The rights & obligations of both owners

The easiest way to determine the boundaries between properties is to consult the official town planning diagrams kept by the local authority in control of the area (Rondebosch). In the event of a dispute over the dividing line between two properties, the first point of reference would be the official property plans (diagrams). One can refer to the title deeds of the properties concerned to ascertain plan numbers and with which deeds the plans are filed.

In the absence of proof that a boundary wall or fence is entirely on one of two adjoining properties, it is presumed to half on one property and half on the other. Some legal authorities state that each part is separately owned by the owner of the property on which it stands, but that there are reciprocal servitudes of support. Other authorities state that the wall is jointly owned by the owners of the adjoining properties.

It is important to take note that the law relating to such encroaching boundary walls reflects the influence of both trains of thought and does not concretely swing in either direction. An owner who transfers his property automatically transfers his joint ownership.

Neither owner may without the consent of the other remove, raise or lower the boundary wall or tamper with it in any way except in an emergency, although in terms of common law a neighbour is allowed to break down a wooden fence and replace it at own cost with a more expensive partition.

Either owner my re-erect a boundary wall destroyed by an act of God, such as fire or flood; the other owner would have to contribute half the cost – if he or she will derive any benefit from it. Each owner is obliged to contribute to the maintenance and repair of the wall, although an owner can refuse to contribute to the cost of an unreasonably expensive new wall. Also, an owner is under no obligation to replace with a similar structure a boundary wall that was unreasonably expensive when it was originally erected.

Although both parties are entitled to reasonable use of the boundary wall, this right does not include reducing its strength or making it unstable but does however include improving and altering the appearance of the side that fronts your property. Subject to local authority regulations, either owner my use his side of the boundary wall as support or a beam or for water pipes and may even build on it if it is strong enough.

Title deeds might determine who is responsible for repairing shared walls or fences. A servitude could also make a single owner entirely liable for the costs of upkeep. If one neighbour refuses to make essential repairs, anyone who is entitled to enforce the servitude may obtain an estimate of the costs of repairs, though it is unlikely that a contractor will undertake to handle the repairs if the person responsible for payment refuses to do so.

The owner of a wall who is not bound by a servitude is usually under no obligation to carry out repairs. However, in the case of deterioration that is likely to prove dangerous to the public, a local authority might order the owner(s) of the property to carry out repairs. Should no servitude exist, repairs must be carried out by agreement between the two owners.

PRACTICAL APPLICATION

In both the High Court judgments of Van Bergen v Van Niekerk & Another and Passano v Leissler, the court reiterated the same stance in accordance with the principles laid down in Voet’s Commentarius ad Pandectas.

The respective courts held that in case of doubt, a wall intermediate between two adjoining properties is presumed to have been built on the common boundary. Such a party wall belongs to both the owners of the adjoining properties, irrespective of who built it. Although this is not co-ownership in the accepted sense of the term, the owners of neighbouring properties do have rights against each other.
One view which was taken was that the owners have the rights of co-owners in the sense that each is entitled to the maintenance of the wall encroaching on his neighbours property, as well as the part standing on his own property. Another view is that while each owner has no right of ownership in the portion of the wall standing on his neighbour’s ground, each owner is entitled to demand that the other co-owner should keep his half of the wall in a proper state of repair.

The courts seemed to favour the view that each owner owns half of the wall on his side of the median line with reciprocal servitudes of lateral support. Accordingly both neighbours are liable for the cost of the maintenance of the wall and both must refrain from doing anything which my detrimentally affect the stability of the wall.

Proceeds                                                       xxxx

Less: Base cost                                             xxxx

                         Equals: Capital gain or loss                           xxxx

In order to calculate a taxable capital gain, the sum of all the capital gains and losses for each asset (determined separately) disposed of during the year of assessment is determined. The resulting total is then reduced by an annual exclusion for a taxpayer who is a natural person or special trust.

As of the 1^st of March 2011 this form of relief to natural persons has been increased as follows:

• The annual exclusion has been increased from R 17 500.00 to R 20 000.00 for individuals during their year of assessment.

• In the case of an individual in the year in which the individual dies, this exclusion has jumped from R 120 000.00 to R 200 000.00.

It is important for all taxpayers to be aware of their tax liabilities and also how such liability is incurred. It is for this reason, coupled with recent changes in legislation that we have decided to dedicate a portion of the next few posts to capital gains tax liability in order to keep all OMDW clients and followers updated and fully informed.

Not only was the sale and transfer of the assets of a business, which was subsequently liquidated, declared void ab initio, but so too the mortgage bonds registered in favour of the bank financing the transaction.

A proper due diligence investigation into all relevant issues is thus of utmost importance when assisting a buyer or a bank evaluating it’s security. It proves that “possession cannot be regarded as “10 points of the law” and possession and even ownership and the security of a mortgage bond can be set aside by a ruling of a court. A bona fide buyer or bank are most likely to be un-aware of a pending liquidation or insolvency of a seller, which liquidation or sequestration can take up to six months to come to conclusion after the sale and full payment of a purchase price has taken place.

The facts of the case can be summarised as follows:

FACTS

• Tiffindell Ski Limited (the company) concluded an agreement of sale with Tiffski Property Investment (Pty) Ltd (Tiffski) on 12 July 2007 in which it sold to Tiffski the immovable property on which it conducted a hotel and resort enterprise along with the said business enterprise (the subject matter).

• The written agreement of sale contained terms quite common in many such agreements and to the effect that possession, occupation and control would be given to Tiffski on the date of transfer, that the agreement would not be published in term of Section 34 of the Insolvency Act, that the company would continue to conduct its business pending transfer and that the agreement represented the entire agreement between the parties.

• Registration of transfer subsequently took place on 16 September 2008 simultaneous with the registration of two mortgage bonds in favour of the State Bank of India Limited (the Bank).

• The company went into liquidation on 23 October 2008 and its liquidators challenged the validity of the transfer of the subject matter and the registration of the mortgage bonds against themselves, arguing that it was void as against them on the grounds that (1) the company went into liquidation within 6[six] months from the transaction (2) the transfer was not in the ordinary course of business (3) the transfer of the business was not for the purpose of securing the payment by the company of its debts and (4) the required notice was not published as set out in Section 34 of the Act.

COURT’S FINDINGS

Upon accepting the liquidator’s arguments, the court rejected Tiffski’s contentions that it was not a “trader” as defined in the Act, that the transaction was in the ordinary course of business, that the transfer fell outside of the 6 month window contemplated in the Act and that due to the transaction being common knowledge it was not necessary to advertise.

It placed specific emphasis on the Bank’s role when considering the validity of the mortgage bonds and rejected the claim by the Bank that it was unaware of the company’s financial difficulties at the time it approved the disputed mortgage bonds. The Bank further contended that the bonds passed by Tiffski over the immovable property transferred from the company constituted real rights in the said property that served as its only “real security” for the monies lent. Thus any order voiding the mortgage bonds would cause it irreparable financial harm.

The Bank sought to rely on a number of court decisions for the proposition that the validity of a mortgage bond duly registered in the Deeds Office is not dependent on the validity of the antecedent contract, a contention that the court also rejected. According to the court in this instance, it is trite that no legal consequence flow from a void jural act. The court stated that “As Tiffski did not acquire ownership of the company’s immovable property – on account of the voidness of the transfer – it must logically flow that Tiffski could not in turn grant any rights, let alone real rights, in the immovable property to the Bank”.

The court then further slammed the Bank saying that it should have insisted on publication of a notice in terms of Section 34 and this being expressly excluded in the agreement of sale must have been done with the Bank’s approval or acquiescence. It was the opinion of the court that to uphold any argument advanced by the Bank in its defense would “defeat the very purpose which the Legislature wished to achieve in enacting Section 34 (1) and benefit the Bank at the expense of the company’s creditors. The Bank must accordingly be taken to have consciously assumed the risk of the transfer of the company’s business to Tiffski falling foul of the legislative requirements and nevertheless agreed to advance moneys to Tiffski fully aware of the risk in doing so.

CONCLUSION

In future, any bank or money lending institution should do well to take head of the court’s hardline approach applied in this case and as the usual remedies relied on in cases of this nature fell on deaf ears in favour of the rights of the company’s numerous creditors. It could in fact signal the start of a growing trend to protect creditors and restrict lending even further, warning any bank to tighten its mechanisms for due diligence, information control and mortgage bond approval criteria even further.

Conveyancing attorneys who attend to the registration of mortgage bonds must also be aware of the risks associated with the registration of a mortgage bond when a court rules the security void, due to non compliance of legal requirements.

With special thanks to Daan Steenkamp.

For the full judgment visit www.saflii.org/za/cases/ZASCA/2011/187

According to Kirkman Lanfear Chartered Accountants, the following are the guidelines to assist with the development of such a manual in terms of Section 51 of the Act.

In terms of this section, the head of a private body must:
• Compile a Section 51 manual which is a roadmap of the company;
• Submit the manual to the South African Human Rights Commission on an annual basis;
• Update any material changes on the manual on a regular basis;
• Make the manual available as prescribed by the Act at the company’s offices and on their website;
• Annex a request form to the manual and also make the request form available on its website and at the company premises and access points.

The manual must among other things contain the following information:
• Details of the company’s postal, email and street address, fax and phone number;
• The description of available records generated by the company stating those which are automatically available and those that are available upon request;
• Outline the request procedure in terms of PAIA;
• State the head of the company (Information Officer in terms of PAIA);
• Stipulate the fees applicable as legislated by the Act which are chargeable to requestors;
• Remedies available to requestors if their request for the information has been refused;
• Details facilitating a request for access to a record etc.

Keep updated and be informed on how to steer clear of the red-tape and comply with the Act’s requirements. Visit www.kirkmanlanfear.co.za for more information.

Generally, upon the appointment of an Executor/Executrix via the issuing of the Letters of Executorship by the Master of the High Court, he/she is given the control and overall custody of all the assets of the deceased so as to proceed with the administration of the estate in question. However, with this control and custody comes a lot of responsibilities.

An Executor/Executrix has various duties in respect of the estate in which he/she is appointed as such. Such an appointee is expected to exercise his/her powers bona fide (in good faith) and with the utmost sense of impartiality and is to treat all claims, brought against the estate, fairly.

One of these duties is to advertise the estate in question. Firstly, in terms of section 29 of the Administration of Estates Act, for all possible creditors and subsequently in terms of section 35 of same, whereby the final Liquidation and Distribution Account lies open for about 21 days for inspection so as to ensure that it is free from all objections.

Recently the Kwazulu- Natal High Court heard a case which dealt with the above:

Van Niekerk v Van Niekerk and another [2011] 2 All SA 635 (KZP)

Summary of the facts of the above case:

• The deceased (the applicant’s husband) died and as per his Will, which was executed shortly prior to his death, appointed his former wife (the first respondent) as the Executrix of his estate, as well as the sole heir to his estate;
• The applicant ( the deceased wife at the time of his death), made an application for the removal of the respondent as the Executrix in terms of section 54 (1) (a) (v) of the Administration of Estates Act;
• The applicant was claiming half of the estate on the grounds that she and the deceased were married in terms of community of property, as well as for the payment of maintenance from the estate as per the provisions of the Maintenance of Surviving Spouses Act 27 of 1990;
• The respondent rejected the applicant’s claims against the estate;
• The court therefore had to decide whether “…the continuance in office of the executrix would detrimentally affect the proper administration and winding up of the estate.”

Note: section 54 (1) (a) (v) of the Administration of Estates Act reads as follows:

• An executor may at any time be removed from his office by the Court if for any other reason the Court is satisfied that it is undesirable that he should act as executor of the estate concerned;

When dealing with an application for the removal of an Executor under this section, the court is vested with discretion, but in exercising such discretion, consideration should be given to the interests of both the estate and its beneficiaries.

In addition to the above provision, the applicant also relied on a common law principle which provides that a court has the discretion to remove an Executor whose personal interests are in conflict with those of the estate.

In dealing with this case, the court hled that an Executrix, when dealing with claims against the estate, is obligated to assess all the claims’ “…merits on a fair consideration of all the facts and its legal merits. It is not proper for the executor to reject claims against the estate without some good reason to do so.”  It is important to note however that this does not in any way prohibit an Executor/Executrix to reject a claim against the estate, if there are good reasons to do so.

Therefore the mere disputing of claims against an estate does not constitute a substantial reason to remove such an Executor/Executrix from office. However, if a court finds that the appointee is utilising his/her office to intentionally resist all or some claims without any due fair minded consideration of the merits of same and/or if it finds that the appointee is doing this so as to secure personal financial benefits in his/her capacity as a beneficiary of the estate, then such court is obligated to remove the appointee in terms of the abovementioned section.  

In the case in casu the court found that the manner in which the Executrix treated the claims of the applicant rendered her appointment as being undesirable. As a result, the court granted the relief sought by the applicant.

FULL JUDGEMENT IS AVAILABLE HERE:

• http://www.saflii.org/za/cases/ZAKZPHC/2010/85.html

Do not hesitate to contact us for any assistance in the administration of estates

 Traditionally banks were able to rely on ‘rubber stamped’ orders, handed down by High Court Registrars, to seize and auction off the properties of their mortgage holder defaulters (defaulters).

However, the recent Constitutional Court (CC) judgment in the Elsie Gundwana case (Elsie Gundwana v Steko Development CC & Others) is argued to have slightly altered the above position.

Brief facts of the above case are as follows:

• Ms Gundwana approached Nedbank and borrowed R 25 000 to help her purchase a house;
• Upon her subsequent default, a Registrar granted a default order declaring her house specially executable;
• When she then failed to enter an appearance to defend her case, her property was sold in execution to Steko Development CC;
• Steko Development CC obtained an eviction order against Ms Gundwana, which she since then has been resisting until the recent handing down of the judgment (in her favour).

Main outcome of the above judgment:

1. The CC declared rule 31 (5) of the Uniform Rules of Court unconstitutional to the extent that it permits the sale in execution of the home of a person.

With regards to the above the CC held that the  “…willingness of mortgagers to put their homes forward as security for the loans they acquire is not by itself sufficient to permit the Registrar to grant an order declaring immovable property executable.”

As a result of the above, banks will now have to obtain a judgment from a Judge or Magistrate permitting them to seize and auction off the properties of their defaulters.

Note: some years ago, a similar rule to the above, relating to Magistrate Courts had already been declared as being invalid, in the Jaftha v Schoeman case. However, banks have been circumventing this case by approaching Registrars to obtain orders permitting them to seize and sell properties in auction, even when the facts allowed for the approaching of a Magistrate Court.

2. The CC also held that alternative means to collect debt should be preferred over the selling of consumers’ homes.

With regards to the above, the CC held that therefore Judges and Magistrate should look at facts such as whether the mortgage debt in question is disproportionate or low in relation to the value of the house or the value already paid in, when determining whether to allow the rescission of the judgment and therefore the subsequent sale of the house.

NOTE THE FOLLOWING:

• The above judgment is said to apply retrospectively;

• Therefore if found that the default judgment was granted by a Registrar, an aggrieved debtor can apply for the original default judgment to be set aside;

In doing the above,

• Provide reasons for not having brought the application for the rescission for the judgment earlier;
• Set out a defence to the claim for judgment against you;
• In addition to the normal requirements for rescission, also show that a court with full knowledge of all the relevant facts existing at the time of granting default judgment would nevertheless have refused to execute against your specially hypothecated property.
• It seems that banks are not put off by this judgment. They believe that although this matter will now entail more administration on their part, when seeking to collect debt by seizing and selling property belonging to their defaulters, the position regarding this matter remains ultimately the same.

Further reading on the above, click on the following:

• http://www.saflii.org/za/cases/ZACC/2011/14.html – (the judgment);
• http://www.ncf.org.za/docs/publications/consumerfair/2011/vol31/part4.pdf

Historically municipalities were indemnified against liability for negligent omissions (failure to perform a duty that is legally due). However, one merely has to look at our case law to see that this has been done away with.

All bodies (public or private) exercising public power owe a duty of care to the public. In addition to this, section 33 of the Constitution of theRepublicofSouth Africa(the Constitution) provides that everyone has a right to an administrative action (as defined by section 1 of the Promotion of Administrative Justice Act 3 of 2000) that is lawful, reasonable and procedurally fair. Therefore administrative actions such as decisions given by local authorities are subject to scrutiny so as to ensure compliance with legal principles.

As per the judgment in Faircape Property Developers (Pty) Ltd v Premier, Western Cape 2002 6 180 (C), a property developer who suffers a loss as a result of a local authority having exercised his/her statutory duties negligently has recourse against that local authority.

Judgments such as the above are in line with our Constitution, which is the supreme form of law inSouth Africa. Our Constitution is founded on values such as the values of democratic government to ensure accountability, responsiveness and openness. The value of an accountable government is promoted by ensuring that citizens have some form of relief against their government when the latter causes them harm.

Davis J In the Faircape Property Developers case said the following:

“… to find that a party who would be gravely prejudiced by gross negligence of an official enjoined to consider such an application, should be without any remedy and thus left to suffer considerable financial consequences of such a wrongful decision would offend the principle of accountable…”

In addition to the above, it is also important to note that when interpreting any legislation inSouth Africa, every court must promote the spirit, purport and objectives of the Bill of Rights. Section 195 (1) of the Constitution provides that public administration must be governed by the democratic values and principles enshrined in the Constitution, including a high standard of professional ethics, accountability and transparency. Section 152 (1) of the Constitution provides that the objects of local government include the provision of democratic and accountable government for local communities.

It is due to the above that I submit that the warning that was recently sent out by South African Property Owners Association (SAPOA)- court warns developers not to rely on local authorities to know the correct zoning on their property, can be deemed as superfluous; the public will always have recourse against a public official whose negligent conduct causes them harm, financial or otherwise.

The Consumer Protection Act (CPA) and municipalities:

• The application of the CPA to municipalities was delayed so as to give municipalities a chance to get their affairs in order. However, municipalities with high capacities such asCape Town,Johannesburgand Tshwane were never exempted i.e. the CPA applied to these municipalities with high capacity as soon as it came into effect.

If you would like a detailed article on the above, please do not hesitate to contact our offices.

This case held that although trustees may disagree internally on a matter, they are prohibited from disagreeing externally. They my debate matters internally and put them up for a vote, after which the decision of the majority shall prevail. However, in order for a trust to function legally, it requires the complete participation of all its trustees; all trustees of a trust are required to partake in the decision making process.

In this case, the trust had three trustees, but in making the decision to take legal proceedings against the respondent company, one of the trustee, who was generally marginalised from the activities of the trust was not informed about the meeting and therefore did not attend the meeting at which the decision to institute the legal proceedings was taken. The High Court therefore held that “…no proper resolution had been taken by the entire complement of the trust body to launch the proceedings.”

The full judgment is available here:

http://www.saflii.org/za/cases/ZAFSHC/2010/134.pdf

                                                           IN ASSOCIATION WITH

                                                 THE INSTITUTE FOR ESTATE AGENTS

IT’S A FACT- SERVICES RENDERED BY ESTATE AGENTS ARE GOVERNED BY THE CPA

There were many that were still arguing for the possibility of Estate Agents not being governed by the Consumer Protection Act (CPA). However, after attending the Complete Compliance Seminar, I think all doubts regarding this matter have diminished and the only thing left is to ensure that all services rendered by estate agents are in compliance with the CPA.

With presentations by:

1. Dianne Brock and Annette Evans – The Institute for Estate Agents;
2. Solly Molefe – Home Ownership Education;
3. Buyile Nopote – A representative from the Western Cape Consumer Protector’s Office;
4. Aubrey Mathope – A representative from the National Consumer Commission (NCC) – Custodians of the CPA;
5. Stefan Le Roux – Legal Compliance for the Consumer
6. Meyer de Waal- Complete Compliance using the Property Transaction Kit (PTK)

All experts within their respective fields, there is no doubt that all attendees, including various attorneys, estate agents and representatives from various bodies all left ‘being the wiser’.

 Some interesting information from the seminar:

• “To ensure that your property transaction is in compliance with the CPA, we recommend using the PTK.”

INSTITUTE FOR ESTATE AGENTS

• “There are about 54% of declined bond applications every year. We need to focus on these declined bond applications as this is where business lies- we need to recycle buyers, rehabilitate them so as to get them into positions where they are able to get loans.”

SOLLY MOLEFE OF HOME OWNERSHIP EDUCATION

• A juristic person/entity is a consumer in terms of the CPA and is therefore subject to same, when its annual turnover is below R 2 million.”

AUBREY MATHOPE A REPRESENTATIVE FROM THE NATIONAL CONSUMER COMMISSION

• “The CPA applies to transactions between the following:
• Property developer – a consumer;
• An individual – a consumer (in the ordinary course of business);
• An individual – estate agent – consumer (in the ordinary course of business);

 But it is not applicable to a once-off transaction between:

• An individual – estate agent – consumer”
• However, the CPA is applicable to the services rendered by the estate agents.

AUBREY MATHOPE A REPRESENTATIVE FROM THE NATIONAL CONSUMER COMMISSION

• “A recent court judgment provided that in determining whether a transaction was conducted within the ordinary course of business, one has to look at whether the underlying contract is used within the ordinary course of business within that specific industry.”

STEFAN LE ROUX- LEGAL COMPLIANCE FOR THE CONSUMER

Please take note that all the presentations from the seminar are available on the Property Transaction Kit (PTK) website:

http://www.propertytransactionkit.co.za/

• Of good quality and are reasonably suited for the purpose for which they are intended for.

If within 6 months after a purchase, the goods are found to be in contravention of the above, a consumer is allowed any of the three R’s:

1. Replacement;
2. Repair; or
3. Refund.

A consumer is allowed recourse to any of the above three R’s .If a supplier refuses a consumer any of the above three R’s ( a consumer elects which of the R’s they would like), the Tribunal shall fine such supplier/business either 10% of its annual turnover or R 1000 000-00.

It is for this reason that if there are any suppliers/businesses that are still operating with ‘no return or refund policies’, that we recommend that they amend their policies as soon as possible. As for consumers out there, know your rights.

TAKE NOTE- there are two types of returns and refunds:

• The ‘change of mind/good will refunds’- in terms of these, suppliers/businesses are not obliged to accept the returned goods and refund the consumers. If suppliers/business do honour these it will be out of good will.
• Those that are imposed by statutes- Under the CPA, there are certain circumstances under which suppliers/businesses are obligated to accept the returned goods and refund the consumer with their monies.

For more information regarding returns and refunds, click on the following link (Reunds and Returns: You have rights as a consumer. Understand them. Enforce them). http://apps.thedti.gov.za/publications/refunds_returns.pdf