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[2018] ZAGPJHC 482
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K v M (2017/44428) [2018] ZAGPJHC 482 (11 July 2018)
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REPUBLIC
OF SOUTH AFRICA
THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2017/44428
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
In
the matter between:
K,
M
Applicant
and
M,
T
Respondent
JUDGEMENT
Headnote
– application to terminate co-ownership of a house and division
of the net proceeds
A
father and mother of a minor daughter were jointly registered as
co-owners and a bond was obtained in both names too – the
applicant mother sought the termination
It
was common cause that the applicant would bear no financial burden
nor take ant responsibility for the house and the respondent
father
would undertake all burdens alone – the house was acquired as
an investment for their minor daughter which was to
be presented to
her when she became an adult.
Both
parties were not averse to a termination of the co-ownership as they
were divorced and not on good terms – the respondent
resisted a
sale of the house because of inadequate equity in the property,
inclusive of the sum he claimed to have expended on
its upkeep –
a dispute of fact existed about his stewardship and the true revenue
derived from letting the property
Held:
a declarator issues that the property is held in trust by the
parties for their daughter
Held:
it was apparent that the parties co=ownership was in their roles as
trustees for their daughter and the disposal of the property
had to
be subject to a consideration of her best interests – if a sale
at this time destroyed the investment it was inimical
to her best
interests
Held
Further: it was not obvious from the papers filed that it was
appropriate that the respondent deduct his disbursements to calculate
the equity in the property and it was necessary that this entitlement
be established; similarly, the equity could only be calculated
once a
debatement and statement of the respondent’s stewardship had
occurred
According,
Held: the parties were ordered to arbitration to debate the statement
of account of the respondent and to determine if
he was entitled to
include his disbursements in that calculation, whereafter the parties
were to either agree how to deal with
the property or approach then
court on amplified papers for further relief.
A
second controversy existed because at the time of the purchase, and
the lodging of the deed of transfer the parties were described
as
married in community of property when they had been divorced –
to regularise that a rule nisi was issued to the registrar
of deeds
to show cause why a correction should not be effected, and if
supported, to indicate what formula would be acceptable
to the
registrar
No
costs were ordered.
Sutherland
J
Introduction
[1]
The ostensible issue in this case is a dispute over a house, Erf […],
Solandpark, in respect of which applicant and first
respondent are
the registered owners in equal shares. The applicant wants it
to be sold and half the proceeds given to her.
The first respondent
resists that relief.
[1]
[2]
Behind this issue lies several larger and more complex issues,
foremost among which is a counter-claim by the first respondent
seeking to enforce the terms of an oral agreement between the parties
concerning, in effect, the beneficial ownership of the property
residing in their daughter N and the two parents undertaking to act
as trustees in her interest, in respect of the property.
[3]
Other issues include the possibility of a need to rectify a deed of
sale and a deed of transfer of the property to accurately
describe
the parties as divorced and not married in community of property, and
the propriety of the respondent accounting to the
applicant for his
stewardship of the property.
The
facts and circumstances giving rise to the dispute
The
acquisition of the property and the oral agreement to hold it for N
[4]
The parties were married in community of property on 12 April 2006. N
was born on 24 July 2006. The parties separated about
September 2006.
N has lived with the applicant at all times.
[5]
A divorce order was granted on 5 November 2007. The applicant alleges
it was done without her knowledge. She does not, however,
wish to
have it rescinded. For the purposes of this case, the circumstances
of the dissolution
per
se
are
not critical, however, her alleged ignorance thereof remains
pertinent to certain aspects of her case.
[6]
On 6 August 2008 the property was purchased. It is common cause that
the idea to purchase the property was the first respondent’s
idea, and he invited her to be co-owner.
[7]
The applicant in her founding affidavit says:
[2]
“
When the property was
purchased it was our intention ….that the property would be a
form of an investment for N, but these
intentions ended with the
marriage. It was agreed [that] the first respondent would be
responsible for looking after the property….”
[8]
The first respondent in his Answering affidavit
[3]
relates that after the divorce he left the country to work for some
time. To cater for any adverse eventualities befalling him
whilst
abroad, he conceived the idea of buying a house for the ‘security’
of N. He approached the applicant who agreed
to register the house in
both their names. But for the bank refusing to register N as the
owner because she was a minor, the property
would not have been
registered in the parties’ names at all.
[9]
The probabilities of the applicant being ignorant of the divorce
order is to some extent corroborated by the fact that in the
deed of
sale and, axiomatically, on the deed of transfer they are described
as being a married couple and married in community
of property. That
description is obviously an error, but the conveyancers could only
have relied on information given to them by
the parties. How the
wrong information was given is not explained.
[10]
More puzzling is the notion of the applicant that the agreement to
jointly hold the property as an investment for N only held
good for
the duration of the marriage. This contention is made again by
the applicant in her replying affidavit when she
avers that N has no
rights to the transfer of the property.
[4]
However, the agreement, itself, is in no way dependent on the fact of
their marriage being extant. On the common cause agreement
to be
trustees of their daughter’s investment, the only significant
relationship between the parties is their parenthood
of N, which
merely explains their decision to jointly have charge of the sole
asset. Neither a former marriage nor an existing
marriage makes any
difference and it could not have been a tacit term of the agreement,
had they indeed still been married at the
time of the purchase.
Moreover, as regards the divorce of 5 November 2007 the applicant
says nothing of when and how she
came to believe the marriage had
terminated.
[11]
In my view, it seems at best problematic that she was in truth
ignorant of the divorce. But even if she was ignorant, her ignorance
contributes nothing towards the validity or duration of the
co-ownership of property to be held for the benefit of her daughter.
In my view, the protestation of ignorance of the divorce has been
made purely to set up the spurious idea that the agreement concerning
N was somehow dependent on her belief that the parties were still
married at the time of purchase and has now lapsed. The
contention does not endeavour to address the logical consequences of
such an agreement lapsing. It would not follow that she has
now an
unfettered personal interest in the property and N’s interest
has been eliminated.
[12]
It is common cause that she never paid any money towards the purchase
or upkeep of the property, despite her being a co-bondholder
with the
second respondent. Her sole contribution is lending her
creditworthiness to the bond application. Indeed, the applicant’s
motivation in this litigation is, to a large extent, dictated by the
fact that as a co-mortgagee in respect of this property she
is being
thwarted in her efforts to raise another bond for a property of her
own. No personal benefit could have accrued to the
first respondent
by obtaining her agreement to be a co-owner at the time (ie after the
divorce) if the common intention was that
the property was an
investment for N; on the contrary a post-divorce co-ownership is
consistent with the idea of both parents being
co-trustees. On the
probabilities, the only possible advantage to the first respondent by
their co-ownership would have been the
enhanced creditworthiness of
two mortgagees, a commitment the applicant would only have made if it
was N rather than the respondent
who was to be the substantive
beneficiary. Whether they were married or not could make no
difference to that matter. The respondent
does seek to resile from
the agreement that the property is to be held for N, and thus does
not stand to be accused of a ruse to
boost his creditworthiness in
seeking co-ownership.
[13]
The upshot is that:
13.1. It is common cause
that the property was acquired with N as the
de
facto
beneficial owner, and the two parents as co-owners exercising rights
of ownership in her interest.
13.2. The notion that
such an agreement terminated because the parties’ marriage was
dissolved is rejected as being implausible.
[14]
There is a contention advanced on behalf of the applicant that any
enforcement of the oral agreement would in some way violate
the
provisions of the
Alienation of Land Act 68 of 1981
, which provides
that the disposal of land can be effected only in terms of written
agreements. This notion is, in my view, misdirected.
The performance
of the terms of the oral agreement do not trespass into the realm
regulated by the
Alienation of Land Act. N
has of course no real
rights to the property. She does have by way of accepting the
benefits of the
Stipulati Alteri
(which is what the oral
agreement is) a personal right against each parent. Whether her
rights are honoured by a voluntary transfer
of the property to her or
by paying her the value of the property is not a matter of legal
significance.
The
Dispute about ending the co-ownership
[15]
Between 2008 and 2018 a lot of water has flowed under the bridge of
the fractious relationship between the parties. It is unnecessary
to
trudge through all of the spats. It suffices to say that both parties
are, in principle, in favour of dissolving the co-ownership
so that
they can be spared having to deal with one another. The applicant has
an additional motive as addressed above.
[16]
The problem that arises however is how that dissolution might be
accomplished, and no less important, whether it can be accomplished
without harming N’s financial interest in the property. A
disposal of the property that leaves N with Nothing is inconsistent
with their undertaking to hold the investment on her behalf.
[17]
The applicant’s proposal is to sell the property and divide the
proceeds. The respondent argues that a sale at this moment
will not
produce any proceeds to divide. His figures are not admitted, but the
applicant cannot, unless there is a statement and
debatement of the
respondent’s stewardship, offer a substantive rebuttal.
[18]
The respondent says that the house was bought for R621,500 in 2008.
The sum outstanding on the bond, now, is R548,126.57. In
addition, he
claims that he has expended over the past ten years sums, as yet to
be verified, in excess of R600,000 on the bond
and on maintenance.
The sums received as rental are unclear and a dispute of fact exists
about the periods during which the property
was rented out. The
respondent claims that his expenditure should be a cost to be
refunded to him in the event of a sale.
If that were to take
place, on these sums, if taken to be accurate, there might be no free
residue at all to divide up. Upon this
premise the respondent resists
a sale at this time. His stance is that no step should be taken that
may prejudice the investment
that N will have as hers to control when
she becomes an adult; ie in 2024, six years from now.
[19]
The assumption that the respondents expenditure is a legitimate
deductible expense from the “investment’ which
will
accrue to N is not well made, at least not on these papers.
Presumably, the principal idea is that when the house is handed
to N,
it will be free of any residual debt, whether to the bondholder or to
the respondent. Given the sum of the bond outstanding
and the
remaining six-year timetable, that prospect is by no means obvious to
me. More likely, is a handover of a property that
remains incumbered,
but in which there is significant equity.
[20]
Of course, whether now or in the future, any free residue from a sale
which is available for distribution and received by each
party as
trustee for N, shall have be expended in N’s interest, whether
in a new investment or otherwise.
[21]
Until the true current value of the house is independently
established no sensible decision can be made; ie to sell now in
the
reasonable expectation of producing a free residue or to defer a sale
until such time as a profit can be made or hand over
the asset to N.
That exercise cannot be carried out in these proceedings. An
appropriate procedure shall have to designed to obtain
this
information.
[22]
In the circumstances it seems to be appropriate that the calculation
be referred to an independent person for a statement and
debatement
of account and for a determination of whether or not the sums
expended by the respondent in terms of any contractual
rights that
flow from the oral agreement entitle such disbursements to be
deducted by him. Upon the determination of those facts,
the parties
may either agree on a course of action or again approach the court
for appropriate relief.
Ancillary
issues
[23]
As alluded to above, there is a need for a rectification of the deed
of transfer. Both the deed of transfer and the agreement
of sale have
patent defects. In my view, the most sensible way to resolve that is
to issue rules nisi on interested parties to
show cause why the
rectification of the deed of transfer should not take place. In my
view, it is unnecessary to cause the agreement
of sale also to be
rectified.
Costs
[24]
In my view, the appropriate outcome in this litigation is to make no
order as to costs.
The
Order
1. It is declared that an
oral agreement between the applicant and the first respondent exists.
in terms whereof they acquired the
fixed property, being erf […]
Solandpark, (the property) as trustees for the benefit of their
daughter N, a minor.
2. A decision on the
question of the dissolution of the registered co-ownership of the
property by the applicant and first respondent
is deferred until such
time as the following has been completed:
(i)
The
applicant and first respondent shall submit to an adjudicative
process to be conducted by an independent third party, either
chosen
by agreement between them within 90 days of date of this judgment, or
failing timeous agreement, appointed by the Chairman
of the
Johannesburg Attorneys association.
(ii)
The third
party shall determine the issues specified in this order, in a
procedure determined at the discretion of that third party,
which
procedures are appropriate to the circumstances and which serves
expeditiousness and sparing of costs.
(iii)
The third
party shall determine the present market value of the property and
whether a sale is likely to result in a free residue
after all
outstanding costs are paid.
(iv)
The third
party shall determine what rental revenue has been received and how
these funds have been utilised.
(v)
The third
party shall determine whether the first respondent is entitled to
claim a refund of any of the disbursements which are
proven to have
been made by him in respect of the property.
(vi)
The third
party shall submit a report to the applicant and the first
respondent.
(vii)
Upon
receipt of the report, the applicant and the first respondent shall
endeavour to reach agreement on the question of whether
or not to
dispose of the property, and failing agreement, may approach the
court, on notice to one another, on these papers suitably
amplified,
for further relief.
3. A rule nisi shall
issue to the Second respondent, and to the Registrar of Deeds,
returnable on 2 October 2018, to show cause
why the deed of transfer
should not be rectified to reflect that the applicant and the first
respondent were not married to one
another after 5 November 2007, and
if no objection is raised thereto, the Registrar of Deeds is directed
to put forward the form
and content of an amendment satisfactory to
the second respondent to give effect to such rectification.
4. There is no order as
to costs.
_______________________________
Roland
Sutherland
Judge
of the High Court
Gauteng
Local division, Johannesburg
Heard:
6 June 2018
Judgment:
11July 2018
For
the Applicant:
Adv
N S Nxumalo,
Instructed
by Tshabalala Attorneys
First
Respondent in person.
[1]
The second respondent
did not participate.
[2]
FA14-15/8.5
[3]
AA 105/11.1 -11.3
[4]
RA 167/20.2