Maseko v Maseko
Encyclopedia
Maseko v Maseko, heard in the Witwatersrand
Local Division by Lazarus AJ from October 22 to 25, 1990
, with judgment handed down on November 16, is an important case in South African contract law
, with its stipulation, on the question of legality
, that contract
s designed to mislead creditor
s are immoral and against public policy
.
The plaintiff in this case, in order to protect her property from possible attachment in execution, had entered into an agreement with the defendant that they would marry, transfer the property to him, thereafter divorce
and then retransfer the property to her once the threat of attachment was over. The purpose of this agreement was to conceal the property from the creditor, and possibly others; as such, it was contrary to public policy.
The court also held that, when a contract is void ab initio, the remedy of restitutio in integrum
will not be available. The essence of the remedy is that there should be a valid legal transaction from which the court will in certain circumstances grant relief by avoiding it ab initio.
in Soweto
, whereafter she signed as surety
for two purchasers of motor vehicle
s. Some time later, when the purchasers default
ed in their payments on the purchase price of the vehicles, the possibility arose of her being held liable in terms of the suretyships. In order to protect her property—that is, her certificate of occupation—she and defendant entered into an agreement whereby they were to be married and then transfer the property to the defendant. They would later get a divorce and, when there was no longer a threat that the property might be attached in execution, retransfer the property to the plaintiff.
The parties were duly married on May 9, 1985
. Less than a week later, the plaintiff ceded her property to the defendant. Divorce proceedings were instituted three days later, and an agreement of settlement was reached at the end of May. A divorce order, incorporating the agreement of settlement, was granted on June 12. One of the terms of the agreement of settlement made an order of court was that the defendant "shall retain as his sole and exclusive property all right, title and interest in certain immovable property," which is to say the property transferred to him by the plaintiff.
The defendant refused to retransfer the property to the plaintiff, who sued.
The court also found that the agreement operated to undermine the institution of marriage, in that the parties' overall plan had been inimical to the institution of marriage. Although the marriage and divorce were valid, the agreement itself was not. The transfer of the property was an inseparable part of that agreement.
The remedy of restitutio in integrum, furthermore, was not available to the plaintiff, as it was of the essence of that remedy that there should be a valid legal transaction to start with, from which the Court, in certain circumstances, granted relief by avoiding it ab initio. The court held that, as the transfer was ab initio void, the remedy of restitutio in integrum was not available to the plaintiff.
As to the remedy of restitution based on the transfer's being void ab initio, the court held that the parties were in pari delicto
: If an order in favour of the plaintiff were not made, the defendant would be substantially enriched at the plaintiff's expense; if the order were made, the Court would be enforcing indirectly an illegal contract. The in pari delicto rule ordinarily served to preclude a plaintiff's recovering what he or she had handed over under a contract or transaction which was void for illegality, but there were well-known exceptions to the rule. These were founded on the principles of equity and public policy. Each case had to be decided on its own facts; there was no general rule on the topic. Despite the fact that the relief sought might have an effect similar to enforcement (that is, of an illegal contract), the Court could still grant relief if the equities favoured it.
While the plaintiff's conduct was deserving of some censure, the court found that the defendant's conduct approximated theft
. Public policy could surely not tolerate that. Accordingly, the in pari delicto rule was relaxed in this case.
If, however, relief were to be granted, it would be in conflict with the divorce order, with its provision that the defendant "shall retain as his sole and exclusive property" the property in issue. That order, although made by consent and in terms of an illegal agreement, was a valid order until set aside; it could not be ignored. As it could not be said that evidence relevant to the setting aside of the order had been fully canvassed, the court found that it could not grant such relief.
The action was dismissed.
Witwatersrand
The Witwatersrand is a low, sedimentary range of hills, at an elevation of 1700–1800 metres above sea-level, which runs in an east-west direction through Gauteng in South Africa. The word in Afrikaans means "the ridge of white waters". Geologically it is complex, but the principal formations...
Local Division by Lazarus AJ from October 22 to 25, 1990
1990 in South Africa
-February:* 2 February - President FW de Klerk scraps apartheid and states that Nelson Mandela will be released** The African National Congress, Pan Africanist Congress and the Communist Party are unbanned...
, with judgment handed down on November 16, is an important case in South African contract law
South African contract law
South African contract law is "essentially a modernised version of the Roman-Dutch law of contract," which is itself rooted in Roman law. In the broadest definition, a contract is an agreement entered into by two or more parties with the serious intention of creating a legal obligation...
, with its stipulation, on the question of legality
Legality
The principle of legality is the legal ideal that requires all law to be clear, ascertainable and non-retrospective. It requires decision makers to resolve disputes by applying legal rules that have been declared beforehand, and not to alter the legal situation retrospectively by discretionary...
, that contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
s designed to mislead creditor
Creditor
A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...
s are immoral and against public policy
Public policy
Public policy as government action is generally the principled guide to action taken by the administrative or executive branches of the state with regard to a class of issues in a manner consistent with law and institutional customs. In general, the foundation is the pertinent national and...
.
The plaintiff in this case, in order to protect her property from possible attachment in execution, had entered into an agreement with the defendant that they would marry, transfer the property to him, thereafter divorce
Divorce
Divorce is the final termination of a marital union, canceling the legal duties and responsibilities of marriage and dissolving the bonds of matrimony between the parties...
and then retransfer the property to her once the threat of attachment was over. The purpose of this agreement was to conceal the property from the creditor, and possibly others; as such, it was contrary to public policy.
The court also held that, when a contract is void ab initio, the remedy of restitutio in integrum
Restitutio in integrum
Restitutio in integrum is a Latin maxim which means restoration to original condition. It is one of the primary guiding principles behind the awarding of damages in common law negligence claims...
will not be available. The essence of the remedy is that there should be a valid legal transaction from which the court will in certain circumstances grant relief by avoiding it ab initio.
Facts
The plaintiff acquired a certificate of occupation of certain propertyProperty
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
in Soweto
Soweto
Soweto is a lower-class-populated urban area of the city of Johannesburg in Gauteng, South Africa, bordering the city's mining belt in the south. Its name is an English syllabic abbreviation for South Western Townships...
, whereafter she signed as surety
Surety
A surety or guarantee, in finance, is a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults...
for two purchasers of motor vehicle
Motor vehicle
A motor vehicle or road vehicle is a self-propelled wheeled vehicle that does not operate on rails, such as trains or trolleys. The vehicle propulsion is provided by an engine or motor, usually by an internal combustion engine, or an electric motor, or some combination of the two, such as hybrid...
s. Some time later, when the purchasers default
Default
Default may refer to:*Default , the failure to do something required by law**Default judgment*Default , failure to satisfy the terms of a loan obligation or to pay back a loan*Default , a preset setting or value...
ed in their payments on the purchase price of the vehicles, the possibility arose of her being held liable in terms of the suretyships. In order to protect her property—that is, her certificate of occupation—she and defendant entered into an agreement whereby they were to be married and then transfer the property to the defendant. They would later get a divorce and, when there was no longer a threat that the property might be attached in execution, retransfer the property to the plaintiff.
The parties were duly married on May 9, 1985
1985 in South Africa
-January:* Three guerrillas and a policeman are killed in a skirmish near Nongoma* 31 January - Pieter Willem Botha, State President of South Africa offers a release proposal to jailed African National Congress leader Nelson Mandela...
. Less than a week later, the plaintiff ceded her property to the defendant. Divorce proceedings were instituted three days later, and an agreement of settlement was reached at the end of May. A divorce order, incorporating the agreement of settlement, was granted on June 12. One of the terms of the agreement of settlement made an order of court was that the defendant "shall retain as his sole and exclusive property all right, title and interest in certain immovable property," which is to say the property transferred to him by the plaintiff.
The defendant refused to retransfer the property to the plaintiff, who sued.
Judgment
In an action for an order directing the defendant to fulfil his end of the agreement, the court held that there was no doubt that the purpose of the agreement had been to conceal the plaintiff's assets from the creditor in whose favour she had signed as surety, and possibly other creditors. While there could be no fraudem creditorum without proof of actual prejudice, an agreement designed to mislead creditors was immoral and against public policy, even if it had not yet served its purpose.The court also found that the agreement operated to undermine the institution of marriage, in that the parties' overall plan had been inimical to the institution of marriage. Although the marriage and divorce were valid, the agreement itself was not. The transfer of the property was an inseparable part of that agreement.
The remedy of restitutio in integrum, furthermore, was not available to the plaintiff, as it was of the essence of that remedy that there should be a valid legal transaction to start with, from which the Court, in certain circumstances, granted relief by avoiding it ab initio. The court held that, as the transfer was ab initio void, the remedy of restitutio in integrum was not available to the plaintiff.
As to the remedy of restitution based on the transfer's being void ab initio, the court held that the parties were in pari delicto
In pari delicto
In pari delicto , Latin for "in equal fault " is a legal term used to indicate that two persons or entities are equally at fault, whether the malfeasance in question is a crime or tort.The phrase is most commonly used by courts when relief is being denied to both parties in a civil action because of...
: If an order in favour of the plaintiff were not made, the defendant would be substantially enriched at the plaintiff's expense; if the order were made, the Court would be enforcing indirectly an illegal contract. The in pari delicto rule ordinarily served to preclude a plaintiff's recovering what he or she had handed over under a contract or transaction which was void for illegality, but there were well-known exceptions to the rule. These were founded on the principles of equity and public policy. Each case had to be decided on its own facts; there was no general rule on the topic. Despite the fact that the relief sought might have an effect similar to enforcement (that is, of an illegal contract), the Court could still grant relief if the equities favoured it.
While the plaintiff's conduct was deserving of some censure, the court found that the defendant's conduct approximated theft
Theft
In common usage, theft is the illegal taking of another person's property without that person's permission or consent. The word is also used as an informal shorthand term for some crimes against property, such as burglary, embezzlement, larceny, looting, robbery, shoplifting and fraud...
. Public policy could surely not tolerate that. Accordingly, the in pari delicto rule was relaxed in this case.
If, however, relief were to be granted, it would be in conflict with the divorce order, with its provision that the defendant "shall retain as his sole and exclusive property" the property in issue. That order, although made by consent and in terms of an illegal agreement, was a valid order until set aside; it could not be ignored. As it could not be said that evidence relevant to the setting aside of the order had been fully canvassed, the court found that it could not grant such relief.
The action was dismissed.
Books
- Du Plessis, Jacques, et al. The Law of Contract in South Africa. Edited by Dale Hutchison, Chris-James Pretorius, Mark Townsend and Helena Janisch. Cape TownCape TownCape Town is the second-most populous city in South Africa, and the provincial capital and primate city of the Western Cape. As the seat of the National Parliament, it is also the legislative capital of the country. It forms part of the City of Cape Town metropolitan municipality...
, Western CapeWestern CapeThe Western Cape is a province in the south west of South Africa. The capital is Cape Town. Prior to 1994, the region that now forms the Western Cape was part of the much larger Cape Province...
: Oxford University PressOxford University PressOxford University Press is the largest university press in the world. It is a department of the University of Oxford and is governed by a group of 15 academics appointed by the Vice-Chancellor known as the Delegates of the Press. They are headed by the Secretary to the Delegates, who serves as...
, 20102010 in literatureThe year 2010 in literature involved some significant events and new books.-Events:*February - The Wheeler Centre, Australia's "literary hub", officially opened.*April 3 - First release of the Apple iPad, electronic book reading device....
.