Philani-Ma-Afrika and Others v Mailula and Others (674/08) [2009] ZASCA 115; 2010 (2) SA 573 (SCA) ; [2010] 1 All SA 459 (SCA) (25 September 2009)

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[2009] ZASCA 115
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Philani-Ma-Afrika and Others v Mailula and Others (674/08) [2009] ZASCA 115; 2010 (2) SA 573 (SCA) ; [2010] 1 All SA 459 (SCA) (25 September 2009)

THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No:
674/08
PHILANI-MA-AFRIKA First Appellant
RESIDENTS OF ANGUS
MANSIONS Second to Sixty Eighth Appellants
and
W M MAILULA
First Respondent
TRUST FOR URBAN HOUSING FINANCE
Second Respondent
J N BHANA & ASSOCIATES Third Respondent
REGISTRAR OF DEEDS Fourth Respondent
THE CITY OF JOHANNESBURG Fifth Respondent
Neutral citation:
Philani-Ma-Afrika
& Others v W M Mailula & Others
(674/08)
[2009] ZASCA 115
(25 September 2009)
Coram:
FARLAM, NAVSA, MLAMBO,
SNYDERS JJA et
TSHIQI AJA
Heard:
26 MAY 2009
Delivered:
25 SEPTEMBER 2009
Summary:
Sale of property –
Failure to establish sale and transfer of property duly authorised –
order putting eviction order into operation
– whether appealable.
______________________________________________________________
ORDER
On appeal from:
Johannesburg
High Court (Willis J sitting as court of first instance)
The following order is made:
1. The appeal is allowed with costs including those
occasioned by the employment of two counsel.
2. The order made by the court
a
quo
in case 2008/14341 (the Philani
application) is set aside and replaced by the following order:
'1. The sale of erf No 4562 Johannesburg, situated at
268 Jeppe Street, Johannesburg, is set aside.
2. The Fourth Respondent is ordered to cancel Deed of
Transfer no T033425/07.
3. It is declared that the property referred to in
paragraph 1 is owned by the Applicant.
4. The First and Second Respondents are ordered to pay
the Applicant's costs.'
3. The order made by the court
a
quo
in case 2008/4453 is set aside and
replaced by the following order:
'The application is dismissed with costs'.
JUDGMENT
FARLAM JA (Navsa, Mlambo, Snyders JJA et Tshiqi AJA
concurring)
[1] This is an appeal against a judgment delivered by
Willis J on 5 November 2008 in the Johannesburg High Court. In his
judgment
the learned judge dealt with two applications which were
argued together before him. One was an application brought by the
present
first appellant, a company registered in terms of s 21 of the
Companies Act 61 of 1973, Philani-Ma-Afrika, which I shall call in

what follows 'Philani', in which it sought orders (a) setting aside
the purported sale of a property known as Angus Mansions, situated
at
Erf no 4562, Johannesburg, the street address of which is 268 Jeppe
Street, Johannesburg, to the first respondent, Mr William
Marofane
Mailula, (b) ordering the Registrar of Deeds, Johannesburg, the
fourth respondent, to cancel Deed of Transfer no T033425/07(in
terms
of which the property was transferred from Philani to Mr Mailula) and
(c) declaring the property to be owned by Philani.
As additional
respondents were cited the Trust for Urban Housing Finance, the
second respondent, which is the mortgagee of the
property under a
mortgage bond registered over the property to secure a debt owed by
Mr Mailula, and as third respondent J N Bhana
and Associates, the
firm of conveyancers responsible for bringing about the transfer of
the property to Mr Mailula. The City of
Johannesburg was cited as
fifth respondent.
[2] The other application was one brought by Mr Mailula,
as owner of the property, for an order evicting 67 named occupiers of
the
property. They feature in this case as the second to 68
th
appellants. The 68
th
respondent in the eviction application was described as 'the
remaining unlawful occupiers of Angus Mansions'. They are not
represented
before this court.
[3] Willis J dismissed the application brought by
Philani and granted the eviction application brought by Mr Mailula
against the
first to 68
th
respondents before him. He granted them and Philani leave to appeal
to this court against his judgment and the orders he made.

Subsequently he granted Mr Mailula leave to execute against the
respondents whose eviction he had ordered (except for the 9
th
,
16
th
, 18
th
,
32
nd
and 65
th
respondents, who are respectively the 10
th
,
17
th
, 19
th
,
33
rd
and 66
th
appellants before us and who are all members of Philani): in what
follows I shall call this order ‘the execution order’. The

respondents whose eviction had been ordered, including those against
whom leave to execute was not given, applied to the Constitutional

Court for an order replacing Willis J's execution order with an order
dismissing the execution application.
[4] On 4 December 2008 the Constitutional Court granted
an order in the following terms:
'1. The order of Willis J in the Johannesburg High Court
on 13 November 2008, granting the First Respondent leave to execute
an
eviction order against 62 of the applicants on 15 December 2008,
is suspended pending the final determination of the appeal in the

Supreme Court of Appeal, pursuant to leave granted to the applicants
by the High Court on 5 November 2008.
2. The application for leave to appeal against the High
Court's order of 13 November 2008 is referred to the Supreme Court of
Appeal
to be adjudicated, to the extent it may be so adjudicated
given the provisions of section 20 of the Supreme Court Act 59 of
1959,
simultaneously with the appeal referred to in sub-paragraph 1
hereof.
3. Costs are to be costs in the appeal.'
[5] It was common cause at the hearing of the appeal
that if the Philani appeal succeeded the appeal against the order in
the eviction
case would also have to succeed.
[6] Philani was incorporated in 1996 to serve as a
corporate vehicle through which the National Housing Board, through
the Gauteng
Provincial Housing Board, subsidised and assisted
underprivileged people collectively to acquire Angus Mansions for
their own occupation.
[7] Its Memorandum of Association states that its main
business is 'to acquire, hold, develop or improve [Angus Mansions]
with a
view to enabling the community of residents, of which at least
75% . . . of the adult members are persons who earn less than R1500

per month . . . to acquire such land, and/or right thereto so as to
occupy the land and buildings wholly or mainly for residential

purposes . . ..' Its powers include the power to sell or deal with
its property, ie, Angus Mansions, 'but always in accordance
with the
main object' (which was identical with its main business). Its income
had to be applied solely towards the promotion of
its main and
ancillary objects (which were limited to those 'necessary to achieve
its main object') and no part of it might be
paid or transferred
directly or indirectly to its members. On winding up its assets have
to be given or transferred to some other
association or institution
'having objects similar to its main object'.
[8] In terms of its articles only residents of Angus
Mansions are eligible for membership and membership is a
pre-condition of occupation
of a flat in the building. Only members
are eligible for election as directors. At all times there have to be
at least seven directors
and if the number falls to below seven the
remaining directors 'may only act to call a general meeting for the
election of additional
directors'.
[9] Philani acquired Angus Mansions and it was
registered in its name on 18 February 1997. The administration and
record-keeping
of the company were neglected and as the appellants'
counsel put it, 'fell into disarray'. The register of members was
never updated
with the result that its only registered members are
the eight original subscribers to the memorandum of association. Of
these
two have died and one has moved away so that Philani has only
five registered members left, the appellants in respect of whom the

execution order was not made. The appointment of the directors and
the functioning of the board have also been neglected. CM 29
returns
have been furnished to the Registrar of Companies reflecting
resignations and the appointment of new directors but the
new
appointments are clearly invalid because the persons allegedly
appointed were not members and were accordingly ineligible for

election as directors (even if elections were held). Indeed it is
clear that it is not possible for Philani to have a board of

directors whose members can do nothing other than call a general
meeting.
[10] On 7 August 2006 a deed of sale was signed by Mr
Mailula, as buyer, and a Mr Mkhumbuzi, purportedly on behalf of the
seller.
The deed reflected the sale of Angus Mansions to Mr Mailula
for R3.5m. Mr Mkhumbuzi signed the deed 'by virtue of a Power of
Attorney
- copy attached'. No copy was attached. Neither Mr Mailula
nor Mr Mkhumbuzi (from whom an unsigned document purporting to be an

affidavit was filed) state whether a power of attorney in fact
existed. If it did, it could not have been valid because the
remaining
directors could not validly have passed a resolution
authorising the sale. The estate agent who handled the sale did not
make an
affidavit nor did the conveyancing attorney, who, as I have
said, was a party.
[11] As counsel for the appellants contended the only
document disclosed in the evidence upon which Mr Mkhumbuzi could have
relied
was a document described during argument as 'the Madisha
document'. The copy of the document annexed to the papers reads as
follows:
'
PHILANI MA AFRICA
PHILANI MA AFRICA
ANGUS MENSSION NO 268 JEEPE STREET [sic] PO BOX 85
JOHANNESBURG WITS
2001 2000
__________________________________________________________________________
RESOLUTION BY DIRECTORS OF PHILANI MA AFRICA
BUILDING SITUATED AT CORNER JEPPE AND END STREET
A meeting was on the 12
th
April 2006 held between the Directors and disposal of property with
immediate effect at an agreed price.
Shares and equity between the members for their own
interest and an amount of R100.000.00 to be paid.
Directly to Solly Madisha.
Disolution of partnership and appointments of interim
directors.
Dated on Johannesburg on this 12
th
day April 2006.
___________________
Directors: Solly Madisha'
(The document bore a signature.)
[12] This is the only document from which Mr Mkhumbuzi
claimed to have derived his authority to sell Angus Mansions on
behalf of
Philani. Counsel for the appellants submitted (a) that it
was inadmissible because the copy was not proved to be authentic; (b)

that there was every reason to suspect that it might be a forgery;
(c) that it was incoherent on its face; (d) that, if admissible
and
genuine, it did not prove a valid resolution because none of the
persons alleged to have adopted the resolution could have
validly
been elected as director of Philani (because none was registered as a
member) and (e) in any event, even if they were validly
appointed
directors, they had no power to do anything other than call a general
meeting, for the reason given earlier. But there
is an even more
telling criticism. It did not authorise anyone to implement it on
behalf of Philani.
[13] Apart from the Madisha document, Mr Mailula relied
on a further document, which, although it was only in manuscript,
purported
to be a copy of a minute of a meeting of residents of Angus
Mansions held on 9 October 2006 (two months after the deed of sale
relied on by Mr Mailula was signed). It reads as follows:
‘
Meeting held at Philani Ma Afrika with Housing Dept
Agenda.
1. Housing Dept introducing Vusani
1. We told housing that we don't need Vusani to manage
us, or to do renovations for us.
2. We told housing that we don't trust them anymore
because during the past years they introduce Cope housing to manage
Philani
and they put us into problems. So now we the declaratory
order need any agent brought by housing.
3. Housing Dept told us that if we don't want Vusani its
fine because everything is up to us as tenants.
4. We tenants we give Philani the authority to appoint
or sell the property to a company that will run the property in a
standard
form of good management.'
[14] No evidence was led as to the authenticity of this
document. Counsel for the appellants contended that it was, in any
event,
a forgery and referred in this regard to the evidence of
Philani's witnesses, who say that there was a meeting of residents on
9 October 2006 for another purpose and the disposal of the building
was not discussed.
[15] It is unnecessary to make any finding on these
issues because, even if the document is authentic and evidences a
resolution
in the terms set out, this still will not assist Mr
Mailula in establishing that Mr Mkhumbuzi was authorised to sell the
building
or to sign the conveyancing documents for the property to be
transferred to Mr Mailula.
[16] Counsel for the appellants attacked the validity of
the sale and transfer on other grounds also but it is clear from what
I
have said that Philani has clearly established that the sale and
transfer of its property were invalid and that it is entitled to
the
relief it seeks in its notice of motion.
[17] Counsel for Mr Mailula conceded that the
documentation purporting to authorise the sale was, as he put it, ‘a
sham’ but
submitted that the case should be sent back to the court
a quo
so that there
could be either a reference to evidence under rule 6(5)(g) of the
Uniform Rules or a reference to trial. The purpose,
he submitted, was
so that a full enquiry into the history of the management of Angus
Mansions could be conducted and the circumstances
leading up to the
sale could be explored. He submitted further that inner city housing
as a whole should be investigated. All of
this is far beyond the
legal issues we are required to address. But this request was in any
event made far too late. In the court
below Mr Mailula was content
for the case to be dealt with on the papers and the evidence adduced
in that court was not sufficient
to raise a valid defence to
Philani's claims, even if believed.
[18] Counsel for the second respondent submitted that
Philani was precluded from obtaining the relief it sought by virtue
of the
application of the
par delictum
rule. He submitted that, if there was a fraud perpetrated on Philani
(as counsel for the appellant submitted), it was as much part
of the
fraud as anyone. In this regard he contended that at all material
times Philani had a board of directors and there was accordingly
what
he called 'corporate intelligence' and the directors ‘must have
known’ what was happening. While I do not think that it
is correct
to say that Philani (in any recognisable form) can be regarded as
complicit in the fraud that was perpetrated, it is
unnecessary to
give further consideration to the point raised because I am satisfied
that, as counsel for the appellants contended,
the
par
delictum
rule does not apply in the
circumstances of this case.
[19] It follows from what I have said that the appeal
must succeed and the orders made by the court
a
quo
must be set aside and replaced with
orders in the Philani application granting Philani the relief it
sought and in the eviction
application refusing the relief sought.
[20] It remains for me to deal with the issue referred
to this court by the Constitutional Court. The application was
brought in
the Constitutional Court because it was believed that the
execution order was not susceptible to appeal to the Full Bench of
the
High Court or to this Court. That belief was erroneous. It is
clear from such cases as
S v Western Areas
2005 (5) SA 214
(SCA) at paras 25 and 26 at
226A-E that what is of paramount importance in deciding whether a
judgment is appealable is the interests
of justice. See also
Khumalo
v Holomisa
[2002] ZACC 12
;
2002 (5) SA 401
(CC) para [8] at
411A-B. The facts of this case provide a striking illustration of the
need for orders of the nature of the execution
order to be regarded
as appealable in the interests of justice. Counsel were agreed that
if the appeal on the merits of the eviction
order were to succeed no
further attention need be paid to the application for leave to appeal
against the execution order –
the latter being premised on the
former. In any event, in view of the suspension of the execution
order by the Constitutional Court
the point, as counsel agreed,
became moot. In the circumstances no order is required in respect
thereof.
[21] The following order is made:
1. The appeal is allowed with costs including those
occasioned by the employment of two counsel.
2. The order made by the court
a
quo
in case 2008/14341 (the Philani
application) is set aside and replaced by the following order:
'1. The sale of erf No 4562 Johannesburg, situated at
268 Jeppe Street, Johannesburg, is set aside.
2. The Fourth Respondent is ordered to cancel Deed of
Transfer no T033425/07.
3. It is declared that the property referred to in
paragraph 1 is owned by the Applicant.
4. The First and Second Respondents are ordered to pay
the applicant's costs.'
3. The order made by the court
a
quo
in case 2008/4453 is set aside and
replaced by the following order:
'The application is dismissed with costs'.
……………
..
IG FARLAM
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT: W H TRENGOVE SC
Ms C STEINBERG
Instructed by
Jerry Nkeli & Associates Inc Johannesburg
Matsepes Inc Bloemfontein
FOR FIRST RESPONDENT: D A KUNY SC
R G COHEN
Instructed by
Mervyn Joel Smith Attorneys Johannesburg
Lovius Block Bloemfontein
FOR SECOND RESPONDENT: J G SMIT
Instructed by
Cliffe Dekker Hofmeyr Inc Johannesburg
Du Toit Louw Botha Inc Bloemfontein
FOR FIFTH RESPONDENT: B L MAKOLA
THIRD, FOURTH AND FIFTH RESPONDENTS REFERRED TO ONLY FOR
RECORD PURPOSES.