Author: Nicole Ross

Collecting Maintenance in Hard Times – Threaten Jail Time

Written by Nicole Ross on October 28, 2020. Posted in Family Law.

“Compliance with court orders is always important. There is a particular scourge in this country of spouses, particularly husbands, failing to pay judicially ordered maintenance” (extract from second judgment below)

Getting money out of serial maintenance defaulters is a notoriously difficult exercise, but even the most recalcitrant and cunning dodger will baulk at the prospect of being locked up for contempt of court.

And our courts, mindful of their position as “upper guardian” to all children, have shown again and again that they will have no hesitation in acting firmly against the sort of bad-faith defaulters we are talking about.

What must you prove?

You must prove not only a deliberate breach of the court order, but also that the breach was “wilful” and in bad faith. Although normally in non-criminal matters the standard of proof required is “on a balance of probabilities”, in contempt proceedings you have to prove bad faith on the much higher standard required for criminal convictions i.e. “beyond reasonable doubt”.

As the Court in the second case below put it: “If, on a conspectus of all the evidence, it is a reasonable possibility that the husband’s non-compliance was not wilful and mala fide, he cannot be subjected to criminal sanctions for contempt.”

Of course, genuine inability to pay, which is no doubt more common now than it was before the COVID-19 lockdown, is a different matter altogether. We are talking here about dodgers who are able to pay but refuse to do so. A defaulter who simply cannot pay should apply for a variation of the court order. If the order stands, payment must be made – end of story.

Two recent High Court decisions illustrate –

First case: A “brazen” defaulter’s choice – pay or go to jail

A father had been ordered, per a 2017 divorce settlement agreement, to pay R15,000 p.m. maintenance for his two minor children. He stopped paying in early 2018 and by the time this matter reached court he had run up arrears of R537,499.
In response to the mother’s application to have him jailed for contempt of court, the father pleaded poverty – a standard ploy.
The Court was having none of that, and the mother had no difficulty in proving her case for contempt.
Pointing out that the father was earning R147,000 p.m. (R83,000 net plus R10,000 to a provident fund), that he was paying R11,000 p.m. for a BMW and R14,000 p.m. on online gambling and trading, and commenting that “father’s position is extraordinarily brazen” the Court declared him to be in contempt of court.
To avoid 30 days behind bars he must pay off the arrears in instalments in addition to keeping up his monthly maintenance payments. He also has to pay all legal costs on the punitive “attorney and client” scale.

Second case: Sorry, dogs, it’s not quite the same for you

Although our courts naturally take a dim view of anyone disregarding any form of court order, jail time is not the only possible sanction. Thus, in another recent High Court case a fine (R20,000 conditionally suspended for three years) was imposed rather than a prison sentence.

An acrimonious divorce action found a husband ordered to pay his wife on an interim basis for a variety of household expenses, including (the aspect that has captured most attention in the media) expenses relating to the couple’s two dogs for dog food, a dog walker, and veterinary, medical, and pharmaceutical expenses.
The husband claimed a genuine misunderstanding of his obligations under the court order (not least regarding his various obligations vis-à-vis the dogs), a defence accepted by the Court in some regards but not in others.
He also claimed inability to pay as a result of the lockdown’s effect on his company and his resultant reduction in salary – a defence rejected by the Court on the basis that he had “failed to put up evidence which should have been available to him to support a claim of unaffordability”. Similarly, his counter-application to reduce the amount of cash maintenance payable failed.

As to why the defaulter in this case avoided a prison sentence (as requested by his wife) the Court concluded that “imprisonment is not called for. I am dealing with a first infraction, which is considerably narrower than what the wife alleged.” One wonders whether another factor in that outcome might have been the fact that no children were involved, just a wife seemingly “unattractively intent on extracting more than her ‘pound of flesh’” and two pampered pooches. Certainly, the wife’s failures led the Court to award the wife only 75% of her costs, and on the ordinary cost scale rather than on a punitive scale.

Disclaimer: The information provided herein should not be used or relied on as 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 professional adviser for specific and detailed advice.

Website of the Month: Looking Good on Zoom

Written by Nicole Ross on October 28, 2020. Posted in Website of the Month.

“Zooming Into the Future: Tips to Improve One’s Appearance at Online Meetings” on Law.com is a useful compilation of advice on the best –

Lighting
Background
Eye level
Appearance (did you know about the “Touch Up My Appearance” button?
Sound.

It’s written specifically for lawyers doing their lawyerly things and for witnesses giving evidence online but is a great resource for anyone and everyone using virtual meetings of any sort.

Is Your Will Valid?

Written by Nicole Ross on September 28, 2020. Posted in Wills and Estate Planning.

“Death knocks at all doors alike” (John Dunton 1692)

Sooner or later we must leave our families to face life without us, and of course these are particularly dangerous times for us all.

Make sure that your own affairs are in order now –

A valid will is the only sure way to protect your loved ones after you are gone.
If you have an old will, check whether it needs updating or changing.
Leave a file with all the important information and documents that your estate’s executor will need.

Five mistakes which can invalidate your will

The last thing you want is to leave your loved ones grappling not only with the tragedy and grief of your passing, but also with a bitter feud over the validity of your will. Avoid these mistakes in particular –

Not complying with all the required formalities when making your will: Although our courts do have a discretion to order the Master of the High Court to accept as valid any document not complying strictly with the various required formalities (the court must be satisfied that the document “was intended to be [your] will or an amendment of [your] will” you will want to spare your loved ones all the delay, cost and risk of dispute involved in a court application.
Not complying with formalities when changing your will: The same applies if you want to change or revoke your will. In addition, a court can declare your will to be fully or partially revoked if you did anything (such as leaving something written on your will, an action on your part, or another document) that satisfies the court of your intention to revoke the will. Again a scenario to avoid at all costs with a properly-drawn replacement will or codicil.
Leaving any doubt as to your “testamentary capacity”: Anyone aged sixteen years or more may make a will “unless at the time of making the will he is mentally incapable of appreciating the nature and effect of his act”. Although it is up to anyone challenging your capacity to prove that you were mentally incapable at the time, there are grey areas here and our law reports are full of bitterly-fought disputes over the question of testamentary capacity. So if there is any chance at all of that sort of challenge arising ask your lawyer to advise on the best way to leave proof of your capacity at the time of signing.
Leaving any doubt as to fraud or forgery: All too often our courts have had to decide disputes over whether the signature on a will is genuine or forged, or over allegations of fraud. Again if there is any risk of that happening, get legal advice on how to put the genuineness of your signature, and of the correctness of your will, beyond doubt.
Leaving any doubt as to coercion or “undue influence”: As with the previous two warnings, this isn’t likely to be a danger for most people, but on the “better safe than sorry” principle don’t risk any chance of someone challenging your will with accusations that you were subjected to some form of duress (threats perhaps, anything that would cause you to act unwillingly or against your better judgment) or undue influence.

If you don’t have an updated will in place contact your attorney now – one of the commonest (and most tragic) mistakes people make is thinking “I’m too busy right now, it can wait”. It can’t!

Landlords and Tenants: Alert Level 1 and the New Eviction Rules

Written by Nicole Ross on September 28, 2020. Posted in Property.

“Only in our dreams are we free. The rest of the time we need wages” (Terry Pratchett)

The flood of lockdown lay-offs and salary reductions has left many tenants struggling to find rent money, and their landlords wondering how to cover their bond repayments and other expenses.

Whether you are a landlord or a tenant (note that we are talking here only about residential leases) you need to be aware of the new Alert Level 1 Regulations applicable to evictions “for the duration of the national state of disaster”.

In a nutshell (this is of necessity only a brief summary of some highlights from the full regulations so take professional advice specific to your circumstances) –

Evictions can take place but only with a court order.
Courts have the power to suspend eviction orders until after the “lapse or termination of the national state of disaster”. Expect courts generally to lean towards suspending eviction orders; in other words landlords will in all probability have their work cut out for them.
Landlords will in practice have to convince the court that it would be “not just or equitable” to suspend the order, taking into account a whole range of listed factors such as health considerations (public health as well as that of the parties), the tenant’s ability to immediately access another residence and basic services, the impact of the disaster on both parties (with the court balancing the prejudice to each of them from delaying eviction) and whether the landlord “has taken reasonable steps in good faith, to make alternative arrangements with all affected persons, including but not limited to payment arrangements that would preclude the need for any relocation during the national state of disaster”.
The Rental Housing Tribunal has new powers to urgently restore occupation and/or services to tenants deprived of either by the landlord. This would be by way of an “ex parte spoliation order”, i.e. without the landlord having any right to be heard, although the landlord can ask for an urgent hearing on 24 hours’ notice.
“Unfair practice” is presumed where –
- Services are terminated without reasonable notice, alternative payment arrangements have unreasonably not been made, or where “no provision has been made for the ongoing provision of basic services during the national state of disaster”’
- Any penalty for late payment of rental (where the default is caused by the disaster) has been levied (only interest can be charged),
- Either the landlord or the tenant have failed “to engage reasonably and in good faith to make arrangements to cater for the exigencies of the disaster”,
- “Any other conduct prejudicing the ongoing occupancy of a place of residence, prejudicing the health of any person or prejudicing the ability of any person to comply with the applicable restrictions on movement that is unreasonable or oppressive having regard to the prevailing circumstances.”

Notes for landlords and tenants

Keep a full record of everything in case your dispute ends up before the courts or the tribunal.

Both landlords and tenants will have to act fairly and reasonably towards each other here, taking into account your respective abilities to comply with the terms of the lease during the state of disaster.

Where tenants are struggling to pay rent as a result of the lockdown, landlords should be open (to whatever extent possible) to any reasonable request for rental deferments or reductions. Tenants in turn should be fair and reasonable in asking for relief. Good faith negotiation is key if landlords can expect to have any chance of obtaining an immediately-enforceable eviction order.

Home Businesses – Is Yours Legal?

Written by Nicole Ross on September 28, 2020. Posted in Business, Property.

The sharp upsurge in businesses operating remotely as a result of the pandemic lockdowns means a lot more people working from home – most presumably in low-profile home offices, but inevitably some in the form of full-on business activities from home. What effect is that having on the property market?

Work-from-home and what’s hot in property market trends

Let’s firstly have a look at what trends are emerging in the “hot property” market, driven by both the work-from-home phenomenon and by the general economic fallout from the pandemic and the lockdowns –

Increased interest in coastal and country properties from employees and businesses looking to work remotely away from congested highways and crowded cities.
Upsizing by stay-at-home workers looking for extra home office space and facilities.
Downsizing by financially-stretched homeowners reducing costs and looking to realise the value in large houses they no longer need (either by selling or by renting out).
Increased demand for rental properties in some sectors, driven presumably by owners selling homes to cut costs, perhaps also by sales in anticipation of emigration or semi-gration.

The law

The next question of course, regardless of whether you are selling, buying or staying put, is this – what does the law have to say about home businesses? As a small business are you clear to move your business into your house? As an employee is there anything in the law to stop you from setting up a home office? As a neighbour do you have any right to object?

Those are of course important questions to ask before you buy a “home-office-house” and before you open up a home business in your existing house. The last thing you want is to be shut down by unhappy neighbours or the local municipality.

The two questions to ask

The High Court has confirmed that there are essentially two questions to ask –

Is the activity in question allowed by local zoning and land use laws?
Is there any other legal block in place, for example are there any title deed restrictions or, if the residence is part of a community scheme like a Home Owners Association (HOA) or a Sectional Title complex, do the complex’s rules allow it?

Living in a complex – the hair salon allowed by zoning laws but closed down by the HOA

A homeowner had for many years run a hair salon business from her home in a complex, although both the HOA’s constitution and its conduct rules allowed only residential usage of houses except with authorisation via a special resolution. She was bound by the constitution and rules both by the terms of her purchase agreement and by her title deeds.
When she refused to cease business the HOA approached the High Court for an interdict. Her central argument was that her home business was permitted by the local zoning regulations in terms of which certain small scale non-residential activities were allowed in the area.
Not relevant, held the Court in interdicting the homeowner from continuing her business. She had agreed to a limitation of her rights, she had agreed to forfeit her right to use their land for anything but residential purposes and the HOA had not purported to change the zoning scheme and was “well within its rights to seek to preserve the residential character of the development”.

In other words, HOA and Body Corporate rules can in principle be more restrictive than local zoning laws and effectively override them in such a case. Bear in mind that each case will be decided on its facts, and in addition there has been some speculation recently that the National State of Disaster regulations and orders could be used to justify a departure from that principle. Much safer however to assume that you are bound by your complex’s rules (which may in any event allow you to work from home and/or to run a small business, although perhaps only with consent).

Must you apply for rezoning or municipal consent? 3 categories to consider

If you don’t live in a residential complex or if you do but are in compliance with the complex’s rules, you need to check that you aren’t going to be stopped from operating (perhaps even fined) by your local authority.

Your local municipality will have its own land use and zoning regulations and bye-laws, but generally speaking your business activities will fall into one of three categories –

Micro business: Depending on the zoning of your particular area, working alone from home in a home office is highly unlikely to cause any issues either legally or practically, and you are also likely to be allowed to conduct small scale business activities from home without consent where your business activities fall into your municipality’s “micro-business” or “home enterprise/undertaking” category (check with your local municipality on its rules in this regard).
Municipal consent: As soon however as your activities go further (there are normally limits on things like the nature of the business, number of staff, percentage area of the house used for the business, parking availability, noise/nuisance factors and the like) you will probably have to apply for municipal consent or a permit to operate.
Rezoning: In other cases you may need to go further and apply for complete rezoning of the property, possibly also for removal of title deed restrictions.

Take specific advice in any doubt!

Friends and Lovers: Before You Lend Out Your Car…

Written by Nicole Ross on September 28, 2020. Posted in Contract, Family Law, General Interest.

“Neither a borrower nor a lender be” (Shakespeare)

This is a case of a “love relationship” gone wrong but the principles of vehicle ownership apply to any situation in which you lend a motor vehicle to anyone else.

A widely-held misconception is that if you are the registered owner of a car, it is yours and you are the owner. Not so, as a recent High Court judgment aptly illustrates –

The registered owner unable to reclaim “her” car

In what must at the time have seemed like a straightforward agreement between two people “in a love relationship”, a woman agreed to lend her lover a vehicle which she bought from a finance company under a loan agreement.
They had agreed verbally that he could use the vehicle for his personal use and would repay her for loan instalments, insurance, licencing, servicing, traffic fines and the like.
When the relationship soured, the woman asked the Court for an order returning the vehicle to her as owner.
Although there was no dispute that she was indeed registered as owner of the vehicle, the Court dismissed her application on the basis that, whilst possession of a vehicle’s registration papers is prima facie (“at first view”) proof of ownership, it is never conclusive proof of ownership. Nor is any change of ownership required to be registered for transfer to take place. So in this case the registration papers did not prove ownership, the actual owner being the finance company.
This is different to the position with land, where registration of ownership in the Deeds Office proves ownership and is necessary for transfer of ownership. That no doubt is the origin of the myth that being registered as the owner of a car proves that you are the owner – an incorrect and dangerous assumption.
The woman was accordingly not the owner of the vehicle, rather the finance house was the owner in terms of the lease agreement which provided that it retained ownership until all amounts due under the agreement had been paid in full.
End result – the ex-lover keeps the car, for now at least.

Lessons for lending out cars…

Should you decide to lend out your car, make sure to do it under a written agreement – the parties in this case were lucky that they could agree on the terms of their verbal agreement as our law reports are replete with bitter and expensive litigation over what everyone said and who agreed to what verbally.
Include a term spelling out clearly your rights to recover possession of the vehicle. The woman in this case would have been in a far stronger position if the parties had agreed that, even if the man held up his end of the bargain to pay for all the loan instalments and other expenses, the woman still retained the right to reclaim the vehicle if their relationship ended (she still wouldn’t have sued as owner, just to enforce the agreement).
For life partners and cohabiting couples this is yet another reminder that there is no such thing as a “common law marriage” in our law. There are no automatic marital or other rights attaching to your relationship and applicable when the relationship ends, so entering into a full cohabitation agreement is the only way to safeguard both your and your partner’s financial and personal rights.

Website of the Month: Don’t Lose Your House Because of a Lockdown Layoff!

Written by Nicole Ross on September 28, 2020. Posted in Website of the Month.

(Note: If none of this applies to you please think of passing it on to anyone you know who may find it useful)

In these hard times it is not always easy to keep up bond repayments, particularly if you are one of the many victims of the lockdown that have lost your job or your business.

The worst thing you can do is ignore the problem – that is a recipe for the bank taking legal action against you and ultimately repossessing your home. For some practical advice on what to do (and what not to do) if you are unlucky enough to fall into arrears with your bond, read “Home Repossession: Holding On To Your House In A Time Of COVID-19” on iAfrica.com. For many people their house is their most important asset so seeking professional help in need is a real no-brainer here!

Property: Don’t Pay Double Commission!

Written by Nicole Ross on August 26, 2020. Posted in Property.

“… in certain circumstances the principal may be liable to pay commission to both agents where it is impossible to distinguish between the efforts of one agent and another in terms of causality or degrees of causation.” (Extract from judgment below)

With many property sellers allowing multiple estate agencies to market their properties in their attempts to sell during what is still (for the moment at least) a buyer’s market, now is perhaps a good time to remind both sellers and buyers of the double commission danger.

Consider this scenario – you mandate an agent who introduces a potential buyer to your property, but no acceptable offer results. Later on you bring another agent in, and this time the same buyer makes an acceptable offer. Which agent must you pay commission to – the agent who originally introduced the buyer to the property, or the agent who eventually closed the deal?

In a nutshell, an agent must be the “effective cause” of the sale to be entitled to commission and our law reports are replete with disputes between sellers and agents over who is and who isn’t the effective cause of a particular sale. As the High Court put it a few years ago: “Our Courts have repeatedly acknowledged how difficult it is, when there are competing estate agents, to determine who the effective cause of the sale that eventuates is.”

The big danger for the seller of course is being held liable to pay full commission to two estate agents. The factual disputes that arose in the High Court case in question illustrate…

R1.6m commission claimed

A property seller engaged agency A to sell the property, and later signed a sole and exclusive mandate with agency B to sell the property by auction.
One (unsuccessful) auction later, and after much negotiation and to-ing and fro-ing, the first agency (A) presented an offer from buyer C which the seller accepted.
Agency B claimed to have been the effective cause of the sale to C and sued the seller for R1.6m in auctioneer’s commission. The seller, at risk of paying (substantial) double commission, resisted vigorously.
Most of the relevant facts were in dispute, with A and B presenting the Court with substantially different versions of events in virtually every important respect. B’s application was dismissed by the Court on the ground that because of the critical disputes of fact it should have proceeded by way of “action” not “application” – a technical distinction of great interest to the legal fraternity but not relevant here.
What is highly relevant to sellers, buyers and agents is the ease with which the seller’s decision to engage the services of two agencies led to such bitter disputes of fact and law.

Sellers, Buyers and Agents: How to protect yourself

Sellers: As always, agree to nothing without legal advice, and insist on formal agency mandates. If you give mandates to multiple agencies, ask them each for a list of the prospective buyers they have introduced, and insist on the buyer indemnifying you against multiple commission claims (necessary because you might not know if your buyer has dealt with more than one agency). You may be advised in some cases to have the various agents give you a similar indemnity.

Buyers: Again, agree to nothing without advice! When viewing a property tell the agent if you have viewed it before with another agent and in particular if the offer/sale agreement you are asked to sign contains any warranties/indemnities, make sure it is safe to agree to them.

Agents: Don’t put your hard-earned commission at risk – avoid uncertainty and dispute with clear, properly-drawn mandates. Comply also with the EAAB’s Code of Conduct’s requirements on exposing a client to the risk of double commission.

Directors, Trustees: Can You Hold Your AGMs and General Meetings on Zoom?

Written by Nicole Ross on August 26, 2020. Posted in Company / Corporate / Compliance, Property.

“O Wonder! …O Brave New World” (Shakespeare)

Regrettably the pandemic still shows no sign of going away any time soon, and the social distancing it has brought to our “new normal” leaves companies with a dilemma. How can you comply – safely and lawfully – with the Companies Act’s stringent requirements for the holding of Annual General Meetings and (where needed) interim General Meetings?

The good news is that our South African legislation has for many years allowed the holding of company meetings via electronic communication.

The savings in cost, efficiency and convenience have now – courtesy of the lockdown – been experienced first-hand by many a company and its stakeholders, and a Google search reveals a multitude of AGMs held recently via Zoom or similar platforms (there are also several proprietary platforms specializing in shareholder meetings).

The benefits of meeting virtually are such that even after Covid-19 is no more than a bad memory many of us will continue doing so in place of the traditional “face-to-face all in one place” gatherings.

Expect also an upsurge in hybrid physical/virtual meetings as things get safer.

The formal requirements

Comply strictly with all the Companies Act’s requirements in regard to proper notice, conduct and minuting of meetings and decisions.
Observe all the legal requirements set out in ECTA (the Electronic Communications and Transactions Act) in regard to identification of originator, accessibility, storage, retrieval etc.
Shareholder meetings can be conducted entirely by electronic communication unless prohibited by your MOI (Memorandum of Incorporation) but if you want to avoid any uncertainty have your lawyer draw your MOI to clearly allow them.
How you hold the virtual meeting is important, the requirement being that “The electronic communication employed ordinarily enables all persons participating in that meeting to communicate concurrently with each other without an intermediary, and to participate reasonably effectively in the meeting.”
Notice of the meeting – over and above the normal requirements for notice, “the notice of that meeting must inform shareholders of the availability of that form of participation, and provide any necessary information to enable shareholders or their proxies to access the available medium or means of electronic communication”.
It’s then over to shareholders (or their proxies) to arrange their own access at their own expense, although good practice might be to assist with technical and perhaps even financial support where necessary. Any suggestion of an infringement of shareholder rights could come back to haunt you.

Board decisions generally

Unless your MOI says otherwise, your board can make decisions electronically (without a virtual or physical meeting) if the decision is one “that could be voted on at a meeting of the board of that company”. Decisions can be “adopted by written consent of a majority of the directors” after “each director has received notice of the matter to be decided.”

Shareholder decisions generally

Shareholders can also vote electronically on resolutions relating to any business not required by the Companies Act or by the MOI to be conducted at an AGM

Public companies

Meetings of public company shareholders “must be reasonably accessible within the Republic for electronic participation by shareholders … irrespective of whether the meeting is held in the Republic or elsewhere”.

Bodies Corporate and Home Owners Associations

Community schemes should take advice on whether in their particular circumstances they can/should postpone their AGMs and/or hold them remotely. Bodies Corporate will need to comply with their Rules and Home Owners Associations with their founding documents (either a Constitution or an MOI).

Buying a Business? Make Sure the Seller Publishes Notice of the Sale

Written by Nicole Ross on August 26, 2020. Posted in Business, Insolvency / Liquidation, Media, Property.

“The purpose of the legislature in enacting s 34(1) is to protect creditors by preventing traders who are in financial difficulty from disposing of their business assets to third parties who are not liable for the debts of the business, without due advertisement to all the creditors of the business.” (Extract from judgement below)

With our economy in trouble and the ongoing pandemic and lockdown damaging more and more businesses by the day, sales by distressed companies and traders are likely to rocket.

If you are a prospective buyer here, be aware of one particular danger lurking in the wings for you.

Follow this rule to protect yourself – before you buy any business, its goodwill or assets forming part of the business, take legal advice as to whether or not the sale must first be advertised in terms of section 34 the Insolvency Act. You stand to lose both the business and the purchase price if section 34 requires the sale to be advertised and it isn’t.

Your risk is that if an unadvertised sale is challenged by a liquidator/trustee (or by a creditor if there is no liquidation/sequestration) within 6 months of the sale, it is likely to be declared void. In that event, you will be lucky to get even a portion of your purchase price back – with the seller in financial difficulty your concurrent claim is probably worthless.

As a creditor…

The advertising requirement is designed to protect you as a creditor from having to claim from a debtor which suddenly becomes a worthless shell having quietly sold away its business and/or assets beyond your reach.

Note that you only have protection if you have instituted proceedings against your debtor “for the purpose of enforcing [your] claim” before the transfer of the business – a good reason not to drag your heels when suing a recalcitrant debtor.

When advertisement isn’t necessary

The sale will only be valid without advertisement if –

The sale was made “in the ordinary course of business” (unlikely where the business subsequently fails), or
It was made for “securing the payment of a debt” (unlikely to be under your control as buyer), or
The seller wasn’t a “trader”. As “trader” is widely defined in the Act, and as the onus of proof here is squarely on the buyer, that’s not going to be easily proved. As we shall see below, you can be a “trader” in property as much as in any other commodity.

As a general rule therefore, it is safest to insist on the sale being properly advertised before you pay out the purchase price, but there are grey areas and pitfalls here so take specific advice. Note also that the Act’s requirements for the timing and manner of advertisement are strict and must be followed to the letter.

As a recent High Court case shows, as a buyer (in this case of a property business) you could lose everything if you lose sight of this very real danger…

An R8m claim and a property transfer (and bond) set aside

A property owner bought and developed a property firstly into a shopping centre and later into a shopping centre with 11 sectional title units.
Whilst being sued by a creditor for R8m, the owner sold a section to a buyer and transferred it to him, and a bank registered a bond over the property.
The creditor obtained judgement against the owner only to find that it had been placed into liquidation. It asked the High Court to set aside the sale on the basis that the sale had not been advertised in terms of section 34 and was therefore void.
The buyer countered by denying that it was a “trader” as defined in the Insolvency Act. Its core business, it said, was to acquire and then rent out properties, “its business objective was not the buying and selling property per se as its stock in trade”.
Finding on the facts that the owner was indeed a “trader” when it sold the property to the buyer, the Court set aside the sale, the transfer to the buyer, and the bank’s mortgage bond.