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28 Jul 2023

Can Your 👍Thumbs-Up Emoji or E-Signature Seal a Deal?

In days of yore, a written agreement involved paper, ink and physical signatures. But today you can find yourself bound to an online contract with not a drop of ink involved. A recent High Court case, in which a debtor’s attempt to escape an electronic contract and signature failed, illustrates.

We’ll discuss also an internationally reported Canadian case in which a seller’s👍thumbs-up emoji was held to have bound him to a texted sale contract. But would a South African court have reached the same conclusion?

“…data messages or electronic signatures are now recognised in our law as equivalent to a proper basis upon which a written contract can be concluded. Thus, a valid written contract can be concluded electronically.” (Extract from the South African judgment below)

ECTA (the Electronic Communications and Transactions Act) means that you can in many cases create legally binding agreements purely electronically – via email, WhatsApp, social media and the like.

There is of course both risk and opportunity here. On the one hand, the old hassles of printing everything out and signing reams and reams of paperwork have become unnecessary, even undesirable, for many transactions (but not all – take advice in doubt). Remember to keep proof of everything.

But be careful what you e-agree to!

On the other hand, beware the risks! We tend to focus more on what we’re agreeing to when it involves reading and signing printed documents, and when everything is electronic it’s a lot easier to gloss over details, and to underestimate the importance of subject matter. Particularly, perhaps, in a social media environment, where things often evolve at pace and with an air of informality.

Let’s start our discussion off with a recent High Court confirmation of the binding nature of electronic signatures.

An e-signature binds a debtor to a R1.5m deal

  • A bank sued a debtor who, it said, had electronically signed a credit agreement to buy a R1.5m BMW X5 motor vehicle and then defaulted on instalment payments.
  • Sued for damages and for return of the vehicle, the debtor countered by denying that he had entered into a valid electronic contract. He said his brother-in-law/employer had purchased the car in his name and had signed the agreement electronically.
  • The bank, however, produced evidence (including recorded telephone conversations between the debtor and its call centre) to support its claim that the electronic signature was indeed the debtor’s.
  • Commenting that “…data messages or electronic signatures are now recognised in our law as equivalent to a proper basis upon which a written contract can be concluded. Thus, a valid written contract can be concluded electronically”, the Court held that the debtor had indeed concluded the contract, and that the bank was entitled to cancel it, demand return of the car, and claim damages.

Can a “Thumbs-Up” 👍 emoji bind you to a contract?

A Canadian Court recently made international news after holding that a👍thumbs-up emoji constituted approval of a contract (a sale of flax), thus creating a valid contract.

The buyer in that matter had texted to the (proposed) seller an image of a purchase contract, along with the message: “Please confirm flax contract”, and the seller had responded with a 👍thumbs-up emoji. When sued for failing to deliver per the contract, the seller claimed never to have accepted the contract – all the emoji meant, he said, was that he would think about it. However, on the particular facts of this matter, the Court concluded that the emoji had indeed signified the seller’s acceptance of the contract. The seller must now pay the buyer Can$82,200.21 (almost R1.2m at date of writing) in damages for breach of contract.

But would the result have been the same in a South African court? It seems logical that it would, provided of course that in the particular context of the matter the emoji clearly meant “I accept” and not perhaps “got it, will come back to you with an answer” or something similar.

28 Jul 2023

Divorce: What is Forfeiture of Benefits and When is it Ordered?

Divorce is at best stressful for everyone, and at worst it involves bitter dispute and recrimination, perhaps to the extent of one or both parties applying for a “forfeiture of benefits” order.

What is that order, how easy is it to obtain, and what factors will the court take into account in deciding whether or not to grant it? We’ll address those questions with reference to three recent and illustrative High Court decisions which involved extra-marital affairs, emotional and financial abuse, and other “substantial misconduct”.

“So often, a party in a divorce is so aggrieved and upset by their spouse’s behaviour during the marriage, and rightfully so, that they cannot fathom having to give up an asset or let their spouse benefit in any way, upon divorce. We have had numerous spouses wanting us to apply forfeiture of the benefits of the marriage based on the other spouse’s bad behaviour during the marriage.” (Extract from one of the High Court judgments below)

Divorce all too often involves high levels of stress, antagonism, dispute and desire for revenge. So, when it comes to splitting up the marital assets, the thoughts of one (or both) of them may well turn to something like “It’s their fault, I want more than just my share, in fact I want everything”.

Which is where the concept of “forfeiture of benefits” (sometimes referred to as “forfeiture of assets”) comes in. It’s an old concept in our law and is increasingly being applied for in our courts, as evidenced in several recent cases which have received wide media coverage. But what exactly does a forfeiture order entail?

What is a forfeiture of benefits order?

The court in granting a divorce has a discretion, in appropriate cases, to order that one party forfeits either all the assets of the marriage, or a specific asset or assets. This overrides both the effect of the “marital regime” of the marriage (in community of property, out of community of property with accrual, out of community of property without accrual) and anything agreed to by the parties in their ANC (ante-nuptial contract).

When will a court order forfeiture?

Forfeiture orders are the exception not the rule, and the onus is firmly on the party claiming forfeiture to establish the basis and amount of their entitlement to it.

The Divorce Act provides that, where a divorce is granted on the grounds of irretrievable breakdown of the marriage, the court may order forfeiture if it is satisfied that one party will otherwise be “unduly benefitted” in relation to the other (the party claiming forfeiture will have to establish the “nature and extent” of that undue benefit). The court will take into account –

  • The duration of the marriage,
  • The circumstances that caused the marital breakdown, and
  • “Any substantial misconduct on the part of either of the parties”.

That gives the court a wide discretion, and every case will be different, but let’s have a look at three recent High Court decisions to illustrate some typical scenarios in which forfeiture was successfully applied for –

  1. A cheating husband loses his share of accrual
    A couple were married out of community of property with accrual. On divorce, that would normally result in a balancing between the parties of the asset accrual during the marriage, but in this case, in granting the wife a divorce from her husband after 12 years, the High Court ordered that the husband “forfeits the patrimonial benefits of the accrual system in total”, including his interest in the wife’s business.The Court’s decision followed its findings that the husband was guilty of “shockingly egregious” misconduct during most of the marriage, including living away from home, failing to “contribute to the common home financially, emotionally, or in any other manner”, engaging in a long string of extra-marital affairs and attempting, whilst employed in his wife’s successful business, firstly to fraudulently extort money from it and secondly to hijack the business.
  2. A short marriage ends, and the wife gets nothing
    Here, the High Court ordered that a wife forfeit her share of the joint estate assets (with “in community of property” marriages a joint estate is formed, which in the normal course would be divided 50/50 on divorce) after accepting the husband’s evidence that she had “married him to secure financial wealth for herself, advance herself in [the] political arena by using his influence and to benefit from his estate.”Relevant factors considered by the Court – the short duration of the marriage (14 months from marriage to separation), the 39-year age gap between them, her lack of love or respect for him and embarrassment at being seen in public with him, and her desire to live an extravagant lifestyle beyond his means.
  3. A husband’s substantial misconduct costs him his share of a joint estate
    In this matter the Court ordered the husband to forfeit his share of another “in community of property” joint estate, including an immovable property and a share in his wife’s pension interest. The husband’s conduct, held the Court, had been tantamount to “substantial misconduct”, including failure to contribute to household expenses, failure to pay his child’s maintenance until forced to do so by the Maintenance Court, extra-marital affairs and physical, financial and emotional abuse.
28 Jul 2023

Your New House Leaks Like a Sieve – Can You Sue the Seller?

You and your family move into your new dream home full of happy anticipation but then it rains, and your roof leaks. Badly.

As you run around with buckets and towels while trying to find a roof repairer available at short notice, you wonder whether you can sue the seller. We’ll address that question with reference to a recent Supreme Court of Appeal judgment concerning a flooded-out guest house and a seller who denied fraudulent non-disclosure of roof defects.

“There is no sound more peaceful than rain on the roof, if you’re safe asleep in someone else’s house.” (Anne Tyler)

You move into your new dream home, excited and happy. Until it rains, and the roof leaks. As the repair teams tramp around on your roof and the bills start piling up whilst you weave around buckets and tarpaulins and sodden carpets, you go back to the seller and demand recompense.

“Sorry”, says the seller, “read the sale agreement. I sold the property “voetstoots” and without liability for any defects. I sympathise, but it’s actually your problem not mine. Good luck, and goodbye.”

Can that be correct? Let’s address that question with reference to a recent Supreme Court of Appeal (SCA) decision over a flooded-out guest house.

A leaking roof puts a real damper on a guest house dream

  • A couple bought a guest house for R1.3m to fulfil their dream of running one.
  • Barely three months after they moved in, heavy rain caused extensive leaking of the entire roof. The guesthouse was flooded and furniture, carpets, linen and luggage soaked. Guests were, unsurprisingly, unhappy.
  • The buyers had to take out a loan to cover the repair costs, plus they lost 2 months’ income during the repairs.
  • They successfully sued the seller for a total of R240k in damages (a combination of repair costs and lost income), an award confirmed by the High Court and then by the SCA on appeal.

To understand that outcome, let’s take a look at our law’s requirements for such a claim to succeed.

Fraudulent non-disclosure of latent defects – 3 things you must prove

As a buyer claiming damages on the basis of “fraudulent non-disclosure in respect of latent defects” (we deal with the alternative of an “implied warranty” claim below), you will, as the Court set it out, have to prove that –

  1. The seller was, at the time of the sale, aware of the “latent” defects (defects that “would not have been visible or discoverable upon inspection by the ordinary purchaser”), and
  2. The seller deliberately failed to disclose those defects to you, and
  3. The seller’s aim was to induce you to conclude the sale.

The buyers in this case had, before buying, noticed water staining in several places. The seller had assured them that although he knew of one roof leak, it had been fixed by his handyman and that he didn’t believe leaks would reoccur.

The Court however preferred the conclusion by an expert witness (a civil engineer) that “any claim by the previous owner that no problems with roof leaks were experienced in the past [would] simply be impossible and untruthful”. The roof, said the engineer, was defective both in respect of inferior design (“the entire roof speaks of negligent design, inferior workmanship and bad maintenance”) and inferior workmanship (“it is evident that [the builder] of the roof was not a skilled artisan … the roof under investigation was prone to leak from the day that it was built.” The engineer also found evidence of past efforts to seal the roof and believed that the problem had escalated over time.

The Court’s conclusion – the seller had fraudulently misrepresented the true condition of the roof and had failed to disclose it to the buyers. “On the probabilities, the only reasonable inference to be drawn …. is that the non-disclosures and misrepresentation were made deliberately in order to induce the sale of the guesthouse, and this constituted fraud.” Hence its confirmation of the damages award to the buyers.

Another way to claim: Breach of the “implied warranty”

The buyer in this case sued on the basis of “delictual liability” which requires you to prove a list of factors, including both wrongfulness and fault. Fortunately, you also have an alternative avenue available to you. Our law is that a seller (of anything) automatically gives the buyer an “implied warranty” that the thing sold has no latent defects. Prove that the seller has breached that warranty and you have the basis of a claim.

You are very likely, however, to come up against the seller protections in a voetstoots clause (common in sale agreements). That clause transfers the risk of latent defects to the buyer by providing that the property is sold “as is” and without any warranty.

To defeat the seller’s protection under voetstoots you can either –

  • Prove fraud by the seller. To be protected, the seller must have been genuinely unaware of the latent defect in question at the date of sale; or
  • You can show that the protections in the CPA (Consumer Protection Act) apply to your sale. The CPA, where it applies, protects buyers from defective or not-fit-for-purpose goods, regardless of what the sale agreement says. There are grey areas here, so specific legal advice is indispensable, but in broad terms the CPA does not protect larger “juristic person” buyers (those with an annual turnover of R2m or more), nor will it generally cover one-off “private” sales between individuals – normally it is developers, estate agents and others acting “in the ordinary course of business” who will be bound by the CPA.

Sellers: Disclose all possible defects of which you are aware in the “mandatory disclosure form” which, since February 2022, must be attached to and form part of the sale agreement.

Buyers: Inspect the property thoroughly before putting pen to paper – you cannot complain about any patent (“obvious on reasonable inspection”) defects that you should have seen yourself. To cover yourself against any latent defects, get expert reports in any doubt.

25 Jul 2023

THE SALE OF IMMOVEABLE PROPERTY OUT OF A DECEASED ESTATE – PATIENCE IS IMPERATIVE

Selling or buying immovable property from a deceased estate can sometimes be lengthy and usually takes longer to finalise in comparison to a ‘normal’ registration of transfer. Therefore, it is vital that estate agents inform the prospective buyers of the potential delays and what to expect from such a transfer.

  1. We have prepared a short list of pitfalls that can cause a delay in the registration of transfer that both parties to the agreement of sale should be aware of:
    Only the executor can issue a mandate to an estate agent to market the property. The executor can only enter into an agreement of sale once they are in possession of the Letters of Executorship issued by the Masters Office. To obtain such Letters of Executorship, it can take anytime between 3 weeks to 3 months, and sometimes even longer! Any agreement of sale that has been entered into before the issuing of the Letters of Executorship from the Masters Office is null & void and of no force or effect, and cannot be ratified! This is confirmed in terms of section 13(1) of the Administration of Estates Act 66 of 1965.
  2. All the heirs of the deceased estate must give written consent to the sale of the immoveable property, as stated in section 47 of the Administration of Estates Act 66 of 1965. This was further confirmed in a 2011 judgment by the South Gauteng High Court [Schofield v Bontekoning (2011) JOL 27906 (GSJ)]. In this case, it was held that the executor is not empowered to sell the property and cannot pass transfer without the heirs written consent. However, should the seller pass away midway through a transfer, the written consent from heirs is waived and not applicable. This is found in the Deeds Registries Act 47 of 1937.
  3. The Power of Attorney signed by the executor must be endorsed by the Masters Office for the Conveyancer to register the property to the third party (stated in section 42(2) of the Administration of Estates Act 66 of 1965), which can take anytime between 3 weeks to 3 months! This is to confirm there are no objections to such transfer. If the Masters Office does not grant permission by refusing to endorse the Power of Attorney, there is no legal binding agreement. This is why the Deed of Sale must include the sentence, “This sale is subject to the Consent of the Master of the High Court”.
  4. The proceeds of the sale of the immoveable property are paid into the deceased estate’s banking account which needs to be opened by the executor or agent acting on behalf of the executor. Once the estate is finally wound-up, the heirs will receive their portion.

If either the seller or buyer dies before transfer, an executor must be appointed and the transfer documents must be re-signed. Where a buyer took out a bond, the sale will have to be cancelled as a deceased estate cannot have a bond. If it was a cash sale, the deceased estate will take transfer of the property and be dealt with subsequently according to the deceased’s will. This will, of course, also delay the transfer by many months.

17 Jul 2023

I LOST THE TITLE DEED TO MY PROPERTY, NOW WHAT?

WHAT DOES THE LAW SAY WHEN YOU LOSE/DAMAGE YOUR TITLE DEED?

Regulation 68(1) of the Deeds Registry Act 47 of 1937 specifically states the following:

“If any deed conferring title to land or any interest therein or any real right, or any registered lease or sub-lease or registered cession thereof or any mortgage or notarial bond, is lost or destroyed and a copy is required for any purpose other than one of those mentioned in either of the last two preceding regulations, the registered holder thereof or his duly authorised agent may make written application for such copy, which application shall be accompanied by an Affidavit describing the deed and stating that it has not been pledged and it is not being detained by any one as security for debt or otherwise, but that it has been actually lost or destroyed and cannot be found though diligent search has been made therefor, and further setting forth where possible the circumstances under which it was lost or destroyed: Provided that where a Registrar is satisfied that any deed mentioned in this paragraph has been inadvertently lost, destroyed, defaced or damaged by him, it shall , notwithstanding the provisions of sub-regulation 2, be competent for him to issue a copy thereof free of charge upon submission of an application and affidavit by the relevant conveyancer or person contemplated in section 15A(2)”

WHAT DOES THIS MEAN TO YOU?

Step 1: Diligently search for your Title Deed (On the first page of your Title Deed it will
reflect an original number endorsed on it and on the last page of the Title Deed it will
have a watermark/embossment);

Step 2: If you cannot locate your Title Deed to the property notify your Conveyancer (If your
property is bonded the Title Deed is in all likelihood in safe keeping with the bank.);

Step 3: Your Conveyancer will draft an Application and Affidavit that you must sign in the
presence of the Conveyancer;

Step 4: Your Conveyancer will send a copy of the Application and Affidavit to the Registrar
of Deeds and obtain a copy of the Title Deed in order for the Title Deed to be
endorsed as a lost Title Deed better known as a “Verlore Akte”;

Step 5: Once the Conveyancer receives a copy of the Title Deed the Conveyancer will need
to place a notice of the lost Title Deed in a local newspaper.

The newspaper publication has to state the following:

  • Notice is given in terms of Regulation 68 of the Deeds Registries Act 47 of 1937;
  • The owner intends to apply for the issue of a certified copy of the Title Deed;
  • The Title Deed number, the sellers names, the buyers names, identity numbers and marital status;
  • The property description of the property and the extent of of the property;
  • That the Title Deed has been lost;
  • The notice calling upon all interested persons having objections to the issue of such copy of the Title Deed are required to lodge same in writing with the Deeds Registry within two weeks from the date of the publication of the notice; and
  • The Conveyancers information who published the lost Title Deed.

Simultaneously when the notice reflects in the publication a copy of the
Application and Affidavit, together with the copy of the Title Deed will lay open for
inspection at the Deeds Registry for two weeks.

Step 6: Once the two weeks has lapsed and no objections has been raised the
Conveyancer can then proceed to lodge the Application and Affidavit in terms of
Regulation 68(1) of the Deeds Registry Act 47 of 1937 with the Deeds Registry together with a Conveyancers Certificate and the original publication from the newspaper to have the lost deed/verlore akte issued. (The Application and Affidavit will also be examined by 3 levels of examiners at the Deeds Registry before the lost Title Deed will be issued. After the publication, and without any objections raised, it will take approximately 7 to 10 working days for the issuing of the lost Title Deed. Once the lost Title Deed has been issued the Deeds Registry will issue it with a lost deed/verlore akte number.)

HOW LONG DOES IT TAKE TO REPLACE A TITLE DEED?

In total it takes approximately 4 to 6 weeks to have a Title Deed replaced. (In a normal Transfer process the replacement of the Title Deed will usually take place simultaneously with the transfer of ownership to a new buyer.)

At time of print, the cost relating to a Title Deed replacement, amounts to approx. R6 000.00. We at Miltons Matsemela offer a system called MM Vault where our clients can safely keep their Title Deeds in our Vaults indefinitely for a minimal once off fee of R950.00.

03 Jul 2023

DUET Properties

By way of introducing the term DUET PROPERTY, it is important to know that a duet is a sectional title property that contains two dwelling units on a singular erf and is administered and regulated by the Sectional Titles Act 95 of 1986.

The Municipal Zoning Scheme states that a duet may only be erected on erven greater than 800m² with separate electrical and water connections. The floor area of each unit may not exceed 300m² while the height of the duet property may not exceed 8 meters. Each unit must be provided vehicle access from and to a street while also being limited to two garages per dwelling unit.

Because a duet is a sectional title unit; it cannot be sold as a plot and plan. The completion of the sectional title unit is a prerequisite for transfer. For a duet, it is important to know that a sectional scheme (which includes all sections, exclusive use areas (EUAs), and common property) needs to be established when a sectional plan is registered at the Registrar of Deeds.

The Sectional Plan is a survey document approved by the Surveyor-General and registered at the Deeds Registry. This Sectional Plan defines the boundaries of all the sections in the scheme, as well as the common property, exclusive use areas, and participation quotas of each section.

To better understand where a duet property fits in, it is important to understand the following concepts that comprise of sectional titles:

The first is a “section”. A section is identified on a sectional plan with a specific number assigned to it and is shown within the boundaries of the said section. The physical part of the sectional scheme which is the separate property of the owner, and it is divided from the common property by the middle line of every wall, ceiling and floor (windows and doors included).

Secondly, a “unit” is a wider concept than a section as it has two components, namely a section as well as an undivided share in common property. Common property refers to all parts of the scheme not pertaining to sections and includes the land on which the buildings are built on. (Driveway, garden. swimming pool and entrance foyer).

The “participation quota” is a percentage that is calculated by dividing the floor area of a specific section by the floor area of all the sections in the building(s). The participation quota is also used to determine the size of an owner’s undivided share in common property, weight of the owner’s vote in general meetings and the ratio in which the owner of a section must contribute to the administrative fund established by the body corporate. When it comes to duet property, the participation quota will be 50/50.

“Exclusive use areas” are defined as a portion of the common property reserved for exclusive use by a specific owner of a section, which is shown on the sectional plan and can additionally be described in the rules set out by the Body Corporate. For example, a parking bay, storeroom, garden, patio or balcony.

“Body Corporates” are essential parts of sectional schemes and are established the moment any person other than the developer becomes an owner.

The Body Corporate is responsible for enforcing the rules set out by said Body Corporate and for the control, management, and administration of the common property to the benefit of all owners. Decisions by the Body Corporate can only be made through voting at a General Meeting. Body Corporates are governed by the Management and Conduct Rules and are obliged to perform their functions under the Sectional Title Schemes Management Act.

The Sectional Title Schemes Management Act requires a Body Corporate to establish and maintain an Administrative Fund to cover the annual operating costs and to establish and maintain a Reserve Fund to cover the cost of future maintenance and future unforeseen circumstances.

Hopefully this has led to some clarification on the topic: “Duet Property.”

Should you need more information, please feel free to comment below or contact any one of our MM Conveyancers.

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