In the Collett case the court found that in terms of section 86(10) of the NCA, when a consumer is in default of the credit agreement, a credit provider may terminate the debt review process at any time after the prescribed 60-day period expires.

However, in the Juselius case, the court found that a notice sent to a consumer by the credit provider in terms of s129(1) (letter of demand) constitutes the first step in legal proceedings. In addition, it found that the relevant credit agreement must be excluded from the debt review process altogether.

In practice, the combined effect of these two judgments is that, although credit providers may be protected from unnecessary delays caused by unsubstantiated debt review applications, more credit agreements are being excluded from the debt review process than ever before. This is because credit providers have been sending out notices in terms of section 129(1) (letter of demand) as soon as an over-indebted consumer defaults on his payments in terms of the original credit agreement. These notices then have the effect of precluding the accounts from being included in the debt review process. As a result the over-indebted consumer, who needs the relief that the NCA holds, finds debt counselling to be long on promises but short on delivery. The scales are clearly out of balance.

Further to the above, in Juselius, an additional question was placed before the court relating to whether such a section 129(1) notice constitutes ‘the step’ for purposes of the debt review application. The court answered in the affirmative and confirmed that section 85 may offer a glimmer of hope in instances where a section 129(1) notice (letter of demand) excludes the credit agreement from the debt review process.

Therefore, when they show good cause, the debt counsellor and consumer have the relief provided in section 85(a) at their disposal. In terms of section 85, the court may “refer the matter directly to a debt counsellor with a request that the debt counsellor evaluate the consumer’s circumstances and make a recommendation to the court”. Good cause has never been defined and each case is measured individually against its specific facts. In addition, the individual measurement of good cause implies that the court can exercise its discretion in determining whether or not it is just and equitable. However, this may lead an already over-indebted debtor to incur additional costs to try and alleviate his or her over indebtedness.

Debtors and creditors and role players such as attorneys and debt counsellors should observe these provisions before deciding how to proceed with a specific matter of indebtedness.

Certain provisions, including those relating to a summons lapsing have been omitted from the new rules. Does this mean that a summons can no longer lapse? And if so, what about prescription?

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The other side of that coin is that fixed-term contracts are often used as substitutes for a probation period, a practice that can expose employers to the ramifications of unfair dismissal.

The National Small Business Chamber (Sanlam Cobalt) published an article on 15 March 2012 that highlighted another pitfall of this practice. When an employee works beyond the contract’s expiry date without signing a new agreement then the employee would be regarded as being indefinitely or permanently employed.

This is based on section 186(1)(b) of the Labour Relations Act 66 of 1995, which makes provision for a situation where an employee has a reasonable expectation of renewal of a fixed term contract:

“on the same or similar terms but the employer offered to renew it on less favourable terms or did not renew it”.

These are important considerations that will help to distinguish between true fixed-term agreements and those that are used to circumvent probation or the laws relating to fair dismissals by purporting to be fixed-term agreements.

Notwithstanding the above in the recent case of University of Pretoria v CCMA & others [2011] ZALAC 25, the Labour Appeal Court found that

“once an employee has established a reasonable expectation of a renewal of a fixed term contract, an obligation is created to renew this contract indefinitely on the same or similar terms, subject to a fair reason for refusing to do so. Therefore, once a contract has been renewed because there was a reasonable expectation of a renewal, taking into account the series renewal of the employee’s fixed term contract in the past, this expectation creates an obligation to renew indefinitely and, in this fashion, the obligation transforms so as to create a duty upon the employer to offer the employer a permanent contract”

Importantly though, according to Johannesburg-based Advocate Nel, contrary to the established interpretation of section 186, the Court further found that …“the words chosen by the legislature, absent an amendment to the legislation, cannot carry the burden of a reasonable expectation of a renewal of that which had previously governed the employment relationship, namely a fixed term contract which had previously been enjoyed, which had now expired and, by virtue of the factual matrix created, at best, a reasonable expectation of a renewal.”

The media has reported on many significant changes that have been made to the labour legislation passed on 22 March 2012, but there is still uncertainty about the full extent of the effects of the legislation.

Another consideration is that fixed term contracts can be deemed fixed-term or contractor or sub-contractor agreements, depending on how the agreements are structured. In this case, the Consumer Protection Act may apply. This means that the rights and duties set for suppliers and consumers must be noted and parties to these agreements must observe the provisions relating to early termination, among other issues.

We will continue to monitor the progress. Until the new legislation has been implemented, employers are still urged not to use fixed term contracts to avoid or circumvent their legal obligations and to consult with their attorneys before entering into agreements.

The other two finalists in the professional category are Sadia Chand  (Chand Environmental Consultants) and Dr Marlene Wasserman (Dr Eve).

The winner will be announced at an event on 25 May 2012.

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Business rescue, applied before a company is liquidated, is a less restrictive measure than judicial management. It is a new concept introduced by the Companies Act of 2008 and aims to aid a company which appears unlikely (reasonably) to pay all its debts as they become due within the next six months. Because there are many uncertainties in this newly introduced process, the courts have considered the practical application of the provisions in recent cases.

According to an article in Financial Mail (author Jooste issue 24/02/2012); an article published by South African Institute of Chartered Accountants (SAICA 01/2/2012); and in terms of section 133 of the Companies Act 71 of 2008, creditors’ rights are suspended during business rescue proceedings. This means they cannot enforce their debts.

Many have presumed that this moratorium extends to sureties and/or guarantees, but is this really the case?

The Western Cape High Court has recently tested whether or not this applies to sureties given to creditors in the case between Southern Palace Investments 265 (Pty) Ltd and Midnight Storm Investments 386 LTD and others (unreported case number: 15155/2011 delivered on 25/11/2011).

When it denied the application for Southern Palace Investments to be put under business rescue, the court held that:

…. on the vague and undetailed information before me, no reason to believe that there is any prospect of the business of the respondent being restored to a successful one. There is not even a concrete plan available for consideration.

In another recent Western Cape High Court judgement (reportable Investec Bank Ltd v Bruyns 19449/2011 handed down 14/11/2011), the bank sought to enforce a surety given by an individual for the company. To all intents and purposes, the company was insolvent but had instituted proceedings to put itself under business rescue instead.

The court ruled broadly as follows:

1. That the wording of section 133(2): “is so explicit that it is impossible to avoid its plain meaning. It refers to a surety by the company and to its enforcement by another person against the company.”
2. Determining who the moratorium applied to is dependent on whether it is in personam (which is applicable to the company only: “a personal privilege or benefit in favour of the company”) or whether it is in rem (when it is attached to the debt itself). If the moratorium is in rem, the surety would have protection. For in rem to apply, the debt must be “invalid, extinguished or discharged”. In the court’s view, this was not the case.
3. The court therefore ruled in favour of the bank and allowed them to claim the debts owed to them by enforcing the sureties.

In light of this, we recommend that individuals carefully consider the risks involved before giving sureties in the form of, or as part of a separate legal agreement. If they do so, or have already done so, it is important to seek legal advice and to ensure that sureties are professionally drafted by an attorney. In addition, creditors should seek legal advice about whether their claims are enforceable before electing to enforce them. With the assistance and appropriate guidance of an attorney, as a general rule creditors should oppose any application of a debtor to be placed under business rescue.

Suspensive conditions are commonly encountered in contracts for the sale of immovable property (e.g. deposit requests). They are often misunderstood, which can result in little recourse.

According to Mia v Verimark Holdings (Pty) Ltd (522/08) [2009] ZASCA 99 (18 September 2009):

The conclusion of a contract subject to a suspensive condition creates ‘a very real and definite contractual relationship’ between the parties. Pending fulfilment of the suspensive condition the exigible content of the contract is suspended. On fulfilment of the condition the contract becomes of full force and effect and enforceable by the parties in accordance with its terms. No action lies to compel a party to fulfil a suspensive condition.

 

If it is not fulfilled the contract falls away and no claim for damages flows from its failure. In the absence of a stipulation to the contrary in the contract itself, the only exception to that is where the one party has designedly prevented the fulfilment of the condition. In that event, unless the circumstances show an absence of dolus (intent) on the part of that party, the condition will be deemed to be fulfilled as against that party and a claim for damages for breach of the contract is possible.

In other words, the fulfilment of a suspensive condition is a pre-requisite for a contract to come into force and effect. Similar to the fulfilment of a suspensive condition, in addition to any condition for the creation of a contract, there are a number of requirements that must be fulfilled.

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When a couple marries under foreign laws, certain considerations should be noted.

An article by Dudley Lee in the South African Deeds Journal explains the regime governing foreign marriages. For practical reasons, marriages governed by the laws of another country are out of community of property, with the retention of the marital power for Deeds Office and conveyancing purposes.

When a spouse in a foreign marriage owns immovable property, ideally both spouses should enter into the transaction together, or one spouse should assist the other.

With regard to land ownership, the effects of foreign marital property regimes becomes particularly relevant in estate planning, will drafting and on death or divorce.

When a spouse dies, or when the couple divorce, and the property is to be transferred, the Deeds Office must be satisfied that the transfer complies with the relevant legal provisions. In divorce cases, this is relatively simple to satisfy.

It is more complex when a spouse dies, as t. thehe transfer must comply with the Liquidation and Distribution account, filed with the Master of the High Court. The will account must lay open for inspection, as prescribed by the Administration of Estates Act 66 of 1965. Ensuring compliance with this condition is now included in section 42(1) of the Administration of Estates Act, arising from Ex Parte Amm’s Executors 1921 TPD 273.

In Ex Parte Broodryk 1944 TPD 57, “It was contended that the Registrar of Deeds had no authority to question the liquidation account confirmed by the Master. But under regulation 50, published in terms of Act 47 of 1937, it is provided that where land is to be transferred in pursuance of the terms of a will the Registrar may require a copy of the liquidation account to be lodged in addition to other documents…”

For foreign couples, being married in community of property helps to speed up property transfers, is more cost-effective, and ensures that the couple benefits from section 45 of the Deeds Registries Act 47/1937 endorsement process versus a  complete transfer. According to Registrars Conference Resolution (RCR) 1/2003 the couple must lodge proof of community of property. In 2004 another resolution, RCR 5/2004, was issued to clarify the form of proof required. The resolution states: “Proof from the foreign mission of the relevant country or an opinion from an expert will be required”.

In most foreign countries, marriages solemnised in South Africa will be recognised when an unabridged marriage certificate and duly authenticated registered antenuptial contract is submitted to the relevant country’s consular authority.

If a document is to be used outside South Africa, it must be authenticated as prescribed in rule 63 of the High Court rules, as amended by Government Notices R 500 dated 12 March 1982 and R 801 dated 23 April 1982; and the Hague Convention of 5 October 1961.

In addition, a marriage certificate is not necessarily proof of the laws or country governing the marriage. For example, in South Africa the marriage is governed by the laws of the country where the husband is domiciled at the time of the marriage. However, we are of the opinion that the presence of an antenuptial contract is prima facie proof of the provisions or country’s laws regulating a marriage.

In some instances, properly authenticated antenuptial or similar contracts may be sufficient for Deeds Office purposes, aiding in proper estate planning and simplifying the estate’s administration.

We offer a specialist notarial service to authenticate documents. We are conveyancers and experts in drafting wills and estate planning.

If you are a couple living in a foreign country, we strongly advise to speak to a specialist attorney and to act pro-actively in having your marriage legally recognised in that country.

Now, however, with the enactment of the CPA, people are no longer bound to such rigid conditions. The CPA ensures more flexibility, but it there are some risks and challenges.

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Section 20 of the Insolvency Act provides that the insolvent is stripped of the estate as soon as the estate is sequestrated. The property is then vested in the Master who appoints a trustee. Once appointed, the trustee takes on the rights to the property.

In terms of section 21 of the Insolvency Act, if the insolvent has a spouse whose estate has not been sequestrated, then the spouse’s property is treated as if it is part of the insolvent’s estate. The rights to the spouse’s property vest in the Master and in the trustee. The trustee must release the property before the spouse can pursue any dealings with the property.

Under section 127A, the estate is automatically rehabilitated if the insolvent is not rehabilitated by the court within ten years from the date of sequestration. However, the insolvent estate remains vested in the trustee until the insolvent is re-invested with the estate. This can only happen after an offer of composition is presented, as section 119 provides.

Where this relates to immovable property the registrar of deeds must endorse the title deed of any immovable property before the insolvent can deal with the property in question.

It is important to note that, under the National Credit Act 34 of 2005 (NCA), creditors may impose insolvency proceedings and thereby circumvent debt enforcement remedies provided for in the NCA. This was confirmed in the case of Naidoo v Absa Bank Ltd 2010 4 SA 567 SCA and thereafter in another judgement First Rand Bank Ltd v Evans 2011 4 SA 597 KZD. This means that a creditor may still institute insolvency proceedings against a debtor even if the debtor is under debt counselling or review.

If an insolvency application is brought, it is therefore important for both the debtor and their spouse to consider the effects of insolvency, and to consider better ways to manage their indebtedness before it gets to that point.