Maintenance Issue 2

Maintenance Issue 2

Maintenance of children after divorce

Although the duty of support of minor children which falls on both parents continues after divorce, it does not follow that the custodian parent in each case is entitled to claim a monetary contribution from the non-custodian parent or that because there is a duty there must be an award against the non-custodian parent.

In the case of Zimelka v Zimelka a custodian father applied to the maintenance court for a variation of the divorce order, in terms of which the non-custodian mother had not been required to contribute to the children’s maintenance.

The maintenance court found that the custodian father had a substantial income but held that the fact that he did not need any contribution from the mother was irrelevant.

On appeal it was held that whether the father required any contribution was indeed relevant and that he had not proved that he did.

Another factor which the maintenance court had overlooked was that because the children spent about two and a half to three months with the mother she was already making a substantial contribution to their maintenance.

For the above reasons, no good cause for a variation had been made out.

A child is entitled to reasonable maintenance to provide for housing, clothing, medical and dental and health care, as well as education and training and, where applicable, recreation.

What is reasonable depends upon the circumstances such as;

·         The position of the family;

·         The child’s health; and

·         In terms of  education and training:

o   The child’s aptitude;

o   And how well the child has done in his or her studies.

The standard of living, taken together with factors such as aptitude and interest, for example, determines whether expenses for recreation, non-vocational training and vocational training at secondary and tertiary level will be awarded.

In Du Toit v Du Toit Kotze J refused to make a special order, in addition to the order for payment of maintenance, for a child’s medical expenses.

He stated that he would make that type of order only in particular circumstances, and that the effect of additional orders in respect of medical expenses and school fees, for example, might be to make the total amount payable unrealistically large.

The upshot would simply be that the person liable to pay would end up in the maintenance court when he failed to comply with the order.

If major illnesses struck the person to be maintained, the custodian parent could and should apply for an increase in maintenance.

There are off course other courts that disagreed with this verdict.

The paramount factor of course is that at all times the “best interest of the child” must be considered.

Court Cases

B v B 1997 (4) SA 1018 (SE)

Although the duty of support persists into the child’s majority, its nature changes and it is then confined to necessaries, “in other words the child must be in indigent circumstances in the sense that he or she is in need of a contribution towards his or her maintenance”.

Bank v Sussman 1968 (2) SA 15 (O)

Support of a child out of parents’ estate.  Both parents must support, proportionately according to their means.  Where the estate has not yet been wound up, a certain sum from the capital should be set aside so that, with accruing interest, it can be used to discharge the estate’s indebtedness to the child or children.  If the estate has been wound up, however, the condictio indebiti is the appropriate action to bring against the heir, but it is necessary to prove the amount of overpayment of the heir.  As far as the amount of maintenance to be awarded is concerned, each case will be considered on its merits, but it seems that the court will look at the standard of living to which the children had been accustomed before their parent’s death.

Bannatyne v Bannatyne 2003 (2) SA 359 (SCA)

In matters affecting children the best interests of the children are paramount and in every matter concerning the paramountcy of the interests of children the Constitutional Court has jurisdiction.

The use of contempt proceedings is an appropriate relief for the enforcement of a claim for maintenance for children.  Good and sufficient reasons should exist for a High Court to enforce the judgement of another court, however.  What constitute good and sufficient reasons would depend on the facts of each case.

While the obligation to ensure that all children are properly cared for is one that the Constitution imposes in the first instance on their parents, there is an obligation on the state to create the necessary environment for parents to do so.

After marriage breakdown, it is almost always the mother who becomes the custodial parent and caregiver.  This places a financial burden on her while placing her at a disadvantage in seeking employment.  Maintenance payments are essential to relieve this financial burden.  Such disparities undermine the achievement of gender equality, a founding value of the Constitution.  Fatalistic acceptance of the insufficiencies of the maintenance system compounds the denial of the rights of women and children. 

Courts should be alive to recalcitrant maintenance defaulters who use legal processes to sidestep their obligations towards their children.  The respondent appeared to have utilised the system to stall his maintenance obligations through the machinery of the Act. 

Well, this is all for now.  If you have any short questions in terms of these aforementioned issues, do not hesitate to post them.  Longer questions will be dealt with in the form of official legal opinions and will be charged for. 

Separation - Maintenance

Maintenance Issue 1

To commence our journey through this very sensitive topic let’s start with a defining introduction to this field:

In our law the terms “support”, “maintenance” and ‘alimony” are used interchangeable, although the term “alimony” is used less frequently in South Africa.

The duty of support extends to:

·         Accommodation;

·         Food;

·         Clothes;

·         Medical and dental attention; and

·         Other necessities of life on a scale in line with:

o   The social position;

o   Lifestyle; and

o   Financial resources of the parties involved.

While food, clothing and shelter are always mentioned in any discussion of maintenance, the concept embraces much more than these necessities.

The maintenance of children also includes education, and must always be approached in a responsible and sensible manner despite the separation emotions in play.

Today the scope of maintenance is always determined according to the standard of living of the parties concerned.  In these issues we will however observe in case precedent that when people separate living standards logical lowers for both parties or at least one of the party’s.

In the following issues we will be looking at the following type of separations:

·         Marries couples;

·         Living together couples including same sex relationships; and

·         Indigenous / customary marriages.

In all issues there will be two to three court cases mentioned irrelevant of the topic under discussion to stimulate the curiosity of the reader on what is transpiring in our courts in terms of these events. 

Court Cases

Administrator, Natal v Edouard ( a very well known case in its field)

Where a child is born after a doctor has failed to sterilize the child’s mother, the doctor’s employers should pay maintenance – which of course in this case happens.

Ally v Dinath

The parties have lived together in an Islamic relationship for about fifteen years, had tacitly or by implication entered into a universal partnership and accumulated a joint estate and the aim of the partnership was to create a joint household and to accumulate a joint estate for the benefit of both parties.  The court referred to the firmly established principle that any contract can be brought about by conduct and, in respect of the making of a profit, the allegation of the objective of the accumulation of an appreciating joint estate was found to be sufficient, at least for purposes of pleading.   

Although was only for the purposes of pleading it did pave the way for what was to come – somebody was going to be up for some kind of maintenance.  This case already occurred in 1984.

Amod v Multilateral Motor Vehicle Accident

The insistence that the duty of support flowed only from a marriage solemnised and recognised by one faith, to the exclusion of others was an untenable basis for the determination of the boni mores (best interest) of society.  It was inconsistent with the new ethos of tolerance, pluralism and religious freedom in the community.

This important shift in the identifiable boni mores of the community must also manifest itself in a corresponding evolution in the relevant parameters of application in this area.

What the defendant had to show was;

·         A duty of support;

·         That the duty arose from a solemn marriage in accordance with the tenets of a recognised and accepted faith; and

·         That the duty deserved recognition and protection for the purposes of the defendant’s action.

And there we have the painful evolution that started in 1984 and found friendly harbour in 1999 in our courts.

I think we will apply the brakes at this stage so that you can ponder the concepts that will start evolving in your mind already after this introduction on maintenance in South African law.

 

Suretyship Issue 9

The various ways of discharging sureties (Continue)

Conduct prejudicial to the Surety

The Surety is released if he or she is prejudiced by the creditor.

Therefore the surety is discharged if the creditor makes his or her liability more arduous, for example, by being too lenient towards the principal debtor, or be neglecting to take reasonable steps to protect his or her rights against the principal debtor.

The surety is also released if the creditor, without the surety’s consent, agrees to a material version of the principal obligation, or departs (or permits a departure) from its terms in a material respect.

The test of materiality in this context is whether the alteration or departure is prejudicial to the interest of the surety and whether the surety would have agreed to become a surety in the absence of the affected provisions.

Mere delay by the creditor in enforcing his or her rights against the principal debtor does not release the surety.

But if the creditor grants an extension of time for payment before the due date, and time is ‘of the essence’, the extension will constitute a material variation which releases the surety.

If a co-surety is released by the creditor, the surety is discharged to the extent that he or she is precluded from recovering a contribution from the co-surety.

The National Credit Act 34 of 2005

With regards to the Pre-agreement phase of intermediate and large credit agreements, there are certain disclosures that the Credit Provider must make in the form a quotation.  Form 20.1 must be used, or the information therein must at least be available to the consumer.  The quote is valid for 5 days.  If the consumer accepts the Terms and conditions of the quotation within the 5 days, a contract between the credit provider and the consumer can be concluded.  But if the interest and costs of credit is MORE than what was initially stated in the quotation, the interest and costs of credit may not exceed the amount in the quotation with more than the “respective prevailing bank rates on the date of the quote and the date on which the agreement was entered into”.  This is on Page 37 of the guide.

What exactly does it mean?

Is “prevailing bank rates” the RR?

Advocate Clark’s Comment

Liezl I think you have quoted that specific paragraph incorrectly.

Let me quote the specific paragraph and explain from there-on.

“If the interest and costs are higher that those stated in the quote, they should not exceed by a margin greater ‘than the difference between the respective prevailing bank rates on the date of the quote and the date the agreement is entered into.’”

I must admit that the grammar in this paragraph is lacking, which could have resulted in you misunderstanding the paragraph’s intention.

Lets start at the beginning:

Repo Rate       -           the repo rate is the interest rate at which the Reserve Bank lends

money to private banks. The governor of the Reserve Bank varies this rate to influence, among other things, inflation.

Prevailing Bank Rates            -           this is usually in the economic sector your normal

Banks we all bank with in terms of the interest rate charged on their overdraft facilities.         

To answer your question, no they are thus not the same and if you phone any bank they will give you both percentages, individually.

Next stage:

Now if you look at the paragraph again you will observe that it is confronting you with a mathematical equation – ‘difference between’, thus a minus (-) calculation should follow to resolve your dilemma.

Let me explain:

Quote interest                                                 -                       2%

Date agreement entered into                          -                       3%

Prevailing interest as on quote date               -                       2.5%

Prevailing interest as on agreement date       -                       3.5%

The first mathematical equation would be the first two which deals with the private contracting parties and the interest they decided upon:

3% - 2% = 1%

The second mathematical equation would be the second two, which deals with bank interests on those specific dates:

3.5% - 2.5% = 1%

So in this example what would the answer be?

You will observe that when the agreement has to be signed the interest between the contracting parties have increased with 1%, which according to the paragraph may not be higher than the difference as set out in the second calculation as instructed by the paragraph also.  The second calculation also comes to 1%, and therefore the first calculation does not exceed the second one.  Therefore it is allowable.  If the first calculation was anything above the 1% of the second calculation then it would have been illegal, for instance 1.5%.  Anything below 1% logically would then be legal and allowable.

Take your time with this, it is indeed confusing!!

Suretyship Issue 8

The various ways of discharging sureties

Termination of the suretyship obligation

The suretyship obligation may be discharged in the same way as obligations generally (for example, by payment of the principle debt, merger, or expiry of an agreed time limit).

In the case of a continuing suretyship, the surety may, unless otherwise provided in the contract, terminate his or her future liability by giving reasonable notice to the creditor.

Termination of the principle obligation

It follows from the accessory nature of a contract of suretyship that it is automatically terminated when the principal obligation is terminated.

If the liability of the principal debtor is, for instance, terminated by novation or absolution, the surety is accordingly absolved from liability.

If only a part of the principal obligation is discharged, the surety is only released to that extent.

The National Credit Act 34 of 2005

An overdraft facility is NOT a credit agreement.  What is it?

Advocate Clark’s Comment

Liezl this is not totally correct.

An overdraft is a credit agreement, but cannot be a large credit agreement.

Let me begin to explain the terminology of ‘credit agreement’ for the purposes of the NCA.

The umbrella term in the Act is “credit agreement”.  An agreement constitutes a ‘credit agreement’ if it is:

·         A credit facility; or

·         A credit transaction; or

·         A credit guarantee; or

·         Any combination of the above three transactions.

Then further we find that in the above first three forms will have sub-categories on each one of them.

The one we are interested in, in order to answer your question would be the ‘credit facility’.

A credit facility is an agreement in terms whereof the credit provider supplies goods or services, or pays an amount to the consumer, or on his behalf or at his direction.

The consumer’s obligation to pay the prize or to repay the amount is deferred or else he is billed periodically.

The consumer pays a charge, fee or interest in respect of the amount deferred (to a dealer in goods or services, or to a bank on a overdrawn cheque account), or in respect of an amount billed which is not paid within the time agreed upon between the parties.

Let me explain it again:

A credit facility is broadly defined in the Act. Section 8(3) as:

·         An agreement in which a credit provider

undertakes to provide services, money or

goods to a consumer, or at the direction of a

consumer, from time to time and

o   Defers the obligation to pay any part of

the cost of the service provided, or the

money given or the goods supplied, or

o   Bills the consumer periodically for the

service, goods, or money, and

·         Charges a fee or interest for any amount

deferred or any amount not paid within a

stipulated time.

Credit facilities would typically include revolving credit facilities like credit cards, store cards and overdraft facilities.

But you will most probably wonder what this has to do with your question.  You see we first had to embark on a journey to precisely determine what an overdraft is in terms of the NCA.  Now we know, a credit facility.

Next step in the legalistic enquiry is to go and observe the categories in which all of these credit agreements under the NCA are operative.

There are three categories:

Small agreements include the following (Section 9(2) of

the Act):

·         Pawn transactions,

·         A credit facility where the limit under the facility

is R15,000.00 or less,

·         Any other credit transaction, excluding a

mortgage agreement and a credit guarantee,

where the principal amount of the agreement

does not exceed R15,000.00.

Intermediate agreements include the following (Section

9(3) of the Act):

·         A credit facility where the limit under the facility

is more than R15,000

·         Any other credit transaction, excluding a pawn

agreement, mortgage agreement or credit

guarantee, where the principal amount of the

agreement is more than R15,000.00, but less

than R250,000.00.

Large agreements include the following (Section 9(4) of

the Act):

·         A mortgage agreement

·         Any other credit transaction excluding a pawn

agreement where the principal amount of the

agreement exceeds R250,000.00.

Now we have to start with the process of elimination. 

We know that an overdraft is a credit facility.

Let’s go to small agreements and see if we can find credit facilities there!  Yes we do, bur restricted only to under R 15 000.00.  So any overdraft under R 15 000.00 will fall within the Act as a credit agreement under credit facilities within the category of small agreements.

Let’s go to intermediate agreements and see if we can find credit facilities there!  Yes we do, bur restricted to only more than R 15 000.00.  So any overdraft over R 15 000.00 will fall within the Act as a credit agreement under credit facilities within the category of intermediate agreements.

Let’s go to large agreements and see if we can find credit facilities there!  No, not at all and therefore a credit facility via an overdraft will never be able to fall under large agreements.

So to answer your question:

A overdraft is indeed a credit agreement in the form of a credit facility than can only be found in the categories of small and intermediate agreements and never under large agreements regardless of its amount.

Suretyship Issue 7

The Surety’s right to reciprocal counter-performance

The creditor may be contractually bound to render a counter-performance to the principle debtor against performance by the debtor of the principle obligation.

On discharging the principle obligation, the surety becomes entitled to claim the reciprocal counter-performance, and to set it of against his or her claim against the principle debtor.

Discharge of the Surety

Any variation of the terms of a contract of surety has to be in writing. 

A contract of surety may, however, be terminated orally, except if the contract requires cancellation to be writing.

There are various circumstances under which a surety may discharged and they will be discussed in the final issue on sureties which also will be the next issue.

The National Credit Act 34 of 2005

Adv Clark,

I have a quick question: 

Let's suppose a consumer is under debt counselling.  It has been established that he is indeed over-indebted and all has been arranged with his credit providers - he pays a reduced amount to each credit provider as they agreed to. 

What will happen if the consumer comes up with X amount of money from somewhere?  Let's call it an external source.  The consumer wants to pay off some of his debt with this extra money.

My question is this:  How will that extra money be distributed?  Will it be evenly distributed as a percentage amongst the creditors, or can the consumer pick one of his creditors at random, with the eye on it to pay off a larger amount and thus pay off that specific creditor in a shorter period?

Please accept my sincere gratitude for your response on my questions and your willingness to help.

Liezl

Advocate Clark’s Comment

Yes Liezl it will have a percentage impact on the down payment of his or her obligations.

In the event where he as a certain amount of money available to contribute to his consolidated debt, as you mentioned, there are two ways of distribution:

·         The one way being to pay off one specific debt.  In such a case you will have to use the % calculations again to re-calculate the remaining debts in terms of what they should receive after such a payment was made.  The amount payable as per court order remains the same and therefore each outstanding debt under such circumstances will be entitled to a monthly payment higher than previously.

·         Or on the existing % calculations that gave rise to the debt restructuring court order you can divide such an amount among the debtors to same %’s initially calculated.

At the end of the day you will have to decide what course of action will be the best in terms of such a person paying of his debts faster.  According to me it will depend on the size of the amount available.

Just for clarity I am reflecting the calculations herein again that must be utilized to address these circumstances:

You will find your answer through the middle of this calculation as reflected within your Debt Councillor’s guide:

Example:

Mr In-trouble has four credit agreements –

Credit Prov.       Type of Acc.    Outstanding Bal  Monthly Pm   Rate                  

Nedbank            Bond                400,000               4,500             14.0%

Standard            Credit Card     10,00                   1,000             20.0%

RCS Loan          Microlender     8,500                   1,500             36.0%

Wesbank            Vehicle            56,500                 3,000             19.0%

He has R6 000 per month available, after PDA and debt counsellor costs, to pay

off his debt.

Calculate how much of the R6000 each credit provider must get:

• Add up the monthly payments: 4,500+1,000+1,500+3,000=10,000

• Divide the credit agreement’s payment by the total and multiply by 100

  to get a percentage:

Nedbank          4,500 ÷ 10,000 X 100 = 45%

Standard          1,000 ÷ 10,000 X 100 = 10%

RCS                 1,500 ÷ 10,000 X 100 = 15%

Wesbank         3,000 ÷ 10,000 X 100 = 30%

• Check that the percentages all add up to 100%:

45% + 10% + 15% + 30% = 100%.

If 100% is not reached then you have made a mistake!

• Multiply the available amount (R6 000) by the percentage for that credit

  agreement:

Nedbank           6 000 X 45%                            = R2 700

Standard           6 000 X 10%                            = R 600

RCS                  6 000 X 15%                            =R 900

Wesbank          6 000 X 30%                            = R1 800

• Add up the amounts calculated for each credit provider and check that

  they add up to the amount he has available.

  If it does not add up then you have made a mistake:

R2 700+R600+R900+R1 800 = R6000

• Now that the monthly payment has been established a repayment

  plan must be tested. The determined payments must be applied to

  the agreements until the agreements are paid off.

If one agreement is paid off then the money used for that agreement must be allocated to the remaining agreements proportionately in the same way that the

original available amount was allocated, but now using the remaining agreements to reach the total, using the recalculated payments.

  Supposing the R900.00 instalment for RCS was sufficient to pay the outstanding balance + interest off over four months. From month five the money would have to be distributed by:

o   Add up the monthly payments: 2,700 + 600 + 1,800 = R5,100

o   Divide the credit agreement’s payment by the total and multiply by 100 to

            get a percentage:

Nedbank          2,700 ÷ 5,100 X 100               = 53

Standard              600÷ 5,100 X 100               = 12

RCS is paid off

Wesbank         1,800 ÷ 5,100 X 100                = 35

• Check that the percentages all add up to 100%:

53% + 12% + 35% = 100%

   If 100% is not reached then you have made a mistake!

• Multiply the available amount (R6 000) by the percentage for that credit

  agreement to get the new instalments payable from month 5

Nedbank          6 000 X 53%                = R3 176

Standard          6 000 X 12%                = R 706

RCS is paid off

Wesbank         6 000 X 35%                = R2 118

• Add up the amounts calculated for each credit provider and check that they

  add up to the amount he has available.

  If it does not then you have made a   mistake.

R3 176 + R706 + R2 118 = R6,000

• If the agreements are solved within the specified time periods and calculations then this is     the plan to submit.

Supposing that this is not the case then:

Credit provider                        Original rate

Nedbank                                   14.0%

Standard Bank Card               20.0%

RCS Personal Loan                36.0%

Wesbank                                  19.0%

Reduce the agreement with the highest rate to be equal to the

agreement with the second highest rate:

Credit provider                        Original rate                New rate

Nedbank                                   14.0%                          14%

Standard Bank Card               20.0%                          20%

RCS Personal Loan                36.0%                          20%

Wesbank                                  19.0%                          19%

• Test to see if the plan works now. If it still does not work, reduce the

   value to the next level:

• If it does not work then reduce the two agreements above to the

  same as the next (third) highest interest rate and test.

  Supposing that prime is 14%, prime + 3 is 14+3 = 17%, so we can only reduce

  to that level for now:

  Credit provider                      Original rate                New rate

  Nedbank                                 14%                             14%

  Standard Bank Card             20%                             19%

  RCS Personal Loan              20%                             19%

  Wesbank                                19%                             19%