standard-title ARTICLES

ARTICLES

Are voetstoots clauses still valid and enforceable?

A voetstoots clause stipulates that a seller shall not be held liable for diseases or defects and that a good is sold “as it stands” or “with all its faults.” When a good is purchased voetstoots, it is purchased as it stands, whether or not it has patent or latent defects. A latent defect is a fault that would not readily be revealed by a reasonable inspection (roof leaks, broken underground drains, leaking geysers) whereas patent defects are defects that are not hidden and should easily be discovered by a reasonable inspection (broken door or damaged tiles).

A voetstoots clause essentially means that what you see is what you get. Prior to the commencement of the Consumer Protection Act (“the CPA”), these clauses were found in most property and second-hand vehicle sale agreements.

The CPA came into effect in 2011 and has placed much doubt on the validity and enforceability of voetstoots clauses. The CPA promotes a fair, accessible and sustainable marketplace for consumer products and services, including the buying or selling of immovable property, and provides for a statutory duty of disclosure. The CPA has furnished consumers new rights regarding the quality and usability of goods purchased and has ensured that suppliers do not deprive consumers of these rights.

There are many provisions in the CPA which have contributed to the near demise of the voetstoots clause. These provisions are highlighted below:

  • S2(10) provides that no provision of the CPA may be interpreted so as to preclude a right that a consumer would have in terms of the common law;
  • S(4)(4)(b) provides that if a contract, standard form or document contains a restriction, limitation, exclusion or deprivation of a consumer’s rights, then such a contract, standard form or document must be interpreted to the benefit of the consumer so that any restriction, limitation, exclusion or deprivation of a consumer’s legal rights should be limited to the extent that a reasonable person would ordinarily contemplate or expect;
  • S48(1)(c) states that a supplier must not request a consumer to waive any of his rights, or waive the liability of a supplier, or assume any obligations on terms that are unfair, unreasonable or unjust. Voetstoots clauses are considered to be “unfair, unreasonable and unjust” and it can be argued that selling goods in terms of a general ‘umbrella’ voetstoots clause is a clear waiver and deprivation of a consumer’s right;
  • S51(1)(b)(i) states that a supplier must not make a transaction or agreement subject to any term or condition if it directly or indirectly purports to waive or deprive a consumer of a right in terms of the CPA;
  • S55(2) states that consumers have the right to safe, good quality goods, particularly that goods must be reasonably suitable for the purpose for which they are generally intended or suitable for any specific purpose which was communicated to the supplier; be of a good quality, in good working order and free of defects; be useable and durable for a reasonable period of time; and comply with any other legislation which regulates their quality;
  • S55(3) provides that the consumer has a right to expect that the goods are reasonably suitable for the specific purpose that the consumer has informed the supplier of. If the defect manifests within 6 months of the delivery of the goods, the complainant is entitled to return them, at the supplier’s risk and expense, and to demand without penalty, a refund, replacement or repair; and
  • S56(4) provides that the implied warranty of quality is in addition to any other warranty in terms of the common law.

Although consumers are sufficiently protected in terms of the above provisions, they must be wary and informed of the following:

  • S55(6) provides that a supplier will not be liable in terms of Section 55(2)(a) and (b) if the consumer has been expressly informed that certain goods were offered in a specific condition and has expressly agreed to accept the goods in that condition, or knowingly acted in a manner consistent with accepting the goods in that condition. A supplier may therefore avoid liability for defects that were brought to the attention of the consumer and that were accepted by him;
  • The CPA only affects agreements concluded in the ordinary course of business, which means that the voetstoots clause cannot be included in sale agreements where the seller is acting within the course and scope of its ordinary business. A seller (e.g. a property developer) cannot rely on the protection of the voetstoots clause if it enters into an agreement of sale with a consumer that is protected by the CPA. On the other hand, sale agreements between private individuals, that is not within their ordinary course of their business, may include voetstoots provisions in the agreements; and
  • In terms of s5(2), the CPA will not apply to a transaction, if a purchaser is a juristic person with an asset value or annual turnover exceeding R2,000,000 (two million rand). An agreement of sale between a seller and a purchaser, whose annual turnover exceeds R2,000,000 (two million rand), may include a voetstoots clause as such transaction does not receive protection under the CPA.

RESIDENTIAL AND COMMERCIAL LEASE AGREEMENTS AND THE RIGHTS AND OBLIGATIONS OF LANDLORDS AND TENANTS DURING LOCKDOWN

Introduction

We are living in unprecedented times where many people living in South Africa have lost income, jobs and even lives. In March this year, President Ramaphosa directed a nationwide lockdown in terms of the Disaster Management Act, which was initially intended to be enforced until Thursday, 16 April 2020. It is now 22 May 2020, and we still find ourselves in lockdown, albeit slightly less restricted. There has been much debate by civil society as to whether lockdown has run its course. The purpose of this article, however, is not to question lockdown, but to rather provide guidance to tenants and landlords who find themselves in burdensome situations. Furthermore, this write-up focuses specifically on breach, eviction and the payment of rental in light of COVID-19.

It is no surprise that the majority of tenants who have partially or completely lost income as a result of lockdown are having difficulty paying rent to their landlords. There have been many calls for landlords to either waive rental for the effected months or to temporarily freeze rental, with the tenant to catch up on payments once they are in a position to do so. A lot of onus has essentially been placed on landlords to assist tenants. Regrettably, the aforementioned is easier said than done, as rent payments received by landlords are very often utilised to cover the landlord’s general expenses, including expenses pertaining to the rented premises. Most importantly, however, rental payments received from tenants mostly constitutes income for the landlord, and in many instances, this rental is their only income. The non-payment of rental thus has a domino effect; if the tenant does not pay the landlord, the landlord in turn cannot pay their own expenses, such as, inter alia, debt due to creditors and employees’ salaries (if applicable). Should the landlord’s creditors or employees not receive payment due to them, the domino effect will simply continue until most economic participants cannot meet their payment obligations. This does not mean, however, that in order for the economy to survive, tenants must pay their rent. Where a tenant has lost income or their job for example, paying the entire month’s rent may not be possible. Landlords and tenants should engage and compromise with one another, in such a way that benefits both parties. This is not always possible as there are different facts and circumstances specifically applicable to each tenancy, such as a history of rental defaults by the tenant before the implementation of lockdown.

In the event that parties to a lease agreement cannot reach an amicable solution regarding rental, it is important that they understand their respective rights and obligations in terms of the law and arising from the agreement. These rights and obligations must then be considered in conjunction with the limitations set by the national lockdown. Outlined in this article are various factors, guidelines and procedures which should be considered by both landlords and tenants when exercising any rights or performing any obligations in terms of their lease agreement.

Breach and cancellation

Certain rights and remedies become available to parties to a lease when there has been a breach of the agreement. A breach usually occurs when a party performs late or fails to perform its obligations in terms of the lease agreement, whether it is the landlord or the tenant.

A breach by the landlord would include, inter alia, failure to render the premises available on the occupation date or failure to carry out repairs and maintenance that significantly affects the use and enjoyment of the premises by the tenant. A breach by the tenant would include, for purposes of this article, failure to pay rental timeously, or at all.

Generally, where the lease agreement is breached, either by the landlord or the tenant, the innocent party shall be entitled to cancel the agreement or to enforce the terms thereof. It is critical to note, however, that in many cases, a breach of the agreement does not automatically entitle the innocent party to cancel the lease. The innocent party will only be able to cancel the agreement if the breach is material in nature. A material breach is one which goes to the “root of the contract and constitutes a breach of a vital term” thereof. A material breach could differ depending on the type of agreement. Fortunately, most lease agreements contain a cancellation or breach clause, so parties do not have to question whether there was in fact a material breach. A cancellation clause is a stipulation in an agreement which affords either party the right to terminate said agreement before its expiration, usually in the event of a breach. Cancellation clauses generally make it clear under which circumstances a lease agreement may be cancelled, as well as the procedure to be followed by the innocent party in effecting cancellation. A breach or cancellation clause could include grounds for cancellation, including but not limited to, rental defaults, failure or refusal by the tenant to occupy the premises timeously, and even sequestration or liquidation by one of the parties. During lockdown, the most common form of breach will be the failure by tenants to pay rent.

Type of premises leased

There are two main types of leases, namely residential and commercial leases. More often than not, a residential lease would be concluded where the tenant intends to live/stay in the premises, such as a flat or a house. Commercial leases are concluded where the tenant intends to trade from the premises, for example a shop in a shopping mall. The purpose for which a premises is rented influences the way a landlord or a tenant is required to proceed when exercising their rights in terms of the lease. It is thus imperative to distinguish between commercial and residential lease agreements.

Lease agreements in respect of property utilised for residential purposes:

Where a lease is concluded for residential purposes, tenants enjoy protection of the Constitution, the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act (“PIE”), the Consumer Protection Act (“CPA”) and where applicable, the Extension of Security of Tenure Act (“ESTA”). Although not entirely relevant for this article, the Rental Housing Act also applies to lease agreements.

Section 26 of our Constitution states that, inter alia, no one may be evicted from their home, or have their home demolished, without an order of court made after considering all the circumstances. The law does not permit arbitrary evictions. This means that before a tenant under a residential lease is evicted, there must be a court order. An order to evict a defaulting tenant during lockdown will not easily nor quickly be obtained. PIE sets out the procedure to be followed by landlords who intend to evict a tenant and sets out various circumstances which both the landlord and the court must consider before an order will be made. PIE applies to all land throughout South Africa as well as to unlawful occupiers thereof. An unlawful occupier is a person who stays on a property without the consent of the landlord or stays on a property without having any right in law to do so, or is not considered to be an occupier in terms of any other law. ESTA applies only to agricultural land, mainly land outside cities and towns, and has special protections for occupiers of land. An unlawful occupier includes a tenant occupying a premises where the lease has been duly cancelled.

Lease agreements in respect of property utilised for commercial purposes:

Evicting a tenant from a premises utilised for commercial purposes is also known as ejectment. Ejectment of a tenant from a commercial premises is easier than evicting a person from their residence. This is mostly because commercial leases are regulated by the law of contract and Section 26 of the Constitution, PIE and ESTA do not apply. A court order will also have to be obtained to evict a commercial tenant that does not vacate the premises voluntarily.

Natural and juristic persons

You may think it is irrelevant whether the tenant is a natural or a juristic person, however, it is not. The CPA, as mentioned above, applies to lease agreements where the tenant is a natural person, which is favourable to said tenant. Strictly speaking, the CPA applies to juristic persons too, but only where the tenant is a juristic person with an annual income/turnover of less than two million rand per year. Furthermore, the CPA is not applicable where both the landlord and tenant are juristic persons, regardless of annual income/turnover. Juristic persons include closed corporations, companies, trusts, partnerships and associations. It is also interesting to note that the CPA makes no distinction between commercial and residential property. In almost all instances, the CPA in this regard will only be applicable to natural persons as it is highly unlikely that there would be a situation where a natural person is leasing a premises to a juristic person. Therefore, if the lease agreement is in respect of a residential premises, the CPA will most likely apply.

Furthermore, for the CPA to apply to a lease agreement, the property must be let in the ordinary course of business. This essentially means that the landlord, alternatively the owner of the property, should regularly be receiving an income from leasing property, and declaring the income to the South African Revenue Service.

The CPA, insofar as it pertains to lease agreements, works very much in favour of the tenant. Section 14 of the CPA provides that a tenant may cancel the lease agreement with 20 business days’ notice, without the need to prove that there was a breach, whether material or not, of the agreement. Basically, a tenant does not have to proffer reasons for cancelling a lease. Furthermore, the CPA allows for the cancellation notice to be sent in any “recorded manner or form,” which means an email or an SMS should be sufficient.

Taking the above into consideration, it sounds crazy for a landlord to lease their property when the tenant can simply cancel at any time and without reason. Fortunately, in such a situation, the landlord would be entitled to a reasonable cancellation penalty and demand all outstanding amounts owed in terms of the lease. To avoid later dispute, parties to a lease agreement should ensure that a cancellation clause, as discussed above, is included in the lease agreement. Where no provision is made for early cancellation in the agreement, Regulation 5(2) of the CPA provides some guidance. Said Regulation states that a penalty may not exceed a reasonable amount, after taking into account various factors, such as, inter alia, the amount still outstanding for the lease period and the timing of the notice of cancellation. Included in the cancellation fee could be the costs incurred by the landlord to conduct credit checks for any potential replacement tenants, advertising costs and rental for the period under the lease during which the premises remains vacant. The landlord may not claim a penalty fee that would place them in a better position than they would be had the lease run its course. This would constitute unjustified enrichment.

Where a tenant has breached a lease agreement and the landlord wishes to cancel the lease, the landlord must give 20 business days’ written notice of a breach of the lease agreement. The landlord may only then cancel the lease if the tenant fails to rectify the breach within the 20 days. This process is prescribed by the CPA. The CPA does not, however, address the situation where the tenant breaches the lease repeatedly, but rectifies the breach within the 20 day period. Where parties have agreed to continue the lease agreement on a month-to-month basis, the notice period for cancellation is one month. In terms of the Rental Housing Act, a month-to-month lease agreement occurs after a tenant’s fixed term lease expires, whereby the tenant does not vacate the premises and/or does not renew their fixed term lease with the landlord. This results in a month-to-month agreement commencing automatically. A landlord may also agree with the tenant upfront that a month-to-month lease is in place.

One must also take cognisance of the fact that where the CPA applies to a lease, said lease may not be a fixed-term lease extending longer than 24 months. The aforesaid can be disregarded when the landlord and the tenant expressly agree to a longer term and the landlord can, as per Regulation 5(1), “show a demonstrable financial benefit” to the tenant.

Force majeure and the doctrine of supervening impossibility of performance

Although most of the information in this article is applicable to lease agreements regardless of lockdown, it is important to bear in mind that due to the present circumstances, the concept of force majeure and the doctrine of supervening impossibility of performance, are extremely important.

Force majeure:

Firstly, parties should check their lease agreement to see whether it contains a force majeure clause. Parties to a lease agreement can include therein a force majeure clause in an attempt to protect against the potential risk of an event, through no fault or act of either of the parties, which may render the performance of contractual obligations impossible. A force majeure clause may allow for a suspension of performance, where such performance is not necessarily objectively impossible and may allow for the suspension, rather than extinction, of the agreement for the duration of the applicable force majeure event.

Where an agreement contains a force majeure clause, such clause is to be applied and interpreted to protect contracting parties by limiting the affected party’s liability for non-performance, if a force majeure event occurs and/or suspending performance of both party’s obligations, without penalties, until such time as performance can continue and/or allowing an agreement to be terminated, without penalty, where performance cannot resume. Consequently, the force majeure provision suspends the ordinary rights and remedies of breach of contract.

Force majeure clauses must be detailed and specifically list the events that the parties agree will suspend their performance of the contract, such as an epidemic or act of government (lockdown). The application and effect of a force majeure clause will depend on the circumstances and the specific wording of the clause, as well as the interpretation thereof. Whether a party may rely on a force majeure clause or, in the absence thereof, the common law doctrine of supervening impossibility, in respect of non-performance as a result of the COVID-19 pandemic is fact-specific and can be complicated.

Instead of a force majeure clause, a lease agreement could contain an exclusion clause. The purpose of an exclusion clause is to exclude certain claims or liabilities which parties to the lease may have. A typical example of such an exclusion clause would be where the parties agree that a tenant would not have any claim of whatsoever nature, including a claim for remission of rental, against a landlord as a result of, among other things, force majeure.

Force majeure clauses generally state that upon giving written notice to the other party, the relevant obligation, such as the payment of rental, will be suspended during the continuance of the event and such party will be relieved of any liability during such period. In the event that a lease agreement contains a force majeure clause, the specific terms of the force majeure clause will determine whether the tenant will be entitled to a reduction in the rental payable or a payment holiday.

Should a lease agreement not contain a force majeure or exclusion clause, the parties thereto are not left completely helpless. Where no such clause is apparent, the common law doctrine of supervening impossibility of performance may apply.

Doctrine of supervening impossibility of performance:

In terms of South African common law, any event beyond the control of parties to an agreement, after the conclusion thereof, which makes the performance of contractual obligations impossible, is dealt with by the doctrine of supervening impossibility. This principle applies to lease agreements which exclude a force majeure clause and can be relied on in order to suspend parties’ obligations under the lease, provided that performance of the obligations has become objectively impossible as a result of an unforeseeable and unavoidable event. Such events are known as vis maior (“major force”) or casus fortuitus (“accidental occurrence”).

 

In Transnet Ltd t/a National Ports Authority v Owner of MV Snow Crystal, the Supreme Court of Appeal held that in order to determine whether the doctrine of supervening impossibility applies, it is necessary to look at factors such as the nature of the contract, the relationship of the parties, the circumstances of the case and the nature of the impossibility. Therefore, it is often the case that a court has to determine whether the doctrine may be relied on in the absence of a force majeure clause.

Therefore, the effect of lockdown on a lease agreement can be determined either by way of a force majeure clause or, in the absence thereof, in terms of the South African common law.

Misconceptions

There are many misconceptions when it comes to landlords and tenants taking matters into their own hands, so to speak. Where a lease agreement is breached by a party, it is imperative that due process is followed by the innocent party in enforcing their rights.  

Changing of locks: 

Locks at a leased premises may only be changed where it is necessary due to fair wear and tear. Prior to changing the locks, reasonable notice must be given to the other party, and after the locks have been changed, both parties must receive a set of the new keys. Neither party may change the locks to the premises in order to keep the other party out.

Entry:

A landlord may only enter the leased premises after giving the tenant reasonable notice and may only do so for the following reasons:

  • To inspect the property;
  • To make repairs;
  • To show the property to prospective tenants, purchasers, mortgagees or their agent;
  • If the property has been abandoned; or
  • Having obtained a court order.

A tenant must allow a landlord entry in these circumstances, subject to entry being at a reasonable time and on reasonable notice. A landlord may not simply enter the leased premises whenever they like.

Cutting electricity and water:

A landlord is not, under any circumstances, allowed to turn off utilities to the rented premises or property. Should this occur, the tenant may bring a claim for spoliation.

Spoliation, or the mandament van spolie, refers to the unlawful deprivation of a party’s right of possession. To succeed in obtaining a spoliation order, all the tenant must prove is that they were in “peaceful and undisturbed possession” and that they were “unlawfully deprived of that possession”. The objective of a spoliation order is to restore the status quo ante (return possession to the person who was deprived) and is based on the principle that no man should take the law into his own hands. The landlord may not raise the defence that the tenant is in unlawful occupation of the premises; this is irrelevant.

Taking the above into consideration, should a landlord change the locks of the premises without the knowledge of the tenant, or cut the tenant’s electricity and/or water without consent, the tenant may be entitled to obtain a spoliation order against the landlord.

Cancellation means eviction:

Cancellation is not synonymous with eviction. Albeit a prerequisite, cancelling the lease does not mean that the landlord may forcefully evict the tenant. A court order will have to be obtained if the tenant does not voluntarily vacate the premises. As mentioned at the beginning of this article, the Constitution and certain legislation, which is mostly in favour of the tenant, dictates the eviction process.

Eviction procedure

The eviction procedure in respect of residential and commercial leases is very briefly highlighted below. Said procedure may not necessarily be applicable to every matter, and only serves as a general guideline.

Breach and cancellation:

Firstly, the party looking to cancel the lease agreement must determine whether the other party has breached the agreement. In doing so, the innocent party must find out whether there is a breach or cancellation clause in the agreement. The aforementioned clause/s will list grounds for cancellation. Where there is no such clause, the innocent party will have to determine whether a material breach has occurred.

Should a breach that justifies cancellation be apparent, the innocent party may cancel the agreement. Depending on the type of lease and the identity of the parties, notice will likely have to be given of the innocent party’s intention to cancel the lease should the breach not be rectified within an allocated time frame. 

During lockdown, the parties should engage one another to see whether an amicable solution could be reached to continue the lease on the same or different terms. This is not always possible.

Eviction application:

The eviction procedure is available to landlords where a lease has been duly cancelled and the tenant remains in unlawful occupation. Legal remedies available to tenants in cases where the lease has been cancelled due to breach by the landlord depend on the nature of the breach and the relief sought.

In the event that a tenant remains in unlawful occupation of the premises after cancelation, the landlord may approach the relevant court to commence the eviction process. The court will provide the landlord with a date and time on which the eviction application will be heard. It is highly encouraged that a landlord wanting to bring an eviction application has attorneys on board. The law is extremely complex, so bringing an eviction application without the assistance of attorneys is discouraged.

The full eviction procedure will not be explained in this article as it can be extremely intricate at times. Again, landlords intending to bring an eviction application are advised to seek legal assistance.

Actual eviction:

Once the eviction application has been heard and the court has ordered that the unlawful occupier is to be evicted from the premises, the landlord, or their attorneys, may instruct the sheriff to proceed with evicting the unlawful occupier. In some instances, the sheriff will request the assistance of the police.

This brief summary simply sets out the steps that follow after the cancellation of a lease agreement. Parties to a lease must seek the assistance of a legal practitioner for further information, as it is not possible to illustrate each potential step of the process.

The way forward

Taking into account the present circumstances under which we are living as well as the contents of this article, one needs to think carefully before acting. Should establishing an agreeable way forward between the parties not be possible, the party wishing to enforce their rights must take into account the complexity of eviction, the cost thereof as well as the time it will take to actually obtain an order. All of this has to be considered in conjunction with the current regulations pertaining to the vacation of and movement from residential and commercial premises.

Government Gazette No. 43320 contains the amended regulations facilitating the movement of persons and goods under level 4 lockdown. It is extremely important that this directive, and any subsequent amendments thereof, are taken into account after there has been a breach of the lease agreement.

For more information, contact Fraser Stockley of Le Roux Vivier Attorneys.

 

 

 

 

 

 

 

 

 

 

 

Fraser Stockley is an associate attorney at Le Roux Vivier Attorneys focusing primarily on property law, contract law, debt collection and family law.

Disclaimer: This article is only intended for educational purposes and does not constitute legal advice. Independent legal advice should be sought by any persons wishing to exercise their rights in terms of a lease agreement, and otherwise.

Text  |  Info: Enter some content to the textarea in the Text element, please.
Text  |  Info: Enter some content to the textarea in the Text element, please.

WHERE CAN I FLY MY DRONE?

During lockdown, many people will be thinking of ways to while away the long hours confined within their property boundaries. One way to leave your property is by flying your drone to see what the neighbours are up to.

The question often posed is what legislation deals with the use of a drone and what are the rules as laid down by the Civil Aviation Authorities?

Drones are referred to as Remotely Piloted Aircraft (RPA) in Part 101 of the South African Civil Aviation Authority Regulations published in Government Gazette No. 38830 on 27 May 2015.

Under the Protection of Personal Information Act 2013, we all have the right to our privacy. Bearing this in mind, when flying an RPA, the pilot is to be aware of the laws of privacy but also adhere to the following rules:

 Only fly over property the remote pilot owns unless there is permission by the owner of the property for a fly over.
 Do not fly within a 10-kilometer radius of a nearby Airport.
 Do not fly adjacent to or above a nuclear power plant, prison, police station, crime scene, court of law, national key point or strategic installation.
 Do not fly within 50 meters of a building, a public road or along a public road or any person or group of persons.
 Keep the line of sight of the RPA 121 meters above ground level with a restricted line of sight within 500 meters of the remote pilot and below the height of the highest obstacle within 300 meters of the RPA, which the remote pilot maintains direct unaided visual contact with the RPA to manage its flight and meet separation and collision and avoidance responsibilities.
 Do not land on a public road or any personal or public property without permission.
 Do not fly at night.
 Do not fly close to other manned aircraft.

This is quite a list, and in applying the rules, a remote pilot has very limited, if any, space to operate the RPA in areas such as beaches and/or built up areas.

PROPERTY PRACTITIONERS REGULATIONS 2020 DATED 6 MARCH 2020

The draft regulations were published on 6 March 2020 for public comment within 60 days of publication.

The Code of Conduct for Property Practitioners is set out in Regulation 34.

The intention is not to repeat the wording verbatim but reference is made to the regulation or sub regulation that is of importance to the legal profession.

Regulation 34(a)(vi) – the wording in this sub regulation stipulates that if a conveyancing attorney acts as an agent, he/she cannot attend to the transfer of the property he or she has sold.
34(b)(i) – conveyancers will need to check that mandate was in fact obtained by the agent prior to it proceeding with transfer process.
34(b)(iv)(1) – conveyancers to check that mandate wording complies with this sub paragraph when a mandate is extended.
34(b)(vi) – the inclusion of a clause conferring a sole mandate to sell or let after conclusion of the sale or lease has been entered into is prohibited.
34(b)(ix) – the assistance of specialists (conveyancer or town planner) will be required when an agent embarks upon transactions of this nature.
34(c) – check the Duty to Disclose and the Mandatory Disclosure form prescribed in regulation 36.
34(e) and (f) – legal practitioners will need to be au fait with the stipulations of these sub clauses when consulted by an aggrieved seller or purchaser regarding misrepresentations or false statements that may have been made by a property practitioner or the duties a property practitioner has regarding offers and contracts.
34(h) – conveyancers need to take note of when remuneration may be released to a property practitioner or not and that the stipulated document/s is/are in place prior to such remuneration being paid or released to the property practitioner from its trust account. Special regard is to be had to the provisions of clause 34(l)
34(i) – property practitioners are not bound by law to prescribed fees and cannot insist that they are precluded from charging less that the prescribed fee.

Regulation 35 deals with UNDESIREABLE BUSINESS PRACTICES

35(a)(i) – attorneys are prohibited from acting as a property practitioner in obtaining mandates from the public unless such a member of the public is an existing client of the attorney’s practice.
35(a)(ii) – an attorney who has brokered a sales transaction in its capacity as property practitioner may not via its conveyancing practice attend to the transfer as well.
35(a)(iii)(1) and (2) – conveyancers are to check whether arrangements with persons or parties who control property developments do not fall foul of this prohibited practice.

IN CASE YOU MISSED IT

The Constitutional Court dismisses application to have the declaration of COVID-19 as a National Disaster declared invalid

On 30 March 2020, the Constitutional Court dismissed an application brought by the Hola Bon Renaissance Foundation (“the HBR Foundation”), in which application the HBR Foundation sought direct access to the Court to challenge the validity of the government’s decision to declare the COVID-19 pandemic a National Disaster in terms of the Disaster Management Act, 2002 (“the Act”) and to interdict the implementation of the decision. The Court dismissed the application as it believed that said application lacked merit and had no reasonable prospect of success.

The HBR Foundation applied for direct access to the Constitutional Court, on an urgent basis, seeking multiple relief, inter alia, an order that the national lockdown is unconstitutional and a declaration that the President had “abused his power.”

The application sought to declare that the President’s declaration of a lockdown constituted a violation of the provisions of Chapter 5 of the Constitution and that the lockdown violated numerous rights contained in the Bill of Rights. Furthermore, the HBR Foundation sought an order declaring that COVID-19 poses “no threat to the country or its people.”

While the application did lack merit and numerous of the contentions were misplaced, without factual support or had been stated based on a selective appreciation of the facts, the HBR Foundation’s concerns in respect of how the national state of disaster will have a negative economic impact and negative economic consequences, especially to the vulnerable citizens of South Africa is a valid concern for many individuals and businesses.

The Impact of COVID-19 on Contracts

We are now into day 14 of the lockdown due to the COVID-19 outbreak, and many people are uncertain as to how this global pandemic will affect existing agreements and performance under these agreements. A lot of the uncertainty concerns agreements in terms of which payments are to be made, such as loan agreements, insurance and rental contracts, and so on.

In terms of South African common law, any event beyond the control of parties to an agreement, after the conclusion thereof, which makes the performance of contractual obligations impossible, is dealt with by the doctrine of supervening impossibility. This principle applies to contracts which exclude a “force majeure” clause and can be relied on in order to suspend parties’ obligations under a contract, provided that performance of the obligations has become objectively impossible as a result of an unforeseeable and unavoidable event. Such events are known as vis maior (“major force”) or casus fortuitus (“accidental occurrence”).

In Transnet Ltd t/a National Ports Authority v Owner of MV Snow Crystal, the Supreme Court of Appeal held that in order to determine whether the doctrine of supervening impossibility applies, it is necessary to look at factors such as the nature of the contract, the relationship of the parties, the circumstances of the case and the nature of the impossibility. Therefore, it is often the case that a court has to determine whether the doctrine may be relied on in the absence of a force majeure clause.

To avoid having to rely on the doctrine of supervening impossibility, parties to a contract can include a force majeure clause to adjust the common law position in respect of the doctrine which, as mentioned above, requires the performance to be objectively impossible for the party to be excused from its obligations and, if applied, may result in the extinguishing of the agreement between the parties. A force majeure clause is included in a contract in an attempt to protect against the potential risk of an event, through no fault or act of either of the parties, which may render the performance of contractual obligations impossible. For this reason, a force majeure clause may allow for a suspension of performance, where such performance is not necessarily objectively impossible and may allow for the suspension, rather than extinction, of the agreement for the duration of the applicable force majeure event.

Therefore, where an agreement contains a force majeure clause, such clause is to be applied and interpreted to protect contracting parties by (a) limiting the affected party’s liability for non-performance, if a force majeure event occurs and/or (b) suspending performance of both party’s obligations, without penalties, until such time as performance can continue and/or (c) allowing an agreement to be terminated, without penalty, where performance cannot resume. Consequently, the force majeure provision suspends the ordinary rights and remedies of breach of contract.

Force majeure clauses must be detailed and specifically list the events that the parties agree will suspend their performance of the contract (such as an epidemic or act of government). The application and effect of a force majeure clause will depend on the circumstances and the specific wording of the clause, as well as the interpretation thereof. Whether a party may rely on a force majeure clause or, in the absence thereof, the common law doctrine of supervening impossibility, in respect of non-performance as a result of the COVID-19 pandemic is fact-specific and can be complicated.

This article does not constitute legal advice and parties who intend to rely on either force majeure clauses or the common law doctrine of supervening impossibility are advised to obtain independent legal advice prior to doing so.

Small Claims Court

Do you have a claim against an individual or a business for an amount that does not exceed R20,000.00?

If yes, then consider approaching the Small Claims Court to recover the amount as opposed to litigating in the Magistrate’s Court. The reason for this is because the Small Claims Court was specifically established for an individual to obtain quick, inexpensive relief by following a simple court procedure.

It is important to bear in mind that only a natural person may institute proceedings in the Small Claims Court, however, juristic persons (companies, partnerships etc), excluding the State, may be sued.

Once proceedings have been instituted, the parties must appear in person and may not be represented in Court. A juristic person, however, must be represented by a duly appointed director or other officer.

There are certain matters that the Small Claims Court may not adjudicate upon whatsoever, such as matrimonial disputes, matters involving the interpretation of wills, or the status of a person in respect of their mental capacity, to name a few.

The procedure in the Court is simple as the defendant must receive a letter of demand from the plaintiff at least fourteen days prior to the issuing of the summons. No further pleadings are necessary, but the defendant may file a written statement setting out his/her defence. The commissioner will then deal with the matter further and ultimately make an order.

The differences between an exception and a special plea

The exception is used in order to object to any pleading which will result in prejudice to either the plaintiff or the defendant and either party has the option to file an exception where, for example, the pleading lacks averments which are necessary to sustain an action or a defence, or where the pleading is vague or embarrassing. The exception to a pleading needs to be delivered before any further step has been taken in response to a pleading of the opposing party.

On the other hand, a defendant may, after entry of an appearance to defend, decide to attack the summons by raising a special plea with a special defence, which will either destroy the cause of action or postpone the operation thereof. The special plea differs from the exception in four respects. Firstly, a special plea raises some special defence that is not apparent ex facie the claim, while the basis of the exception must appear ex facie the pleading to which the exception is taken. Secondly, a special plea may be pleaded only in response to the plaintiff’s particulars of claim or declaration, while an exception may be raised to any pleading. Thirdly, the exception may be raised by the plaintiff as well as the defendant, while a special plea may only be raised by the defendant. Lastly, the correctness of the averments of the pleading to which exception is taken are assumed and therefore no evidence is led in exception proceedings, whereas the averments set out in the special plea will have to be proved if they are not admitted by the plaintiff.

Marriage Registrations

There are a million things to plan when it comes to your wedding. So it is no surprise that many people forget about their marriage regime! In South Africa, the following marriage regimes, inter alia, are recognised:

1) In Community of property

If you choose not to draw up an antenuptial agreement in South Africa then you will automatically be married ‘in community of property’. The state assumes that all assets and liabilities of both husband and wife are shared. It simply means that everything which is his is hers and everything which is hers is his. Exactly what two lovers want when entering into a marriage, right? Well if so, it is important that you keep the following in mind:

Disadvantages:
• If one of you gets into financial trouble, creditors have a claim against both of you.
• There is also little financial independence; if the wife wants to open a clothing account, the husband has to sign the account application; if the husband wants to buy a   car, the wife has to sign too. Most business transaction requires the consent of both parties.
• If one partner should die, the estate of both the deceased and the surviving partner will be wound up because it is a joint estate – the surviving partner who will find       themselves in legal limbo for a while.

Advantages:
• On death or divorce, the estate is divided equally.

2) Antenuptial contract (“ANC”)

The signing of an ANC means that you are married out of community of property. The law recognizes you as two separate entities.

There are two types of antenuptial contracts:
a) Antenuptial contract without accrual; and
b) Antenuptial contract with accrual

2.1) ANC without accrual
       Assets acquired before or during the marriage remain separate throughout the course of the marriage. Assets are not shared and each partner has a separate                estate.

Advantages:
• If one of you goes insolvent, creditors may not attach the assets of the other;
• Each of you have financial independence, feel free to spend as you please.

Disadvantages:
• In the case of death or divorce, you are entitled only to those assets you have accrued in your name. Should one of you choose to stay at home to raise children, that   partner would not be entitled to the assets accumulated by the other partner.

2.2) ANC with accrual
       Each partner states the value of their respective assets at the beginning of marriage. Thereafter, any assets (accumulated during the subsistence of the marriage)          are shared 50/50. One can state that   specific assets be excluded from the accrual, such as inheritances, donations etc.

Advantages:
• You both share in the wealth accumulated during the marriage;
• If each of you owned property before the marriage, it remains in your respective names;
• You each conduct your own independent financial affairs;
• If one of you goes into debt, it cannot be claimed from the estate of the other;
• In the case of divorce, any assets accumulated whilst married are shared – it doesn’t matter who acquired them; each partner’s current net asset value is calculated      by subtracting all liabilities from assets;
• The ANC can be tailored to suit your needs;
• It protects the partner who remains at home to care for the family.

One needs to keep in mind that according to the Department of Justice and Constitutional Development, a customary marriage is automatically considered to be in community of property.

Should you have any questions, LVA will gladly assist.