Commercial entities commonly require security in the form of inter alia a deed of suretyship in respect of commercial contracts concluded with other entities where payment is deferred, or any other form of credit is extended to the client. Whilst the persons providing the suretyship often have no objection to signing the document in order to reap the benefits of the underlying contract, they often attack the validity of the document in the event that the suretyship is enforced.

A weapon in the surety’s arsenal which is often employed in the attack on the validity of a suretyship is Section 15(2)(h) of the Matrimonial Property Act 88 of 1984 (“the Act”), which states that a spouse in a marriage in community of property may not without the written consent of the other spouse bind him/herself as surety.

Our firm recently represented a corporate client in the matter of Strydom v Engen Petroleum Limited (184/2012) ZASCA 187, in which the surety launched an appeal to the Supreme Court of Appeal, principally on the interpretation of Section 15(2)(h). The appeal was dismissed with costs and the judgment handed down by the Court expanded on a number of previous decisions in which sureties sought to escape liability under a deed of suretyship through section 15(2)(h).

The Court held that the statutory protection under Section 15(1) of the Act, against unilateral conduct by one spouse that may detrimentally affect the joint estate is not absolute, and should be read in context with the exceptions contained in inter alia Section 15(6) of the Act, which specifically nullifies the operation of Section 15(2)(h) where a spouse has acted in the ordinary course of his profession, trade or business. The pressing question to then be decided is what constitutes acting in the ordinary course of one’s profession, trade or business.

In answering that question, the Court stated that the determination of whether one acted in the ordinary course of one’s profession, trade or business is a question of fact that must be judged objectively with reference to what is to be expected of businesspeople.

Where a business is carried on through an incorporated vehicle such as a company or close corporation, or even an unincorporated vehicle, such as a partnership or trust, the question to be answered is whether the execution of the suretyship was in the ordinary course of the surety’s business, and not the business of the company, close corporation, partnership or trust. In other words, did the execution of the suretyship hold any potential benefit to the surety personally, or serve to benefit the surety’s personal interest.

Where a person who holds a number of non-executive directorships that are the principal source of their income, they may well be acting in the ordinary course of their business when executing a deed of suretyship for one of those companies. After all, the underlying reason for requesting that suretyships be provided by directors, members and the like is that they in general have a personal commercial interest in the business’s success or failure.

In the case of companies and close corporations in particular, the surety, in many instances, owes a fiduciary duty to the company/close corporation and is vested with powers of management in respect of its affairs. By, for example, investing capital into the business or being party to the conclusion of a loan agreement with a third party, the surety enables that investment to succeed by providing it the necessary funding and in so doing supports his own interest/trade/business/profession.

It must also be noted that the party seeking to rely on Section 15(2)(h) cannot merely state that they were married in community of property and that their spouse did not consent to the transaction in order to bring themselves within the ambit of the section. This is specifically because the section only operates in certain limited circumstances, and essentially as an exception to Section 15(1) of the Act, which seeks to abolish the marital power vested in the husband under the Roman Dutch Common Law, which allowed the husband to take all decisions in respect of the estate to the exclusion of his wife.

The surety therefore has an onus to bring themselves within the range of operation of Section 15(2)(h), specifically where matters are within his/her exclusive knowledge, such as the extent of their managerial commitment to the company/close corporation/partnership/trust, their reasons for providing capital, whether the profit generated forms a significant portion of the surety’s income and so on. If the surety remains silent on the details of his involvement in the dealings of the entity on behalf of whom he has provided security, it speaks volumes of the allegation made by the creditor that he has done so in the ordinary course of his profession, trade or business.

It must however be kept in mind that the Court was tasked with adjudicating a particular set of facts  and circumstances, and by no means proposed a rigid test for determining whether one has acted in the ordinary course of their profession, trade or business. In the circumstances, the validity of a suretyship in the face of the Section 15(2)(h) is to be determined with reference to the facts peculiar to the person seeking to invoke the protection afforded by the section. It is however clear that the section operates within clearly defined parameters, and that a surety seeking protection under the section has an equal, if not higher burden to satisfy in proving whether a suretyship was executed in the ordinary course of business or otherwise.

- Lefika Morobe, Candidate Attorney – Lanham-Love Attorneys

Contact Us for more information

Photo credit: lily&tim / Foter.com / CC BY-SA

The post Spousal consent: is that suretyship valid? appeared first on Lanham-Love Attorneys.

Given the administrative burden that this poses, CIPC will undoubtedly see an influx of companies failing to meet this deadline.

The question arises, what penalties do companies face for failing to comply with this transitional provision?

Whilst the Act fails to make reference to penalties for non-compliance with this transitional provision, the Act does provide that companies will be allowed to lodge their new MOI’s even after the window period has expired, however in these instances
companies will be liable for all costs associated with lodging a new MOI as well as a fee for registration of the special resolution (in the event that one is needed) with CIPC.

A failure to lodge a new MOI will result in a company’s MOI remaining in force and effect subsequent to 30 April 2013 to the extent that its provisions are in harmony with the Act and all those provisions that are in contravention with the Act will be void. Whilst this may not be as stringent as CIPC adopting a ‘standard’ MOI by default, this approach may result in adverse effects for companies.

In order to avoid this less than desirable situation, companies are encouraged to lodge their new MOI in accordance with the Act before the deadline expires.

- Kimmona Kannigan, Candidate Attorney – Lanham-Love Attorneys

Contact Us for more information

Photo credit: Jewish Historical Society of the Upper Midwest / Foter.com

The post MOI Deadline Looms appeared first on Lanham-Love Attorneys.

Having an ANC constitutes a marriage out of community of property. Therefore, each spouse becomes liable for his/her own assets and liabilities.

The ANC has to be signed prior to the marriage taking place. It is registered at a Deeds Office and it usually takes about 3 months before the ANC is registered and returned to one.

There are essentially two types of ANCs into which one can enter; with accrual or without accrual. The ANC comes into force at the dissolution of a marriage, either by death or divorce.

With the Accrual System
Upon dissolution of a marriage, the growth of each spouse’s estate during the course of the marriage is compared. The spouse whose estate shows the least growth has a claim to 50% of the difference of the other spouse’s estate. For example – At the dissolution of the marriage the Husband’s estate shows a growth of R100 000.00, whereas the Wife’s estate shows a growth of R150 000.00. The Husband will therefore have a claim to 50% of the difference, being 50% of R50 000.00, i.e. R25 000,00 from the Wife’s estate.

Without the Accrual System
Upon dissolution of a marriage, each party will have only what they had accumulated during the duration of the marriage. No claim can be made by either spouse to the other spouse’s estate.

Common Questions that are asked about ANCs:-

Does the ANC affect my Will?
No. The ANC deals only with the estates of the spouses in relation to each other at the dissolution of the marriage (either death or divorce), whereas a Will, is applicable at the death of a party and will take into consideration all the assets and how a distribution should be done.

Do I need my spouse’s consent to open a bank account or sell property?
No. Registering an ANC means that the marriage is out of community of property and each spouse’s estate is seen as being a separate and individual estate. Hence , each party will be able to deal with his/her affairs separately and without the consent of the other party, unless the property is registered in both parties’ names.

Can we buy property together?
Yes. The property will be registered in both parties’ names in either a 50 / 50 share or undivided half shares.

Getting married is an exciting time but one needs to ensure that before getting married one understands the different marriage regimes and makes the correct choice, bearing in mind that if an ANC is not entered into, the marriage will automatically be governed by the laws of Community of Property.

Killindrie Pillay, Professional Assistant – Lanham-Love Attorneys

Contact Us for more information

Photo credit: George Eastman House / Foter.com

The post 101 on Antenuptial Contracts (ANC) appeared first on Lanham-Love Attorneys.

The consequences of not having a document properly commissioned, the point being taken either at an Insolvency Enquiry or at the hearing of an Application, either opposed or unopposed, can be dire. The claim may be rejected or an Application dismissed on this ground alone.

In terms of the Act a Commissioner of Oaths may within the area for which he is appointed as a Commissioner of Oaths administer an oath or affirmation to or take a solemn or attested declaration from any person, except for certain specifically mentioned issues.

The Minister may by notice in the Government Gazette designate the holder of any office as a Commissioner of Oaths such as an Attorney, Bank Manager or Police Officer.

In terms of the regulations to the Act, the Minister is entitled to prescribed the form or manner in which an oath or affirmation shall be administered.

In terms of the Regulation promulgated in Government Notice GNR.1258 of 21 July 1972 the following is prescribed:-

• the Deponent shall sign the declaration in the presence of the Commissioner of Oaths and if the Deponent is not able to write then he/she shall affix a mark at the foot of the declaration;
• the Commissioner in turn is required to do the following:-
  • sign the declaration and print his full names and business address below his signature;
  • state his designation and area in which he holds his appointment or office held by him if he holds his appointment ex officio;
• a Commissioner of Oaths shall not administer an oath or affirmation relating to a matter in which he has an interest.

Accordingly, it is imperative that when documents are commissioned that all the prescribed information as detailed above appear below the Commissioner’s signature.

In addition, and while this information cannot be confirmed after the fact, a Commissioner of Oaths is obliged in terms of the Regulation to ask the Deponent:-

• whether he/she knows and understands the contents of the declaration;
• whether he/she has any objections to taking the prescribed oath; and
• whether he/she considers the oath to be binding on his/her conscience.

It is only after the Deponent has acknowledged and confirmed the facts referred to above that the Commissioner of Oaths may administer the prescribed oath.

It appears to be a case of Deponent and Commissioner of Oaths beware!

- Gavin Smith, Senior Associate – Lanham-Love Attorneys

Contact Us for more information

Photo credit: Jeffrey Beall / Foter.com / CC BY-ND

The post Is that document really commissioned? appeared first on Lanham-Love Attorneys.

Divorce proceedings in South Africa have long held a reputation as being maternal in nature, ensuring the welfare of the mother first and foremost. Many a dinner table conversation has turned on the strength of a mother’s position when divorce involves children. A particularly notorious threat often used is the suspension of a father’s access to his children when the marital relationship fails.

The law of South Africa does provide a procedure that can be used by both the parties to resolve key issues during the interim period before divorce is finalised. This is called a Rule 43 Application. The Rule provides for interim maintenance and financial assistance for litigation, and extends into regulating the custody and access to the children of the marriage until such time as the divorce is settled.

The matter is argued on the papers, with the Applicant serving and filing an Affidavit setting out the facts of the divorce and the interim relief sought. The Respondent may then respond by means of an Affidavit. No further papers are permitted. In order to expedite the process, the court has held on numerous occasions that the papers must be precise and specifically on point, thus avoiding the nastiness of “mud-slinging”.

In particularly difficult divorces, where access to the children is denied due to tactical game playing or spiteful behaviour, a Rule 43 Application can be brought on an urgent basis to secure a fathers ability to communicate with and visit the children.

A Rule 43 Application is a fast and effective means of obtaining clarity on the rights and obligations of the parents and often leads to the full and final settlement of the divorce proceedings at an earlier stage than usually anticipated during litigation.

It is necessary to seek the professional assistance of an attorney when launching an Rule 43 Application as there is no appeal process and poorly drafted papers could lead to an unsuccessful outcome for the Applicant concerned.

- Amy Groenewald. Senior Associate – Lanham-Love Attorneys.

Contact Us for more information

The post Rule 43 Application: Securing a father’s access to his children during a divorce appeared first on Lanham-Love Attorneys.

Lanham-Love has recently undergone a corporate rebranding.

James Hemphil from Thought Capital explains the rationale behind the new corporate identity:

ThoughtCapital received briefing to upgrade the Lanham-Love Visual Identity to talk to, and reflect, a ‘new generation of law’, an initiative in the company driven by the energy of the founder Bobby Lanham-Love and those that make up his team.

The project entailed transforming a dated Corporate Identity, which revolved largely around an old logo mark, into an invigorating Visual Identity and Brand Voice that reflected both the ‘new generation of law’ as well as current design and aesthetic trends.

After several initial logo mark developments, the 12th hour saw the realisation of a mark that is directly reflective of the driving force in the business; the name Lanham-Love, as well as depicting the ‘pages’ of the law.

With approval of the mark, the corporate colour narrowed itself to a youthful & flexible green, that takes its roots from the rather traditional ‘British Racing Green’.

The extension of the mark ranged across basic stationery elements, through electronic templates, to signage for the Lanham-Love new offices, as well as client gifts and corporate calendars for 2013.

Lanham-Love now has an identity that has handsomely answered the initial briefing, as well as supported the Company’s re-birth at its new premises in Saxonwold, Johannesburg.

Credit is due to Bobby Lanham-Love, Tim van Rooyen, and the Lanham-Love team, for their support of the creative process – for letting the ‘creative huskies’ run north, and, in so doing, deriving ‘Capital’ for client.

The post Corporate Rebranding appeared first on Lanham-Love Attorneys.

Lanham-Love Attorneys

View Larger Map

Our telephone number remains 011 268 6565

Our fax number is 086 768 6565

The post We have moved! appeared first on Lanham-Love Attorneys.