Freedom of testation and our Constitution

 

A will drafted in 1902 created a fideicommissum for three generations. The first generation of heirs included the testator's children, both sons and daughters.  However, the fiduciaries and eventual fideicommissaries were limited to the male descendants in each generation from the second generation. 

In King v De Jager; 2021 (4) SA 1 (CC), the Constitutional Court was called upon to decide whether the exclusion of female grandchildren fell within the definition of freedom of testation or fell foul of section 9 of the Constitution.

After their father died in 2015, female great-grandchildren of the testator went to Court to argue that the terms of the fideicommissum were discriminating based on gender and offended section 9 of the Constitution. This section guarantees equality before the law and freedom from discrimination by private persons.

In our law, a testator can leave his property to anyone he likes. Van den Heever JA stated in Bydawell v Chapman 1953 (3) SA 514 (A) 521E-F: 'Roman-Dutch law recognises as a matter of public interest, transcending the private interests of beneficiaries under a will, that effect should be given to the wishes of a testator … the "interests" of the testator and the public interest demand that effect should be given to a testator's last wishes.'

However, a testamentary provision may not contradict the boni mores / public policy.

The Court reiterated that there is no obligation to bequeath anything to anyone, and testators are free to disinherit any family member. However, the Court found that the condition that upon the death of the last fideicommissaries, the inheritance must go to the male descendants of the testator, was invalid as it discriminated unfairly against the female grandchildren.

Under what circumstances can a Defendant request a Plaintiff Company or Close Corporation to furnish security for costs?

By Dean Brainin (Candidate Attorney) and Roy Bregman.

Section 13 of the Companies Act 61 of 1973 (the old Act) and Section 8 of the Close Corporations Act 69 of 1984 (the CC Act), entitle a Defendant to ask a company or Close Corporation as a Plaintiff in litigation to put up security for costs if there is reason to believe that the Plaintiff will not be able to pay the Defendant's costs if it loses an action or application.

The Companies Act 71 of 2008 (the new Act) replaced the old Act and does not contain a provision that allows a Defendant to ask a Plaintiff to provide security for costs. Under what circumstances can a party approach a court to compel a company to furnish security?

In the case of Boost Sports South Africa (Pty) Ltd v South Africa Breweries (Pty) Limited [2015] 3 All SA 255, the SCA set out the factors that determine if a court should order a Plaintiff incola Company to furnish security for costs, namely, if:

·         There is a basis in law to order an incola plaintiff company to furnish security.

·         Defendant fails to demand security expeditiously.

·         The application commits the Plaintiff under oath to a version before the trial.

·         Plaintiff's claim is vexatious, unmeritorious or amounts to an abuse.

·         Under section 34 of the Constitution, Plaintiff's constitutional right will be infringed unless a Court hears the case in a fair and public hearing.

·         There are material disputes which the parties cannot resolve on the papers and without the benefit of oral evidence.

Our courts have enunciated on these principles. In African Farms & Townships v C.T. Municipality 1963 (2) SA 555 (A) the Court stated: "an action is vexatious and an abuse of the process of Court … if it is obviously unsustainable ". In Golden International Navigation S.A. v Zeba Maritime 2008 (3) S.A. 10 (C) the Court posited that action is vexatious and frivolous, "where on the face of the pleadings it is shown that the action cannot be maintained ".

In the case of Telecommunications (Pty) Ltd v Datagenics (Pty) Ltd 2013 (1) S.A. 65 (GNP), the Court held it must apply the common law where the Companies Act did not contain a provision regulating security for costs. Additionally, the Court cannot order South African companies to furnish security purely based on their financial position.  

Section 8 of the CC Act still applies. In the recent case of Fusion Properties 233 CC v Stellenbosch Municipality (932/2019) [2021] ZASCA 10, the SCA addressed the uncertainty concerning an order for security for costs against a Close Corporation.

In this case, Fusion instituted legal proceedings against the Stellenbosch municipality for damages resulting from an alleged breach of contract for the sum of roughly R32 million. Fusion was a company that had no assets. Because of this, the Municipality made an application for security for costs as it believed it had no prospect of recovering their costs of litigation if they were successful in defending the claim brought by Fusion. The High Court ordered Fusion to furnish security for costs of R2 626 431.06 and further ordered that stay of action until Fusion complied with such order. Fusion contested its obligation to provide security for costs.

Fusion disputed the order to furnish security on three grounds, namely:

·         The Municipality did not call for security for costs "as soon as possible after the commencement of the action". 

·         Section 8 of the CC Act deals with security for costs in legal proceedings by Close Corporations.  Fusion argued that no basis existed for the High Court to order that Fusion put up security, even if Defendant believed that Fusion would be unable to satisfy an adverse costs order. 

·         If they were to furnish security, Fusion would be unable to pursue its claim by being denied access to Court in terms of Section 34 of the Constitution.

The High Court rejected all three grounds upon which Fusion relied. The SCA upheld the finding of the lower Court.  The SCA held that it could not ignore Section 8 because Section 13 of the Companies Act 61 of 1973 - the functional equivalent of Section 8 - was not carried over to the current Companies Act 71 of 2008 when the legislature repealed the old Act.

The Fusion case confirms that a Defendant may ask a Close Corporation to put up security when it has insufficient funds or assets to cover the Defendant's costs if a Court grants an adverse cost order against it. However, the Court still has to be satisfied that the main action or application is (1) vexatious, (2) reckless, or (3) amounts to an abuse of the process of the Court.

 

Amending my will

 

 

A client has recently had a baby and asked me how she goes about changing her will. 

A will ensures that the person that winds up your estate distributes your assets to named beneficiaries after you pass, according to your wishes. 

If there are changed circumstances such as the birth of a child or the death of a beneficiary, you can write a new will or amend the existing will by supplementing your current will with a codicil. 

Codicil 

A codicil is a way to make minor changes to a will but is not appropriate for significant differences, when a new will is better. Codicils must be signed by two witnesses, just like a will. 

Amend your will after a divorce. 

The Wills Act provides that if you die within three months of the divorce, a legacy to your divorced spouse will fall away as though the spouse had passed away before you executed the will. 

The Act gives you three months after your divorce to change your will by removing your ex-spouse as a beneficiary and appointing someone else in his place (in a new will or codicil). If you do not, he will inherit, despite the divorce.

 

Are you plagued by spam text messages?

 

You can do something about the many uninvited SMS's you receive on your phone from direct marketers.

Our Constitution respects your right to privacy. In addition, the Consumer Protection Act and the Protection of Personal Information Act contain specific provisions regulating direct marketing and your right to privacy.

The Wireless Application Service Providers' Association (WASPA) also does its share to protect you. It has introduced a Codes Project that gives consumers access to a platform to identify the owner of a short, long or USSD code at smscode.waspa.org.za 

By clicking on this link and inserting the sender's number appearing on your phone, you can identify the originator of the marketing message if the sender is a WASPA member.

If the company that sent the SMS is a WASPA member, you can look up their contact details. You can then contact them directly to obtain more information about them, request them to remove you from their database or lodge a complaint with WASPA.

You can block the sender on your phone. Another remedy is to request WASPA to do so (as part of WASPA's Do Not Contact (DNC) initiative, to avoid unsolicited SMS advertising. If the company fails to comply, WASPA will investigate.

The bottom line is that WASPA's members – and their clients – can only send marketing messages to you if they are readily identifiable as the sender and you are an existing customer or have given them specific permission to SMS you.

Marriages solemnised outside South Africa

 

A client asked: 'We are a South African couple that got married in Mauritius. Are we married in or out of community of property? 

These are the legal principles:

 

·         Where the husband in a marriage regards South Africa as his domicile (permanent place of residence) at the time of conclusion of the wedding, such marriage is one in community of property, in the absence of the execution of a valid antenuptial contract.

 

·         In Frankel′s Estate and Another v The Master and Another (1950) ALL SA 347 A, the court held that the law of the place of the husband′s domicile prevails where a marriage is concluded in a territory outside of the husband's domicile. 

 

·         So, if the husband lived permanently in South Africa when the couple got married in Mauritius, if they did not conclude a marriage contract before the wedding, they were married in community of property.

 

·         Although the formal validity of a marriage is determined by the law of the place where the marriage is solemnised (in this case, Mauritius), this does not mean that Mauritian law governs the legal and proprietary consequences of such marriage. 

 

·         The principles provided for in the Frankel case do not apply to same-sex marriages governed by the Civil Union Act 17 of 2006. One hopes that the law will clarify the uncertainty of whose domicile will be the deciding factor where a civil union is concluded.

 

·         In some countries (the United Kingdom, Zimbabwe, and Botswana, to name a few), the opposite applies. Parties will be married out of community of property, automatically, without having to conclude a prenuptial contract.

 

·         In Holland v Holland 1973 (1) SA 897 T, the court held that a person′s domicile is a particular territorial jurisdiction area or country where he/she intends to settle or is settled indefinitely. The court in the Frankel case held that:"…the matrimonial regime is governed by the law of the husband′s domicile at the time of the marriage, and that it is not governed by the law of another domicile which he then intends to acquire immediately or within a reasonable time after his marriage." 

 

·         The above principles were confirmed in the Domicile Act of 1992 and the case of Esterhuizen v Esterhuizen 1999 (1) SA 492 C. 

 

·         If you intend to have a destination wedding or if the husband is domiciled in a foreign country, you can and should enter into an antenuptial contract regulating the consequences of your marriage and register the contract in South Africa. This will avoid uncertainty regarding whether the marriage is one in or out of community of property.