About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2012
>>
[2012] ZAGPJHC 23
|
|
Knox v Mofokeng and Others (2011/33437) [2012] ZAGPJHC 23; 2013 (4) SA 46 (GSJ) (30 January 2012)
REPORTABLE
IN THE SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO: 2011/33437
DATE:30/01/2012
In the
matter between:
KNOX,
DAVID BOYD NO
(in his capacity
as executor of the late estate Knox, number
3911/04)
........................
Applicant
and
MOFOKENG,
MISHACK MHAMBI
..............................................
First
Respondent
O’SHEA,
JAMES REGINALD
................................................
Second
Respondent
STANDARD
BANK
OF SOUTH AFRICA LTD
…...................
Third
Respondent
FIRST
RAND BANK
LTD
.........................................................
Fourth
Respondent
THE
REGISTRAR OF
DEEDS
....................................................
Fifth
Respondent
THE
MASTER OF THE HIGH COURT
......................................
Sixth
Respondent
THE
SHERIFF OF THE HIGH COURT,
JOHANNESBURG
EAST
......................................................
Seventh
Respondent
JUDGEMENT
LJ VAN DER MERWE, AJ
This judgement concerns the rights of
bona fide
purchasers of
property at sales in execution where the judgement in terms whereof
the sale in execution was effected, has been
subsequently rescinded.
It also concerns the validity of the transfer of immovable property
to a chain of successive purchasers,
under such circumstances. The
conclusion reached in this judgement is that the legal consequences
of rescission of the judgement
in question subsequent to the sale in
execution differ, depending on whether transfer of ownership had
already been effected
or not.
It has been accepted in the case law that where a judgement is
rescinded after a sale in execution had taken place but before
transfer of the property to the purchaser had taken place, the owner
of the property is entitled to seek an order setting the
sale in
execution aside and interdicting the transfer of the property to the
purchaser at the sale in execution. See eg
Vosal Investments
(Pty) Ltd V City of Johannesburg
2010 (1) SA 595
(GSJ);
Jubb
v Sheriff, Magistrate's Court, Inanda District; Gottschalk v
Sheriff, Magistrate's Court, Inanda District
1999 (4) SA 596
(D)
at 605F-G. In the
Vosal Investments
-judgement (above, at
paragraph 16), the South Gauteng full bench accepted the statement
in the
Jubb
-judgement (above, at 606F-G), with reference to
the judgement by McCall AJ in
Joosub v JI Case SA (Pty) Ltd (now
known as Construction & Special Equipment Co (Pty) Ltd
1992
(2) SA 665
(N), that the owner of an immovable property is entitled
to restoration of his property from a
bona fide
purchaser at
a sale in execution, “
where a sale of property not followed
by transfer
is rendered a nullity by reason of the rescission
of the judgement which alone gave it validity."
It was also
accepted by the South Gauteng full bench in
Vosal Investments
(above, at paragraph 16) that where the purchaser of the property at
the sale in execution became aware of the claims of the
owner
(because he was aware of the owner's application for rescission of
the judgement) prior to registration of transfer having
been
effected, such purchaser is also obliged to restore possession to
the owner, once the judgement has been rescinded. This
approach was
based on the conclusion that the purchaser was aware of the attack
on the judgement by the owner and on the consequent
sale in
execution and had knowledge that some risk might attach to his
rights as buyer of the property.
It has further also been accepted in the case law that where a
default judgement has been rescinded subsequent to the sale in
execution, both the default judgement and the warrant of execution
issued in terms of the judgement become null and void and
of no
effect, as between the judgement creditor and the judgement debtor.
In such event, the judgement debtor is entitled to
have the status
quo ante
restored as against the judgement creditor. The
warrant of execution and the sale of execution were all dependent on
the existence
of the default judgement. Once the default judgement
had been rescinded the warrant of execution and the sale in
execution has
no legal basis as between the parties to the
litigation. See
Lottering v SA Motor Acceptance Corporation Ltd
1962 (4) SA 1
(E) at 3H-4B;
Jasmat v Bhana
1951 (2) SA 496
(D);
Maisels v Camberleigh Court (Pty) Ltd
1953 (4) SA 371
(C).
The current matter concerns the situation where a judgement is
rescinded after the property sold at the sale in execution had
been
transferred to a
bona fide
purchaser, who had no knowledge of
the claims of the owner at the time of registration of transfer. In
the present instance,
the immovable property in question has been
sold and transferred (by way of registration in the name of the
purchaser in the
Deeds Office) to a
bona fide
purchaser
following the sale in execution and has thereafter been sold and
transferred by the first purchaser to a second
bona fide
purchaser. The dispute between the parties in the present matter
turns on the implications of the abstract theory for the passing
of
ownership under such circumstances and the application of the common
law adage that nobody can transfer more rights to another
than he
himself has (
“nemo dat qui non habet”
), which has
been described as the “golden rule” of the law of
property. See eg Badenhorst, Pienaar & Mostert
(5th edition)
Silberberg and Schoeman's the Law of Property
73.
It appears from the analysis of the case law and the relevant common
law principles dealt with below that the judgement debtor's
entitlement to claim restoration of the property once the judgement,
in terms whereof the property had been sold in execution,
has been
rescinded, depends on the factual circumstances present at the time
of rescission. At least three factual scenarios
can in general be
envisaged, although other factual permutations are possible. The
first scenario is where the sale in execution
had not been perfected
by delivery in the case of movables and registration of transfer in
the case of immovables. As indicated
above, in such event, the
owner is in principle entitled to claim recovery of the property in
question following the rescission
of the judgement. See
Vosal
Investments (Pty) Ltd V City of Johannesburg
2010 (1) SA 595
(GSJ);
Jubb v Sheriff, Magistrate's Court, Inanda District;
Gottschalk v Sheriff, Magistrate's Court, Inanda District
1999
(4) SA 596
(D) at 605F-G. The second scenario is where the sale in
execution had been perfected by delivery in the case of movables or
registration
of transfer in the case of immovables, but the
purchaser had knowledge of the proceedings instituted by the
judgement debtor
for the rescission of the judgement in question
prior to delivery or registration of transfer. In such event, the
owner is also
in principle entitled to recovery of the property in
question, even where transfer had already been effected. See the
Vosal Investments
judgement, above, at paragraph 16. The
third scenario is where the sale in execution has been perfected by
delivery in the case
of movables or by registration of transfer in
the case of immovables to a
bona fide
purchaser who had no
knowledge of the judgement debtor's proceedings for the rescission
of the judgement or where transfer of
ownership has been effected
prior to the institution of the rescission proceedings. The
conclusion reached in the analysis below
is that where transfer of
ownership had been effected pursuant to the sale in execution by the
time the judgement has been rescinded,
the judgement debtor is not
entitled to recover possession of the property in question, unless
it can be established that the
judgement and/or the sale in
execution constituted a nullity. This conclusion is dictated and
explained, in my view, by the application
of the abstract theory for
the transfer of ownership, which will be dealt with in greater
detail elsewhere in this judgement.
I turn briefly to the factual background. The applicant is the duly
appointed executor of the estate of his late mother, Mrs
SMM Knox,
who passed away on 15 December 2003. The applicant seeks an order
declaring the sale in execution of a property, known
as erf 144,
Troyeville township, Johannesburg (hereinafter referred to as "the
property"), which was registered in
the name of the late SMM
Knox, and all subsequent sales of such property to be null and void.
The applicant further seeks an
order that the deeds of transfer of
the property from the estate of the late SMM Knox to the second
respondent and from the second
respondent to the first respondent be
cancelled in terms of
section 6
of the
Deeds Registries Act, 47 of
1937
. Lastly, the applicant seeks an order directing the Registrar
of Deeds to re-register the property in the name of the estate of
the late SMM Knox. The Registrar of Deeds filed an affidavit in
which it was stated that the Registrar has no objection to the
granting of the order as prayed.
At the time of Mrs Knox's passing away the property was bonded to
the fourth respondent, being First Rand Bank Ltd (hereinafter
“First
Rand Bank”). The bond fell in arrears while the applicant was
in the process of finalising the estate. The
full amount owing on
the bond to First Rand Bank at the time of Mrs Knox's death was
R96,131.90. Correspondence ensued between
the applicant and First
Rand Bank and the latter’s claim was included in the final
distribution account of the late estate.
First Rand Bank was
informed that its claim would be paid upon the final conclusion of
the estate.
On the unchallenged version of the applicant, First Rand Bank had
served a summons for the arrears on the bond at the late SMM
Knox's
domicilium citandi et executandi
in terms of the bond
agreement, despite the fact it had been informed that the claim
against the estate would be honoured upon
the final winding up of
the estate and with knowledge that the applicant was represented by
a firm of attorneys, at whose address
First Rand Bank had lodged its
claim against the estate. Consequently, the applicant never received
notice of the summons in
respect of the arrear amounts on the bond.
First Rand Bank then obtained default judgement against the
applicant in his capacity
as executor of the estate of the late SMM
Knox on 7 May 2007. First Rand Bank thereafter proceeded to serve
the writ of execution
again at the
domicilium citandi et
executandi
of the late SMM Knox, again with the result that the
applicant did not become aware of the writ of execution. First Rand
Bank
proceeded to sell the property in execution to the second
respondent, who in turn sold the property to the first respondent.
It was only when the property had already been transferred into the
name of the first respondent that the applicant became aware
of the
conduct of First Rand Bank and of the fact that default judgement
had been taken and that the property had been sold in
execution. A
rescission application was launched in the North Gauteng High Court.
On 16 August 2010 an order was granted for
rescission of the default
judgement obtained by First Rand Bank. In terms of the order, the
default judgement against the estate
of the late SMM Knox was set
aside, the first respondent was interdicted and ordered not to sell
or dispose of the property and
First Rand Bank was ordered to join
the first, second and sixth respondents to its original action for
the recovery of the arrear
bond payments.
Following the rescission of the default judgement, the first
respondent vacated the property and returned physical possession
thereof to the applicant. At the time of the hearing, the property
was still registered in the name of the first respondent.
Notwithstanding the rescission of the default judgement, First Rand
Bank, who had allegedly retained the entire proceeds from
the sale
in execution in the amount of some R271,000, did not proceed with
the action and the entire matter was left in an indeterminate
state.
Whilst the applicant was in the process of considering the launching
of a further application it came to his attention
that the third
respondent, Standard Bank of South Africa Ltd (hereinafter “Standard
Bank”), had instituted action
against the first respondent (in
whose name the property was by then registered) for monies lent and
advanced and secured by
a mortgage bond registered against the
property in favour of Standard Bank. Standard Bank had obtained a
writ of execution and
the Sheriff of the High Court, Johannesburg
East was instructed to sell the property in a sale of execution on
21 July 2011.
Notwithstanding attempts to explain the legal position
to Standard Bank, the latter insisted that it was entitled to
proceed
with the sale of execution. Consequently, the applicant was
obliged to launch an urgent application to stay the sale in
execution,
which was granted on 21 July 2011. The applicant was
ordered to launch an application within 30 days of the granting of
the order
for the re-transfer of the property to the deceased
estate.
Standard Bank (the third respondent) is the only party who oppose
the application. Standard Bank raises two defences, namely
that the
application was launched out of time and that the first respondent
remained the owner of the property by virtue of the
fact that the
property was registered in his name. When I indicated to counsel on
behalf of Standard Bank that the applicant
would in any event be
entitled to condonation, which was sought in the alternative, the
defence that the application was not
launched within the 30 day
period stipulated in the previous order, was abandoned.
Ms Strydom, appearing on behalf of the applicant, contended that the
sale of the property in execution, following the default
judgement
obtained by First Rand Bank, was invalid since the judgement in
terms whereof the property was sold and subsequently
transferred to
the second respondent had been rescinded. In addition, she contended
that, since the order in terms whereof the
property had been
declared to be specially executable in terms of High Court
rule
46(1)
has been rescinded, the rescission of the default judgement
had retroactive effect. Consequently, she contended, the writ of the
execution and the subsequent sale of the property by the Sheriff to
the second respondent was void for want of compliance with
the
provisions of
rule 46(1)
, because there was no longer an order in
existence in terms whereof First Rand Bank was entitled to attach
the property and to
have it sold in execution.
Ms Strydom relied primarily on the judgement in
Menqa v Markom
2008 (2) SA 120
(SCA), where the sale of a property in execution and
the transfer thereof, as well as subsequent sales and transfers of
the property,
were declared null and void. The judgement in
Menqa
v Markom
(above) was based on the ground that the warrant of
execution, pursuant to which the sale had taken place, had been
issued by
the clerk of the Magistrates' Court without judicial
supervision, thereby impairing the judgement debtor's constitutional
rights
in terms of section 26(1) of the Constitution that accords
everyone the right to have access to adequate housing, in accordance
with the judgement by the Constitutional Court in
Jaftha v
Schoeman; Van Rooyen v Stoltz
[2004] ZACC 25
;
2005 (2) SA 140
(CC) and the
subsequent judgement in
Gundwana v Steko Development
2011 (3)
SA 608
(CC). Ms Strydom also relied on the judgement in
Campbell
v Botha
[2008] ZASCA 126
;
2009 (1) SA 238
(SCA), where the court found that a sale
in execution of a property and the subsequent transfer thereof to a
purchaser who acted
in good faith, had no legal force and effect, by
virtue of the fact that the sale in execution was null and void. The
judgement
was rescinded in an earlier judgement by the High Court on
the grounds that the judgement debtor was a minor at the time when
judgement was obtained against him and the judgement creditor failed
to cite him as being assisted by his father. The Supreme
Court of
Appeal then found in the subsequent proceedings that the sale in
execution was null and void because neither the warrant
nor the
notice of attachment was served on or brought to the notice of the
judgement debtor. Consequently it was the declared
that the
judgement debtor retained ownership of the property.
In the alternative, Ms Strydom argued that the sale in execution to
the second respondent was invalid for non-compliance with
the
requirements of
section 30
of the
Administration of Estates Act, 66
of 1965
. This provision i
nter alia
stipulates that a property
in the estate of a deceased person which has been attached, whether
before or after his death under
such writ or process, may not be
sold in execution unless the court otherwise directs or unless the
person charged with the execution
of the writ could not have known
of the death of the deceased person.
Mr Vorster, appearing on behalf of Standard Bank (the third
respondent), relied on the subsequent judgements by the Supreme
Court Of Appeal in
Legator McKenna Inc v Shea
2010 (1) SA 35
(SCA) and
Meintjes NO v Coetzer
2010 (5) SA 186
(SCA). In the
judgement of
Legator McKenna Inc v Shea
(above) the Supreme
Court of Appeal held that a property had been validly transferred,
notwithstanding the fact that the transfer
was effected by virtue of
an invalid agreement of sale (
inter alia
for non-compliance
with the writing requirements of
section 2(1)
of the
Alienation of
Land Act, 68 of 1981
). The court held that the abstract theory of
transfer applies to the transfer of both immovable and movable
property. Since there
was no defect in the real agreement, the
property was validly transferred to the second respondent. (See
paragraph 21-24 of the
judgement.) In
Meintjes NO v Coetzer
(above) the Supreme Court of Appeal held that the transfer of
ownership of the property was invalid under circumstances where
the
respondents (children of a deceased person) had fraudulently
obtained the transfer of property into their names by virtue
of a
falsified deed of sale and falsified transfer documentation. The
court held that the obligation-creating agreement as well
as the
real agreement were invalid due to the fraudulent conduct of the
defendants and that the deceased had accordingly never
lost her
rights of ownership, notwithstanding the fact that the property had
been registered in the names of the respondents.
Mr Vorster argued that the real agreements in the present instance
could not be challenged and that the property had accordingly
validly been transferred, firstly to the second respondent pursuant
to the sale in execution and thereafter to the first respondent
in
terms of the agreement of sale between the second respondent and the
first respondent. He also contended that the earlier
judgements in
Menqa v Markom
(above, reported in 2008) and
Campbell v
Botha
(above, reported in 2009) failed to take the principles of
the abstract theory for the passing of ownership into account, since
the invalidity of an underlying agreement was irrelevant to the
validity of the transfer of ownership. As such, he contended,
these
judgements were in conflict with the approach reflected in the
subsequent judgements of the Supreme Court of Appeal in
Legator
McKenna Inc v Shea
(above, reported in 2010 ) and
Meintjes NO
v Coetzer
(above, reported in 2010), where it was for the first
time expressly confirmed by the Supreme Court of Appeal that the
abstract
theory of transfer applied to the transfer of immovable
property (see
Legator McKenna Inc v Shea
at paragraph 21) and
where the Supreme Court of Appeal accepted that the transfer of
immovable property could validly be effected
notwithstanding the
invalidity of the underlying obligation-creating agreement. Other
recent judgements where these implications
of the abstract theory
for the passing of ownership were expressly accepted by the Supreme
Court Of Appeal are
Du Plessis v Prophitus
2010 (1) SA 49
(SCA) and
Oriental Products (Pty) Ltd v Pegma 178 Investments
Trading
CC
2011 (2) SA 508
(SCA). In paragraph 12 of the
judgement in
Oriental Products (Pty) Ltd v Pegma 178 Investments
Trading CC
(above) Shongwe JA held as follows:
"It is trite that our law has adopted the abstract system of
transfer as opposed to the causal system of transfer. Under the
causal system of transfer, a valid cause (iusta causa) giving rise to
the transfer is a sine qua non for the transfer of ownership.
In
other words, if the cause is invalid, e.g. non-compliance with formal
requirements, the transfer of ownership will also be void
-See Carey
Miller 'Transfer of Ownership' in Feenstra & Zimmerman Das
R
ömisch-Holländische Recht 537; 'Transfer of
Ownership' in Zimmerman & Visser Southern Cross: Civil Law and
Common
Law in South Africa 727 at 735-9. Under the abstract system
the most important point is that there is no need for a formally
valid
underlying transaction, provided that the parties are ad idem
regarding the passing of ownership: Meintjes NO v Coetzer
2010 (5) SA
186
(SCA)."
Mr Vorster contends, correctly in my view, that immovable property
validly sold in execution at judicial sales cannot, as a general
rule, after registration of transfer be vindicated from a
bona
fide
purchaser. Thus it was held by Van den Heever JA in
Sookdeyi v Sahadeo
1952 (4) SA 568
(A) at 571G - 572B that it
was a principle of the common law that a perfected sale in execution
should after transfer or delivery
of the subject matter not be
lightly impugned and that the reluctance to rescind perfected sales
in execution has been received
in our case law. The remainder of the
contentions advanced by Mr Vorster on behalf of the third respondent
disregards, however,
the common law authorities and case law where
it was held that vindicatory proceedings are not excluded in respect
of property
sold in execution where the essential formalities and
statutory requirements for a sale in execution had not been complied
with,
resulting in a nullity. The common law principles in this
regard have been examined by McCall AJ in
Joosub v JI Case SA
(Pty) Ltd (now known as Construction & Special Equipment Co
(Pty) Ltd
1992 (2) SA 665
(N), where it was held that the owner
of property, which had been transferred pursuant to a sale in
execution to a
bona fide
third party, can recover such
property from the purchaser under circumstances where the sale in
execution was a nullity for non-compliance
with the peremptory
provisions of High Court
rule 46(3)
regarding notice in writing by
the Sheriff to the owner of the property. See also, regarding the
common law principles, the
judgement by Cloete JA in
Menqa v
Markom
2008 (2) SA 120
(SCA) at paragraph 31-42, especially at
paragraph 30. Other judgements were the same approach was applied
include
Van der Walt v Kollektor (Edms) Bpk
1989 (4) SA 690
(T) at 696B-H;
Jones v Trust Bank of Africa Ltd
1993 (4) SA
415
(C);
Kaleni v Transkei Development Corporaration
1997
(4) SA 789
(TkS) and
Absa Bank v Van Eeden
2011 (4) SA 430
(GSJ).
The common law principles are also reflected in Badenhorst, Pienaar
& Mostert (5th edition)
Silberberg and Schoeman's the Law of
Property
261 in the following terms, with reference to the
relevant common law authority:
"Property sold at judicial sales cannot, after delivery in
the case of movables or registration in the case of immovables, be
vindicated from a bona fide purchaser. Even when an article is sold
by mistake as belonging to a judgement debtor, the true owner
cannot
vindicate it from a bona fide purchaser (though Matthaeus states that
he or she can do so on refunding the purchase price
to the
purchaser). Thus, section 70 of the Magistrates' Courts Act provides
that the sale in execution by the Sheriff of the court
will not, in
the case of movable things after delivery thereof or in the case of
immovable things after registration of transfer,
be liable to be
impeached as against a purchaser in good faith and without notice of
any defect."
In footnote 192 on the same page, the authors qualify the general
statement by stating that
"[t]he sale, however, has to be a
valid sale complying with the applicable rules of court and statutory
measures: see Van
der Walt v Kolektor (Edms) Bpk
1989 (4) SA 690
(T); Joosub v JI Case SA (Pty) Ltd
1992 (2) SA 665
(N) at 679B."
It follows that the first common law principle to be applied in the
present instance is that, as a general rule, property sold
at a sale
in execution in terms of a valid, existing judgement cannot be
vindicated from a
bona fide
purchaser once the property had
been transferred to the purchaser, provided the sale in execution
was not a nullity. This implies
that even where a valid judgement
has been rescinded after the sale in execution had taken place, the
property cannot be vindicated
from a
bona fide
purchaser who
had taken transfer of the property, merely on the ground that the
judgement had been rescinded. The second relevant
common law
principle is that the first principle only applies where a valid
judgement was in existence at the time of the execution
sale and
where a valid execution sale complying with the essential applicable
rules of court and statutory measures had taken
place. Where there
was no judgement or where the judgement was void
ab initio
or
where the essential statutory formalities pertaining to the sale of
an immovable property had not been complied with, the
immovable
property in question can in principle be vindicated, even from a
bona fide
purchaser who had taken transfer of the property.
The reason for the second rule is that where the sale in execution
was invalid,
the Sheriff had no authority to conduct the sale and to
transfer the property to the purchaser. The result is not only that
the
underlying sale agreement concluded at the sale in execution is
invalid but also that the real agreement is defective, since the
Sheriff does not have authority to transfer the property to the
purchaser. The Sheriff only has such authority where a valid
sale in
execution had taken place.
The principles of the common-law pertaining to the abstract theory
for the passing of ownership have been stated as follows by
Brand JA
in
Legator McKenna Inc
v Shea
(above) at
paragraph 22 (and referred to with approval by Shongwe JA in
Meintjes NO v Coetzer
(above) at paragraph 8):
"In accordance with the abstract theory the requirements for
the passing of ownership are twofold, namely delivery - which in
the
case of immovable property is effected by registration of transfer in
the deeds office - coupled with a so-called real agreement
or
‘saaklike ooreenkoms'. The essential elements of the real
agreement are an intention on the part of the transferor to
transfer
ownership and the intention of the transferee to become the owner of
the property. … Broadly stated, the principles
applicable to
agreements in general also apply to real agreements. Although the
abstract theory does not require a valid underlying
contract, e.g.
sale, ownership will not pass - despite registration of transfer - if
there is a defect in the real agreement.”
This implies that the transferor must be legally competent to
transfer the property, the transferee must be legally competent to
acquire the property and that the golden rule of the law of property
that no one can transfer more rights than he himself has also
apply
to the real agreement. See Badenhorst, Pienaar & Mostert (5th
edition)
Silberberg and Schoeman's the Law of Property
73
When these basic principles of the common-law are applied to the
cases of
Menqa v Markom
(above),
Campbell v Botha
(above),
Legator McKenna Inc v Shea
(above) and
Meintjes
NO v Coetzer
(above), it is evident that the is no conflict
between them and that the implications of the abstract system for
the transfer
of ownership have been adhered to in all these
judgements, even though there was no express reference to the
abstract theory
of transfer in the earlier judgements in
Menqa v
Markom
and
Campbell v Botha
. In the case of
Menqa v
Markom
the sale in execution was void because the warrant of
execution was issued without the required judicial oversight. Since
the
sale in execution was void the Sheriff had no authority to
transfer the property in terms of the real agreement with the
bona fide
purchaser. Since the real agreement was defective, the
property could be vindicated in principle from the
bona fide
purchaser. Thus, in
Menqa v Markom
(above, at paragraph 24)
Van Heerden JA stated as follows:
"The Sheriff derives his or her duty and authority to
transfer ownership pursuant to a sale in execution of immovable
property
from rule 43(13) of the Magistrates' Courts rules. If the
sale in execution is null and void because it violates the principle
of legality, as in the present case, then the Sheriff can have no
authority to transfer ownership of the property in question to
the
purchaser who will thus not acquire ownership despite registration of
the property in his or her name."
It is accordingly evident that the judgement in
Menqa v Markom
is consistent with the abstract theory for the passing of ownership,
although no express reference was made to the abstract theory.
In
Campbell v Botha
(above) the sale in execution was void
because neither the warrant nor the notice of attachment was served
on the judgement debtor.
Since the sale in execution was void, the
Sheriff had no authority to transfer the property in terms of the
real agreement with
the bona fide purchaser. Since the real
agreement was defective, the property could be vindicated in
principle from the
bona fide
purchaser. Again, the judgement
is consistent with the abstract theory of transfer of ownership,
although no express reference
was made to the abstract theory. In
Legator McKenna Inc v Shea
(above), the underlying agreement
was invalid,
inter alia
for non-compliance with the
formalities required by
section 2(1)
of the
Alienation of Land Act,
68 of 1981
and because the
curator bonis
of a person who had
suffered brain injuries entered into an agreement for the sale of an
immovable property, prior to his letters
of curatorship having been
issued by the master in terms of
section 72(1)(d)
of the
Administration of Estates Act, 66 of 1965
. By the time transfer of
the property had been effected, however, the
curator bonis
had received his letters of curatorship. Consequently, by the time
the real agreement was entered into, the
curator bonis
was
properly authorised to enter into the real agreement. Since the real
agreement was valid the property could not be vindicated
from the
bona fide
purchaser. (See paragraph 25 of the judgement.) In
Meintjes NO v Coetzer
(above) the sale agreement as well as
the transfer documentation had been falsified. Consequently both the
underlying agreement
of sale as well as the real agreement was
invalid and the property could be vindicated from the purchasers.
It is accordingly evident that the principles of the abstract
theory of transfer have been applied consistently in the case
law
referred to above. Immovable property which had been transferred to
a
bona fide
purchaser could, notwithstanding registration in
the name of the purchaser, be vindicated from the purchaser where
the real agreement
was defective, irrespective of the validity of
the underlying transaction. Where the requirements for a valid real
agreement
were present the transfer of ownership to a
bona fide
purchaser was valid and the property could not be vindicated. See
also in this regard
Du Plessis v Prophitius
2010 (1) SA 49
(SCA) and
Oriental Products (Pty) Ltd v Pegma 178 Investments
Trading CC
2011 (2) SA 508
(SCA), where the same principles were
applied. Whilst the purpose of the abstract theory of transfer of
ownership is to introduce
greater certainty regarding the ownership
of property than the causal system, the abstract theory does not and
cannot serve as
a guarantee of ownership.
Applying the basic principles of the common law to the present
matter, it is evident that the contentions on behalf of Standard
Bank, to the effect that the property could not be vindicated by the
owner from the first respondent because the property had
been
transferred to and registered in the name of the first respondent,
who was a
bona fide
purchaser, cannot be accepted without
qualification. The reasoning presented on behalf of Standard Bank
would only be valid if
there was no defect in the real agreement in
terms whereof transfer was effected. It follows that the validity of
the real agreement
in terms whereof transfer was effected must be
examined in the present matter in order to determine whether the
applicant is
in principle entitled to the relief sought.
The contentions presented on behalf of the applicant, to the effect
that the applicant was entitled to vindicate the property
once the
judgement in terms whereof the property was sold in execution, had
been rescinded, can also not the accepted without
qualification.
Whilst it has been accepted in the case law that, where the
judgement has been rescinded, property sold in execution
can be
vindicated prior to the transfer of ownership (see
Vosal
Investments (Pty) Ltd V City of Johannesburg
2010 (1) SA 595
(GSJ), paragraph 16;
Jubb v Sheriff, Magistrate's Court, Inanda
District; Gottschalk v Sheriff, Magistrate's Court, Inanda District
1999 (4) SA 596
(D) at 605F-G), this is not the legal position where
transfer of ownership had taken place. I am not aware of any
authority in
terms whereof property can be vindicated from a
bona
fide
purchaser who had received transfer of the property, merely
because the judgement in terms whereof the sale in execution had
taken place, had been rescinded. In such an event, the sale in
execution would have taken place in terms of a valid judgement
existing at the time of the sale. If the required statutory
formalities had been complied with, the Sheriff would ordinarily
have had authority to enter into the real agreement regarding the
transfer of the property to the
bona fide
purchaser. The fact
that a judgement which had been validly granted is subsequently
rescinded after transfer had been effected,
cannot, in my view,
retroactively affect the validity of the real agreement in respect
of the transfer of the property. To hold
otherwise, would introduce,
in my view, an unacceptable degree of legal uncertainty pertaining
to the purchase of property at
sales in execution. It appears from
decisions such as
Sookdeyi v Sahadeo
1952 (4) SA 568
(A) at
571H-572A and
Jubb v Sheriff, Magistrate's Court, Inanda
District; Gottschalk v Sheriff, Magistrate's Court, Inanda District
1999 (4) SA 596
(D) at 604D-E that the common law reluctance to
rescind the consequences of sales in execution applied to sales
which had been
perfected by delivery (in the case of movables) or
transfer (in the case of immovable). The distinction regarding the
legal consequences
of rescission of the judgement in question,
pertaining to the judgement debtor's entitlement to recover
possession of the property
in question, in instances where transfer
of ownership had been effected and where transfer had not been
effected, is accordingly
based on recognised principles of the
common law and on rational policy considerations. It follows that
rescission of the judgement
in terms whereof a sale in execution had
taken place will only be entitled a judgement debtor to recover the
property from a
bona fide purchaser who had received transfer, if
the real agreement in terms whereof transfer was effected was
defective. The
mere fact that the judgement is rescinded subsequent
to transfer of the property, does not, in my view, has the legal
consequence
that the real agreement in terms whereof transfer was
effected, becomes invalid.
Once again applying the established principles of the common law,
the validity of the real agreement in terms whereof transfer
was
effected must accordingly be examined in order to determine whether
the applicant is entitled to the relief sought in the
current
matter. The applicant contends that the sale in execution was
proceeded with in contravention of the provisions of
section 30
of
the
Administration of Estates Act, 66 of 1965
.
Section 30
provides
as follows:
"
30 Restriction on sale in execution of property in
deceased estates
No person charged with the execution of any writ or other process
shall-
before the expiry of the period specified in the notice referred
to in
section 29
; or
thereafter, unless in the case of property of a value not
exceeding R5000, the Master or, in the case of any other property,
the
Court otherwise directs,
sell any property in the estate of any deceased person which has
been attached whether before or after his death under such writ
or
process: Provided that the foregoing provisions of this section shall
not apply if such first-mentioned person could not have
known of the
death of the deceased person."
In
Gounder V Absa Bank Ltd
2008 (3) SA 25
(N) it was held
that the court order declaring immovable property to be executable
could never amount to the required direction
by the court for the
purposes of
section 30(b).
A specific and pertinent direction from
the High Court is required. The court also held that it was only in
exceptional cases
that leave to sell any estate asset through a
process of execution should be entertained before at least the first
liquidation
and distribution account has been approved, lain for
inspection and the period for objection has expired without any
objection.
In
De Faria v Sheriff, High Court, Witbank
2005
(3) SA 372
(T) it was held that non-compliance with the provisions
of
section 30
resulted in a nullity as the wording contained in
section 30
was clearly couched in peremptory and negative language.
The court took into account that a criminal sanction was imposed in
section 102(1)(h)
in the event of the provisions of
section 30
not
being adhered to and that recognition of a sale in contravention of
the section would give legal sanction to the very situation
which
the legislature sought to prevent. The court found that the purpose
of the provision was to ensure that every creditor
and heir received
what they were entitled to without preference. If sales in
contravention of
section 30
were not visited by nullity, those
intentions would be frustrated, the Master would have no control
over the liquidation and
distribution process and the statutory
procedures would be circumvented. Accordingly, the court held that
the sale in execution
in contravention of
section 30
of the act was
invalid. (See paragraph 34 and 35 of the judgement.) in
Wright v
Westelike Provinsie Kelders Bpk
2001 (4) SA 1165
(C) it was held
that the provisions of the
Administration of Estates Act displaced
the common law right to proceed against a debtor. The provisions of
section 30
gave expression to public policy in that execution of a
judgement against a deceased was required to be completed by means
of
a claim against the executor appointed under the Act.
Accordingly, judgement obtained against the deceased was not
executable
against any property which formed part of the estate,
unless the Master or the Court otherwise directed. (See paragraph 49
of
the judgment.)
It is evident from the facts in the present matter that the property
fell within the estate of the late SMM Knox and that the
sale in
execution took place in contravention of
section 30
of the
Administration of Estates Act. It
is evident that the Sheriff (being
the person charged with the execution of the writ) could have known
of the death of the late
Mrs SMM Knox, as the applicant was cited in
the summons in his capacity as executor of the estate of the late
SMM Knox. In any
event, there was no denial of the applicant's
allegation in the founding affidavit that the sale in execution
constituted a contravention
of section 30 of the Administration of
Deceased Estates Act. It follows that the sale in execution of the
property constituted
a nullity and that the Sheriff had no authority
to enter into the real agreement for the transfer of the property to
the second
respondent pursuant to the purported sale in execution of
the property. Since the transfer of the property to the second
respondent
was invalid, the subsequent sale and transfer of the
property by the second respondent to the first respondent was also
invalid,
because the second respondent was not the owner of the
property. The principle that no one can transfer more rights to
another
than he himself has, applies to the real agreement in
respect of the second sale as well. See e.g.
Oriental Products
(Pty) Ltd v Pegma 178 Investments Trading CC
2011 (2) SA 508
(SCA) at paragraph 26, where Harms DP found that the old adage
nemo
plus iuris ad alium transferre potest quam ipse haberet
applies
to such a situation.
I am accordingly of the view that the applicant is in principle
entitled to claim vindication of the property. In
Joosub v JI
Case SA (Pty) Ltd (now known as Construction & Special Equipment
Co (Pty) Ltd)
1992 (2) SA 665
(N) at 680G-H and 681H, the court
found, after considering the relevant Roman Dutch texts, that it was
not clear whether the
common law remedy of the owner was the
rei
vindicatio
or
restitutio in integrum
and whether the
owner was obliged to restore the price to the purchaser or was
obliged to do so only if the latter could not
recover it from the
seller. In that matter, the issues were decided on exception and the
court found it not necessary to decide
the issue.
In
Menqa v Markom
(above) the Supreme Court of Appeal
considered the appropriateness of an order directing the Registrar
of Deeds to re-register
the applicant as owner of the property in
question under similar circumstances. Van Heerden JA held that
theoretically, the owner
was entitled to recover the property in
vindicatory proceedings. The court then took into account that the
owner appears to have
been unjustifiably enriched at the purchaser’s
expense since the purchaser had paid the purchase price for the
property
and the owner’s mortgage bond indebtedness to the
bank had been extinguished. The court indicated that it did not
appear
fair under the circumstances to direct the registrar of deeds
to re-register the property in the owner's name, although an order
declaring the sale in execution as null and void, together with all
subsequent sales of the property, was issued. The court held
that it
would be much fairer to the parties if such claims were dealt with
in future proceedings. (See paragraph 25 of the judgement.)
A
bona fide
purchaser would under appropriate circumstances
be protected by the doctrine of estoppel where the owner knowingly
did not correct
erroneous entries in the deeds register. Thus, it
was held in
Oriental Products (Pty) Ltd v Pegma 178 Investments
Trading CC
that an owner was estopped from vindicating his
property when he was aware of the fraudulent transfer of his
property to another
and failed to take urgent action to rectify the
entries in the deeds register. The court held at paragraphs 13 and
28 of the
judgement that, although the effect of registration is not
the guarantee of any right, the public is entitled to rely on the
correctness of entries in the deeds office. The
bona fide
purchaser who is prejudiced by the vindicatory action of the owner
may in theory be able to recover the purchase price paid from
the
seller or may have a claim for damages against the judgement
creditor (who proceeded with the sale in execution in disregard
of
the statutory prohibition in
section 30
of the
Administration of
Estates Act, 66 of 1965
) on the grounds of breach of a duty of care.
The
bona fide
purchaser may also have a claim for enrichment
against the applicant in appropriate circumstances. The potential
causes of action
referred to above are not intended to be
exhaustive. I also express no opinion on the prospects of success of
such actions, but
mention them in order to demonstrate that the
bona
fide
purchaser (such as the first respondent) or any other
bona
fide
party (such as Standard Bank) are not necessarily without a
remedy even where the sale in execution was a nullity. In the
present
matter, none of the respondents raised the defence of
estoppel, the issue of enrichment or any of the other potential
claims
in response to the relief sought by the applicant. Standard
Bank opposed the application exclusively on the basis that the first
respondent was the registered owner of the property.
It appears from the judgement in
Menqa v Markom
at paragraph
25 that the applicant’s remedy under the current circumstances
is to institute vindicatory proceedings. A
consequence of the
recognition of this cause of action is that the applicant is
entitled to the relief sought in the notice of
motion. In the
absence of objections based on issues such as estoppel or enrichment
by any of the respondents, either on affidavit
or during argument of
the matter, the applicant is not only entitled to a declaratory
order but also to the remainder of the
relief sought. As indicated
above, this does not necessarily mean that the
bona fide
purchaser or any other party who had suffered a loss as a result of
the invalidity of the sale in execution is left remediless.
This
judgement does not preclude any of the respondents from instituting
proceedings to recover any losses suffered or to enforce
any other
rights they may have. It is evident from the affidavits filed (and
in the absence of opposition by any of the respondents,
save the
third respondent) that the respondents elected to raise none of
these issues in the current proceedings. The court should
be slow,
in my view, to introduce issues which the parties, for reasons known
to themselves, have elected not to raise in the
proceedings before
the court. It follows that the applicant is entitled to the relief
sought in the notice of motion, including
an order for
re-registration of the property into his name. I am fortified in
this conclusion by the judgement in
Vosal Investments (Pty) Ltd v
City of Johannesburg
2010 (1) SA 595
(GSJ), where the full bench
ordered retransfer of an immovable property in the alternative,
under similar circumstances, without
requiring that the judgement
debtor should compensate the purchaser for the purchase price. The
applicant only sought a cost
order against such of the respondents
who oppose the application. Consequently, the applicant is only
entitled to a cost order
against the third respondent.
I make the following order in terms of prayers 1,2 and 3 of the
notice of motion:-
The sale in execution of the property known as Erf 144, Troyeville
Township, Registration Division IR, Province of Gauteng,
being 18
Andries Street, Troyeville, Johannesburg ("the property"),
previously held under the title deed number T29359/1995,
purportedly held on 12 July 2007 at Braamfontein, and all
subsequent sales of the property thereafter, are declared to be
null and void;
The deeds of transfer of the property, purportedly from the late
estate of the late SMM Knox to the second respondent and from
the
second respondent to the first respondent are cancelled, in terms
of
section 6
of the
Deeds Registries Act, 47 of 1937
;
The fifth respondent is directed to re-register the property in the
name of the estate of the late SMM Knox.
The third respondent is directed to pay the costs of the
application.
___________________________
LJ VAN DER MERWE, AJ
ACTING JUDGE OF THE HIGH COURT
30 January 2012.
Applicant’s Attorneys: Geo Isserow & TL Friedman Inc,
Johannesburg.
Third Respondent’s Attorneys: Blakes Maphanga Inc, Alberton.
Applicant’s Counsel: Ms M Strydom.
Third defendant’s Counsel: Mr SPM Vorster.