July 22, 2024
KVV | Note from Directors
The legal landscape of our time is asking for a holistic, yet specialized offering. Finding a law firm that not only delivers a wide variety of services but also fosters strong partnerships with clients and stakeholders is essential.
At KVV Inc, we pride ourselves on offering a unique value proposition that prioritizes collaboration, communication, and a commitment to achieving the best possible outcomes for our clients.
Partnerships are at the core of everything we do. We believe that by collaborating closely with our clients, understanding their needs, and aligning our strategies with their goals, we can create a strong and lasting partnership that leads to success. Our KVV team is dedicated to building trust, transparency, and open communication with every client, ensuring that we are always on the same page and working towards a common objective.
Driving results is not just a goal for us; it’s a commitment. We understand that our clients come to us with complex legal challenges that require innovative solutions and strategic thinking. By leveraging our expertise, resources, and network of professionals, we can deliver tangible results that exceed expectations. Whether it’s transferring a property, registering a bond, resolving a dispute, or negotiating a deal, we are relentless in our pursuit of success for our clients.
In conclusion, KVV’s value proposition of fostering partnerships and driving results is not just a promise; it’s a philosophy that guides everything we do. We are continuously looking at new and fresh ways in which we can optimise our service and we are not reluctant to blaze new and uncharted trails. With our team of dedicated attorneys by your side, you can trust that we will go above and beyond to deliver the results you need and deserve.
You, our valued client can now get an even more comprehensive service from KVV – Contact us for all your:
- Property related matters.
- Last will and testament
- Antenuptial contract
- Partnerships agreements and general contracts
- General litigation
Diaan van Wyk | Director
KVV Inc Attorneys
July 22, 2024
Home Buyer loses R5.5m in Phishing Scam – Don’t Make the Same Mistake!
“[The buyer] must in the circumstances take responsibility for her failure to protect herself against a known risk” (extract from judgment below)
Cybercriminals absolutely love targeting property transactions because they provide the perfect mix of large money deposits, heavy reliance on email communication from trusted parties like attorneys, banks and estate agencies, and deadlines creating a sense of urgency and lack of attention to detail.
Let’s consider just one recent example of a high-value BEC (Business Email Compromise) attack on the purchase of a house.
A textbook case costs a pensioner R5.5m
- A woman describing herself as “an elderly divorced pensioner without the knowledge, experience or resources to protect herself against sophisticated cybercrime of which she had no knowledge or experience” purchased a house for R6m.
- She paid a R500k deposit to the estate agents, and then after an exchange of emails with her appointed conveyancers, she paid the balance of R5.5m into what she believed to be the conveyancing firm’s account.
- In fact, her email system had been hacked and the criminals were intercepting and altering both her incoming and outgoing emails. In a typically sophisticated operation, they ensured that the mails and attachments looked genuine, deceived the buyer into paying the R5.5m into their fraudulent account, and then, via a further chain of back-and-forth emails, delayed detection of the fraud for long enough to give them time to withdraw the funds and disappear.
- The buyer sued the conveyancers for her R5.5m loss, arguing that they had a legal duty to protect her from the BEC. The High Court agreed and ordered the firm to pay her back, but that was reversed on appeal to the SCA (Supreme Court of Appeal).
- Critically, the SCA held that in cases of “pure economic loss”, creditors have no general legal duty to protect their debtors from the interception of payments, and there is no inference of “wrongfulness”. So, it is up to the client in such a claim to prove not only negligence by the business, but also wrongfulness.
- In this particular case the Court found that the buyer had “ample means to protect herself”. It was not the conveyancers but the compromise of her email account that enabled the criminals to intercept her emails. She could have paid by bank guarantee but chose to pay in cash. Moreover, she had been warned by the estate agency about this very risk and had heeded the warning and verified the agency’s banking details before paying in the deposit. She could, and should, have taken the same precaution before paying the conveyancers.
- Bottom line – the buyer “must in the circumstances take responsibility for her failure to protect herself against a known risk” and must bear her R5.5m loss herself.
How to protect yourself – 5 steps to take immediately
- Whether you are business or client, protect your systems from being hacked. Constantly update all your software and anti-virus/anti-malware programs. Use 2FA (two factor authentication) on your accounts. If it is your email system that is hacked and causes the loss, you have a problem! As a business you could also be in trouble for breaching POPIA (the Protection of Personal Information Act).
- Constantly warn everyone about the risks of email interception and fraud and remind them never to accept any change of banking details notifications without checking.
- Protect all attachments from alteration (including PDFs!).
- Before making deposits, phone to confirm all banking details you are given via email. Make sure to phone a number you have confirmed to be genuine – criminals regularly provide fake contact numbers in intercepted emails and documents.
- Carefully check all email addresses as scammers often make subtle changes – in this case for example the buyer failed to notice that the word “africa” in an email had been changed to “afirca”. Other common dodges are changing numerals or adding/removing hyphens.
Above all, treat all email communications as inherently unsafe and don’t let your guard down for a second!
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
© LawDotNews
July 22, 2024
Can You Sign an Affidavit Over Zoom?
“These technological developments would have seemed far-fetched and science fiction a brief few years ago.” (Extract from judgment below)
It’s an important question – the invalidity of an affidavit could sink even the strongest case, so it’s vital to get this right. Of course, it’s always tempting to cut corners where you can on the commissioning side, and perhaps you urgently need to sign an affidavit but are far from a commissioner of oaths or perhaps for some reason you just can’t visit a commissioner physically.
That of course became a commonplace scenario during the Covid-19 restrictions on personal contact and the pandemic accelerated the need for our laws to evolve in step with all the new “science fiction made real” technologies enabling meetings to be held virtually, documents to be signed electronically, and secure online handling and storage of information generally.
Whilst legislation and our courts have made important strides in this regard, some areas of uncertainty remain. One of them is the question of whether or not affidavits can be commissioned remotely.
The problem – what does “in the presence of” mean?
For an affidavit to be valid, the relevant Regulations require that it be signed “in the presence of” a commissioner of oaths. And as much as we might think that we are for all practical purposes “in the presence of” everyone else in a virtual meeting or family chat session, it’s not clear yet to what extent virtual presence will be considered sufficient compliance with the Regulations.
Let’s look at three recent High Court decisions with differing outcomes –
- Case 1: An affidavit validly commissioned by Zoom from Italy:
A commissioner of oaths in South Africa commissioned affidavits in a Zoom video call with deponents in Italy. The Court allowed the affidavits to stand, agreeing with previous judicial comments that “…Courts must adapt to the requirements of the modernities within which we operate and upon which we adjudicate…” and concluding that there had been “substantial compliance” with the requirements of the Regulations. However, the Court also cautioned against the idea that courts can “willy nilly accept non-compliance with acts and regulations.” - Case 2: An application for a general declaration refused:
A global publishing company asked the High Court for an order declaring that “in the presence of” is to be broadly interpreted to include the administration of an oath or affirmation “by means of live electronic communication, consisting of simultaneous audio and visual components”. The Court dismissed the application, distinguishing this case from the one above and commenting that, although the argument that “the object of the Act and the Regulations can be achieved by virtual means is tempting”, it could not ignore “the clear meaning of the words in the Regulations” and “It is not for a Court to impose its view of what would be sensible or businesslike where the wording of the document is clear”. - Case 3: Courts have a discretion only if normal commissioning is impossible:
A bank’s property valuation affidavits had been signed electronically in the absence of the commissioner of oaths. The Court agreed that a court has a discretion to accept such affidavits “if it finds that that there has been substantial compliance with the regulations” – but only where physical commissioning is not possible. Thus, in a previous matter, a court had exercised its discretion to allow an affidavit’s remote commissioning as a result of “the impossibility of the oath being administered normally because of the Covid restrictions against personal contact”. That, said the Court, “does not mean that a party may deliberately set out to achieve substantial compliance with such regulation rather than comply with its requirements.” In other words, you can’t elect to commission remotely just because it suits you. The valuator’s affidavits were rejected.
Err on the side of caution
There are some important grey areas there, and clearly remote commissioning will not be allowed as a matter of course. You’ll have to justify it.
So, regardless of how inconvenient it may be, unless and until new legislation (or perhaps a definitive ruling from the Supreme Court of Appeal) brings the Regulation’s wording up to speed with technology, the only way to be sure that a court will accept your affidavit as valid is to err on the side of caution and visit a commissioner of oaths physically whenever possible.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
© LawDotNews
July 22, 2024
Brand-New Car Giving You Nightmares? CPA to the Rescue
“The Consumer Protection Act 68 of 2008 (CPA) establishes a broad and comprehensive scope for consumer protection. Its purview includes developing and maintaining a consumer market in such a way as to ensure fairness, accessibility, effectiveness, sustainability and responsibility for the benefit of consumers” (Extract from judgment below)
You drive your brand-new car home, eager to take the family out for a first spin. Happiness! Until suddenly the car won’t start, or you notice a funny rattling noise, or you notice rust, or … it could be anything, because although “brand new” should in theory mean “free of defects”, that’s not always so in the real world.
You return to the dealership and demand a refund, or a replacement, or at least a courtesy car and a repair. “Nope, sorry” says the dealership, “there’s nothing wrong with it/the warranty doesn’t cover it/it’s not our problem/blah blah blah” – what can you do?
Step One: Exhaust the CPA’s dispute resolution processes
- A motorist’s brand-new VW Polo Vivo wouldn’t start after it was delivered to her. It was towed to the dealership which reported that it was in working order and not defective.
- A few days later it again wouldn’t start, instead making a “clack clack noise”. The problem was diagnosed as a loose fuse pin and fixed, but the buyer refused to take the car back and gave notice of cancellation of the sale.
- She then lodged a complaint with the Motor Industry Ombudsman of South Africa, which said it couldn’t support her expectation that the supplier must cancel the deal. Off to the High Court went the buyer.
- The Court refused her application for a new car or a refund on the basis that she hadn’t first exhausted all “internal remedies” before approaching a court. Specifically, she should have followed the comprehensive dispute resolution mechanisms set out in the Consumer Protection Act (CPA) – sure, she had approached the applicable industry Ombud, but she hadn’t lodged a complaint with the National Consumer Commission, nor had she approached a Consumer Court, the National Consumer Tribunal or an authorised alternative dispute agent.
- The lesson: Exhaust all other remedies as set out in the CPA before going to court!
Step Two: Heigh Ho Heigh Ho It’s Off to Court We Go
Finding extensive rust in his brand-new Ford Everest, the buyer demanded that the dealership repair it. The dealership refused, claiming that the buyer had spilt pool acid in the car. After unsuccessfully approaching the Motor Industry Ombud (unsuccessful because the dealership declined to cooperate with the Ombud’s investigation), the buyer ended up before the National Consumer Tribunal, which ordered the dealership to remove the rust.
In this case it was the dealership and not the buyer that went to court, with the dealership appealing the Tribunal’s order in the High Court.
The Court rejected the appeal and upheld the Tribunal’s rust removal order on the basis that –
- The CPA gives every consumer the right to receive goods that “are of good quality, in good working order and free of any defects”.
- The vehicle was defective at date of sale, and it was irrelevant that the vehicle was still functional and fulfilling its intended purpose of transporting the buyer “from Point A to Point B”– which it had successfully done for 3 years and 170,000 km before this case reached court. As the Court put it, “it is not meant to have a rusting or corrosion on any of its parts as a new vehicle … one can say that the vehicle is less acceptable and unsafe than people generally would reasonably be entitled to expect from the goods of that type, a brand-new car. This indicates a defect in the vehicle.”
- It is for you as buyer in such a case to prove that the defect existed at the time of the sale and that you were unaware of it. In this case, the rust was a latent defect (being hidden under a carpet) and as the buyer was no car expert, it was irrelevant that he had signed a pre-delivery inspection form confirming that there was no problem with the car.
- The Court accordingly found that the buyer had succeeded in proving what he needed to, and the dealership must “remove the rust and repair the Respondent’s car back to the standard it should have been if there was no rust”.
Insist that your brand-new car is free of defects and remember we can help you with specific advice and assistance if it isn’t.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
© LawDotNews
July 22, 2024
The New Cannabis Act: Here’s What You Will and Won’t Be Allowed to Do
“It’s high time they legalised cannabis” (Anon)
Much excitement has greeted the signing into law of the Cannabis for Private Purposes Act, which will formally regulate the cultivation, possession, and use of cannabis by adults in a private setting and, says the Presidency, lays the groundwork for regulatory reforms “to allow for the industrialisation of the cannabis sector.”
But although the new Act has been widely reported in the media as though it is already in force, this is not correct – it will only come into effect when its commencement date is gazetted. It is not clear at date of writing when we can expect this to happen, but it could be a lengthy process. Until then the rather vague parameters for private and personal use, possession and cultivation set by the Constitutional Court in 2018 will presumably remain in place.
In the interim, here are some highlights of the Act –
What is “cannabis” in the new Act?
“Cannabis” is defined for the purposes of the Act as meaning “the flowering or fruiting tops of a cannabis plant and includes products made therefrom” (i.e. “buds”, extracts, oils and the like) but the definition excludes “any seed, seedling, the stalk, leaves and branches.”
What you will be able to do, and what you won’t
In a nutshell, it will be legal within prescribed limits to grow, possess, use and share cannabis in private, but not to sell it. More specifically, and with the general requirement of “private purpose” –
- In private: Any adult (18 or over) will be able to cultivate, use, possess and share cannabis “in a private place for a private purpose”. But not in the presence of a child or non-consenting adult, and not “if it is likely to cause a disturbance or nuisance to any person” in a nearby public place. Note that when it comes to sharing (supplying or obtaining), there cannot be any exchange of “consideration” defined as “any form of compensation, gift, reward, favour or benefit” (i.e. sale for recreational as opposed to medical use will remain prohibited, even for private purposes). The prescribed “maximum amounts” (see below) will apply in private as well as in public places.
- In public: An adult will be able to possess (subject to prescribed maximum amounts), but not to use, cannabis in a public place.
- Protections for children: No child (person under 18) can be given cannabis or any cannabis product, nor be allowed to possess or use it without a medical prescription, nor can they be used to deal in it. Importantly, any adult “who is in possession of cannabis must take reasonable measures to ensure that such cannabis is inaccessible to a child whether that child is under the authority, supervision or care of that adult person or not.”
Maximum amounts will be prescribed, and transport will be regulated
Regulations will prescribe –
- The maximum amounts allowed for cultivation, possession and transport of cannabis.
- “Conditions, restrictions, prohibitions, obligations, requirements or standards regarding the transportation of cannabis, by the person transporting cannabis as well as in respect of the passenger in such transport.”
Current speculation (i.e. you can’t hold us to this!) is that the prescribed amounts will be based on those proposed in a version of the Bill which was not incorporated in the final Act. That Bill proposed that adults would be able to –
- Possess unlimited seeds and seedlings.
- Privately cultivate four flowering cannabis plants per person (or eight per household occupied by two or more adults).
- Privately possess 600 grams of dried cannabis per person (or 1,200 grams per household occupied by two or more adults).
- Publicly possess 100 grams of dried cannabis or one flowering cannabis plant.
- Provide/obtain for personal use 30 seeds/seedlings, 1 flowering cannabis plant, 100 grams of dried cannabis.
Note however that the 2020 Bill’s structure is different to that of the final Act, so wait for the final Regulations before relying on any of these speculated limits!
Criminal records to be expunged
Convictions for possession and use of cannabis (dagga) will be automatically expunged, as will convictions for dealing based on legal presumptions rather than actually dealing. Where records have not been automatically expunged, they will be expunged on application.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
© LawDotNews
July 4, 2024
A note from our director
Me, myself and I
A friend told me a story about her younger years. She went overseas in search of herself. Just to find herself back home.
Another story told goes like this, no matter where you go, flee, or hide you will be there. Wherever we go we tag along.
Fun fact, self management, self leadership should be 50% of your time.
Why is this so important?
Another story…..
In the early years of Christianity they were called monks. In Greek or Hebrew it has two meanings, solitude and togetherness.
Boncke explained the two sides of the same coin.
Solitude means being able to spend time with yourself and being content with who you are. Solitude gives us time to learn to know ourselves and become a whole person.
Once you are a whole person content with yourself, then you can contribute in togetherness or community in a significant way.
We are created to be who you were made to be so you can contribute that only you can give to others. The authentic me is very important for creating meaningful togetherness.
Spend time, lots of time discovering yourself through God’s eyes. After all He lovingly created you with love to be just as He created you to be.
Roy Kapp | Director
KVV Inc Attorneys
May 27, 2024
Why an Oral Estate Agency Mandate Isn’t Worth the Paper It’s Written On
“A verbal contract isn’t worth the paper it’s written on” (Samuel Goldwyn)
Perhaps you are a seller marketing your property through an estate agency, or a buyer asking an agent to find you one, or a landlord employing an agent to let out your property. Whatever the transaction involved, make sure that the agency mandate is in writing.
The problem is that, because we have a human tendency to hear only what we want to hear, the parties to any verbal agreement can, quite genuinely, each remember the terms of their agreement quite differently. Even worse, if one party is determined to cheat the other, it’s a lot easier to challenge a verbal agreement than a written one.
Bottom line – oral contracts invite misunderstanding, conflict and protracted litigation, and for that very reason few agents will accept a mandate without requiring your signature on a written agreement.
But not always – let’s consider a recent High Court fight over a R450,000 commission claim.
Buyer must pay R450k for a cancelled sale
- A property developer had previously employed an estate agent to source development property for it. No written mandate was ever signed.
- The agent, relying on what she said was a verbal mandate to find a further development property, introduced the developer to a property which it decided to buy. An agreement of sale, including a clause confirming that the agent was entitled to R450,000 in commission, was signed by both buyer and seller. The agent had thus fulfilled her mandate and was the effective cause of the sale, the developer being willing and able to buy the property. In the ordinary course the agent would then have been entitled to her commission on fulfillment of all suspensive conditions (“conditions precedent”).
- However, when the developer cancelled the sale, it refused to pay the agent her commission, denying firstly that any mandate had been given, and secondly arguing that in any event commission was only payable against actual transfer of the property from the seller to the buyer.
- Long story short, the Court dismissed the developer’s attempts to convince it that there was no mandate at all, or that the suspensive conditions had not been fulfilled, or that the mandate included either an implied or a “tacit” term to the effect that commission would only be payable against transfer.
- The developer was ordered to pay the agent’s commission and is left R450k (and legal costs) down, with absolutely nothing to show for it.
The lessons…
That is of course not only an expensive lesson for the developer, it’s also a clear wake-up call to anyone and everyone entering into a property deal of any sort with the involvement of an estate agent to ensure that you –
- Sign a written, clear mandate
Both parties could have saved themselves all the aggravation, delay and cost of litigation had they only entered into a written mandate agreement with clear, simple terms accurately recording the terms and conditions they had agreed upon.
As we said above, most agencies insist on written mandates anyway, but make sure you aren’t the exception!
- Specify that commission is payable against transfer
Most sale agreements will provide that commission is earned on performance of the agent’s mandate and fulfilment of any suspensive or resolutive conditions (bond clauses and the like).
But when is the commission actually payable to the agency? As it is normally deducted from the buyer’s deposit held in trust, both seller and buyer should check that it will not be paid out before transfer (or, in the event of a breach or cancellation of the sale, on that date). And whilst most standard mandates and sale agreements will provide exactly that, you must check because every agreement will be different. If there is a clause allowing payment of commission before transfer, don’t accept it without specific legal advice.
From an agent’s perspective, further clauses are of course essential to protect your commission payment in the event that the sale is frustrated or doesn’t proceed – normally the agreement is that a defaulting party (buyer or seller) is liable to pay the full commission on default.
Most importantly of all, sign nothing property-related without asking us to check it over for you first!
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
© LawDotNews
May 27, 2024
Siblings Feuding Over a Business: Can You Get a Domestic Violence Protection Order?
“It is the purpose of this Act to afford the victims of domestic violence the maximum protection from domestic abuse that the law can provide” (Domestic Violence Act)
When sibling rivalry escalates into physical or psychological abuse, victims should take advantage of the very strong protections offered to them by the Domestic Violence Act (“DVA”). As the Supreme Court of Appeal (SCA) has put it: “…the primary objective of the Act is to provide victims of domestic violence with an effective, uncomplicated, and swift legal remedy … and placing upon the courts and law enforcement functionaries’ extensive obligations to assist and protect victims of domestic violence.” (Emphasis supplied)
The DVA, as its name suggests, is there to protect victims where the parties are in a “domestic relationship”. Victims of abuse in business or commercial relationships have other legal remedies, but they aren’t nearly as effective, quick or accessible as a DVA protection order.
So, are the DVA’s protections available to siblings who are not just closely related but are also in some form of commercial or business relationship? A recent High Court decision addressed just that question…
An abusive brother, threats of murder, and a family-owned deli business
- A 59-year-old brother and his 56-year-old sister were not just siblings, but also had a commercial/business relationship in that the brother and his sister’s husband had been 50/50 partners in a deli business managed by the brother.
- When her husband died, the sister tried to discuss with her brother payment of monies due to her late husband’s estate from the deli business. The resultant abuse at the hands of her brother led her to obtain a final protection order from the magistrate’s court based on (disputed) allegations of –
- Sexual molestation by her brother when he was 15 and she was 12;
- A continuing pattern and history of abuse into adulthood, including an assault in the presence of her two children, minors at the time;
- Thereafter numerous threats towards her and her adult daughter, including serious threats of murder (with repeated statements that he had actually ordered a “hit” on her for trying to take his business away from him), stories of stalking her and the children with a drone, and intimidating phone calls to her daughter by third parties.
- The brother appealed the protection order, asking the High Court to set it aside. He denied any wrongdoing and also argued that the DVA did not apply anyway, because he and his sister were not in a “domestic relationship” as defined in the DVA. Their dispute, he said, was really of a commercial nature.
- The High Court, noting a SCA decision to the effect that “a mere blood relationship” was not enough to establish that the DVA applies, found that in this case the siblings not only had a business relationship as regards the deli, but were also in a “domestic relationship” because of their ongoing meetings about their parents’ wellbeing and care. That brought their relationship and dispute within the realm of the DVA’s protections.
- As regards the facts, the brother had baldly denied any wrongdoing but had not addressed the various detailed allegations made against him, leading the Court to find him guilty of verbal, emotional, or psychological abuse, harassment and stalking.
- The main objective of a protection order being “not to punish past misdeeds, but to prevent future misconduct”, the Court confirmed the final protection order accordingly.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
© LawDotNews
May 27, 2024
Contracting with Trusts – Is a Majority Resolution Valid?
“Externally, trustees cannot disagree. In the external sphere the Trust functions by virtue of its resolutions, which have to be supported by the full complement of the Trust body.” (Extract from judgment below)
A recent Supreme Court of Appeal (SCA) judgment provides yet another reminder to tread carefully when contracting with trusts. Your agreements with a trust will be invalid and unenforceable if the trustees acting for the trust weren’t properly authorised to bind the trust.
But must trustee resolutions always be taken unanimously by all of the appointed trustees to be valid, or will a majority decision ever suffice? The SCA addressed that question in the context of a trust seeking to escape from a suretyship which had not been unanimously agreed to and signed by all three trustees acting jointly –
When a majority trustee decision isn’t enough
- A creditor sued a property trust for payment under a suretyship given to it by the trust. The trust countered that the suretyship was invalid because the resolution authorising trustees to sign the suretyship was not authorised and signed by all three trustees, but only by two of them.
- Indeed, only two of the trustees had attended the trustee meeting at which the suretyship was discussed. The third trustee had not been at the meeting and did not sign either the resolution authorising the suretyship to be signed or the actual suretyship.
- The meeting itself was in order, in that the trust deed provided for two trustees to constitute a quorum for meetings. But the deed also provided that a unanimous decision was required for the trust “to conduct business on behalf of and for the benefit of the Trust, and to employ trust property in such business”.
- In any event, as the Court put it: “…trustees must act jointly in taking decisions and resolutions for the benefit of the Trust and beneficiaries thereof, unless a specific majority clause provides otherwise” and “Even when the trust deed provides for a majority decision, the resolutions must be signed by all the trustees. (Emphasis added)
- As it was neatly put in an earlier High Court decision: “A majority of trustees in office may form a quorum internally at a trust meeting, but can still not externally bind a trust by acting together … It is not the majority vote, but rather the resolution by the entire complement which binds a trust estate. A trust operates on resolutions and not votes.” (Emphasis added)
- As only two of the three trustees had acted for the trust in this case, the Court held both the resolution and the suretyship to be invalid and unenforceable.
So, what does that mean for you in practice when contracting with a trust?
Internal trust matters: Internal matters (such as using trust income for the benefit of beneficiaries or administering trust assets) “may be debated and put to a vote, thereafter the voice of the majority will prevail.”
External trust matters: As an outsider however your dealings with the trust will relate to external trust matters (transactions relating to trust property with the outside world such as buying and selling property, signing suretyships and the like) and here unanimity is essential for the trust to be bound. Even when the trust deed allows majority decisions, all the trustees must still participate in the decision-making and all of them must sign a resolution to make it valid externally. Make sure therefore that all trustees signing for the trust have the power to do so per the trust deed and by a valid, unanimous resolution.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
© LawDotNews
April 24, 2024
In the Land of the Will, Clarity is King
“The golden rule for the interpretation of testaments is to ascertain the wishes of the testator from the language used. And when these wishes are ascertained, the court is bound to give effect to them, unless we are prevented by some rule or law from doing so.” (Quoted in the judgment below)
When drawing up your will (“Last Will and Testament”), remember that “clarity is king”. Ambiguity is one of the cardinal sins of will-drawing because it exposes your loved ones to the risk of uncertainty, dispute, rancour, and quite possibly expensive litigation.
Worse, if in the end a court has to try and decipher what you actually intended, there is no guarantee that it will be able to correctly ascertain your true wishes.
A case of different interpretations and a bitter dispute
A recent SCA (Supreme Court of Appeal) case confirms once again the need to express your wishes clearly and unambiguously in your will –
- A bitter dispute between a widow on the one hand and her three step-children on the other had its roots in a deceased father’s ownership of two plots. On the one plot the father had built houses for his two daughters, with his son building flatlets for renting out on the same plot. He and his wife lived in their house on the other plot.
- The dispute centered on two different interpretations of a clause in the father’s will in which he had left both plots to his daughters, but subject to a right of habitatio in favour of his wife. That, said the executor of the deceased estate, gave the widow the right to live in, and to rent out, the buildings on both plots.
- The widow’s step-children on the other hand argued that it could not have been their father’s intention to give his wife such rights to the plot in question in light of all the “surrounding circumstances”. They made much of the fact that their parents’ ante-nuptial contract referred only to the other plot (the one with the marital home) in that context. They also pointed out that they had all agreed informally to each of the siblings being allocated a “portion” of the disputed plot.
- The siblings accordingly refused to pay out any rentals to the executor, and the dispute eventually found its way into the courts – first the High Court and then the SCA.
- In confirming the widow’s right to live in the buildings and to let/sub-let them out and receive rentals from both plots, the SCA confirmed that a court will establish the intention of the deceased from the language used “in its contextual setting”. In other words, “the will must be read in the light of the circumstances prevailing at the time of its execution.” Thus, in this case it was relevant that the father had not changed his will to reflect the informal allocation of “portions” of the disputed plot between his children, and that he had probably intended his wife to benefit from the receipt of rentals for her financial well-being and maintenance.
- But beyond that, there is no place for the introduction of “extrinsic evidence” or “surrounding circumstances” if the wording of the will is clear and unambiguous – as it was in this case.
Bottom line – it is critical that the wording of your will be drawn professionally to correctly, clearly, and concisely set out exactly what your wishes are.
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