.

The living will tells the doctor and family that the patient does not consent to being kept alive artificially. It speaks for the patient at a time when the patient may be unable to communicate.

South African law and most religions accepts the validity of the living will, but none of the main religions accept euthanasia.

Euthanasia is against the law. Sean Davison, the respected UWC professor who helped his 85-year-old terminally ill mother, Patricia Ferguson, die in New Zealand by preparing a lethal dose of morphine, was arrested in New Zealand in September 2010 on an attempted murder charge.

It is important to have a properly drafted, legal living will to avoid far reaching and traumatic consequences for the loved ones that stay behind.

Many lawyers who practice in the area of estate planning include a living will and a health care power of attorney in their package of estate planning documents.

The advantages of a living will

  1. The directives respect the patient’s human rights, and in particular his or her right to reject medical treatment.
  2. It encourages full discussion about end-of-life decisions.
  3. It also means that the medical staff and caregivers are aware of the patient’s wishes, and knowing what the patient wants means that doctors are more likely to give appropriate treatment.
  4. It will avoid the situation where the patient’s family and friends have to take the difficult decisions.

Disadvantages of  a living will

  1.  Drafting this document  can  be very depressing.
  2. The person may still be healthy and not in a position to actually imagine that he or she could ever be in the position where they would voluntarily give up living.
  3. When the time comes to act on the living will the patient might have changed his or her mind and it is then often difficult to amend the document.

Important points to consider

  1. The living will should not be incorporated or attached to the last will and testament, which is only acted upon after death.
  2. A living will does not become effective unless the patient becomes incapacitated; until then the patient will be able to choose appropriate treatment.
  3. A certificate by the patient’s doctor and another independent doctor certifying that the patient is either suffering from a terminal illness or permanently unconscious, is required before the living will becomes effective. In the case of a heart attack, the living will does not take effect. A living will is only executed when ultimate recovery is hopeless.
  4. You have to notify your doctor and family of your living will and preferably have copies of the document available for the doctor, hospital  and  family.

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.

Consumer Law, Contracts

CANCELLATION OF THAT GYMNASIUM CONTRACT

We have all made New Year’s Resolutions. This year I will start exercising, eating healthy and spend less time at the office and more with the family. In order to fulfil this resolution, you join the local gymnasium as soon as you return from your December holiday. It does not bother you whether the agreement is for two, three or four years. This year you are going to keep that resolution!

Then winter arrives and you spend more time at the office and at the fireside and less time in the gymnasium. By August you recognise the debit order of the gymnasium on your bank statement, knowing full well that you have not been there for at least two months.

The Consumer Protection Act (“the act”) has limited the effect of fixed-term agreements containing automatic renewal clauses for a further fixed term. As the legislator has given a wide definition to the words “goods” and “services”, most fixed-term agreements will fall within the scope of the act. Section 16 of the act provides that any consumer may cancel a long-term agreement with twenty business days’ notice, which notice must be in writing, unless both parties to the agreement are juristic persons.

The act then provides that the supplier may be entitled to a “reasonable cancellation penalty” payable by the consumer for cancelling the fixed-term agreement. What constitutes a reasonable cancellation penalty will depend on the type and nature of the contract.

Lester Timothy of Deneys Reitz Attorneys uses the example of a mobile phone contract, an analogy most of us will understand. A consumer enters into a two-year contract with a mobile phone service provider and simultaneously purchases a handset to be paid by monthly instalments in the course of the two-year contract. The service provider will thus have incurred expenses regarding the handset. Therefore, in the event of the consumer cancelling the contract, it will be acceptable for the mobile service provider to charge the consumer for the outstanding balance of the handset to recover the expenses incurred.

Where a supplier incurs no significant additional cost as a result of the cancellation of the contract, the supplier will have more difficulty to establish the reasonableness of any cancellation penalty unless a discount is given.

You may therefore approach that gymnasium and notify them in writing of your intention to cancel the agreement after twenty business days. Depending on the remaining period of your contract and the wording of the agreement, you will have to pay a reasonable cancellation penalty. However, as the gymnasium did not incur significant additional costs as a result of your cancellation, you will be entitled to a discount on the remaining balance of the agreement.

Negotiate the cancellation penalty fee with the gymnasium. You may be surprised what the offer of an immediate payment as cancellation penalty can do.

And next year, rather buy running shoes, even expensive ones. They will wait patiently in your wardrobe till the following New Year’s Day …

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.

Credit law

RESCISSION OF JUDGEMENT

Imagine receiving the nasty surprise that default judgement has been entered against your name because of a summons that you have never even received. It is necessary that you know the procedure of how to rescind a default judgement to get you out of this unwanted situation.Many people are confronted with the unfortunate situation of a judgement being entered against their name, without even being aware that legal action is being taken against them. The reason for this is that when a party fails to deliver a notice of intention to defend a summons, a Plaintiff is entitled to lodge an application for default judgment.[1]

The reason for many Defendants not filing a notice of intention to defend, is the fact that they simply never receive the summons initiating an action against them. Personal service of documents by the Sheriff is only required where the matter affects a person’s personal status, such as with divorces and sequestrations. As it is not a requirement for the Sheriff personally, to serve a summons on a person, it can lead to situations where the Defendant never sees the summons, although the Sheriff stated that the summons has been legitimately served.[2] An example hereof many people who indicate their domicilium citandi et executandi or nominated address where notices are sent, in an agreement.

In the event of the Defendant moving, the Sheriff will still deliver the summons to this address, but the Defendant will never receive it.In the event of a Defendant not receiving a summons, certain steps have to be taken to have the judgment rescinded. The Defendant has to serve and file his application for rescission of judgment within 20 days after becoming aware of the judgment that was entered against him.[3] The Defendant (now the Applicant) is required to set out in an affidavit why the matter was not defended and what the bona fide defence is to the claim.  The onus is upon the Applicant to set out legitimate reasons for why the matter was not defended.[4]

When bringing an application for the rescission of judgement before court, the following principles are applicable:[5]

The Applicant must give a reasonable explanation for his default. The court will be unwilling to help the Applicant if it is found that he was aware of the proceedings against him or if the default was simply due to his own negligence. If the Applicant’s default is of a wilful or negligent nature, these will serve as considerations that the court will take into account when deciding whether an application should be granted.

In many cases an Applicant simply rescinds a default judgement to delay the inevitable. It is therefore necessary for the Applicant to show that he is not simply delaying the Plaintiff’s claim. A bona fide defence, in other word a genuine defence, must therefore be shown, although it is not required to deal fully with the merits thereof or produce any evidence in this regard.

Ultimately, the court has discretion whether to rescind the default judgment or not, based on whether good cause was shown by the Applicant.[6]

Although it involves an unwanted and often lengthy and expensive process, it is important to have any judgments against your name rescinded as soon as possible, as they have a negative impact on your credit rating. These judgements, if executed, will also leave you highly annoyed when the Sheriff shows up on your doorstep with a warrant of execution to seize your personal belongings.

[1] Magistrates Court, Rules of Court, Rule 12(1)(c)

[2] Magistrates Court, Rules of Court, Rule 9(3)

[3] Magistrates Court, Rules of Court, Rule 49(1)

[4] Du Plessis v Tager 1953 (2) SA 5 (O)

[5] Grant v Plumbers (Pty) Ltd 1949 (2) SA 470 (O)

[6] De Witts Auto Body Repairs v Fedgen Insurance Co Ltd 1994 (4) SA 705

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.

Wills and Esates

SOME POINTERS FOR PLANNING YOUR ESTATE

The main aim of planning your estate is to ensure that as much of the accumulated wealth is utilised for your own benefit and for the maximum utilisation of dependents on your death.”Estate planning” has been defined as the process of creating and managing a programme that is designed to:

  1. Preserve, increase and protect your assets during your lifetime;
  2. Ensure the most effective and beneficial distribution thereof to succeeding generations.

It is a common misconception that it revolves solely around the making of a Last Will and Testament, or the structuring of affairs so as to reduce estate duty.

Each person’s estate is unique and should be structured according to his/her own unique set of circumstances, goals and objectives.

The lack of liquidity on the date of death may cause for the deceased’s family members and dependents to suffer hardship, as certain assets might be sold by the executor to generate the cash needed.

Liquidity means that there should be enough cash funds to provide for:

  1. Paying estate duty;
  2. Settling estate liabilities and administration costs;
  3. Providing for other taxation liabilities that may arise at death, such as capital gains tax.

Technically the estate is frozen until such time as the Master of the High Court has issued Letters of Executorship.

Dying without executing a valid Last Will and Testament, your estate will be dealt with as an intestate estate, and the laws relating to intestate succession will apply. The Intestate Succession Act determines that the surviving spouse will inherit the greater of R125 000 or a child’s share. A child’s share is determined by dividing the total value of the estate by the number of the children and the surviving spouse. If the spouses were married in community of property, one half of the estate goes to the surviving spouse as a consequence of the marriage, and the other half devolves according to the rules of intestate succession. If there is no surviving spouse or dependents, the estate is divided between the parents and/or siblings. In the absence of parents or siblings, the estate is divided between the nearest blood relatives.

An executor is entitled to the following remuneration:

  1. Remuneration fixed by the deceased in the Last Will and Testament; or
  2. 3.5% of gross assets; or
  3. 6% on income accrued and collected from date of death.

Executor’s remuneration is subject to VAT where the executor is registered as a vendor.

Where the value of the estate exceed R3.5 million, estate duty will become payable on the balance in excess of R3.5 million, with the exception of the property bequeathed to a surviving spouse, which are exempt from estate duty and/or capital gains tax.

Section 3 of the Subdivision of Agricultural Land Act prevents the subdivision of agricultural land, and such land being registered in undivided shares in more than one person’s name is subject to Ministerial approval.

A minor child is a person under the age of 18 years of age, and any funds bequeathed to a minor child will be held by the Guardian’s Fund, which falls under the administration of the Master of the High Court. These funds are not freely accessible, and are usually invested at below market interest rates. It is thus advisable to provide for minors by means of a trust.

The Close Corporations Act provides that, subject to the association agreement, where an heir is to inherit a member’s interest (in terms of the deceased’s Will), the consent of the remaining members (if any) must be obtained. If no consent is given within 28 days after it was requested by the executor, then the executor is forced to sell the member’s interest.

Section 3(3)(d) of Estate Duty Act determines that where an asset is transferred to a trust during an estate planner’s lifetime, yet the estate planner, as trustee of the trust retains such power as would allow him to dispose of the trust asset(s) unilaterally for his own or his beneficiaries’ benefit during his lifetime, then such asset(s) may be deemed to be property of the estate planner and included in his estate for estate duty purposes.

Where the parties are married in community of property, the surviving spouse will have a claim for 50% of the value of the combined estate, thus reducing the actual value of the estate by 50%. The estate is divided after all the debts have been settled in a deceased estate (not including burial costs and estate duty, as these are the sole obligations of the deceased and not the joint estate). Only half of any assets can be bequeathed.

The proceeds from life insurance policies can be used to:

  1. Generate income to maintain dependents while the estate is dealt with;
  2. Pay estate expenses: funeral, income tax, estate administration, estate duty.

All proceeds of South African “domestic” policies taken out on the estate planner’s life, where there is no beneficiary nominated on the policy, will fall into his estate on his death.

Where a beneficiary is nominated on the policy, the proceeds will be deemed property for estate duty purposes, even and although they are paid directly to the beneficiary (subject to partial exemptions based on policy premiums).

Policies which are exempted from inclusion for estate duty purposes are buy and sell, key man policies, and those policies ceded to a spouse or child in terms of an antenuptial contract.

Certain assets in a deceased estate are excluded from capital gains tax:

  1. Assets for personal use (with certain exceptions);
  2. Assets that accrue to the surviving spouse;
  3. Assets bequeathed to approved public benefit organisations;
  4. The proceeds from life assurance policies; interests in pension, provident or retirement annuity funds;
  5. The first R2 million in respect of a primary residence;
  6. The first R750 000 in respect of small business assets;
  7. Currency, excluding gold and platinum coins.

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.

Children’s Act

ENTERTAINMENT AT YOUR LOCAL RESTAURANT OR NURSERY: WHO BEARS LIABILITY FOR YOUR CHILD’S INJURY?

We often hear of accidents in which a child or toddler is injured. Has this become something which society accepts as the norm … that accidents do happen?

Who bears liability in this case and who is responsible for safety in these situations?

Accidents happen so quickly – the kind which turns a day of excitement into a nightmare filled with horror. These types of freak accidents can happen in the blink of an eye if the necessary steps are not taken to prevent them.

Take your local restaurant as an example. Nowadays every restaurant has some sort of playroom or entertainment area, which is available for the use of children and toddlers. These entertainment areas have now also become popular at nurseries and even at functions such as weddings or parties, in order to keep the youngsters entertained. The question remains – who is to be held responsible for ensuring the safety of all at these entertainment places? What is the legal position today in South Africa?

In order to determine the legal position we have to relate to some practical examples, thus we will make use of the example where entertainment is offered at local nurseries or restaurants, as well as at functions. The Children’s Act will find application hereto.

Section 140 of the Children’s Act 38 of 2005 finds application if:

  1. The place of entertainment is accessible through the use of doors, stairs or even lifts and this includes entrance by mechanical means;
  2. The majority of the people entering the area are children; and
  3. The number of people, including children, entering the premises, is more than 50 at a time.

In the abovementioned case the person providing the entertainment must take notice of the measures to be applied as set out in the Commentary on the Children’s Act, with specific reference to Section 140 thereof.

The person providing entertainment in an area qualifying in terms of the above, is also required to know how many people, including children, can be accommodated on the premises, and must also ensure that there is a sufficient number of attendants available to assist in ensuring that too many children do not enter the area of entertainment, or alternatively ensure, upon admittance, that it is completely safe for them to do so.

Should the number of people (including children) exceed 50 in total, it remains the responsibility of the person providing the entertainment to ensure that all the reasonable steps and precautionary measures are taken to ensure the safety of the children and other people at such a place of entertainment, in order to ensure the safety of all at all times.

I refer again to the example of the restaurant or function. These places of entertainment sometimes accommodate large numbers of children at a time, even toddlers. This would require strict adherence to the safety measures set out.

A children’s party, where a jumping castle is available, is another example. For instance, it is the birthday party of Mr X’s daughter, and Mrs Y has offered to set up her jumping castle at the party for the entertainment of the children. In this case it would remain the responsibility of Mrs Y to ensure that all safety measures are complied with and she, as host of the entertainment, will be held liable to ensure the safety of the children. Should Mrs Y not be held liable for some reason, the liability to ensure the safety of the children will fall upon Mrs Y’s principal, as the “agent of the entertainment”.

It remains of utmost importance for the presenter or agent of the entertainment to take all reasonable steps necessary to ensure the safety of the children and even the toddlers, insofar as it is possible. In situations such as these, where large numbers of children are accommodated, stricter measures of safekeeping will be demanded.

This brings us to another requirement: The requirement that the movement of all participants to the specific entertainment must also be monitored at all times.

The overall requirements to qualify in terms of Section 140 create the impression that the section and the measures to be taken only find application in situations where entertainment is presented indoors. This is in fact not the case. Outdoor entertainment areas, where access is controlled, also fall under these criteria. Outdoor areas such as beaches and open fields will obviously not form part of or fall under the criteria, seeing that there is no regulation of access to such places.

In summary we can thus conclude that the responsibility to ensure the safety and protection of the children making use of the entertainment areas will be that of the “entertainment organiser“ or “entertainment manager”, and that this person should take the following steps:

  1. Determine the maximum safe accommodation space for the number of children or people who are expected to be entertained;
  2. Ensure that extra children do not enter such premises unless it is safe;
  3. Control the movement of all children within the area; and
  4. Ensure that overall safety is upheld within the vicinity of the entertainment area and the specific area at all times.

The problem is that things can still go wrong and this brings us to the steps that can be taken against the offender. Even though there are currently no criminal sanctions envisaged or determined, measures can still be implemented against the offender.

A person who is duly authorised by the municipal authority of the area may enter an enclosure at any given time in order to ensure that all the safety measures are complied with. If they are found not to be compliant, such duly authorised person may withdraw any licence that was granted/issued to permit the entertainment that is offered.

Other measures include municipal health and safety by-laws which may be invoked in order to disallow the entertainment until the necessary safety measures are taken. And finally, there is always the option of instituting a delictual claim against the offender in the event of injury or damages suffered as a result of negligence on the part of the offender.

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

ME, MY NEIGHBOUR AND THAT TREE

The house was just perfect – the right neighbourhood, well-established garden, beautiful trees waving graciously in the summer breeze with just the right amount of shade next to your swimming pool and veranda.And as the trees are those of your neighbour, no problem with pruning or the leaves, said the estate agent. You fell in love and your family loves the new home.

Autumn arrives. The leaves have changed colour and you have actually taken the competition-winning photographs right from your doorstep! When the leaves started falling, the swimming pool pump required repairs twice due to blockage and your Saturday golf has been replaced with hauling loads of leaves to the garden refuse. During the first thunder storm of the new season the wind ripped a branch off and whipped the branch through your electric fence, taking all off the wall.

The acorns made dents into your brand new pride and joy, whilst the ripe fruit falling down on your lawn has started to rot whilst you were at the beach house. You can’t wait for them to leave this weekend to jump over the fence with your chainsaw … Problems with trees from adjacent gardens are as old as townships itself and since man moved into closer proximity to each other.

To merely jump over the fence and prune, or worse, cut down the tree to your satisfaction will not only constitute trespassing but also malicious damage to property. Many disgruntled neighbour has approached the courts demanding relief. The courts have carefully considered the basis on which you can approach the court, now generally considered as “nuisance”.

You will have to prove to the court that the inconvenience caused to you by your neighbour’s tree is more than you just being fanciful, elegant or having dainty modes and habits of living.  The inconvenience caused must materially interfere with your ordinary physical comfort and your human existence.

The standard that the court will consider regarding this infringing of your health, well-being or comfort in occupation of your property, will be that of a normal person of sound and liberal tastes and habits. The test of reasonableness shall be applied taking into account general norms acceptable to a particular society. Actual damage to your property is not a requirement.

The court will, however, also consider the nuisance, even if the tree(s) is actually causing damage, balancing this with your responsibility to tolerate the natural consequence of the ordinary use of the land. In other words, the court will consider the dispute and the decision will involve balancing the competing interests of you and your neighbour.

The judgement of Judge De Vos in Vogel vs Crewe and another 2003 (4) SA 50 (T) raised a further very important aspect – the environment.

In a world where trees and nature are considered all the more important for our well-being and that of the earth, all the more careful consideration should be taken before a demand for the cutting down of a tree is granted.

Judge De Vos noted that trees form an essential part of our human environment, not only giving us aesthetic pleasure but also being functional in providing shade, food and oxygen. And, like many other living things, trees require, in return for the pleasure provided, a certain amount of effort and tolerance.

With our increasing awareness of the importance of protecting our environment, we need to become more tolerant of the inevitable problems caused by the shrinking size of properties and the greater proximity of neighbours, and consequently, the neighbours’ trees.

Before you sell your property and move to another neighbourhood altogether, consider a friendly discussion with your neighbour and his pruning company of choice, from YOUR side of the fence.

Explain to your neighbour which branches of which trees are problematic or show him the cause for your concern. And be willing to reach an agreement somewhere in the middle, taking the type of tree, its form of growth and the balance of the tree into consideration. It will not suffice to demand the removal of a large branch unbalancing the tree which will then fall over during the next storm taking down your wall!

If all your efforts, including friendly letters and e-mailed correspondence fall on deaf ears, you are allowed to prune all branches as from the point that it protrude over the wall into your property. You are not allowed to lean over the wall to cut those branches at the neighbour’s side of the wall. You will also be responsible for removing the branches from your property after you have pruned the tree in this manner.

So take your cup of tea, and have a good, impartial look at that “offending” tree. See the insects, the birds fluttering around and the odd lizard. Tranquil, is it not? Must that tree go, or can you tolerate its existence, maybe with a little pruning? Cutting it down, you might just open a view into your neighbour’s garden (or house), which is even less pleasing!

Consider the environment. Tolerate that tree. In the summer you will relish the shade.

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.

Contracts

MY BROTHER’S KEEPER: THE UNFORTUNATE BUILDING CONTRACTOR AND THE ENRICHED OWNER

A building contractor entered a binding and legal, written building contract with a closed corporation to erect a residential house on land registered to the sole member of the corporation and a third party.

Occupation was taken and the builder released the property (and thus his builder’s lien) to the owners of the land, in spite of the final certificate still outstanding, due, owing and payable.

The building contractor has issued summons in terms of the written building contract against the corporation, which has no assets. The question arose whether the building contractor has an alternative claim against the co-owners of the land for enrichment as the land has been improved with the residence.

The development of the law of enrichment in South African was dealt a severe blow in the judgement of Couws vs Jester Pools (Pty) Limited 1968 (3) SA 563 (T) when Justice Jansen took quite a narrow view on enrichment and claims in terms thereof.

Jester Pools erected a swimming pool on a property under the impression that it was contracted by the owner, whilst in fact they contracted with a third person. The court ruled that the building contractor had no claim against the actual owner of the property based on enrichment either calculated on the increase in value of the property or the actual expense of the swimming pool.  Jester Pools had to accept the loss and pay the legal cost of the owner as well.

The keeper of his “brother’s” goods, a person or entity thus acting on behalf or in the interest of another, in certain circumstances, could incur costs or expenses in the process. The recovery of these costs or expenses can be problematic.

Depending on the facts, a claim can be instituted either on enrichment (conditio indebiti or condition sine causa) or based on unauthorised administration (negotiorum gestio).

Any claim based on enrichment, whether conditio indebiti or condition sine causa conditio indebiti or condition sine causa each has four, almost similar essential elements a claimant must fulfil to be successful.

In short, the elements entail enrichment of the other party at the expense of the keeper, impoverishment of the keeper and absence of justification thereof.

A claim in terms of the negotiorum gestio also has four essential elements.

Firstly, the affairs managed by the keeper must be those of another. The keeper can be a company, trust or a natural person and the affairs that of a company, trust or a natural person.

Secondly, the other must be oblivious of the fact that his affairs are being managed.

Thirdly, and a very important element, is that the keeper must have had the intention to manage the affairs of another.

Fourthly, the management of the affairs should be conducted in a reasonable manner. Even if the management was unsuccessful, the caretaker shall have a claim against the other.  However, if the management was unreasonable, the caretaker will have no claim.

To succeed in a claim based on the negotiorum gestio, our builder will have to fulfil all of the above essential requirements. The contractual obligations between the builder and the corporation negate the intention to manage and the reasonableness thereof. In terms of the Couws vs Jester Pools judgement the builder will be limited to a claim in terms of the contract, with the risk of an empty judgement with little if any hope to recover any of the outstanding amount.

Luckily for our builder, thirty years after the Couws vs Jester Pools matter, two judgments have paved the way for an extension of the negotiorum gestio or unauthorised administration on behalf of a third party by the “extended” actio negotiorum gestorum or the actio negotiorum utilis. This development will specifically assist the building contractor as he had no intention to manage the affairs of another and it could assist where the reasonableness of his actions is questioned.

In ABSA Bank Limited t/a Bankfin vs Stander t/a CAW Paneelkloppers 1998 (1) SA 939 (C) J Van Zyl detailed the development of South African enrichment law. The judgement will provide any reader thereof with a cursory yet detailed background knowledge of this specific area in our law.

This judgement extends the reach of the enrichment law in that, although a general enrichment action is still not accepted or proposed, the holes caused by Couws vs Jester Pools are at least plugged. 

In the second judgement, McCarthy Retail Limited vs Shortdistance Carriers CC, delivered by    JA Schutz on 16 March 2001 under case number 110/1990, the Supreme Court of Appeal again carefully considered the position. The judgement refers to the predicament of our builder, but does not make a ruling which would constitute applicable case law. The comments do take the position further and clarify the case law noted.

The perceived injustice of the Couws vs Jester Pools-judgement has been rectified.

The last two cases combined does open an alternative claim to our building contractor against the actual registered owners of the stand on which the residence has been erected. In the event of the corporation not being able to fulfil its payment obligations towards our building contractor, the owners of the stand might just find themselves indebted to their keeper.

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

DISPUTES WITH BODY CORPORATE: HOMEOWNERS’ REMEDIES

Our office recently dealt with a matter where the trustees of the body corporate of a certain sectional title scheme clamped the wheel of the car of one of its homeowners because he did not park on his allocated parking bay.

Even though the homeowner did not park on his allocated parking bay, he could not understand why his vehicle got clamped for parking outside of his own front porch, when he was in and out of the house during the day. It seemed highly unfair and unreasonable to the homeowner.

It is a truism that every homeowner cannot do as he pleases as this would lead to total disorder in the sectional title scheme, and it is the duty of the trustees of the body corporate to enforce rules on owners and tenants alike. When one buys a property in a sectional title scheme one will more often than not find a provision in the agreement which states that homeowners, inter alia, will abide by the rules of the body corporate.

This begs the question whether or not the homeowner’s hands are tied if the rules were amended by a special decision taken at a general meeting by the trustees of the body corporate.

Remedies available to homeowners and tenants

If there is reason to believe that the trustees of the body corporate of a sectional title scheme have acted ultra vires (outside their powers), homeowners have a choice of two remedies – either arbitration or an interdict.

  1. Arbitration step-by-step

The discontented homeowner could apply for arbitration, the duration of which should not exceed a maximum of 52 days.

In terms of Section 71 of Annexure 8 of the Sectional Title Act 95 of 1986, the purpose of arbitration is not, as some believe, to achieve compliance. The prescribed process requires the discontented homeowner to submit his dispute in writing to the trustees of the body corporate of the sectional title scheme within 14 days of the problem arising, whereafter the trustees will review and attempt to settle the matter. Should the problem still not be resolved, either the homeowner or the trustees of the body corporate can request that the matter be referred for arbitration.

The arbitrator has wide discretion in making a costs award. He may order payment by one party, by more than one jointly, or in specific proportions, depending on the outcome of the arbitration. The arbitrator’s decision may be made an order of the High Court upon application by either party, or a party affected by the arbitration.

  1. Alternative remedy

There is a further remedy available to the homeowner, namely an interdict or any form of urgent or other relief by a court with jurisdiction.

But this line of action has elicited the following warning:

Furthermore, the interdependence of the owners and occupants of units and the unavoidable requisite of harmonious co-existence render an interdict inadequate and indeed improper in the sectional title context. A successful application for an interdict can permanently ruin the harmony of a scheme (LAWSA aw para 238).

In essence, if the rules of your body corporate allow the trustees to clamp your wheel should you disobey the rules, and you have reason to believe that your Body Corporate is acting outside of its powers and/or the rules are unreasonable, you may follow the steps as set out above.

REFERENCED WORK:

See the article “Managing the Unmanageable” by Tertius Maree, published in De Rebus, August 1999.

Also see the article “Arbitration in Sectional Title Disputes” by Tertius Maree, published in De Rebus, August 1998.

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

SELLER’S PROTECTION UNDER VOETSTOOTS CLAUSE LIMITED

A seller’s protection under the “voetstoots” clause in a deed of sale for immovable property is not as “absolute” as some might think. It is still the seller’s duty to inform prospective purchasers about all latent (hidden) defects in a property.

A seller’s failure to do so could cost the seller in the long run, as per a recent ruling by the Supreme Court of Appeal in Banda & Fynn vs Van der Spuy (781/2011) [2013] ZASCA 23 (22 March 2013).

Examples of latent defects are a leaking roof or a faulty geyser. It basically includes any defects that cannot be seen with the naked eye. Prospective purchasers will, for example, not see water marks on a ceiling resulting from a leaking roof in the “dry” months.

In the abovementioned case the sellers failed to inform the purchasers about the true extent of the damage to the property’s roof. The sellers were aware of the fact that the roof leaked and had some repairs done to it to try and fix the problem. On closer inspection by specialists it was found that the cause of the leaks were twofold. Firstly, the wooden roof poles were inadequate to properly support the weight of the thatch roof and resulted in the gradual sagging of the roof. Secondly, the pitch of the property’s thatch roof was only 35 degrees and not 45 degrees as it should be, which would have at least ensured that rain water would run off the roof. The specialists testified that due to the pitch of the roof being 35 degrees, water ran into the roof and caused the thatch to rot more quickly. It was found that the initial repairs were therefore not sufficient to stop the roof from leaking in future. The purchasers only discovered this after registration of the property and the sellers had to fork out to replace the roof, as the problem could not be permanently solved by doing repairs to it. Even though the sellers were not aware of the bigger problem, namely the incorrect pitch of the roof, they were still held liable because they were aware that the repairs which they had done were not adequate.

On the other hand, patent defects are still the purchaser’s responsibility. Prospective purchasers cannot sit back and think that if any problems occur after occupation, the sellers will be held liable. A patent defect is defined as “one which will be apparent on an ordinary inspection”*. An example of a patent defect will be a crack in a wall which shows through the paint. It is a prospective purchaser’s duty to ask the sellers about such defects and get all guarantees from the sellers in writing.

It is clear that a mutual responsibility rests on sellers and purchasers regarding defects in a property. Sellers should be honest regarding latent defects and purchasers should be vigilant, when viewing a property, for any patent defects. It will be wise for sellers to rather negotiate a lower purchase price due to defects in a property, and to disclose them to the purchaser. Failing to be honest with the purchaser could have huge financial implications for the seller after registration of the property.

References:

Banda & Fynn vs Van der Spuy (781/2011) [2013] ZASCA 23 (22 Maart 2013)

*Dictionary of Legal Words and Phrases, 2nd edition, Claassen

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.