Shaun Nel Attorneys

Shaun Nel Attorneys Shaun Nel Attorneys specializes in Commercial and Corporate Law, Insolvency/Bankruptcy Law, Contract

Shaun Nel Attorneys is a specialist law firm, built on personal “client-attorney” relationships, which equips us to have a proper and complete understanding of our client’s requirements so that we give our client’s the most efficient, honest and cost effective legal services. Our methodology brings about a fresh approach to creating meaningful partnerships between law service provider and client’s

commercial objectives. Shaun Nel Attorneys specialise in Commercial and Corporate Law, Insolvency/Bankruptcy Law, Contract Drafting and Banking Law. Our expertise includes all types of commercial contracts, information technology, due diligence investigations, insolvency and corporate recoveries, corporate governance, construction and building.

19/04/2020

Section 133(1) of the Companies Act, 71 of 2008 (“Act”) provides that during business rescue proceedings no legal proceeding, including enforcement action, against a company, or in relation to any property belonging to the company, or lawfully in its possession, may be commenced or proceeded with in any forum subject to certain exceptions, for example, where a business rescue practitioner has not suspended the obligations of the tenant under a lease (in terms of s 136(2)(a) of the Act, and the landlord has validly cancelled the lease due to non-payment, the landlord can bring ejectment proceedings to evict the tenant, despite being in business rescue, as the tenant is an unlawful occupier.

19/04/2020

Labour Tenants:

The Land Claims Court (“Court”) dealt with the claim of a “labour tenant” in the case of Kubheka v Adendorf and Others [2019] 3 All SA 566 – Kubheka, the plaintiff, a pensioner residing on a farm owned by the defendant, sought an order from the Court (a declaratory order) declaring that he was a labour tenant, as well as an award of land in terms of s 16 of the Land Reform (Labour Tenants) Act 3 of 1996 (the Act). Section 1 of the Act defines a labour tenant as, (a) a person who is residing or has the right to reside on a farm; (b) who has or has had the right to use cropping or grazing land on the farm in exchange for providing labour to the owner or lessee and, (c) whose parent or grandparent resided or resides on a farm and had the use of cropping or grazing land on such farm or another farm of the owner in exchange for providing labour to the owner or lessee.
The plaintiff had resided on the farm since 1975 with cropping and grazing rights, providing labour to successive owners of the farm. The defendant argued that from 1986 to 1995, the plaintiff worked for a person who was neither the owner nor the lessee of the farm and, thus he did not comply with para (b) of the definition during that period and was, therefore, not a labour tenant. The main problem with that argument was that it failed to adopt a holistic and continuous approach to the definition of labour tenant. The plaintiff provided labour to the other owners and lessees of the farm for a cumulative period of 18 years. On a holistic and continuous interpretation of the labour tenant definition, that constituted compliance with para (b). The evidence further established that the plaintiff complied with the third part of the definition as his parents lived on the farm, had cropping and grazing rights on the farm and provided labour to the owner. Furthermore, it was not proven that the plaintiff was a farm worker.
In terms of s 16 of the Act, a labour tenant may apply before the cut-off date for the award of land, which he was entitled to occupy in terms of s 3.
The court was satisfied that the plaintiff had made a valid application for the award of land and was thus entitled to the award of the land he was using and occupying as at 2 June 1995.

07/04/2020

Registration as a Credit Provider: Du Bruyn NO, the Supreme Court of Appeal (SCA)
The court was tasked to decide whether a credit provider to a once-off credit transaction and who is not a regular participant in the credit industry is obliged to register as a credit provider in terms of the National Credit Act 34 of 2005 (the NCA).
In 2013, the seller sold his interest in three corporate entities by way of three sale agreements for an aggregate price of R 2 million. The same terms of payment were applicable to all three agreements: the purchasers had to pay a deposit of R 500 000, with instalments of R 30 000 to be paid on a monthly basis, subject to identical amortisation table for a period of five years and interest to be levied on the deferred amount. At the date of conclusion of the sale agreements, the seller was not registered as a credit provider, albeit he was successfully registered some months later. The purchasers ultimately defaulted on the instalment payments, and the seller successfully applied to the High Court for payment of the balance of the purchase price. The purchasers appealed this decision, which came before the SCA. It is common cause that the three sale agreements were agreements in terms of s 8 of the NCA and fell within the ambit of application of the NCA. The issue before the SCA was whether the seller was obliged to register as a credit provider in terms of the NCA in light of the fact that he was not a regular participant in the credit industry and that the agreements in question constituted a once-off transaction. Section 40(1) of the NCA provides that ‘[a] person must apply to be registered as a credit provider if the total principal debt owed to that credit provider under all outstanding credit agreements, other than incidental credit agreements, exceeds the threshold prescribed in terms of section 42(1)’. The SCA held that to conclude that the NCA did not apply to a once-off transaction or to those who were not regular participants in the credit industry conflicts with a plain reading of the text of the statute. The SCA held that the only possible conclusion, which could be drawn is that the requirement to register as a credit provider is applicable to all credit agreements once the prescribed threshold is reached, irrespective of whether the credit provider is involved in the credit industry and irrespective of whether the credit agreement is a once-off transaction. At the time of conclusion of the agreement, the applicable threshold in terms of s 42(1) of the NCA was R 500 000. The amount in terms of the credit agreements exceeded the prescribed threshold, and the respondent was, therefore, obliged to be registered as a credit provider at the time of conclusion of the agreements. Due to the respondent’s non-compliance with the NCA’s requirement to register, the agreements were null and void, and the appeal succeeded. Note: as of 11 November 2016, the threshold prescribed by the Minister of Trade and Industry in terms of s 42(1) is nil. This means that currently every person who provides credit in terms of a credit agreement, which is not excluded from the application of the NCA by any other provisions thereof, must register as a credit provider.

07/04/2020

Making a CCMA award an order of the High Court: Goliath v Rocklands Poultry Loss Control/ Sovereign Foods
Mr. A was dismissed from his employment with Co. B - Mr. A then referred the matter, as an unfair dismissal dispute, to the CCMA. The CCMA ordered Co. B to reinstate Mr. A retrospectively (reinstatement award), which it failed to do. Mr. A more than 3 years later approached the High Court for an order that Co. B be ordered to re-instate him according to the reinstatement award. Note: most debts prescribe after three years and court judgments prescribe after 30 years (see the Prescription Act 68 of 1969). As more than three years had passed since the reinstatement award was issued, Co. B contended that Mr. A was no longer entitled to the fruits of the reinstatement award on the basis that the reinstatement award had prescribed. The question was whether the reinstatement award constituted a debt as contemplated by the Prescription Act and, whether it had prescribed on the expiry of three years from the date on which it was granted (published). The court confirmed that (a) the award constituted a debt to which the provisions of the Prescription Act applied, (b) the period of prescription commenced when Co. B dismissed Mr. A, (c) was interrupted when the unfair dismissal dispute was referred to the CCMA for conciliation, (d) interruption of prescription ceased when the reinstatement award was issued, (e) the reinstatement award gave rise to a new period of prescription of 30 years and, (f) when Mr. A filed his court application the reinstatement award had not prescribed and was still enforceable. The court made the reinstatement award an order of court.

25/02/2020

BET-EL FAITH MISSION V MOTTHAMME AND OTHERS
Facts:
A and B were owners of adjacent properties. B contended he replaced an existing wire boundary fence between the two properties with a brick and steel fence in 1998 in the genuine belief that the fence was the true boundary between the two properties. Also, after a car damaged B’s home in 2004, he repaired and expanded the house by building a brick garage on A's property. The garage extended over the boundary line onto A’s property. A requested B to remove the encroaching structure, but B refused. A sought an order from court to have the garage demolished.
Decision:
The Court found the garage was erected illegally without an approved building plan in contravention of the National Building Regulations and Building Standards Act 103 of 1997 (“Act”), and that it clearly encroached on the A’s land. It was also built over an existing servitude in direct contradiction of the restriction registered against both properties.
The Court held that in cases of encroachment, the court has a discretion to either order the removal of the encroachment or to award damages and compensation. The deciding factor is the disproportionality or otherwise between the removal of the encroachment as against the damage or inconvenience suffered by the aggrieved landowner. When compensation rather than demolition is ordered, it is usually done on the basis of policy considerations such as an unreasonable delay on the part of the landowner, or on the basis of what might be viewed as acquiescence, and prejudice and the principles of neighbour law are taken into account. The Court further held that where a building not only unlawfully encroaches onto a neighbouring property, but it was also unlawfully built in contravention of the Act, different considerations apply. A court may not condone illegal activity. That led to the court granting the order for demolition.

24/02/2020

Mortgage bond foreclosure: Absa Bank Ltd v Mokebe and Related Matters
Several mortgage bond foreclosure matters came before the High Court, Johannesburg. The main issues to be determined included, among others, (a) whether the court had a discretion to grant a money judgment order while postponing the granting of the order for ex*****on of the property involved; (b) the circumstances under which the court should set a reserve price and how such price were to be determined; (c) revival of the [loan] agreement after default by the debtor.
The Full Court held that: (a) in all matters where ex*****on was sought against a primary residence the entire claim, including the monetary judgment, had to be adjudicated at the same time (and not piecemeal), (b) ex*****on against movable and immovable property was not a bar to revival of the [loan] agreement until the proceeds of the ex*****on had been realised, (c) any document initiating proceedings where a mortgaged property could be declared executable had to contain a statement made in a reasonably prominent manner and drawing the attention of the debtor (defendant/respondent) to s 129(3) of the National Credit Act 34 of 2005 (the NCA) indicating that the debtor could pay to the credit grantor all amounts that were overdue, the credit grantor’s permitted default charges and reasonable or agreed costs of enforcing the agreement prior to the sale and transfer of the property in order to revive the credit agreement, (d) save in exceptional circumstances, a reserve price should be set by a court, in all matters where ex*****on was granted against immovable property, which was the primary residence of a debtor where the facts disclosed justified such an order.
Expounding on the above principles the court held that it was both desirable and necessary for the money judgment and the ex*****on order to be heard simultaneously. To this end, there was a duty on banks to bring their entire case, including the money judgment, based on a mortgage bond, in one proceeding simultaneously. What prevented reinstatement of the agreement in terms of s 129(4)(b) of the NCA, in the event of default by the debtor, was only the sale in ex*****on of the immovable property and realisation of the proceeds of such sale. Prior to realisation of the proceeds of the sale the mere attachment was no hindrance to the reinstatement of the agreement. The fact that the mortgaged property had been attached pursuant to default judgment and an order declaring the property specially executable was of no consequence. It was only when the mortgaged property had been sold and the proceeds of the sale had been realised that there could be no reinstatement. Rule 46A(8)(e) of the Uniform Rules of Court, in operation since December 2017, empowers the court to set a reserve price for the property at the sale in ex*****on. That price applied only to those properties, which were primary homes of debtors who were individual consumers and natural persons. Setting a reserve price depends on the facts of each case. That price should be based on all the factors placed before the court by both the creditor and debtor.

24/10/2017

Deadlock - Buying-out a Shareholder to Resolve a Deadlock:

Section 163(1) of the Companies Act and ss 36 and 49 of the Close Corporations Act confers on the court a wide discretion to compel a transfer of shares or member’s interest to deal with prejudicial, oppressive, unjust and inequitable conduct by a company, director, shareholder or member against other members. See the case of De Klerk v Ferreira and Others 2017 (3) SA 502 (GP) - the defendant was a co-member of a CC and co-shareholder in a company and a director. His co-member and co-shareholder complained (as plaintiff) that the defendant had breached the trust owed to the plaintiff by committing serious acts of financial irregularities. The court agreed and granted the plaintiff an order authorising the plaintiff to acquire the defendant’s membership interest in the corporation, his shareholding in the company, both with proper compensation, and terminating the defendant’s directorship of the company.

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