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[2015] ZAGPJHC 208
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Jessop v Industrial Development Corporation of South Africa and Another (42379/2012) [2015] ZAGPJHC 208 (16 September 2015)
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REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
CASE
NO: 42379/2012
In the matter between:
GRAHAME ALLEN JESSOP
Applicant
and
INDUSTRIAL DEVELOPMENT CORPORATION
OF SOUTH AFRICA
First
Respondent
ECC PROPERTIES (PTY) LTD
Second Respondent
J
U D G M E N T
LAMONT,
J
:
[1] This is an application brought by the
applicant against two respondents. The application does not
proceed against the
second respondent.
[2] On 1 March 2004 an entity known as Zimtile CC
(the buyer) concluded a written contract of sale of an undivided
half-share of
Portion 1 of Erf [...], Duncanville Township
Registration Division IQ in terms of which it bought the property at
a price of R110
000,00. Portion 1 of Erf [...] and Erf 491 were
registered in one title deed in the name of the seller, the second
respondent.
Before the portion purchased by the buyer could be
transferred, there needed to be an adjustment to the title deed
holding the
two erven jointly so that each erf could be held in its
own title deed and transferred. The buyer would then obtain the 50%
undivided
half-share together with Unie Property Investments CC
(“Unie”) in Portion 1 of Erf [...].
[3] In due course the suspensive conditions in the
contract were fulfilled (18 January 2005) the buyer paid the purchase
price to
the transferring attorneys and became entitled to transfer.
[4] During April 2005 the seller requested the
upliftment of the original title deed from the attorneys who were
acting as the conveyancers
of the properties. The seller informed the
conveyancers that as there was only one title deed in respect of Erf
[...] and Erf 491
and as a bond was due to be registered over Erf 491
simultaneously with the registration of the sold property into the
name of
the buyer and Unie it required the title deed. On 10 May 2005
IDC attorneys wrote to the conveyancing attorneys notifying the
conveyancing
attorneys that it had received instructions from the
seller to attend to the registration of a bond over erven 491 and
[...].
It requested that it be provided with a copy of the
draft deed, a list of simultaneous transactions and confirmed that
“
we are also attending to the
registration of a simultaneous notarial general covering bond
[by
the debtor]
in favour of IDC …
”.
On 11 May 2005 the conveyancing attorneys wrote to IDC attorneys
referring to that letter and enclosing a copy of
the title deed and a
list of simultaneous registrations. The list of simultaneous
registrations included the following: the
registration of a
first bond by the owner in favour of IDC over Erf 491 (the attorneys
dealing with the matter were IDC attorneys);
a transfer of Portion 1
of Erf [...] from the seller to the buyer (the attorneys were Van Zyl
Le Roux and Hurter); a transfer from
the seller to Unie of the
remaining extent of Erf [...] (the attorneys were Van Zyl Le Roux and
Hurter). It appears from
the letter that the instructions in
relation to Erf [...] were to emanate from Van Zyl Le Roux and
Hurter.
[5] The history between IDC and its debtor reveals
that on 9 May 2005 IDC recognising that it was possible for the
security it required
to be provided in two ways suggested to its
debtor that there could be the registration of a mortgage bond by the
owner of the
properties held in terms of the title deed alternatively
another option was for the owner to transfer the properties to the
debtor.
The debtor opted to structure the security required by way of
providing a bond rather than by way of transfer of ownership of the
properties to the debtor.
[6] On 9 May 2005 IDC proposed to its debtor that
the loan and security contract between it and its debtor be
restructured to reflect
that as security for the obligations of the
debtor under the contract a first surety mortgage bond would be
registered over erven
491 and [...] in favour of IDC by the owner of
erven 491 and [...]. The IDC letter addressed to its debtor
required its debtor
to arrange for signature by all parties to the
term it proposed. The letter was duly signed by IDC debtor. It
accordingly became
a term of the contract between IDC and its debtor
on 12 May 2005 (when the document was signed by the IDC debtor) that
a mortgage
bond be registered over the property (erven 491 and [...])
owned by the seller.
[7] This term requiring the IDC debtor to register
the bond was not a requirement of the contract until 12 May 2005 a
date later
than the date of the letter sent by the conveyancing
attorneys on 11 May 2005. Accordingly at the date of the
amendment to
the contract IDC knew of the contractual rights of the
buyer and Unie against the seller.
[8] As at 12 May 2005 it was the contractual
obligation of the IDC debtor to ensure the registration the mortgage
bond required
by the contract over both erven 491 and [...] as it had
undertaken to do. IDC acquired only rights against its debtor in this
regard.
[9] It is the owner of the property that registers
the mortgage bond over it; the owner unilaterally takes the necessary
steps to
put up the security. That act is outside the control of the
person seeking the security (IDC). The fact, that IDC required its
attorneys to act for the seller and deal with the matter in no way
changes that state of affairs. IDC was not entitled to; neither
did
it, itself give instructions relating to the registration.
[10] In due course the seller registered a
mortgage bond over erven 491 and [...]. This occurred on 31 May
2005.
[11] During December 2005 the present applicant
recognising a tax advantage and being the sole member of the buyer
concluded a contract
with the seller in terms whereof the contract
between the seller and the buyer set out previously was cancelled and
a fresh contract
was concluded on the same terms and conditions
between the applicant and the seller. The two contracts were
entered into
at the same time.
[12] The submission of the applicant is that the
effect of the cancellation and conclusion of the fresh contract is
that he was
substituted for the buyer and that there is no impact on
the present proceedings by reason of the change of party.
[13] During 2008 the applicant sought delivery of
the property from the seller as the seller had failed to deliver the
property
to him. He brought an application to compel the seller
to deliver the property. IDC was not cited as a party to that
application. During or about July 2009 an order was made directing
the seller to deliver the property to the applicant. It was
impossible for the seller to deliver the property to the applicant
until such time as it had obtained the release of the property
from
the mortgage bond in favour of IDC. IDC was not prepared to
release the property from the mortgage bond until the debt
of the
debtor had been paid.
[14] The matter seems to have lain dormant for
some time after that.
[15] IDC in due course took steps against its
debtor and the seller. It obtained a judgment permitting execution
against the mortgaged
property on 10 July 2012. Pursuant to
that judgment the property was sold in execution on 25 October 2012.
[16] On 29 January 2013 the applicant alleged that
IDC was aware of the fact that there was a personal right vested in
the buyer
to obtain transfer of the property from the seller prior to
the time when the mortgage over the property was registered. IDC
accepted
for purposes of this application that notice to its
attorneys on 11 May 2005 constituted notice to it in relation to the
position
of the buyer not the applicant. As far as the
applicant’s personal rights to obtain transfer, they arose
after the
registration of the bond.
[17] The submission of the applicant was that as
IDC had knowledge of the obligation of the seller to transfer the
property to the
buyer pursuant to the sale contract prior to the time
when the mortgage bond was registered it was entitled to force the
delivery
of the property to it notwithstanding registration of the
bond. The applicant relied on
Meridian
Bay Restaurant v Mitchell NO
2011 (4)
SA 1
(SCA) paras [12] to [31] as authority for the statement of law
in the case of a double sale. The argument was developed to submit
that the registration of the bond had rendered the property incapable
of transfer.
[18] It was submitted that as delivery of the
property had become impossible by reason of the sale in execution the
applicant was
entitled to payment of damages. The applicant in the
present matter seeks payment of damages in lieu of the delivery of
the property.
[19] A mortgage bond is a contract whereby
immovable property is provided as security for a debt by the owner.
The person
who bonds the property is the owner. This appears
from the bond itself. The attorneys who acted in the
registration
of the bond were the attorneys of IDC nonetheless they
did not act for IDC in the transaction they acted for the owner and
pursuant
to the owners’ instruction. The knowledge of IDC
extends only to the fact that at a point in time a third party (the
buyer)
claimed to have a personal right against the seller/owner. IDC
commits no act in relation to the registration of the bond. It does
not frustrate the exercise of the personal right of the buyer against
the seller. The inability of the seller to transfer arises
not
because of the bond but because the seller assumed an obligation to
pay a creditor and the seller’s subsequent failure
to make the
necessary payment to obtain the release of the property from the
bond.
[20] The IDC debtor on 12 May 2005 indicated to
IDC that it was contractually able to obtain the mortgage bond
required by IDC.
It in fact obtained the mortgage bond.
In my view it was not for IDC to search for a reason why the owner
was prepared at
that stage to register the mortgage bond over the
property. The fact that a claim that the property be transferred to
the buyer
had been raised by the conveyancing attorney in no way
infringed the right of the owner who granted the power of attorney
for the
bond to be registered to do so. In my view IDC was entitled
to rely on the fact that the owner of the property had executed
authority
for the bond to be granted (subsequent to the letter being
sent by the conveyancing attorneys) the owner also had concluded the
appropriate surety contained within the bond. It was submitted
that IDC should have known that the effect of the registration
of the
bond was to deprive the owner of any right of transferability.
This submission was made based on the large amount
of the
indebtedness of the debtor undertaken by the owner. I do not agree
with submission. As a matter of principle it is always
open to the
owner to bond his property notwithstanding the existence of the
personal right. It is for the owner to put the property
in a
transferable position so as to effect delivery as and when required.
It is not a necessary inference from the fact that
the property is
bonded that the owner will be unable to subsequently place the
property in a transferable position.
[21] The submission was made at a point that the
registration of the bond and the fact that it was sold in execution
“at the
instance of IDC” created a state of affairs which
rendered the property un-transferable. A judicial sale is
a
sale made to compel the debtor to realise assets with which to pay
the debt. The sheriff is the seller. The creditor does
not
disable the debtor by exercising his rights of realisation pursuant
to the
pignus judiciale
and to payment. Hence the sale in execution and the disposal of
the property is not pursuant to any act by the creditor (IDC).
In any event in the present case the sale of the property was by
sheriff there being no act performed by IDC in relation to the
sale.
See also
Dream Supreme
Properties 11 CC v Nedcor Bank Ltd and
Others
2007 (4) SA 380
(SCA)
[24] It is not necessary to determine precisely
what constitutes the delict in the light of my findings above. It is
for the same
reason not necessary to determine what the date of the
delict was (the date of registration of the bond, the date of taking
steps
to recover the monies, the date when the sale in execution took
place or various other dates in between).
[26] It remains to consider whether the position
of the applicant and the seller is the same. Assuming the IDC
committed a delict
in regard to the seller that delict was against
the seller and the rights of action vest in the seller not in some
subsequent purchaser
in the form of the applicant. Hence the
application must fail in any event. The reason is that the IDC prior
knowledge of the buyers’
personal rights is not knowledge of
the subsequently acquired personal right of the applicant as also
that the applicant’s
rights were acquired post bond
registration.
[27] I am accordingly of the view that:
27.1 IDC committed no delict in
relation to the seller.
27.2 IDC committed no delict in
relation to the applicant.
[28] I was asked, assuming I was in favour of the
applicant to separate the issue of the quantum of damages including
the date when
such damages were suffered from the other issues.
[29] In my view the rules relating to applications require
applications to be brought and proceeded with in respect of losses
other than damages. The submission was made that originally the claim
was for property and only once it became impossible to prosecute
that
claim was a claim for damages made.
The answer to that submission in my view is that
the applicant should have sought a referral to trial and dealt with
the matter
on a proper basis. Had it been necessary to do so I
would have declined the application to separate issues and would have
dismissed the application on the basis that the applicant seeks
damages by way of a wrong procedure.
[30] In my view an appropriate order is that the
application be dismissed with costs.
[31] In the circumstances I make the following order.
Application dismissed with costs.
__________________________________________
C G LAMONT
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
COUNSEL
FOR THE APPLICANT
:
Adv.
Van Niekerk SC
APPLICANT’S
ATTORNEYS
:
McCloughlin
Porter Inc
COUNSEL
FOR THE FIRST RESPONDENT :
Adv.
Sidwell3 SC
FIRST
RESPONDENT’S ATTORNEYS
:
Cliff
Dekker Hofmeyer Inc
DATE
OF HEARING
:
31
August 2015
DATE
OF JUDGMENT
:
16
September 2015