The Body Corporate's Right to Block Property Transfer: A Case Analysis

Introduction:

In a November 2023 ruling by the Supreme Court of Appeal, The Body Corporate of Marsh Rose v Steinmuller, the court reaffirmed the authority of a body corporate to impede property transfers by withholding a levy clearance certificate. This power, enshrined in Section 15B(3)(a)(i)(aa) of the Sectional Titles Act, plays a crucial role in protecting community schemes. This article explores the case's details, the legal context, and implications for property owners and buyers.

Summary of the Law Pertaining to Sectional Titles:

Section 15B(3)(a)(i)(aa) dictates that the Registrar of Deeds cannot register property transfer without a certificate from the body corporate confirming full payment or suitable arrangements. The primary purpose is to safeguard community schemes by ensuring debt recovery from property owners.

Case Analysis - The Body Corporate of Marsh Rose v Steinmuller:

Background:

Mr. Steinmuller purchased a property in a foreclosure auction, where the conditions of sale made him responsible for charges, including those owed to the body corporate.

Legal Dispute:

The body corporate demanded R312,903.21 before issuing the levy clearance certificate, leading to a dispute resolved through Mr. Steinmuller's application to compel the body corporate.

High Court Decision:

The high court ordered the body corporate to issue the certificate but required certain actions, including a security deposit of R250,000 by Mr. Steinmuller.

Full Court and Supreme Court of Appeal (SCA):

The full court upheld the high court's decision, but the SCA ruled in favour of the body corporate, deeming the high court's order incompetent. There was an emphasis on the body corporate's incapacity to facilitate property transfer.

SCA's Legal Comparisons:

The SCA compared Section 15B(3)(a)(i)(aa) to Section 118(1) of the Municipal Systems Act, acknowledging the vital purpose of embargoes in securing debt recovery for bodies corporate.

SCA's Findings:

The SCA affirmed the body corporate's right to resist transfer until debts are settled, recognizing the protective role of embargoes for community schemes.

Cautionary Conclusion:

The potential for abuse notwithstanding, the SCA emphasized the value of protection for community schemes. Diluting the provision could jeopardize the financial stability of these schemes. While not a preferent claim, the embargo provides leverage for effective debt recovery. Financial institutions are advised to monitor non-payers to prevent complications in foreclosure proceedings.

Final Thoughts:

This case serves as a reminder for property market participants to carefully consider sale conditions and conduct due diligence. Understanding the implications of outstanding debts and the body corporate's rights is essential for a smooth property acquisition process. The legal landscape supports the notion that the body corporate's right to safeguard the financial health of community schemes remains a crucial aspect of property transactions.

 

Essack v Sun International: Legal Perspectives on Compulsive Gambling Liability

Introduction: In the case of Essack and Another v Sun International South Africa (Pty) Ltd and Others, the Gauteng High Court grappled with the liability of a casino owner for losses incurred by a compulsive gambler. The plaintiff, Essack, sought damages of R 5.2 million, alleging that the casino, despite his excluded status, allowed him to gamble and encouraged substantial losses. The court considered both statutory and common-law duties in its ruling and dismissed his claim for damages.

The court determined that the statutory obligations imposed on the casino were designed for the collective benefit of the community, rather than specifically addressing the challenges faced by individuals like Essack, who was regarded as the architect of his financial misfortune. The court pointed out that suggesting the regulations place a responsibility on the casino implies a scenario where a compulsive gambler could retain their winnings despite violating the rules, while simultaneously holding the casino accountable for their losses. Such a proposition, the court argued, would undermine the intended purpose of the regulations, and fail to align with the broader public interest, akin to the proverbial impossibility of having one's cake and eating it too.

Summary of the Law:

Statutory Claim and the Madrassa Principle: Essack's statutory claim, asserting a violation of gambling regulations, was dismissed by the court. The judgment contended that the regulations aimed at criminal offences were societal protection measures, not grounds for individual claims. However, it's argued that the Madrassa principle, which examines a statute's language for available remedies, was overlooked. This could potentially support a damages claim against the casino.

Delictual Claim and the Reeves Dictum: The court rejected Essack's delictual claim based on the Reeves dictum, stating that the law doesn't protect individuals from the harm they inflict upon themselves. Critics argue that this dictum is outdated, given contemporary South African statutes and regulations that mandate protection against self-inflicted harm.

Comparisons with Foreign Jurisdictions: The court cited foreign cases where no duty of care was imposed on casinos regarding problem gamblers. However, it is suggested that the court overlooked Australian and Canadian precedents where such duty of care was recognised in instances of problem gambling.

Legal Duty towards Problem Gamblers: The court took a stern stance on individual responsibility over the casino's role in causing losses. Contrarily, it's argued that casinos have a legal duty, per gambling regulations, to monitor and prevent problem gambling. These regulations align with the recognition of problem gambling as a serious issue by the Gauteng Gambling Review Commission.

Precedents on Commercial Hosts' Duty: While South Africa lacks the doctrine of commercial host liability, cases have established that commercial establishments, including casinos, must ensure the safety of patrons. This duty, akin to commercial host liability, demands reasonable steps to prevent foreseeable harm.

Conclusion: In conclusion, the Essack case's findings may be contestable, with potential counterarguments challenging the court's stance. The rejection of both statutory and delictual claims could be questioned, considering the Madrassa principle and evolving perspectives on individual responsibility versus institutional duties. Furthermore, the court's reliance on foreign cases may not fully capture the nuanced legal landscape surrounding problem gambling. The emerging recognition of casinos' legal duty to prevent harm to patrons, as seen in other jurisdictions, raises questions about the adequacy of current legal standards in South Africa. As gambling-related issues continue to evolve globally, future cases may prompt a reconsideration of the legal responsibilities of casinos towards compulsive gamblers, paving the way for a more nuanced and comprehensive legal framework.

 

Why SME’s need contracts

Just like a person avoids drafting a will (because it’s a concession to mortality), some business owners avoid concluding contracts (with employees, suppliers, freelancers, etc.) because they think this is negative and anticipates problems.

Properly drafted contracts do not create problems — they solve them. Written agreements are essential for a good working relationships with providers, vendors, partners and clients or customers.

Why do contracts make sense?

They provide certainty.

A well-drafted contract clearly sets out each party’s expectations. It helps both parties focus on their business relationship and removes any uncertainty about their respective rights and duties.

Contracts outline obligations and remedies.

Parties need to know what their obligations to each other are and what the consequences of failing to perform (breach) may be. E.g., the contract may state that if one party sues the other and wins, the loser pays all the costs.

They provide alternative remedies.

The contract should provide for alternative dispute mechanisms, such as an obligation to first meet to attempt to resolve thorny issues, and that failing, to mediate the dispute or go to arbitration. Usually this avoids lengthy and expensive litigation and may even restore the trust relationship between the disputants.

Contracts help you end the business relationship. The contract sets out when and how either party can terminate the contract (e.g., after a material breach, a specific time period, etc). This creates certainty.

Contracts anticipate the unforeseen.

A commonly included clause in business contracts is the “force majeure” or the “act of God” provision. This clause in a contract sets out the parties’ obligations and rights in the event of an unforeseeable event, such as a pandemic, a natural disaster, or any other circumstances beyond their control that makes it unreasonably difficult to perform under the contract. 

Unenforceable Clauses in A Marriage Contract

 

A client asked if he could include a provision in his antenuptial contract that expressly excludes the right of his intended spouse to claim maintenance upon divorce.

Another client asked if the contract could contain a clause deterring the husband-to-be from being involved in an extramarital affair in the future?

Antenuptial Contracts: An Overview

An Antenuptial contract (ANC), often referred to as a prenuptial agreement or marriage contract, is a legal document that couples can enter into before getting married. An ANC is a way for couples to outline their financial arrangements, specifying how their assets and liabilities will be divided if the marriage ends in death or divorce.

Spouses are generally free to include any provision in their ANC. However, the provision may not be contra bonos mores (against the good morals of the public), against nature, reason, public policy, prohibited by any law or purports to take over the powers of the court. Clauses of this nature will be null and void. An ANC may not include clauses that are unreasonable, against public policy or unlawful:

Unreasonable clauses include ones:

 

• prohibiting a spouse from working.
• forcing a spouse to live in a particular area.
• stating that marital disputes must be referred to arbitration.
• obliging a spouse to adopt the religion of the other spouse.
• stating that the parties will not live together as man and wife after the marriage.
• stating that neither spouse shall have the right to ask for an order of forfeiture or share in the accrual of the other’s estate or claim maintenance following a divorce.

Against public policy:

• Clauses enforcing a change of religion, gender or race or prohibiting any association.
• A clause permitting the parties to commit adultery.

Unlawful

• Clauses allowing or forcing a spouse to commit a crime.

Effect of a clause discouraging infidelity

May an ANC include a clause to deter the husband from being involved in an extramarital affair in the future?

Case law suggests that one must interpret this type of clause in context. For example, the parties had been divorced before because of the husband’s involvement in extramarital affairs.

An example of such a clause:

‘Should it be proven that A be the cause of a future divorce through an extramarital relationship, he will (here reflect an obligation on the husband to give the wife a fixed property, pay her a cash amount, etc.)’

The court will enforce this clause as it seeks to preserve the marriage by discouraging another extramarital affair by the husband.

Summary:

Whether it possible to include a provision in an antenuptial contract that excludes any right or imposes an obligation after divorce, its enforceability can be a complex and contentious issue. It is crucial to seek legal counsel to ensure that your antenuptial contract is valid and complies with South African laws. Consulting an attorney experienced in family law will help you navigate this sensitive and legally intricate process to create a contract that reflects the intentions and needs of both parties while respecting the principles of fairness and justice.

 

Restraint of Trade Agreements and Business Transfers

Introduction:

In the ever-evolving legal landscape surrounding restraint of trade agreements and business transfers, two significant cases, Slo Jo Innovation (Pty) Ltd v Beedle in 2020 and Avis Southern Africa (Pty) Limited and Others v Porteous in 2023, have set the stage for critical discussions. These cases concern the transferability of restraint of trade agreements when employees change employers. While the 2020 case provided one perspective, the 2023 case introduced a different approach, prompting substantial legal debate.

Comparing the 2020 Case with the 2023 Case:

The 2020 case, Slo Jo Innovation (Pty) Ltd v Beedle, marked a turning point. It established that restraint of trade agreements included in employment contracts were transferable under the Labour Relations Act, providing legal ground for such transfers. However, in 2023, the High Court's judgment in Avis Southern Africa (Pty) Limited and Others v Porteous presented an alternative viewpoint.

Court's Findings:

In the Avis case, the first and second respondents, David and Belinda Porteous, were central figures. David had worked with Avis since 1988, and eventually, Avis became part of Barloworld South Africa (Pty) Limited. David held the position of Chief Operations Officer of Avis's car rental and leasing business when he resigned in 2023.

Belinda, on the other hand, started her employment with Zeda in 1999 and later became the Manager of International Sales for the Avis Rent-a-Car business, a role she maintained after her employment transferred to Zenith in 2021. She resigned in 2023 with plans to establish a consulting company in Mauritius, focusing on the mobility and tourism industry.

A critical issue in the Avis case revolved around the restraint of trade undertaking. Avis contended that the restraint undertakings were included in Belinda's Zeda contract and continued to apply when she was employed by Zenith in 2021. This issue raised the question of whether the benefit of the restraint of trade undertaking was indeed transferred to Zenith.

Bester AJ, presiding over the case, was tasked with determining whether the restraint of trade undertakings had effectively been transferred. The court's findings were as follows:

Bester AJ emphasized that the transfer of rights was a factual matter. To prove the transfer of restraint undertakings, the applicants had to establish that the terms of the agreement between Avis and Barloworld explicitly included these restraints. The court's decision was to be based on the parties' intentions, as evident in the wording of their agreement. In this case, the court was not persuaded that the applicants had effectively demonstrated the cession of the restraint of trade undertakings to Barloworld.

Bester AJ also distinguished the Avis case from the Beedle case, highlighting a crucial difference. In Beedle, the Labor Appeal Court had ruled based on the absence of a business transfer to a third party, which rendered the question of ceding restraint of trade undertakings from one employer to another irrelevant.

Summation: 

The Avis case holds particular importance for employers looking to enforce restraint of trade agreements, especially in cases where new employment contracts lack explicit restraint clauses. To succeed in such cases, employers must establish that both parties intended to cede restraint of trade undertakings as part of the business's goodwill. In essence, employers must provide evidence demonstrating that both parties mutually agreed to these stipulations, even if they were not explicitly articulated in the contract. 

Understanding the Shifrin Case and the "Written Variation" Rule in South African Contract Law

Introduction:

In South African law, contracts play a pivotal role in regulating agreements between parties. The Shifrin case is a significant legal decision that has had a profound influence on how contracts operate. It introduced a key rule that states when a contract is in writing and includes a provision that requires any changes to be in writing, any attempts to alter it through oral agreements are not permissible and will not be legally recognized.

Summary of the Shifrin Case and the "Written Variation" Rule:

The Shifrin case involves written contracts that incorporate a stipulation mandating written modifications. Here are the main points:

·         Written Contracts and Modifications: Many contracts include a provision requiring that any changes or revisions to the contract be documented in writing. This is done to avoid misunderstandings. 

·         The Shifrin Case: In the Shifrin case, the parties had a written contract with a provision specifying that changes must be documented in writing. Nonetheless, one party attempted to effect changes through verbal discussions. 

·         The Legal Rule: The court in the Shifrin case determined that when a contract insists on written modifications, all parties must adhere to that requirement. Therefore, any attempts to amend or annul the contract through oral discussions are ineffective and will not be legally enforced. 

·         Implications: The Shifrin rule underscores the significance of written agreements and contributes to legal certainty. It restricts the capacity to casually modify a contract through verbal discussions, particularly when the contract stipulates that changes must be documented in writing. This rule fosters clarity and stability. 

·         Exceptions: Although there can be exceptions, they typically necessitate compelling evidence to substantiate.

Conclusion:

The Shifrin case and the "Written Variation" rule have had a profound influence on how contracts are employed in South African law. They emphasize the importance of written agreements and ensure adherence to the terms specified in the contracts. This serves to avert misunderstandings and bolster the reliability of contracts. While there are limited exceptions, they demand substantial evidence for validation. In simple terms, the Shifrin case ensures that written contracts are accorded serious consideration, and any modifications should conform to the written requirement as set out in the contract.

High Court Rules Parental Leave Provisions Unconstitutional

 

Introduction

In the case of Van Wyk and Others v The Minister of Employment and Labour, the High Court has made a significant ruling regarding the constitutionality of certain provisions related to parental leave in South Africa. These provisions were outlined in the Basic Conditions of Employment Act (BCEA) and the Unemployment Insurance Act (UIF Act), affecting maternity, parental, adoption, and commissioning parental leave. The court's decision revolves around the discrimination between mothers and fathers in these provisions, which it found offensive to the principles of the Constitution.

Examination of the Facts

The applicants in this case are Werner and Ilka Van Wyk, a married couple with a child. Sonke Gender Justice, an organisation advocating for gender equality, and the Commission for Gender Equality (CGE) also participated as applicants. The respondent is the Minister of Labour, responsible for the BCEA. Mr. Van Wyk is a salaried employee, while Mrs. Van Wyk runs her own business. They faced a unique situation where Mrs. Van Wyk needed to return to her business quickly to prevent it from failing, making Mr. Van Wyk the primary caregiver for their child.

Court's Findings

The core issue before the court was the alleged unconstitutionality of sections 25, 25A, 258, and 25C in the BCEA, which address maternity and parental leave. The argument presented was that these sections are unconstitutional because they unfairly discriminate against parent-employees, violating the equality (section 9) and dignity (section 10) provisions of the South African Constitution.

The contested sections differentiate between three categories of children: those born of a mother, those born through surrogacy, and adopted children. Moreover, they differentiate between mothers and fathers, as well as between birthmothers and other parents. The logic behind these provisions assumes that one parent is a primary caregiver, and the other is ancillary, leading to a four-month maternity leave for birthmothers.

The court ruled that providing only ten days of leave to fathers implies a mindset that marginalizes the father's role in early parenting, which is offensive to the constitutional principles of dignity. The BCEA did not account for family models like the Van Wyks', which are consistent with constitutional norms. Consequently, the court declared the sections in the BCEA to violate sections 9 and 10 of the Constitution and called on Parliament to address the inequalities.

The court's immediate solution to eliminate inequality, during an interim period, is to propose that all parents, regardless of their situation, enjoy four consecutive months of parental leave, to be shared as they see fit.

The court directed parliament and the legislature to address the unconstitutional provisions of the BCEA and the UIF Act within a period of two years.

Conclusion

The Van Wyk case has declared certain provisions in the Basic Conditions of Employment Act and the Unemployment Insurance Fund Act unconstitutional. These provisions unfairly discriminated between mothers and fathers, and between different types of parents and children. The court found that the discrimination impaired the dignity of fathers and was inconsistent with the South African Constitution. To rectify this, the court proposed equalizing parental leave for all parents, allowing them to share four months of leave as they choose. This decision is a significant step toward promoting gender equality and addressing discrimination in parental leave policies in South Africa.

Joint Ownership Termination in Family Disputes: Britz v Sequeira Case

Introduction:

Joint ownership of property, especially within families, is a common arrangement. However, what happens when the relationship sours and the co-owners can't agree on how to end their shared ownership? This case, Britz v Sequeira, explores the intricacies of terminating joint property ownership in such situations.

Summary of the Facts:

Gideon Britz and George Sequeira, who are brothers-in-law, co-own a holiday home in River Lodge, Parys. This property includes two exclusive-use areas known as boat garages. The dispute at hand revolves around whether their shared ownership of this immovable property should be terminated due to their ongoing conflict. The property, initially purchased as a holiday home, is part of a sectional title scheme.

Since January 2016, George Sequeira has occupied the property permanently, denying Gideon Britz and his family the use and enjoyment of the property, to which they are entitled as co-owners. In response, Britz initiated legal proceedings to terminate the joint ownership under the actio communi dividendo.

Enunciation of the Legal Position:

The legal principles governing the termination of joint property ownership are crucial in this case. The judge points out that if the property were the sole connection between the parties, the termination would be relatively straightforward. In principle, every co-owner has the right to seek the termination of joint ownership, as stated in Robson v Theron. The requirements for a party claiming termination include:

(a) Proving the existence of joint ownership.

(b) Demonstrating a valid ground for termination, such as a refusal by other co-owners to agree to the termination, an inability to agree on the method of termination, or a previous agreement to terminate with the other co-owners non-compliance.

(c) Presenting facts that allow the court to decide on a fair and equitable method of termination, which could include options like property division, public auction, compensation, or private auction among co-owners.

Co-owners typically have undivided shares in the property, which need not be equal. They are entitled to reasonable use of the property proportionate to their shares. If the property generates income, profits are distributed according to their share ratios. Co-owners are also responsible for property expenses based on the same share proportions.

Court's Findings:

In this case, the breakdown of the trust relationship between the co-owners is undeniable, even though they are brothers-in-law, and Gideon Britz is married to George Sequeira's sister. However, considering the accepted facts, it is not just and equitable to order the termination of the joint ownership, including the method of termination at this stage. The main application is not dismissed but is instead stayed, awaiting the outcome of proceedings in the Pretoria action.

Conclusion:

The Britz v Sequeira case sheds light on the complexities of terminating joint ownership of property, particularly when family relationships are involved. While the law provides a framework for such terminations, the court's decision hinges on fairness and equity in the specific circumstances of the case. In this instance, the judge decided to delay the termination decision until further proceedings take place. This case serves as a reminder of the intricacies and legal considerations surrounding joint property ownership disputes.

Constitutional Court Ruling on Asset Redistribution in Accrual Regime Marriages

 

In this article, we discuss the Constitutional Court ruling in the case of EB (born S) v ER (born B) and Others; KG v Minister of Home Affairs and Others [2023]

Introduction:

On October 10, 2023, the Constitutional Court of South Africa delivered a significant judgment in two separate applications seeking confirmation of orders declaring section 7(3) of the Divorce Act 70 of 1979 invalid and unconstitutional. The cases, CCT 364/21 and CCT 158/22 centred on the issue of whether parties married under an accrual regime may be awarded redistribution of assets by a court, regardless of when they were married, or whether the marriage ends through death or divorce.

Discussion of the Case:

CCT 364/21 - Dissolution of Marriage by Death:

In CCT 364/21, the case revolved around divorce proceedings initiated by Mrs. B against her late husband, Mr. B, who were married under an antenuptial contract that excluded community of property. During the divorce process, Mr. B passed away, dissolving the marriage. The primary constitutional challenge was the alleged discrimination in section 7(3) of the Divorce Act, which only applied to marriages ending in divorce, not death. Mrs. B argued that this distinction was unconstitutional, as it unfairly discriminated against spouses married before November 1, 1984. The High Court found this distinction unconstitutional and ordered an amendment to the Divorce Act, including redistribution in cases of marriages dissolved by death.

In a unanimous judgment, the Constitutional Court affirmed the High Court's decision. It found that section 7(3) created an unjustifiable differentiation between spouses married before and after November 1, 1984, based solely on the date of their marriages. This differentiation was deemed irrational and unconstitutional. The Court ordered an interim reading-in of an analogous provision and granted Parliament 24 months to address the issue comprehensively.

CCT 158/22 - Marriages Before and After November 1, 1984:

In CCT 158/22, Mrs G sought a redistribution order under section 7(3) of the Divorce Act after her 30-year marriage broke down. However, she was disqualified from its provisions due to the limitation that it applied only to marriages out of community of property concluded before November 1, 1984. Mrs. G argued that this limitation was unconstitutional as it arbitrarily discriminated against spouses married before and after the mentioned date. The High Court ruled in favour of the government, citing the importance of honouring contractual agreements. 

In the Constitutional Court, Mrs G continued her challenge against section 7(3), alleging that it unfairly discriminated against spouses in different types of marriages, particularly marriages concluded after November 1, 1984. The Court upheld her challenge, finding that the differentiation based on the availability of the accrual regime was rational but created indirect discrimination against women. The Court ordered the suspension of the declaration of invalidity for 24 months and an interim severance of the offending differentiation in section 7(3)(a) while granting Parliament time to address the constitutional issues.

Conclusion:

In both cases, the Constitutional Court has declared section 7(3) of the Divorce Act 70 of 1979 invalid and unconstitutional, allowing for the potential redistribution of assets in marriages governed by the accrual regime. These rulings have far-reaching implications for spouses married before and after November 1, 1984. The Court's decision emphasizes the need to rectify gender-based disparities and grants Parliament time to enact legislative changes to address the constitutional issues. These rulings mark a significant step towards achieving greater fairness and equity in marital property matters in South Africa.

Legal Case Analysis: Lion Ridge Body Corporate v. Alexander - Disconnecting Utilities in Sectional Schemes

  

Introduction:

The Lion Ridge case revolves around a pivotal legal question - Can a Body Corporate within a sectional scheme disconnect water and electricity services for non-payment? In this analysis, we will delve into the details of the case, its background, and the court's findings, shedding light on the intricacies of this legal matter.

Summary of the Court's Findings:

The Lion Ridge Body Corporate initiated legal proceedings against Alexander and other respondents, seeking to recover arrear levies, water, and electricity charges. They further sought an order to disconnect electricity services to their units and limit water supply to six kilolitres per month until the judgment debts were settled. Additionally, Lion Ridge requested that the respondents be held liable for the costs associated with the disconnection and reconnection of utilities.

The court, however, denied the relief sought by Lion Ridge, citing the profound constitutional rights implicated in this matter. These rights include the right against arbitrary deprivation of property, the right to sufficient water, the public law right to receive electricity, and the right of access to adequate housing. The court highlighted that any relief that limits these constitutional rights is only permissible if authorized by law.

The crucial legal argument was that neither the Sectional Titles Act nor the standard Management and Conduct Rules provided the authority for a Body Corporate to interfere with a member's utility supply. The Act permits a Body Corporate to enter into agreements concerning utility supply, but such agreements must align with the legal framework provided.

In this case, the court emphasized that Lion Ridge failed to establish any provision within the Sectional Titles Act, a Body Corporate rule, or an agreement term that authorized the relief they sought. The absence of such authorization rendered their claims legally untenable.

Conclusion:

The Lion case underscores the significance of adhering to the legal framework when attempting to limit or disconnect utilities for non-payment within a sectional scheme. While the need to recover debts is acknowledged, constitutional rights, including property rights, access to water, and electricity, must be respected. Any relief affecting these rights must be explicitly authorized by law, be it through the Sectional Titles Act, Body Corporate rules, or agreements. In the absence of such authorization, as was the case here, such relief cannot be granted. This case serves as a significant legal precedent, emphasizing the importance of legal compliance within sectional schemes when dealing with utility disconnections.

University of Pretoria v Roger and Others: Exploring Municipality Land Use Rights, and Noise Nuisance

 Introduction:

In the case of University of Pretoria v Roger and Others, the University of Pretoria ("the University") initiated legal proceedings to address the noise nuisance caused by several pubs close to the University. This case delves into the conflict between land use rights, liquor licenses, and the protection of students' well-being and academic pursuits, with significant implications for zoning regulations and permissible noise levels.

Discussion of the Facts:

The University alleged that the Jolly Roger and other respondents operated bars and nightclubs on premises situated along Lynnwood Road, known as the "Strip," directly across from the University campus. This location proximity has led to complaints from nearly 1,000 students residing in four University-owned residences. The complaints center on the incessant noise emanating from the Strip, disturbing students' ability to study and rest. An environmental noise impact assessment conducted by an acoustics expert confirmed that noise disturbances had occurred at two measuring points on the campus, constituting a severe contravention of the Noise Control Regulations.

Court's Findings:

The court addressed several key arguments. Firstly, it addressed the "authority" attack by respondents, confirming the Registrar's authorization to launch the application on behalf of the University. Furthermore, the court acknowledged that the premises were zoned as Business 1, allowing their use as Places of Refreshment, but it rejected the argument that the Town Planning Scheme allowed for a secondary use as Places of Amusement.

The court considered the steps taken by the Jolly Roger to mitigate noise, acknowledging their success in this regard. Consequently, the claim for an interdict in relation to noise nuisance against the Jolly Roger was dismissed. However, the court emphasized that liquor licenses could not supersede Land Use Rights, and thus, the claim for an interdict against the Jolly Roger's violation of land use rights succeeded.

Additionally, lease agreements contained clauses prohibiting tenants from using the premises for illegal or improper purposes or causing disturbances to adjacent properties. The court ruled that the landowners were entitled to enforce these clauses and granted an order against them.

Conclusion:

In summary, the court issued an order interdicting the respondents from conducting any business in violation of the permissible land use rights outlined in the Pretoria Town Planning Scheme. The respondents were also interdicted from creating or allowing anyone to create, a noise nuisance exceeding the noise levels permitted by the Land Use Rights. The seventh respondent was specifically instructed to take all reasonable measures to ensure that the second and third respondents did not cause a noise nuisance. This case underscores the significance of upholding land use regulations while considering the well-being of the University's students in a densely populated urban area.

Stemmet v Mokhethi - Commencement of Prescription in Latent Defects Case

Introduction:

In the case of Stemmet and Another v Mokhethi and Another, heard on October 4, 2023, the South African Supreme Court of Appeal (SCA) grappled with the crucial question of when prescription starts to run in cases involving latent defects. The dispute revolved around a property sale where the purchasers, the Mokhethis, alleged that the sellers, the Stemmets, had concealed significant structural defects. The central legal issue at hand was whether the Mokhethis had obtained sufficient knowledge of the defects to initiate their claim within the prescribed time frame under the Prescription Act 68 of 1969.

Facts of the Case:

The Mokhethis purchased a property from the Stemmets in Fichardt Park, Bloemfontein, believing it to be in good condition. After taking possession, they discovered structural defects, including structural cracks, which they alleged the Stemmets were aware of but had failed to disclose. Subsequently, on July 19, 2017, the Mokhethis initiated legal proceedings against the Stemmets, claiming damages for the undisclosed defects. They argued that the defects were fraudulently concealed, leading them to purchase the property under false pretences.

Legal Argument for and Against Prescription:

In anticipation of a potential special plea of prescription, the Mokhethis asserted that they became aware of the defects on August 12, 2014, when informed by Absa that the defects were due to the property being built on clay soil, which expanded and retracted, and that the foundation was inadequately underpinned and supported. They sought damages, including the cost of repairs, amounting to R128,423.26.

The primary legal issue before the court was whether the Mokhethis had acquired the minimum facts necessary for prescription to start running within the framework of the Prescription Act. The Act stipulates that prescription commences when the creditor has the requisite knowledge of both the existence of the cause of action and the identity of the person responsible for the damage.

Court's Finding:

The majority of the full court of the Free State Division of the High Court had ruled in favour of the Mokhethis, rejecting the special plea of prescription. However, the SCA, after a careful examination of the facts and applicable legal principles, came to a different conclusion.

The SCA noted that the Mokhethis had reasonable grounds to believe that the defects existed as early as June 2014. They were in possession of enough evidence to conclude that the Stemmets had attempted to conceal these latent defects through patchwork on the cracks. The court emphasized that prescription begins when the creditor has the minimum facts necessary to initiate legal action, not when they are fully aware of the extent of their legal rights or possess all the evidence to prove their case.

 

In essence, the SCA held that the Mokhethis had sufficient knowledge of the essential facts, namely the existence of the defects and the alleged fraudulent concealment, well within the prescription period. Therefore, the Mokhethis' claim had indeed prescribed.

Conclusion:

The Stemmet v Mokhethi case provides clarity on when prescription begins to run in cases involving latent defects under the Prescription Act 68 of 1969. It underscores that the commencement of prescription is not postponed until the creditor is fully aware of all details or has evidence to prove their case comfortably. Instead, prescription starts when the creditor has acquired the minimum facts necessary to institute legal action. In this instance, the Mokhethis' claim was found to have prescribed, leading to the dismissal of their claim with costs. This judgment reaffirms the importance of timely action in pursuing claims related to latent defects and has implications for similar cases in South African jurisprudence.

General Principles of Restraint of Trade in South Africa: the Kleynhans case

 

Summary:

The case of Micros South Africa (Pty) Ltd and Others v Kleynhans and Others involves an urgent application for interdictory relief to enforce a restraint of trade and confidentiality agreement against Ms Kleynhans, who intended to take up employment with a competitor. The court ultimately granted the interdict, and here, we discuss the general principles and enforcement rationale.

General Principles of Restraint of Trade in South Africa:

In South Africa, restraint of trade clauses are typically valid and enforceable unless they are unreasonable or contrary to public policy. The principle of pacta sunt servanda, emphasizing the honouring of freely and voluntarily undertaken obligations, guides the enforceability of such agreements. An unreasonable restraint of trade is one that prevents a party from engaging in trade or commerce without a corresponding interest deserving of protection.

Enforcement Against Kleynhans: In this case, the applicants successfully argued for the enforcement of a restraint of trade and confidentiality agreement. Several key factors influenced the court's decision:

• Legitimate Interest: The applicants demonstrated a legitimate interest in protecting their trade connections and confidential information related to specialized software for the hospitality industry. Ms. Kleynhans had extensive knowledge of their Opera products and strong customer relationships.
• Reasonableness: The restraint was found to be reasonable as it aimed to prevent employees from utilizing knowledge and connections acquired during their employment to offer similar products to the same customer base. The duration of one year was deemed reasonable.
• Public Interest: Enforcing the restraint was not against public interest, as it aimed to protect confidential information and prevent unfair competition. It balanced the interests of the applicants with Ms Kleynhans's right to employment.
• Confidential Information: The court acknowledged that confidential information in an employee's head, such as business strategies and trade secrets, can be subject to interdiction if unlawfully disclosed, even if not documented.

Conclusion:

The court's decision to enforce the restraint against Ms. Kleynhans aligns with the principles of legitimate interest, reasonableness, and protection of confidential information. Ms. Kleynhans, as an employee, had voluntarily agreed to the restraint, and the court found that her actions posed a substantial risk of taking proprietary interests to a competitor, thereby justifying the interdict. In conclusion, this case underscores the importance of upholding valid restraint of trade agreements while ensuring they are reasonable and aligned with the law to strike a fair balance between protecting business interests and individual rights.

 

Dealing with a Usufruct in the Sale of Bequeathed Immovable Property Due to Estate Illiquidity

 

A client asked: where the surviving spouse holds a life usufruct over a property, what is the position if the executor needs to sell it to settle debts? 

Summary of the Law: 

In essence, the question revolves around what happens when a Will grants immovable property to a beneficiary with a Usufruct, but circumstances require the sale of that property because the estate lacks liquidity. Let's break down the legal aspects involved: 

When we talk about abatement of legacies, the Executor's primary duty is to settle estate debts using the estate's residue. Only after this is done, if the Executor needs to sell the assets bequeathed to beneficiaries to cover the remaining liabilities, the legacies must be reduced proportionately. Abatement refers to the reduction of a legacy to ensure that it accommodates a proportional share of the remaining debts. 

It's important to note that while the Executor can choose which specific bequeathed assets to sell, the legatee (the beneficiary) retains the right to claim those assets by paying their fair share of the outstanding liabilities. 

Now, if a Usufruct was granted to someone over a special bequest, the total value of the assets consists of two parts: the usufructuary value and the value of the bare dominium. In such a scenario, both the usufructuary and the bare dominium holder will share proportionately in covering the remaining estate debts.

 Conclusion: 

In a nutshell, when an estate faces liquidity issues and the sale of the bequeathed immovable property becomes necessary, the following principles apply: 

Estate liabilities are prioritized, and the residue of the estate is used to settle these debts first. 

If the sale of bequeathed assets is required to cover remaining debts, legacies must be reduced proportionately. The Executor has some discretion in choosing which assets to sell, but beneficiaries have the right to claim these assets by paying their share of the liabilities. 

If a Usufruct was granted, both the usufructuary and the bare dominium holder would share proportionately in addressing the estate's outstanding debts. 

These legal principles aim to ensure fairness and equity in the distribution of assets when an estate faces financial challenges. If you have further questions or need specific guidance related to your case, please don't hesitate to reach out to our legal team for personalized advice.