IN THIS ISSUE -
(“Communio est mater rixarum” (Roman law maxim meaning “Co-
A recent High Court case highlights once again the dangers of cohabiting without entering into a formal cohabitation agreement, particularly when substantial assets are acquired jointly.
Things fall apart
The perils of prescription
Because A and B had no written agreement as to what their respective financial obligations were in regard to the costs of acquiring and maintaining the house, the Court had to exercise its “wide equitable discretion in making a division of the joint property”.
Critically, A claimed that many of B’s claims had prescribed (i.e. become unclaimable
for lack of enforcement within 3 years). B tried to convince the Court that his
and A’s co-
The danger of course is that cohabiting couples will only start thinking of enforcing their claims against each other when they break up – too late!
The result – B is down R815k in respect of prescribed claims against A for a share of the initial purchase deposit, bond repayments, improvements and rates and taxes.
In the final analysis however both parties are losers – they could have avoided all the delay, dispute, uncertainty and cost of litigation through the simple expedient of putting in place a comprehensive cohabitation agreement upfront.
“South Africa is plagued by crime – often viciously violent, sometimes sophisticated and organised, often ridiculously random, but always audacious and contemptuous of the values we are supposed to believe in and the human rights enshrined in our Constitution …..” (Constitutional Court, below)
Unfortunately it is often the most violent and vicious of the criminal gangs who breach all our defences by the simple expedient of impersonating police officers. Regular readers of LawDotNews will recall the traumatic story of a family who in 2009 fell victim, in their own home, to just such a gang.
The Constitutional Court has just written the final chapter in the family’s long quest through our courts to hold their security services provider liable for the nightmare experience they were subjected to.
The police imposters, and the guard who opened the gate
The final chapter
The family refused to give up and took the matter to our highest court – the Constitutional Court. Holding (on the facts) that the security company had both breached its contract with the family and was vicariously liable for the guard’s negligence, the Court declared it liable to pay damages to the family.
Home owners: What is the weakest link in your security? If you think it may be your security services provider, or perhaps the terms of your contract with it, take legal advice now. And call for help immediately if you are approached by anyone who claims to be a police officer but cannot produce an official SAPS appointment card (a white card with the officer’s photo under “SA POLICE SERVICE”, the SAPS logo to the right and officer’s name at the bottom; on the reverse, “APPOINTMENT CERTIFICATE”, “Sect 30 Act 68/1996”, then force number, name and ID with issue date and issuing SAPS signature).
Security service providers: Take particular note of the Court’s comments that “The community expects security guards not to give criminals access to guarded property. It is wrongful to do so” and “Security guards are trained to provide guarded protection and to detect nefarious ways in which opportunists may try to penetrate that protection. That is the core of their mandate…..In providing the robber with access to the property without attempting to ascertain his identity or business, [the guard]’s conduct thus in any event failed to meet the standard of a reasonable security guard.”
“Confusion now hath made his masterpiece” (Shakespeare, Macbeth)
An “acceleration clause” in a loan agreement (where the loan is repayable in instalments) provides that if the borrower fails to pay any one instalment, the full amount of the loan becomes due and is immediately recoverable in full by the creditor. Inserting such a provision into a loan agreement is a sensible precaution for a lender to take – without it he could only sue for any overdue instalments, not for the full amount of the loan.
Borrowers: your danger
Failure to pay just one instalment exposes you to court action for recovery of the full amount owing.
Lenders: your limits
But, as a recent High Court judgment illustrates, lenders also have to act cautiously
here. A lender had invoked an acceleration clause to sue the debtor for the full
amount outstanding (over R7,6m) after the debtor missed one instalment of R42,133-
In other words, the borrower’s failure to pay R86-
The Court refused to enforce the acceleration clause on two grounds –
The “contrary to public policy” principle
A basic principle in our law is that, whilst generally you are held to your agreements (contracts), any agreement that is “contrary to public policy” will be void and unenforceable.
The problem is that deciding what is and what isn’t “contrary to public policy” is by no means an exact science. For example, the Court in this case held that “it is not a question of a contract offending an individual sense of proprietary and fairness but rather whether the values of the Constitution are breached”. Clearly there are no hard and fast rules here, and lenders need to err on the side of caution if they are to avoid having their agreements rendered unenforceable.
At the very least, be aware of “constitutional values” not only in drawing up your
contracts, but also in enforcing them -
You walk into an official bank agency to open up an investment account – can you take it for granted that the bank is accountable to you for your investment if the agent “goes rogue” and steals it?
Generally the answer will be yes, because our law entitles you to assume that a bank’s branch manager or agent “is empowered to represent the bank in the sort of business (and transactions) that a branch of the bank and its manager [or agent] would ordinarily conduct”. Put differently, the bank will generally be bound by its agent’s “apparent authority” even if the agent is in secret acting fraudulently and in his/her own interests.
But of course you will have a problem if you knew (or should reasonably have known) that the manager or agent was acting beyond the scope of the bank’s “ordinary business”.
Tax evasion, collusion and the rogue agent
To take an extreme example, these were the facts in a case recently decided in the
Supreme Court of Appeal -
POPI (the Protection of Personal Information Act) is now partially in effect, but only to the extent that the way is now cleared for the appointment of an Information Regulator and the promulgation of Regulations. That’s certainly progress, but it’s likely to be a while still before the main provisions of the Act come into effect – and even then, you will have at least a year to comply.
Nevertheless, the clock is ticking faster so here’s a reminder -
“Be careful about reading health books. You may die of a misprint.” (Mark Twain)
SMEs are eligible for a share of R1.7m in prizes in the Eskom Development Foundation Business Investment Competition if they are –
Don’t miss this chance to grow your business!
You only have until 18 July to enter so go now to Eskom’s “Business Investment Competition” page at http://www.eskom.co.za/OurCompany/CSI/Pages/BIC.aspx for the full terms and conditions, guidelines, prizes and rules.
Have a Great June!