RULE 46A AND TRUST PROPERTY
Bestbier v Nedbank [2022] ZASCA 88
A trust conducts business as a wine farm and restaurateur in Stellenbosch. The first and second appellants are trustees and reside in the main house while their son occupies a cottage on the property. The trust’s permanent employees and their families occupy 12 smaller cottages on the property. The trust obtained financial assistance from Nedbank secured by mortgage bonds and, when the trustees failed in their obligations, the bank proceeded against them with a claim for over R8 million. In terms of a settlement agreement, the trustees agreed to certain payment, failing which the bank would be entitled to proceed with an application that provided for payment, failing which, the private sale of the property or, failing which judgment by consent. They also agreed to an order declaring the property executable and a minimum reserve price. The trustees failed to pay and the High Court granted judgment for payment and an order declaring the immovable property executable. On appeal the trustees contend that the bank was obliged to comply with the procedure in Rule 46A.
Molefe AJA discusses the legislative and historical context of Rule 46A, as well as the case law; and the contention by the trustees that the High Court misinterpreted Rule 46A in finding that the rule was only triggered when a property is the debtor’s primary residence. Trust beneficiaries should not be barred from the protection of Rule 46A merely because the property in question is owned by a trust. In this case Rule 46A was applicable despite the judgment debtor being a trust. However, the circumstances do not involve a mortgage loan taken out to acquire a primary residence but involve a commercial loan to be employed in the business of the trust, which conducts business as a wine farm. The order was granted by agreement between the parties, in circumstances where both parties were, from the outset, legally represented. The question was whether the execution of the immovable property could impair the trustees’ existing and potential access to adequate accommodation. There was nothing to show that if Rule 46A was applied, default judgment and an order declaring the immovable property specially executable would not have been granted. The appeal is dismissed.
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INSURANCE – DRIVER DISHONESTY CLAUSE
Wyno Construction v Miway Insurance [2022] 48046-20 (GP)
Wyno is the owner of a truck which it uses commercially to transport coal and that was insured by MiWay. Wyno’s employee driver conjured reasons why he needed to take the truck over the weekend. The tracking devices were removed and left at a truck stop. The truck has not been seen since. Wyno opted not to take cover in circumstances where its own employee commits an act of dishonesty such as theft. MiWay’s repudiation of the claim was triggered. Wyno now seeks to have Miway’s policy declared unconstitutional and that it is contrary to public policy and unenforceable to the extent that it excludes liability where the loss is caused through theft by an employee of the policy holder.
Malindi J discusses Miway’s contention that different cover options were available and Wyno deliberately elected to exclude driver dishonesty; public policy and Wyno’s reliance on Beadica v Trustees of the Oregon Trust; and the onus of proving unreasonableness. The court finds that this type of clause is common place in insurance policies and that such optional clauses do not coerce a policyholder to choose them but gives them an option to choose from more than one, with the commensurate premium to be paid. As was stated in Barkhuizen v Napier, “Self-autonomy, or the ability to regulate one’s own affairs, even to one’s own detriment, is the very essence of freedom and a vital part of dignity.” Miway’s driver dishonesty clause was reasonable and not against public policy. The application is dismissed.
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DISPOSITION NOT FOR VALUE
Strydom NO v Snowball Wealth [2022] ZASCA 91
DexGroup was unable to pay its debts and its liabilities exceeded its assets, so was placed in final liquidation in 2016, with the appellants being appointed as joint liquidators. During 2010, it sold shares to Snowball Wealth and the other respondents. The appellants contended that the reasonable market value of the shares at the time of each sale was 67 cent per share. Because the respondents paid 27 cent (40 per cent of the market value) and 48 cent (72 per cent of the market value) the value given for the shares was “illusory or merely nominal”. The appellants sought orders setting aside each sale on the ground that each sale constituted a disposition without value in terms of s 26(1) of the Insolvency Act 24 of 1936. Snowball raised exceptions, contending that DexGroup had received payments of several million for the shares and that the disposition was not for “no value” and also not illusionary or nominal. The High Court upheld the exceptions.
Van der Merwe JA discusses the meaning of the phrase “not made for value” in s 26(1) of the Act; that although it has been considered in a number of decisions of this court, it has not definitively been decided whether s 26(1) contemplates a claim based on a disposition for inadequate or insufficient value as opposed to no value at all; the case law; the interpretation of the phrase; that the most important contextual consideration is that s 26 forms part of a set of remedies available to a trustee or liquidator under the Insolvency Act; that the relevant provisions in the Act were intended to constitute a comprehensive set of remedies to reverse objectionable transactions that occurred prior to sequestration or winding-up and that the more objectionable the transaction, the more extensive the remedy afforded. All the contextual and purposive indicators reinforce the ordinary meaning of the phrase. The phrase “not made for value” in s 26(1) means for no value at all. The appeal is dismissed.
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ABOUT THE EDITOR
Louis Podbielski spent ten years at Juta working on various law reports and has read many thousands of judgments for case selection. He has considerable experience in writing flynotes and headnotes, compiling case annotations, and in refining subject indexes. During his four years at LexisNexis he was involved with legal data, analytics and in developing various legal tech solutions. He now runs his own case law service Louis Case Law
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