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[2022] ZALMPPHC 26
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Hans Merensky Land Owners' Association v Registrar of Deeds, Polokwane and Others (4619/2022) [2022] ZALMPPHC 26 (24 May 2022)
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
LIMPOPO DIVISION,
POLOKWANE
REPORTABLE:
YES/NO
OF
INTEREST TO THE JUDGES: YES/NO
REVISED.
Case no: 4619/2022
In the matter between:
HANS MERENSKY LAND
OWNERS’ ASSOCIATION
APPLICANT
And
REGISTRAR OF DEEDS,
POLOKWANE
FIRST
RESPONDNENT
SOUTHERN SKY HOTEL AND
LEISURE (PTY) LTD
(IN LIQUIDATION)t/a HANS
MARENSKY HOTEL SPA
SECOND
RESPONDENT
MUSTUFA MOHAMED
N.O
THIRD RESPONDENT
PULENG FELICITY BODIBE
N.O
FOURTH RESPONDENT
MARYNA ESTELLE SYMES
N.O
FIFTH RESPONDENT
JOHANNES ZACHARIAS HUMAN
MULLER N.O
SIXTH RESPONDENT
INDALO INVESTMENT
HOLDINGS (PTY) LTD
SEVENTH
RESPONDENT
JUDGMENT
MULLER
J:
[1] This application was
launched as extremely urgent a day after another urgent application
in respect of the same property was
struck from the roll with costs
on 17 May 2022. The application stood down to yesterday 19 May 2022
at 14hoo to allow the respondents
the opportunity to file opposing
affidavits. The applicant filed two separate replying affidavits late
yesterday afternoon. The
application was argued last night.
[2] The parties were
informed at conclusion of the arguments that judgment will be
delivered on Monday. However, I decided during
the course of the
night to issue the order today so as to inform the parties with equal
urgency of the outcome and to give the
reasons for the order as soon
as possible.
[3] The application was
dismissed with the question of costs postponed until 10 June 2022,
when CJ Langenhoven, S Matlala and Me
Rinderknecht were to advance
reasons, on affidavit, at 9hoo why they should not be ordered to pay
the costs of the application
on the scale as between attorney and
client, including the costs consequent upon the employment of two
counsel.
[4]
I informed the parties when the order was pronounced in open court
that the reasons will follow promptly. These are my reasons.
[5]
The applicant is a non-profit company and Home Owners Association in
respect of a development in Phalaborwa better known as
the Hans
Merensky Estate. The estate borders the Kruger National Park. The
golf course was once (and it might still be) a championship
golf
course with the relevant amenities and a hotel. The development which
also includes about fifty home owners is situated on
the property,
the subject matter in both the applications. It is described as:
“
Remaining extent
of Portion 1 of the Farm Merensky 32 registration Division L.U.
Limpopo Province.
Measuring 112, 7071 (One
Hundred and Twelve Comma Seven Zero Seven One) Hectares.”
[1]
[6] The following
restrictive conditions, which are relevant for present purposes, are
registered in the title deed in favour of
the Hans Merensky Land
Owners Association,
[2]
its
successors in title or assigns. They read:
“
1
.Neither the land nor any undivided share therein shall be
transferred to any person without the
prior written consent of the
Land Owners Association. Every owner of the property, or any interest
therein, shall automatically
become and remain a member of the
Landowners Association and the conditions pertaining to the resort
permit applicable to each
portion and the Remaining Extent of Portion
1 until he/she ceases to be the owner as aforesaid.
2.
the owner of the property shall not be entitled to transfer the
property or any share interest or members
interest therein without a
clearance certificate of the Land Owners Association to the effect
that he provisions of the articles
of Association have been complied
with.”
[7] The deponent to the
founding affidavit is the chairman of the Association. The Articles
of Association which are not attached
to the founding papers, but
which the third to sixth respondent
[3]
attached revealed that a board of trustees is established for the
association and consist of no less than three and not more than
10
members.
[8] There are presently
five trustees. The Articles provide in clause 9.3.3 that when
there are five trustees, three trustees
are nominees by the
developer, which is Hans Merensky Country Club (Pty) Ltd. The
deponent, as well as Mr S Matlala and Me Rinderknecht
are the three
trustees nominated by the developer. The remaining two trustees are
Messrs Coppin and Bronèe, who were nominated
as
representatives by the home owners, on the board.
[9] Clause 14.2
provides that a quorum for the holding of any meeting of the trustees
are two trustees who must be personally present
and during the
development stage the presence of a majority of trustee who are
nominees of the developer shall be necessary at
all meetings to
constitute a quorum. A simple majority of votes is required for a
resolution.
[10] The resolution to
institute the proceedings which bind the home owners was obtained
without the nominees of the home owners
being present or invited to
the meeting of the trustees where the resolution was taken. It is
therefore, not surprising that the
three trustees nominated by the
developer met and took the resolution to institute the present
application.
[11] The facts set out by
the deponent in the founding affidavit reveal that the second
respondent is a company in liquidation which
is the owner of the
property. The liquidators in the exercise of their duties concluded a
sale agreement with the seventh respondent
in terms whereof the
property of the second respondent was sold to it.
[12] On Tuesday 10 May
2022, subsequent to a Deeds Office Title Deed Search document, which
was furnished to the deponent it came
to the attention of the
Association that the seventh respondent was seeking registration of
the property in its name on 11 May
2022.
[13] The deponent was
absolutely shocked by the discovery since he was unaware that
consent, as required by the restrictive conditions
in the title deed
has never been sought by or granted to the seventh respondent.
[14] The deponent
continued to aver that he sought urgent advise from the Association’s
attorneys, Knowles Husain Lindsay
Inc. The attorneys addressed a
letter to the first respondent (the Registrar of Deeds) and to the
liquidators in which it was pointed
out that consent from the
Association is required prior to transfer of the property to the
seventh respondent. An attorney, one
Cameron, who represented Me
Rinderkneckt and other applicants in the application that was struck
from the roll on 17 May 2022 happened
to be present and hand
delivered the letter on behalf of attorneys to Mr Phali an employee
at the deed office. During their discussions
Phali informed Cameron
that the sale is treated as a sale by auction by the liquidators as a
“forced sale” and as such
all restrictive conditions are
ignored by the deeds office. Cameron was surprised and enquired from
Phali what is considered as
a “forced sale.” Phali
informed him that he believed it to be a forced sale because the
sellers are the liquidators.
The deponent believes differently. The
deponent knows that no consent was granted, and, if consent was
granted, that it constitutes
a fraud on the deeds office, the
Association and, of course, its members.
[15] The clear right the
Association relies on is the restrictive condition registered against
the title deed in favour of the Association.
[16] The first respondent
opposed the application mainly because the Association seeks a costs
order against it in the notice of
motion. Counsel on behalf of the
first respondent said that the first respondent does not wish to take
sides or wish to become
embroiled in the disputes and will abide the
decision of the court. I consider the stance of the first respondent
as prudent and
what is to be expected from the first respondent.
[17] The liquidators
filed an unsigned affidavit of the trustee Coppin together with the
opposing affidavit and requested that his
evidence albeit it hearsay
be accepted as evidence in the light of the urgency. I will take
cognisance of the contents in view
of the extreme urgency with which
the respondents were required to file opposing papers. Coppin says
that the he is one of the
trustees nominated by the home owners and a
board meeting was held two weeks ago where the deponent Langenhoven
was present. Transfer
of the property was discussed and in particular
whether consent from the Association is required for the transfer.
Langenhoven
pointed out that the sale is a “forced sale”
and that consent is not a requirement for the transfer to the new
owner.
All the levies are paid in respect of the property and consent
may be given, if the consent is required. The liquidator attached
the
written consent dated 21 April 2022 and signed by ST Bronèe.
[17] In the replying
affidavit Langenhoven states that he first had sight of the letter of
consent when he considered the affidavit
of the seventh respondent.
He reiterated that it is fraudulent for the following reasons.
Firstly, because the board of trustees
never granted consent for the
transfer and because the letter makes no reference to the restrictive
conditions. Secondly, because
the board has not authorised the
signatory to sign the document. And thirdly, because the document is
dated 21 April 2022. A board
meeting was held on 22 April 2022 where
Bronèe was present and has failed to disclose that the consent
was signed by him.
He maintains that the consent of the Association
is a necessary prerequisite for the transfer of the property. Nor can
the sale
by the liquidators be regarded as a “forced sale”
for purposes of transfer of the property.
[18]
The seventh respondent
[4]
pointed out in the answering affidavit that the present application
is yet another chapter in the long line of applications which
involved the Hans Merensky estate the nature of which it has little
knowledge. Indalo operates in the hospitality industry. As
a result
of the liquidation of the second respondent Indalo purchased the
property on 11 March 2022 from the liquidators. The purchase
price
was paid on 10 May 2022 after Indalo first hesitated to pay as a
result of the first urgent application which was designed
to stop
transfer of the property.
[19] Counsel for Indalo
maintained in argument that the sale by the liquidators constitutes a
“forced sale” similar
to a sale in execution of a
judgment. Counsel relied on
Nel
v Lubbe
[5]
as
authority for that proposition. I will return to this issue.
[20]
The relief claimed against the first respondent is firstly an
interdict to restrain the transfer of the property. Secondly,
the
Association claims for a declaratory order that the restrictive
conditions contained in the title deed are binding on all the
respondents and a declaration that the sale is not a “forced
sale” as envisaged by the Deeds Act nor that the deeds
office
practice manuals and accordingly applies to the transaction. It also
seeks an order to declare the consent letter as
pro non scripto
and of no force or effect.
[21] When a company is
liquidated ownership of the assets of the company remain vested in
the company. The liquidator, although
not vested with ownership of
the company’s property, exercises all rights of ownership. The
duty of a liquidator in realising
an asset is a statutory duty cast
upon the liquidator to realise the assets for the benefit of all the
creditors and to distribute
them. Liquidators perform their duties
in
invitum
(against the will) of the company and its directors. The
common cause facts are clear that the liquidators sold the property
to
the seventh respondent in the performance of their duties to
liquidate the second respondent.
[22] The question to be
answered, in my view, is not if the sale is a “forced sale”
but rather if restrictive conditions
embodied in a title deed
prohibit transfer of the property in instances where such a property
is sold at the direction of the liquidators.
The expression
“forced sale” in this sense is misleading and does not
describe the duties of the liquidators.
It is not the validity of
sale as such, that is disputed but the obligation of the first
respondent to transfer the property to
the seventh respondent without
the written consent of the Association. In
Nel v Lubbe supra
the court held that a forced sale:
“
[It] is a sale
where the owner of the property sold is in distress, usually having
no funds to pay his debts. The sale is conducted
by the Sheriff.
There is no reserve price. Advertisement of the sale is invariably
inadequate and often the mortgagee, who attends
the sale to protect
his interest, succeeds with a bid which in money terms is derisive.
In the case of a sale not in execution
but by public auction on the
direction of the trustees of an insolvent estate, I consider is no
less than a forced one. While the
advertisement of the sale is more
extensive, there are many factors which do not attach a large number
of bidders.”
[23] The passage is not
helpful. The present issue does not relate to the price at which the
property was sold, but whether the
restrictive conditions prohibits
the first respondent to transfer of a property to the seventh
respondent. If the answer is that
written consent of the Association
is a necessary prerequisite, it is the end of the enquiry. The term
“forced sale”
is not an appropriate one. It is clear that
the purpose of the restrictions in the title deed is to grant the
Association the right
to decide for reasons of their own who to allow
to become members of the Association. A purchaser becomes a member
once a property
is transferred in to the name of such a member. A
sale is normally subject to the restriction. There is no evidence
that the property
was sold subject to the condition that the
Association must first consent to the transfer before the property
may be transferred.
I accept therefore that no such condition is
contained in the deed of sale. It seems to me that the restriction
was considered
to be applicable only to voluntary alienations.
[24] In
Heimann
v Klempman & Jaspan
[6]
it was held that a trustee in an insolvent estate is not bound by a
provision in a lease prohibiting assignment without a landlord’s
consent. The learned Judge referred to a judgment of the Chief
Justice in
London
and South African Exploration Co v Official Liquidator of
North-Eastern Bultfontein and the Registrar of Deeds
[7]
which
said:
“
The deed
authorises the lessees to transfer the claims during the term on
condition that no such transfer shall be made unless all
rent or
licence moneys owing to the lessors on the claims shall have been
duly paid. This condition is clearly applicable only
to voluntary
transfers, and not to transfers which are necessitated by the
insolvency of the lessee for the purpose of distributing
the proceeds
among their creditors in due order of preference.”
[8]
[25] The question was
extensively discussed after a review of the authorities in
Moseley
Buildings Ltd v Bioscope Cafes Ltd,
[9]
almost a hundred years ago, in the contexts of whether a liquidator
of an insolvent company is bound to a restrictive covenant
in a lease
agreement.
[26] The court stated the
general principle to be:
“
In my opinion, the
guiding principle accepted by the court is that, both a trustee and a
liquidator, notwithstanding the legal difference
of their title to
the control of the assets, have a statutory duty to perform, namely:
to realise the assets for the benefit of
the creditors as a whole…
not so much for the benefit of the insolvent or the company…in
other words, as stated by
LE BLANC J, in Doe v Bevan, their disposal
of the assets is in the nature of a “statutable execution”
[10]
[27] It seems clear from
these decisions that the court accepted that a liquidator in the
exercise of its duties is generally not
bound by restriction in a
contract that bind the parties.
[28] The Appellate in
Division
in Durban City Council v Liquidators Durban Icedromes Ltd and
Another
[11]
pointed
out that since the amendment of section 37 of the Insolvency Act,
that a trustee is bound to a stipulation in a lease which
restricts
or prohibits the transfer of any right under a lease. The court
commented:
“
There remains the
question whether the liquidators are bound by the provision in the
lease that the lessee shall not assign it without
the consent in
writing by the council. Before the amendment of
sec 37
of the
Insolvency Act, 1936
, by sec 14 of the Insolvency Law Amendment Act
1943, neither a trustee nor a liquidator was, according to a number
of decisions
in our Courts, bound by a clause of that nature in a
lease. (Cf
inter
alia
Heimann
v Klepman and Jaspan
1922
WLD 115.
Himmelhoch
v Liquidators fresh Milk and Butter Supply Co Ltd and Others
1925
TPD 958).”
[12]
[29] The correctness of
those decisions were not questioned by the court. The writers of
Meskin
Insolvency Law and its Operation in Winding-Up
[13]
states:
“
Since the sale is
a compulsory one dictated by the provisions of the
Insolvency Act,
contractual
or other non-statutory stipulations precluding or
restricting the insolvent from selling or delivering the property
concerned are
not operative against the trustee (although in relation
to a lease, this situation is modified by the provisions of
section
37(5)
of the
Insolvency Act.) It
is submitted that as a result of the
concursus
creditorum
a
stipulation which is intended also to bind the trustee and to prevent
him from selling the property in accordance with the provisions
of
the
Insolvency Act is
as a general rule without force and
effect.”
[14]
[30] The restriction
contained in the title deed cannot properly be allowed an impediment
to the transfer of the property when it
is sold by public auction by
the liquidators in terms of their duties as liquidators. In
Heenop
v Magaliesbergse Koringkooperasie Bpk
[15]
the question was whether the provisions of a statute prohibited a
liquidator from selling crops by public auction. The court approved
of the passage in
Moseley
Buildings Ltd supra
and
reiterated that it is the duty of a liquidator do all things as may
be necessary for the winding-up the affairs of the company
and
distributing its assets under supervision and sanction by the court.
[31] The liquidators, in
my judgment, were obliged in terms of
section 82
of the
Insolvency
Act to
sell all the property in the estate in such manner and upon
such conditions as the creditors may direct as long as the sale of
the property of the estate was not prohibited by statute or was
unlawful.
[16]
There is no
suggestion in the papers that the sale of the property to Indalo is
prohibited by statute nor that the sale was unlawful.
[32] I cannot imagine
that the restrictive condition can have the same force of a statute
to prohibit transfer of a property lawfully
sold in the liquidation
process by the liquidators, thereby nullifing the wishes of the body
of creditors and render the
consursus creditorum
illusory, and
the provisions of the
Insolvency Act, sterile
and ineffective.
[33] I have come to the
conclusion that the liquidators are not bound by the restrictive
conditions in the title deed. As a result
the Association has not
made out a case for an interdict. The court has a discretion to grant
a declaration of rights. I am of
the view that the Association has
not succeeded to prove the right claimed.
[34] I accept that the
question of consent was discussed at the meeting of 22 April 2022
over which Langenhoven presided. His failure
to attach the minutes of
that meeting to the replying affidavit is conspicuous. The
probabilities point to him as the person
who provided Cameron with
that information. The whole issue of consent and the forced sale was
discussed at this meeting where
he himself pointed out that consent
is not needed. This aspect was not denied in the replying affidavit.
The application appears
to be opportunistic and yet another attempt
to prevent at all costs the transfer of the property.
[35] The resolution to
institute the application was taken without the nominees from the
home owners being present. There are in
the region of 50 home owners
who will have to make a contribution to the costs of this application
without having being heard as
a result. I do not consider it fair or
in the interest of justice that they should subsidise the costs of
the application. It is
my
prima facie
view that the three
trustees who made the decision should be given the opportunity to
advance reasons why they should not pay the
costs of the application.
The question of costs, therefore, must stand over for argument.
ORDER.
1
The application is dismissed.
2.
The question of costs is postponed to 10 June 2022 at 9h00 when CJ
Langenhoven
S
Matlala; and
3.
Mrs Rinderknecht must advance reasons by means of affidavits why they
should not be ordered to
pay the costs of the application on the
scale as between attorney and client, inclusive of the costs
consequent upon the employment
of two counsel.
_____________________
GC
MULLER
JUDGE
OF THE HIGH COURT
LIMPOPO
DIVISION: POLOKWANE
APPEARNCES
1.
For the Applicant
: Adv Morton
2.
For the first Respondent
: Adv Mohlabi
3.
For the second
: no appearance
4.
For the third to sixth Respondent
: Adv Scheepers SC
: Adv De Beer
5.
For the seventh Respondent
: Adv Pretorius
[1]
Hereinafter called “the property”.
[2]
Hereinafter called “the Association”.
[3]
Hereinafter
called “the liquidators”.
[4]
Hereinafter
called “Indalo”.
[5]
1999
(3) SA 109 (W).
[6]
1922
WLD 115.
[7]
1895
SC 12
225; Also
Himmelhoch
v Liquidators Fresh Milk and Butter Supply Co Ltd and Others
1925
TPD 958,
[8]
At
238.
[9]
1923
WLD 189.
The judgment was confirmed on appeal in
United
Bioscope Cafes Ltd v Moseley Buildings Ltd
1924
AD 60.
[10]
At
199.
[11]
1965 (1) SA 600 (A).
[12]
612B-C.
[13]
Magid PAM
et
al
Ed.
[14]
P10-3.
[15]
1962
(4) SA 97
(T) 102D.
[16]
Oertel
and Others NNO v Director of Local Government and Others
1981
(4) SA 491
(T). 508H.