Thanks for your support in 2011.
Have a Wonderful Festive Season, and a Happy and Prosperous 2012!
VARYING A TRUST DEED? BE CAREFUL!
Here's a warning from a recent Supreme Court of Appeal case - don't amend the provisions of a trust deed without first checking whether or not you need to get consent from the beneficiaries.
In the case in question, a father originally nominated his two minor children as beneficiaries of a trust. But, after a bitterly disputed divorce and remarriage, he and the trustees agreed to vary the trust's provisions substantially. Amongst other things, the original beneficiaries were no longer to be guaranteed any benefit, but were reduced to the status of potential beneficiaries along with the father's new wife, and her children from a previous marriage.
What the law says
Our law in this regard is clear - the founder (in this case the father) and trustees of a trust may vary its provisions, or even cancel it, without the consent of the beneficiaries; but only if the beneficiaries haven't yet accepted benefits conferred on them by the trust. As soon as beneficiaries accept benefits, they acquire rights in the trust and any variation without their consent is invalid.
The factual question
What isn't always so clear is the factual question of whether benefits have or have not actually been accepted.
In this case the preamble to the trust deed (translated from the original Afrikaans) contained this statement: "And whereas the beneficiaries have indicated (Afrikaans - 'aangedui') their acceptance of the benefits conferred upon them in terms hereof". That, held the Court, indicated upfront acceptance by the father - as natural guardian acting on behalf of his minor children - of their trust benefits. The subsequent purported variation of the trust deed's provisions was accordingly invalid, and the original provisions prevailed.
Take advice upfront!
Some trust deeds (not all) may have similar wording, and every case will be different. Tread carefully, and take advice in doubt!
BUSINESS BUYERS AND BANKS: BEWARE A STATUTORY TRAP!
With rampant business failures a feature of our economy these days, do not buy (nor finance the purchase of) a business, its goodwill or assets - not, that is, without first seeking advice on whether or not the sale must first be advertised in terms of the Insolvency Act.
Playing with fire - the Appeal Court case, and the facts
A recent Supreme Court of Appeal case illustrates the dangers of not doing so. A company had sold its business and assets - movable and immovable - to a buyer for just over R22m. The buyer financed the deal with a loan from a bank, secured by means of mortgage bonds registered over the property. The parties had specifically agreed not to advertise the sale in terms of the Act. And that, as we shall see, can be a dangerous move indeed - a real case of playing with fire.
The company was thereafter liquidated, and the sale attacked by the liquidators. The Court held that both the sale and the mortgage bonds were invalid - leaving the buyer and the bank with unsecured concurrent claims (normally very cold comfort indeed in a liquidation scenario).
The danger
The danger is that, for a period of 6 months after such a sale, it is subject to challenge by the seller's creditors, or by the liquidator if the seller is liquidated - unless the sale has first been properly advertised in terms of the Act.
The fact that the creditors and other stakeholders may all know of the sale anyway is irrelevant - formal compliance with the Act is still necessary.
An unadvertised sale will be valid only -
If it was made "in the ordinary course of business" (unlikely where the business subsequently fails), or
For "securing the payment of a debt" (seldom under the control of anyone but the seller), or
If the buyer can prove that the seller wasn't a "trader". As the term is widely defined in the Act, that's not going to be easy.
The bank whose bond went bad
The bondholder in this case must be particularly irked by the result, the Court having found that even if it had, as claimed, acted entirely reasonably and in good faith in financing the deal, this was of no assistance to it. The bonds, although registered in the Deeds Office, were invalid and provided no security whatsoever for the bank's claim.
The moral of the story
There will always be a lot at stake here, and the advertising process must be handled correctly to be valid - take advice or risk getting burnt!
ARRESTED FOR SHOPLIFTING - THE RISK, AND THE REMEDY
Shoplifting is a major problem for stores (and in the end shrinkage losses are passed on to us as consumers!), so one cannot blame them for adopting a zero tolerance policy towards it
The damages claim
But mistakes happen, and if you are unlucky enough to be wrongfully accused of shoplifting - with the attendant embarrassment of a public trip to the manager's office in the custody of a security guard - take advice immediately on whether you may have a claim for damages against the shop.
The shopper, the shoes, and the security guard
Prevention being better than cure, the first step of course is to do nothing that might attract unwarranted suspicion. In a case recently before the High Court, a shopper had bought a pair of shoes from a chain store, and wore them to another branch of the chain the next day. Critically, she hadn't removed the chain's price tag from under the shoes - and that attracted the attention of a sales assistant. The shopper had left her proof of purchase at home, and when asked by a security guard to produce it she was unable to do so until her husband brought it through some hours later.
She claimed to have been subjected to vulgar and abusive language, to have been accused of theft in front of customers and staff, and to have suffered bruises to her arm - all of which the store denied. The shopper accordingly sued the store for R450.000 damages for unlawful detention, defamation and assault. In dismissing her claim, the Court noted that the shop employees had denied "detaining" her, and commented that in any event it would not have amounted to "unlawful detention" even if they had questioned her "in the privacy of their office, and waited there with her for the proof of purchase".
In the circumstances the store had acted reasonably and lawfully by "first investigating the circumstances of the case before taking any decision whether to detain, arrest and prosecute" the shopper.
WHEN THE LIGHTS GO OUT, EVEN THOUGH YOU PAID YOUR ACCOUNTS
The scenario
Consider this scenario (not an entirely unlikely one in these challenging times):-
Your property (residence, office, shop or factory) is part of a sectional title scheme
You have paid all your own municipal service accounts, and all levies due to the body corporate
Nevertheless the local municipality cuts off lights and water to the entire complex - i.e. including you - because the body corporate itself is in arrears with its rates account.
Can that really be possible?
Yes, following a recent Supreme Court of Appeal decision, which confirmed the right of a municipality to cut services to a shopping mall whose body corporate had run up a bill of over R2.7m for rates, penalties and interest.
The bottom line
The bottom line is this -
Even if all electricity and water consumption has been paid for, the municipality has the power to consolidate all
accounts for rates, services, and "other municipal taxes, levies and duties". This in turn means that it can enforce
payment of the full consolidated account by termination of services - even if the arrears are for rates, not services.
Although accounts cannot be consolidated - nor services cut - if there is a dispute over an outstanding account,
this only applies if
The amount disputed is "properly specified", and
If the dispute in regard thereto is "properly raised", in writing, with the municipality.
In this case, held the Court, the "so-called 'dispute'" belatedly relied on by the body corporate was "merely a
delaying tactic" and could not avail it.
Although sectional title owners are responsible for their own rates - and often also for their own electricity and
water - they are still at risk if their body corporate fails in its duty to pay its own municipal accounts.
CHARITIES: LOTTERIES BOARD NOT SHELLING OUT? CONSIDER LEGAL ACTION
If you represent a "socially worthy project" struggling to obtain a grant from the Lotteries Board, take heart from a recent Supreme Court of Appeal decision, which confirmed a High Court order in favour of two registered charities whose applications for funding had been declined by the Board.
Noting that the Board had failed to fulfil its mandate by not disbursing some R6 billion in public funds "held by it in trust for the purpose of allocating them to deserving projects", the Court pointed out that administrative decision-makers such as the Board and its distribution agencies must -
Act fairly, and give proper and adequate reasons for their decisions
Consider each application individually and justify every decision
Exercise their discretion properly (in this case, by applying the relevant funding guidelines consistently, but not rigidly or inflexibly).
You shouldn't have to resort to legal action to have your grant application properly considered - but don't take an unjustified refusal lying down!
THE DECEMBER WEBSITES: SAFE (AND SOBER) DRIVING THIS FESTIVE SEASON!
The crackdown against drunk driving continues, with 20,000 arrests a year and effective jail time on the cards for serious offenders.
Go to Arrive Alive's website (follow the links from the "Drunk Driving and Road Safety" page at http://www.arrivealive.co.za/pages.aspx?i=1259) for articles on these and other topics -
"How Much is Too Much?"
"Medical Legal Facts"
"The Test/The Arrest"
"Court Procedure"
"Confiscation of Vehicles"
Don't take a chance! If you drink, don't drive - rather arrange a lift, take a taxi, or use one of the many chauffeur or "designated driver" services that have sprung up in major centres. For a list of some of them see Car Magazine's website at http://www.carmagblog.co.za/opinion/legal/papa-wag-vir-jou/. There are many others out there - use Google to find one that operates locally.
Be safe on the road this Festive Season!
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