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[2020] ZAECPEHC 20
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Mohamed N.O v VGZ and Others (1372/2019) [2020] ZAECPEHC 20 (23 June 2020)
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IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN CAPE LOCAL
DIVISION, PORT ELIZABETH
CASE
NO 1372/2019
Date heard:
30/04/2020
Date
delivered: 23/06/2020
In the matter between
MUSTAFA MOHAMED
N.O.
APPLICANT
(In his capacity as duly
appointed Executor
of the deceased estate of
M[..] D[…] B[…]
ID no 370[…])
and
V[…] G[…]
Z[…]
1
st
RESPONDENT
ABSA BANK
LIMITED
2
nd
RESPONDENT
EASTERN CAPE
DEVELOPMENT CORPORATION
3
rd
RESPONDENT
MASTER
OF THE HIGH COURT
4
th
RESPONDENT
JUDGMENT
ROBERSON J:
[1]
It was agreed that this application would be heard without oral
submissions, in view of the Covid-19 crisis.
[2] The
application is brought in terms of the
actio communi dividundo
(the
actio
). The applicant is the executor in the
intestate estate of the late M[…] D[…] B[…] (the
deceased) who
died on 17 July 2014. The deceased was formerly
married to the first respondent in community of property. They
were
divorced on 24 February 2009 and a settlement agreement was made
an order of court.
[3] The
deceased and the first respondent were joint owners of the immovable
property described as Erf 1[…]
H[…] Retreat, Nelson
Mandela Metropolitan Municipality, Division of Port Elizabeth,
Province of the Eastern Cape (the property).
Clause 3 of the
settlement agreement provided for the division of assets.
Clause 3.1 provided as follows:
3.1
Immovable property:
3[…] T[…] Street, Rowallan Park, Port Elizabeth
3.1.1 It is recorded that the
immovable property situated at 3[…] T[…] Street,
Rowallan Park, Port Elizabeth
(“the property”) is by
virtue of the marriage in community of property registered in the
joint names of the Plaintiff
and the Defendant and that the
said property is subject to a mortgage bond registered over the
property in favour of Absa
Bank (“Absa Bank”).
3.1.2 The parties agree that the
Plaintiff shall be entitled to retain the property as her sole and
absolute property and
that the Defendant shall have no right or claim
in respect of the said property.
3.1.3 The Plaintiff shall be
solely liable for the repayment of the mortgage bond registered over
the property and the Plaintiff
hereby indemnifies the Defendant
against any claim(s) whatsoever by Absa Bank under the said mortgage
bond. The Plaintiff
will immediately supply the Defendant with
the necessary documentation in order to release him from the
obligations towards Absa
Bank.
3.1.4 The Defendant shall, when
called upon to do so, sign all such documents and do all such things
as may be required in
order to transfer his undivided half share in
the property to the Plaintiff in accordance with sub-clause 3.1.1,
which transfer
will be done as soon as possible after granting of the
order of divorce, but not later than 90 (ninety) days from granting
of the
divorce order.
3.1.5 The
Plaintiff shall be solely liable for payment of all costs in
connection with the transfer of the Defendant’s
undivided half
share in the property to the Plaintiff, as above.
[4]
It is common cause that the transfer of the deceased’s half
share in the property to the first respondent
has never been
registered in the Deeds Office. It is the applicant’s
position that the deceased estate is still the
owner of a half share
in the property and is entitled to utilise the
actio
to attain a termination of the joint ownership and an equitable
division of the property. The first respondent has opposed
the
application.
[5]
Gorven J set out the principles of the
actio
in
Matadin v
Parma and Others
[2010] ZAKZPHC 18 (7 May 2010) at paragraph [2]
as follows (footnotes omitted):
“
The
basis for the application is well recognised in our law. The cause of
action invoked by the applicant is the
actio
communi dividundo
.
This was recognized by the old authorities including
Voet
and
van Leeuwen and has been recognized ever since. The underlying
rationale is that every co-owner of property may insist
on a
partition of the property at any time unless there is an agreement
between the co-owners not to do so within a certain period.
Even if
there is an agreement to constitute perpetual joint ownership, the
co-owner may demand partition at any time. If
the co-owners
cannot agree on the manner in which the property is to be divided
between them, the court is empowered to make such
order as appears to
be fair and equitable in the circumstances. Where the property is not
physically capable of subdivision such
an order may, for example,
entitle one of the co-owners to obtain the whole of the property upon
payment of a certain sum. If this
is not appropriate, or possible,
the court may order the property to be sold and the proceeds to be
divided amongst the co-owners
according to their shares. One well
recognised mode of doing this is a sale by public auction and a
division of the proceeds. The
court may make any equitable adjustment
if one of the co-owners has, for example, benefited financially from
the property or incurred
expenses in respect of the property.”
[6]
The distribution proposed by the applicant is a sale of the property
by public auction, alternatively through
an estate agent, and after
payment of the amount owing to the second respondent and municipal
charges, the remaining proceeds of
the sale are to be divided equally
between the deceased estate and the first respondent.
[7]
In his founding affidavit the applicant set out the history of the
ownership of the property. It was
purchased by the first
respondent in 1994 and transferred into her name. She
thereafter married the deceased who by virtue
of the marriage in
community of property became a joint owner of the property. The
first respondent had been granted a loan
by the second respondent to
purchase the property and over time further loans were granted, some
of which were granted to the first
respondent and the deceased as
joint owners. The loans were secured by mortgage bonds.
The third respondent also loaned
money which was secured by a
mortgage bond but it has not submitted a claim against the estate.
[8]
Following the divorce the first respondent did not carry out her
obligation to effect transfer of the deceased’s
half share to
her, with the result that the deceased estate is still the registered
owner of a half undivided share in the property.
The deceased
estate is liable for payment of the amount owing to the second
respondent, which amount is currently R669 402.82
together with
interest thereon at the rate of 9% per annum.
[9]
The applicant states he is in a predicament because the deceased
estate has to be administered and finalised
but at this stage only a
50% share in the property can be sold. A half share in a
residential property, so he stated, either
would not be sold or would
sell far below a fair value. Consequently the estate cannot be
finalised. He has a duty
to the estate’s beneficiaries
and creditors to do so. The applicant’s attorneys wrote
to the first respondent,
giving her an opportunity to purchase the
deceased estate’s half share in the property or to sign a power
of attorney allowing
the applicant to sell the whole property.
No response was received. The applicant also unsuccessfully
attempted to
contact the occupants of the property.
[10]
The applicant expressed the view that the only way the predicament
can be resolved is a termination of the joint
ownership of the
property and an equitable division.
[11]
In her answering affidavit the first respondent said that she did not
deny the contents of the founding affidavit.
I had difficulty
understanding precisely what the grounds of her opposition were.
She said that the second respondent was
required to avoid reckless
lending and had extended loans to her when it was not prudent to do
so. She said that if clause
3.1.4 was not severed from the
settlement agreement, then after 90 days she and the deceased were
jointly and severally liable
to the second respondent. She
appeared to accept that the deceased estate was liable for 50% of the
debts. She said
that the third respondent is owed R113 000,
bringing the total to R886 402.82. The municipal valuation
of the property
is R770 000. If the property was sold in
order pay the debts, the applicant’s powers, so she stated,
were cancelled
by the insolvency of the deceased estate.
[12]
The first respondent went on to say that the applicant should allow
the court to appoint a liquidator and divide
the joint estate “as
stated in clause 2 of the Divorce Decree”. Paragraph 2 of
the divorce order recorded that
the settlement agreement was made an
order of court. The first respondent further said that she
would be prejudiced if 50%
of her pension interest was paid to the
applicant. There was no mention of her pension interest in the
settlement agreement.
She concluded by asking for an amendment
to paragraph 2 of the divorce order as follows: “that a
liquidator be appointed
to adjudicate the joint property and divide
the proceeds among the parties equally from the date of marriage
until the dissolution
of the marriage.”
[13]
Despite the request for this relief in the answering affidavit, the
first respondent’s heads of argument
took a different turn.
A point in limine challenging the locus standi of the applicant was
raised. This was that the
deceased no longer had an interest in
the property as a result of clause 3.1.2 of the settlement
agreement. The joint ownership,
so it was submitted, was
terminated by the settlement agreement. Following the divorce
order incorporating the terms of the
deed of settlement, the
deceased, in terms of clause 3.1.2, had no further right or claim in
the property. Joint ownership
was therefore in dispute.
[14]
Both parties referred to the decision in
Fischer
v Ubomi Ushishi Trading CC and Others
2019 (2) SA 117
(SCA), a matter involving similar circumstances.
Mr and Mrs Haynes, the second and third respondents, were previously
married
in community of property, and were joint owners of an
immovable property. When they divorced, an agreement that the
immovable
property was awarded to Mrs Haynes was made an order of
court. The court found that the agreement, although binding on
the
parties, did not by itself vest ownership of Mr Haynes’
half share. The vesting of ownership in Mrs Haynes required
an
endorsement on the title deed in terms of s 45 (bis) (1) (a) of the
Deeds Registries Act (at paragraph [18]). This was
not done and
Mr Haynes was still reflected in the Deeds Registry as a co-owner.
Fischer, a creditor of Mr Haynes, in the
court a quo sought
unsuccessfully to execute against Mr Haynes’ half share in the
property. He was unsuccessful on
appeal because although
ownership of the half share had not vested in Mrs Haynes, her
personal right to enforce registration of
the half share preceded
Fischer’s claim.
[15]
The effect of this decision is that ownership of the deceased’s
half share in the property has not yet vested
in the first
respondent.
[16]
In
Fischer
it was accepted that Mrs Hayne’s acquisition of ownership was
derivative, arising as it did from the settlement agreement.
At
paragraph [19], the court stated:
“
That
derivative acquisition of ownership in land requires registration,
has been the position at common law for more than a century.”
It
went on to refer to the following passage in
Lucas’
Trustee v Ismail and Amod
1905 TS 239
at 242:
“………
.
the general rule of our law is that real rights in land can only be
validly constituted by registration
coram
lege loci
.
There are well recognised exceptions to that rule, such as, for
instance, acquisition of ownership to land by prescription, or
of an
interest in land by marriage in community of property, and so on. But
none of those exceptions apply in the present case.
Hence the general
rule governs, and the real right which is sought to be established
is, it appears to me, in the same position
as a right of ownership or
right of mortgage or a claim to some portion of the
dominium
cut
off and separated from it so as to create a servitude. In such cases
the right can only be validly constituted by registration.”
[17]
In reliance on this passage, it was submitted on behalf of the first
respondent that the exception of an interest
in land by marriage in
community of property could be invoked. The settlement
agreement and the order in which it had been
incorporated were
binding despite the fact that transfer had not been effected via the
Deeds Registry (presumably meaning transfer
of the deceased’s
half share). I think that this submission overlooks the fact
that it was the deceased who acquired
joint ownership through the
marriage in community of property, not the first respondent.
Her acquisition of ownership was
derivative when she purchased the
property.
[18]
It was further submitted that the failure of both parties to act in
ensuring transfer of the deceased’s half
share to the first
respondent could not mean that the deceased’s non-existent
interest in the property was resurrected.
Again this submission
overlooks that as a matter of law presently the deceased estate is a
joint owner of the property.
[19]
The position therefore remains that the property is jointly owned by
the first respondent and the deceased estate,
as represented by the
applicant.
[20]
It was submitted on behalf of the applicant that the requirements for
a termination of joint ownership and a division
had been met.
The property is jointly owned and the applicant representing the
deceased estate may insist on a termination
and division. The
first respondent has not agreed to divide and the applicant is
entitled to approach the court to order
a division (see
Robson
v Theron
1978 (1) SA 841
(A) at
855A-F).
[21]
In a memorandum to the parties I expressed the prima view that the
applicant could not claim a division of the
property by way of the
actio
because in terms of the settlement agreement which was made an order
of court the first respondent was awarded the property and
the
deceased was to have no right or claim to the property. The
settlement agreement and court order could not be reversed
so that
the deceased estate retained its half share in the property instead
of it being transferred to the first respondent.
I also stated
that
Fischer
made it clear that the deceased’s half share in the property
had not yet vested in the first respondent. I expressed
the
view that the appropriate remedy was an application to enforce the
first respondent’s obligations in terms of the order
and that
such an order could be made under “further or alternative
relief. I also suggested that the parties should
be able to
reach agreement along the lines proposed by me, alternatively that
the first respondent should agree to carry out her
obligations in
terms of the order so that the transfer could take place. I
accordingly requested further submissions.
[22]
In further heads of argument the applicant persisted in submitting
that the estate could obtain relief through
the
actio
.
It was re-iterated that the property was still jointly owned and that
there is no agreement on a method of termination.
Reliance was
now placed on an interpretation of the order which incorporated the
terms of the settlement agreement. Reference
was made to the
judgment in
Eke v
Parsons
2016 (3) SA
37
(CC) at paragraph [29] where the following was said (footnote
omitted):
“
Once
a settlement agreement has been made an order of court, it is an
order like any other. It will be interpreted like all
court
orders. Here is the well-established test on the interpretation
of court orders:
“
The
starting point is to determine the manifest purpose of the order. In
interpreting a judgment or order, the court’s
intention is to
be ascertained primarily from the language of the judgment or order
in accordance with the usual well-known rules
relating to the
interpretation of documents. As in the case of a document, the
judgment or order and the court’s reasons
for giving it must be
read as a whole in order to ascertain its intention.””
[23]
It was submitted that the agreement which was made an order of court
recognised that there was a mortgage bond
registered over the
property in favour of the second respondent. Although the first
respondent acquired the right to transfer
of the deceased’s
share, this right was not unconditional. She was required to
release the deceased from his obligations
towards the second
respondent. On a proper interpretation of the order she would
only be entitled to transfer upon complying
with her obligations in
terms of the order. The first respondent would not have been
able to transfer the deceased’s
share in the property without
the approval or consent of the second respondent. Reference was
made to s 26 of the Deeds Registries
Act 47 of 1937 (the Act), read
with s 16 of the Act. The section which applies in these
circumstances is s 45 bis of the
Act, the relevant portions of which
provide:
Endorsement
of deeds on divorce, division of joint estate, or change of
matrimonial property system
(1) If immovable
property or a lease under any law relating to land settlement or a
bond is registered in a deeds registry and it-
(a)
formed
an asset in a joint estate of spouses who have been divorced, and one
of them has lawfully acquired the
share of his or her former spouse
in the property, lease or bond; or
(b)
…………………………..
the registrar
may, on written application by the spouse concerned and accompanied
by such documents as the registrar deems necessary,
endorse on the
title deeds of the property or on the lease or the bond that such
spouse is entitled to deal with such property,
lease or bond, and
thereupon such spouse shall be entitled to deal therewith as if he or
she had taken formal transfer or cession
into his or her name of the
share of the former spouse or his or her spouse, as the case may be,
in the property, lease or bond.
(2)
(a)
If
immovable property referred to in subsection (1) is hypothecated
under a registered mortgage bond, the provisions of subsections
(2),
(3) and (4) of section 45 shall
mutatis
mutandis
apply.
[24]
Section 45 of the Act provides:
Transfer or
cession by means of endorsement
(1) If immovable
property, a lease under any law relating to land settlement or a
bond, which forms an asset in a joint estate is
registered in a deeds
registry and the surviving spouse has lawfully acquired the share of
the deceased spouse in the property,
lease or bond, the registrar
shall on written application by the executor in the estate of the
deceased spouse and by the surviving
spouse save where the surviving
spouse has signed as executor, accompanied by such other documents as
may be prescribed, endorse
on the title deeds of the property or on
the deed of lease or on the bond that the surviving spouse is
entitled to deal with such
property, lease or bond, and thereupon
such spouse shall be entitled to deal therewith as if he or she had
taken formal transfer
or cession into his or her own name of the
share of the deceased spouse in the property, lease or bond.
(2)
If the immovable property mentioned in subsection (1) is hypothecated
under a registered mortgage bond the endorsement provided
for in the
said subsection shall not be made unless-
(a)
such
bond is cancelled; or-
(a)bis
the
said property or the share of the deceased spouse therein is released
from the bond; or
(b)
......
(c)
a
written consent (which shall be in duplicate, in the prescribed form
and signed by the survivor and the legal
holder of the bond) to the
release of the estate of the deceased spouse from liability under the
bond and to the substitution of
the survivor as sole debtor in
respect thereof, is produced to the registrar together with the bond.
(3)
The registrar shall, in any case of release and substitution in terms
of paragraph
(c)
of
subsection (2), when he or she endorses on the title deeds of the
property that the survivor is entitled to deal therewith-
(a)
make
in the appropriate register an entry setting forth that the estate of
the deceased spouse is released from
liability in respect of the
obligation secured by the bond and that the survivor has become sole
debtor in respect of the bond;
and
(b)
endorse
on the bond that the estate of the deceased spouse is released from
liability in respect of the obligation
secured thereby and that the
survivor has become sole debtor in respect of the bond.
(4)
As from the date of the endorsement on the title deeds of the
property in terms of subsection (1), the estate of the deceased
spouse shall be absolved from any obligation secured by the bond and
the survivor shall become sole debtor in respect thereof in
the same
manner as if he had passed the bond at that date and, if the bond is
a bond to secure future debts, the immovable property
thereby
mortgaged will secure any further or future advances which are made
by the mortgagee of the bond to the survivor.
(5)
Any reference in this section to a bond shall include a charge in
favour of the Land and Agricultural Bank of South Africa or
any
Department of State.
[25]
It was submitted that the first respondent failed to release the
deceased (and thereafter the estate) from the
obligation towards the
second respondent. She does not qualify for the transfer loan
with the consequence that the estate
will not be released from its
obligations towards the second respondent. The first respondent
herself stated in her affidavit
that any further loan from the second
respondent would amount to reckless lending. Implementation of
the agreement and court
order is, so it was submitted, a relative
impossibility and it seemed clear from the first respondent’s
affidavit that enforcement
of her obligations in terms of the order
is a virtual impossibility. The second respondent will not
agree to a transfer of
the property without the outstanding loan
being paid and further has not consented to the transfer of the
property without the
full outstanding balance being paid.
[26]
It was further submitted that it could not have been the intention of
the parties that the first respondent could
obtain transfer of the
deceased’s share without complying with her obligations in
terms of the agreement. The order,
properly interpreted,
insofar as it relates to forfeiture of the deceased’s rights in
the property, could only have related
to the proceeds of or equity in
the property. If the court were to find accordingly, it would
be justified in ordering termination
of the joint ownership, payment
of the outstanding amount on the bond, and should there be any
residue, such should be paid to
the first respondent.
[27]
In
Unlocked
Properties 4 (Pty) Ltd v A Commercial Properties CC
[2016] ZAGPJHC 373 (29 July 2016) Meyer J had to deal with a defence
of impossibility of performance. The applicant, the
purchaser
of an immovable property, applied for an order of specific
performance against the respondent, the seller, to transfer
the
immovable property to the applicant. There was a mortgage bond
over the property and there was a shortfall between the
purchase
price and the amount owing on the bond. The seller stated that
it did not have the financial means to provide a
guarantee making up
the shortfall or to provide a guarantee to the bank to enable
cancellation of the bond.
[28]
Meyer J referred to certain authorities dealing with this defence,
and stated at paragraph [7]:
“
The
impossibility must be absolute or objective as opposed to relative or
subjective. Subjective impossibility to receive
or to make
performance does not terminate the contract or extinguish the
obligation.”
At
paragraph [9] Meyer J also referred to LAWSA Vol 5 (1) First Reissue
paragraph 160 where it is stated:
“
The
contract is void on the ground of impossibility of performance only
if the impossibility is absolute (objective). This
means, in
principle, that it must not be possible for anyone to make that
performance. If the impossibility is peculiar to
a particular
contracting party because of his personal situation, that is if the
impossibility is merely relative (subjective),
the contract is valid
and the party who finds it impossible to render performance will be
held liable for breach of contract.”
Further, at paragraph
[13] Meyer J stated:
“
The
fact that the property is burdened with a limited real right of
security in favour of the bank, ‘matters little’.
Because of its accessory character, a mortgage is extinguished by
discharge of the principle debt. The seller is under an
obligation to discharge his debt owed to the bank in order for
transfer of the property to pass to the purchaser free from the
burden. The impossibility on which the seller relies is
peculiar to itself because of its personal financial situation and
incapability of securing payment of the full debt owed to the bank,
and not absolute. Such obligation can, in general, be
performed. The seller’s personal incapability does not
render the contract void. The defence of impossibility
of
performance has not been established.”
[29]
Although it is the applicant, and not the first respondent, who has
raised impossibility of performance by the
first respondent, the
principles relied upon in
Unlocked
Properties
apply in
the present matter. The impossibility relied upon by the
applicant on behalf of the first respondent is in my view
relative or
subjective. The applicant relies upon the first respondent’s
alleged inability to obtain a fresh loan and
to pay the outstanding
balance on the bond. This inability is peculiar to the first
respondent and therefore not absolute.
The first respondent’s
reference to reckless lending on the part of the second respondent
does not change this position.
[30]
MeyerJ’s view that the fact that the property is burdened with
the security in favour of the bank “matters
little” is
also applicable in this matter. In terms of the settlement
agreement and court order the first respondent
undertook liability
for repayment of the bond so that the endorsement on the title deed
could take place. If she failed to
do so it did not mean that
her obligation had been extinguished.
[31]
I further do not agree with the interpretation of clause 3.1 of the
settlement agreement submitted on behalf of
the applicant. The
deceased unreservedly agreed that the first respondent would be
entitled to retain the property as her
sole and absolute property and
abdicated any right or claim in respect of the property. As
between the parties the first
respondent assumed liability for
repayment of the bond and an interpretation that the deceased only
forfeited the equity in the
property does not accord with the clear
wording of the clause. It could not be interpreted to mean that
if the first respondent
did not pay the bond and bring about
transfer, the award of the property to the first respondent was
reversed. As stated
by Meyer J, the mortgage bond in favour of
the second respondent is accessory in character and would be
extinguished if the first
respondent carried out her obligations in
terms of the order so that endorsement on the title deed could take
place.
[32]
Insofar as the applicant relies on the
actio
,
I am of the view that the deceased and consequently the estate had no
locus standi to claim a division of the property.
The property
was dealt with in the settlement agreement and order and the deceased
in my view abandoned any personal claim against
the first respondent
for a division of the property in terms of the
actio
.
[33]
Brief submissions were made on behalf of the first respondent in
response to my request. They were:
“
1.First
respondent must submit the divorce decree and the settlement
agreement to the second respondent.
1.The
second respondent must update the details in the loan agreement as of
the first respondent.
3.
The applicant’s application be dismissed as he has no locus
standi with costs.
4.
The respondent to pay the second respondent’s debt within a
period of 12 months from the date of the order.”
[33]
These submissions seem to propose an arrangement to be reached
between the first and second respondents, to ensure
the endorsement
on the title deed in favour of the first respondent and to allow the
first respondent some time to settle the debt
owing to the second
respondent. The second respondent did not appear in the matter
and obviously has not been given notice
of this proposed arrangement,
given the relief claimed in the notice of motion, which, if granted,
would have resulted in at least
partial payment of the amount owing
on the bond. It would however be in everyone’s interests
if the first respondent
was to carry out her obligations in terms of
the order as soon as possible. The second respondent may well
institute action
against the estate and the first respondent, which
could result in the property being declared executable and sold in
execution.
[34]
Nonetheless it follows from what I have said above that the
application cannot succeed. With regard to costs,
I see no
reason to depart from the general rule that costs follow the result.
Submissions made on behalf of the first respondent
were of little
assistance, and it appears that the effect of
Fischer
was misunderstood. However the first respondent was obliged to
come to court and oppose the application and I have found
against the
applicant on all the grounds on which his claim in his representative
capacity were based.
[35] The
following order will issue:
The
application is dismissed with costs.
______________________________
J M ROBERSON
JUDGE
OF THE HIGH COURT
Heads of argument for the
applicant prepared by Adv R Raubenheimer, instructed by Vezi de Beer
Incorporated, c/o Pagdens Attorneys,
Port Elizabeth.
Heads of argument for the
first respondent prepared by Mr T Mabini, Mabini Incorporated
Attorneys, c/o Lexicon Attorneys, Port Elizabeth.
Judgment delivered
electronically by email by arrangement.