Are your sectional title affairs in a mess (your body corporate owes a fortune in arrear municipal charges)?

You may consider appointing an administrator to halt legal proceedings and negotiate a way out.

The Application to appoint an Administrator for a fixed period with the purpose of rehabilitating the scheme, is brought in terms of section 16 of the Sectional Titles Schemes Management Act.

It is our experience, particularly where there is a large amount outstanding in municipal debt, the Council is more at ease negotiating a settlement with a court appointed Administrator than with Trustees. An Administrator ‘takes the place of the Trustees’ for a period, and as a completely independent third party making all the decisions affecting the scheme (including harsh steps relating to debt collection), removes the stress and pressure that you may currently be experiencing.

An attorney (we can help) would bring an application to the High Court for the appointment of the administrator.

We would require a copy of a current levy roll, bank account balance, latest audited financial statements and a summary from the Trustees of the state of the building in respect of maintenance and repair requirements. We also need to know the approximate amounts currently outstanding to creditors and a copy of the most recent municipal accounts.

Once we have assessed the situation, we will advise you of the legal costs of bringing the Application, as well as an indication of the time it will take before the Administrator is appointed and can begin the rehabilitation process.

Contracting with a trust

If you buy a property in the name of a company, the offer to purchase can state that Joe Bloggs acts in his capacity as an agent of a company to be formed. This is perfectly valid in that the company can subsequently ratify the offer.

This is not the case with trusts. The following principals apply:

·         All contracts must be concluded with an already-established trust;

·         All (or in the case of some trusts, a majority of) trustees must consent in writing to the contract before entering into contracts on behalf of a trust. If there is no prior written authority (usually in the form of a resolution), the contract will be void;

·         A void contract cannot be rectified by ratification (i.e. the remaining trustees can’t approve – and thereby resurrect – a void contract after it has been signed).

This was confirmed by our Supreme Court of Appeal in the case of Thorpe and Others v Trittenwein and Another 2007 (2) SA 172 (SCA). In this case one trustee (who was also the founder and a beneficiary of a trust) signed a sale agreement for the purchase of land without the prior written authority of the other trustees. The other trustees subsequently ratified the first trustee’s act but the Court held that this was not possible and the seller was free to sell to someone else.

·         Trustees can only exercise a power if that power is given to them in the trust deed. If, for example, the trust deed doesn’t give the trustees the power to buy and sell property, a unanimous resolution of trustees to do so doesn’t cure this defect – the agreement will still be void.

So if you are about to enter into a contract with a trust, make sure that the trust deed gives the trustees the authority to contract with you, satisfy yourself that the trustees are who they claim to be (see latest Letters of Authority for the trust) and ensure that an appropriate resolution is in place, signed by all the trustees.

Is an unregistered marriage contract binding on the parties?

In a case heard in the High Court of KwaZulu-Natal, (KS v MS [2015] JOL 33262 (KZD)), in a divorce action between the parties, two issues were separated and were now before the Court.

1. The first issue was whether the signing of a power of attorney by the parties and the initialling of a draft antenuptial contract constituted a recognisable antenuptial contract, and accordingly whether the parties were married in or out of community of property. 

2. If the parties were married out of community of property with the application of the accrual system, the question was whether the date for determination of any such accrual should be litis contestatio (the stage in litigation when the pleadings are closed) or the date of divorce. 

Prior to their marriage, the parties had signed a power of attorney that authorised an attorney to appear before a notary public and to execute an antenuptial contract on their behalf. Unknown to the parties, the antenuptial contract was not executed and registered in the deeds office. The plaintiff therefore contended that the marriage was in community of property.

Held that although the antenuptial contract was not registered, the plaintiff conceded that prior to the marriage, the parties agreed that their marriage would be governed by an antenuptial contract. Although an antenuptial contract which has not been registered in accordance with the provisions of section 87 of the Deeds Registries Act 47 of 1937 is of no force or effect as against any person who is not a party thereto, it would be valid and binding as between the parties because the unregistered contract would reflect the common intention of the parties at the time the contract was entered into. The Court therefore found that an informal antenuptial contract existed in this case.

The Court then turned to consider the date for determination of accrual. The practical effect of litis contestatio being the date of determination of accrual is that the trial is expedited and the temptation to squander assets is limited. It was held that the date for determination of accrual was at litis contestatio.

Change the registered office of your company!

https://www.bregmans.co.za/commercial-law/

It is no longer possible for a company to use an address chosen for convenience (e.g. of its auditors) as its registered address. Company management should ensure that CIPC's records reflect the company's registered office as the address of its office. If there is more than one office, then the address of the principal office should be used.

A company can change its registered office by filing a notice of change of registered office with the CIPC. There is no filing fee payable.

The Western Cape High Court considered the issue of the 'residence' of a company under the new Companies Act (the '2008 Act') in the matter of Sibakhulu Construction (Pty) Ltd v Wedgewood Village Golf and Country Estate (Pty) Ltd.

The judgment highlights the changes introduced by the 2008 Act relating to a company's registered office as well as the impact of these changes on the court having jurisdiction over proceedings involving the company in certain circumstances.

Judge Binns-Ward found that under the 2008 Act:

• a company's registered address must be the address of its office;

• if the company has more than one office, its 'principal office' must be its registered office in accordance with section 23(3). The term 'principal office' is not defined in the 2008 Act. Looking at the 2008 Act's requirements as to what must be kept at its registered office (sections 24 and 28), the court concluded that the principal office should be the place where "the company's general administration is centered" in other words where the "administrative business of the company is principally conducted";

• the transitional provisions in Schedule 5 of the Act do not deal with a pre-existing company's registered office and accordingly section 23(3) applies equally to such companies (a 'pre-existing company' is a company that was incorporated before 1 May 2011 under the Companies Act 1973); and

• the place where the company's registered office is situated determines where a company resides and therefore which court has jurisdiction in proceedings affecting the status of a company, such as liquidation and business rescue proceedings. (Before the 2008 Act came into effect, it was possible for a company to reside at more than one place and one could elect to institute proceedings using, for example, either the place of its registered office or its principal office.)

Rights of grandparents to contact with grandchildren

See: https://www.bregmans.co.za/access-contact/

Grandparents can seek court-ordered contact with their grandchildren.

Most grandparents actively participate in their grandchildren’s lives. Unfortunately, divorce or family dysfunction often cuts them off from their grandchildren. For example, the mother of a child born out of wedlock may, on a whim, refuse the paternal grandparents contact with her kids.

Any number of situations can lead to a grandparent petitioning a court for contact (visitation) rights – frayed relationships with their own children or their spouses, abuse or neglect of the grandchildren by their parents, or divorce. Fighting parents sometimes forget the special bond that has been created between the children and their grandparents.

The courts consider the best interests of the child

If such a special bond exists, the courts usually find that it would be in the children’s best interests for grandparents to continue seeing their grandchildren.

Our law requires judges to make their decisions about grandparents’ right to contact based both on the best interests of the child as well as the parents’ rights to fundamental care and custody of their children.

Money is a factor, but communication is key

It is difficult and expensive for grandparents to pursue visitation rights through the courts and mediation is more effective and cheaper. If parents and grandparents agree to meet with someone to facilitate a resolution of the disputes, most cases can be settled without expensive litigation and cost (both financial and emotional) for the family.

Reunification of the family can be a success for everyone, especially the children.

In LH and another v LBA (EL1426/20101, Eastern Cape High Court) the court had to decide what rights of access grandparents had to their grandchild.

Summary

The applicants sought an order allowing them access to their six-year-old grandson, born out of a relationship between their deceased son and the respondent. The respondent had initiated contact between the child and the applicants when the child was about six months old. The applicants then had regular contact with the child and he soon started to spend weekends with them. That arrangement continued until December 2008, after the child’s third birthday, when the respondent abruptly stopped it. Despite various attempts by the applicants to convince the respondent to allow them to see the child, they had not had any contact with him for the past three years.

Held

That when considering such an application the Court is enjoined to consider, inter alia, the best interests of the child; the relationship between the applicant and the child, and any other relevant person and the child; and the degree of commitment that the applicant has shown towards the child. In terms of section 7 of the Children's Act 38 of 2005, the Court must, when determining what is in the best interests of the child, have regard to the need for the child to remain in the care of his or her parents, family or extended family; and to maintain a connection with his or her family, extended family, culture or tradition.

The Court was not convinced that the reasons proffered by the respondent for refusing to allow contact between the child and his biological paternal grandparents were valid. However, the Court was also of the view that the extent of the access sought by the applicants was too wide, and it would not be in the child’s best interests to allow contact on that basis. A more limited right of access was granted.