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[2021] ZAMPMBHC 6
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Mathebula v Du Toit Smuts Attorneys and Another (A40/2020) [2021] ZAMPMBHC 6 (4 February 2021)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(MPUMALANGA DIVISION,
MBOMBELA)
(1)
REPORTABLE:NO
(2)
OF INTEREST TO OTHER JUDGES
:NO
(3)
REVISED: YES
CASE
NO: A40/2020
In the matter between:
MAGHUBA
SAMUEL MATHEBULA
Appellant
and
DU
TOIT SMUTS ATTORNEYS
First
Respondent
ROBIE
KHOZA
Second
Respondent
J
U D G M E N T
MASHILE
J:
INTRODUCTION
[1]
This is an appeal against the whole of the judgment and order of
Magistrate Khumalo sitting as
a Court of first instance, which he
handed down on 22 July 2020. The Court
a quo
had to decide on
the application of the interpleader rule of the magistrate’s
court, Rule 44. The appeal follows upon the
Appellants’
denunciation of the decision of the Court
a quo
to dismiss his
case against the Respondent. The First Respondent derives its
interest in the matter from three entities which are
its clients. The
entities are in turn lessees of Mpakeni-Mlegeni Communal Property
Association (“the CPA”). All three
entities have
deposited rentals due to the CPA into the trust account of the First
Respondent.
[2]
The rental, which it is common cause belongs to the CPA, was being
claimed by the Appellant and
Second respondent in their
representative capacity as chairpersons of the CPA. Not knowing who
of the two parties was the legitimate
chairperson of the CPA, the
First Respondent commenced interpleader proceedings before the court
a quo calling upon them to show
which of the two putative ‘adverse
claims’ was valid. The issues that the Court
a quo
had
to determine remain unchanged before this Court. The appeal
serves before this Court with leave of the Court
a quo
.
GROUNDS OF
APPEAL
[3]
The Appellant is attacking the judgment and order of the court a
quo
on a number of grounds and these are:
3.1
T
he factual finding of the court a
quo
that on considering the available evidence,
it was satisfied that the Appellant had failed to prove on a balance
of probabilities
his instruction to the First Respondent where the
money of the CPA had to be deposited. Having found that it was not
necessary
for the Court to decide on the validity of the meeting of
28 September 2019, it nonetheless concluded that the Second
Respondent
had authority in respect of the affairs of the CPA;
3.2
Finding that on a prima facie basis the Appellant had no authority
while the Second Respondent
did when this conclusion could not be
made solely on the papers before the Court;
3.3
The court a
quo
concluded that the constitution of the CPA was
the basis of authority but the finding notwithstanding the court
decided that the
Second Respondent was properly authorized while the
Appellant was not. It is astounding that the court a
quo
based
that decision on the meeting of 28 September 2019 the validity of
which the court held was not required to decide.
[4]
On the ruling of the court a
quo
on matters of law, the
Appellant raised jurisdiction and non-joinder, specifically that:
4.1
The court a
quo
erred by deciding and pronouncing on the
issues without any reference or applying the procedures provided for
in sub-rule 44(5);
4.2
Insofar as jurisdiction is concerned, the approach of the court a quo
was that the issue hovered around different
instructions given to the
First Respondent where the rentals of the CPA in the possession of
the Appellant was to be paid;
4.3
Regarding non-joinder, the court a
quo
found that the parties
did not lay claim for the rentals in their personal capacity but
erred in holding that the CPA was not required
to be joined because
both the parties
acted on behalf of
the CPA.
4.4
The Appellant also maintains that the Court a
quo
erred in
directing that the Appellant was to personally pay the costs of the
First Respondent in circumstances where he has found
that both
parties acted on behalf of the CPA. The Appellant submitted that this
is a grave misdirection warranting this Court’s
intervention
ordering the CPA to pay the costs.
FACTUAL
MATRIX
[5]
The First Respondent is a law firm that represents three entities
referred to above. The entities
have jointly deposited an amount of
R379 800.00 due and owing to the CPA as rental into its trust
account. The rental is for
the period, 1 August 2019 to 1 February
2020, and ought to have been paid by the three entities to the CPA.
On 27 January 2020,
Kruger and Partners Incorporated, on behalf of
the Appellant, wrote a letter to the First Respondent claiming that
the funds due
to the CPA by the three entities be paid into its trust
account.
[6]
On 9 March 2020, the Second Respondent represented by M E Mazibuko
Attorneys Incorporated also
wrote to the First Respondent claiming
that the rental in its trust must be paid into the banking account of
the CPA. Accompanying
the letter were a copy of the banking details
of the CPA, Minutes of the CPA’s Annual General Meeting (“AGM”)
where the Second Respondent was ostensibly elected as the new
Chairperson of the CPA, verification list of the beneficiaries of
the
CPA, attendance register for the meeting and a letter from the
Department of Rural Development and Land Reform (the Department)
reflecting and confirming the changes made to the CPA’s
Executive Committee and reflecting the names of the newly elected
Executive Committee of the CPA.
[7]
The two instructions were demonstrably at variance. Confronted with
these two manifestly conflicting
instructions from the Appellant and
Second Respondent, the First Respondent launched this Application as
it could not decide who
of the parties was authorized by the CPA to
provide the First Respondent with a bank account into which the
rentals were to be
deposited. In doing so, the First Respondent
called upon the two parties to show to the Court a
quo
who of
them was entitled to the funds in its trust account.
ASSERTIONS OF
THE PARTIES
[8]
I do not expect a party in the position of the First Respondent in
these proceedings to have interest
that stretches beyond resolution
of the matter either in favour of the one party or the other.
Understandably, its stance will
always be neutral in these kind of
matters. That introductory remark leaves me to deal with the
arguments of the Appellant and
the Second Respondent.
[9]
On the endorsement of the second Respondent as a chairperson of the
CPA by the Department, the
Second Respondent contends that his
endorsement as chairperson is an administrative act. The
Appellant was the Chairperson
of the CPA having taken up the position
on 7 July 2012. The trust deed of the CPA provides that the term of
office of a chairperson
shall be three years. With that provision in
mind, it follows that the term of office of the Appellant as
chairperson of the CPA
ended on 6 July 2015. Had elections taken
place then a new chairperson would have assumed office then until
2018.
[10]
Elections were held in 2019 and the Second Respondent was declared
the new chairperson of the CPA on
28 September 2019. The Second
Respondent concludes that he has authority to act on behalf of the
CPA. To this end, he refers to
a letter from the Department under the
rubric of “Annual Report in Terms of Regulation 8 read with
Section 11 (1) of The
Communal Property Association Act, (Act No. 28
of 1996) (Annual Report). This letter, contends the Second
Respondent, is an administrative
decision which cannot be disregarded
without it being set aside by an appropriate forum.
[11]
Furthermore, the letter from the Department is prima facie proof of
the people constituting the Executive
Committee of the CPA. The
Second Respondent, so continues the argument, is making a claim for
the rentals in his Official Capacity
as the Chairperson of the CPA.
The Second Respondent submits that the Appellant ought to launch an
application to set aside the
decision of the Department because, as
an administrative decision, it persists until set aside by a court of
law. If it is common
cause that the Appellant became chairperson of
the CPA in 2012, it ought to be a matter of course that his term as a
chairperson
expired in 2015.
[12]
The Second Respondent is steadfast that the court a
quo
had
jurisdiction to adjudicate this matter in terms of Rule 44. The
words, instructions and claims, in the context of this
matter have
the same connotation. ‘adverse claims’ or ‘adverse
instructions’ or ‘competing claims
or instructions or
conflicting claims or instructions’ must all be understood to
mean the same against the background of
Rule 44. Doing so will leave
very little doubt that this matter was correctly dealt with under
Rule 44.
[13]
Insofar as non-joinder is concerned, the Second Respondent’s
submission is that it is trite that
parties are not joined to
proceedings for convenience only but it must be shown that such a
party has a direct and substantial
interest, which if not done, will
result in prejudice. Since the parties have both declared that they
act on behalf of the CPA,
joining it would have been convenient only
and not strictly necessary.
ISSUES
[14]
It is apparent that some of the key issues to be discerned from the
above facts are:
14.1
Whether or not the Court a
quo
was correct in adjudicating the
dispute between the parties in terms of Rule 44. This is what the
Appellant has referred to as
the jurisdiction of the Court a
quo
.
That issue cannot be decided independently of the determination of
the presence of ‘adverse claims’ as envisaged in
Rule 44;
14.2
Whether or not the CPA being the party to which the funds in the
trust account of the First Respondent belongs,
had a direct and
substantial interest sufficient to have warranted its joinder to the
proceedings before the Court a
quo
;
14.3
The relevance of the ratification of the meeting of 28 September 2019
of the CPA during which the Second
Respondent was elected as
chairperson of the CPA.
LEGAL CONTEXT
[15]
Central to this matter is whether or not Rule 44 was correctly
invoked in the circumstances of this
case. Accordingly, to put the
matter in its proper perspective, it is pivotal to cite the Rule in
full below:
“
(1) (a) Where any third
party (hereinafter in this sub-rule referred to as the “applicant”)
has in his or her custody
or possession property to which two or more
persons (hereinafter in this rule referred to as the “claimants”)
make
adverse claims the applicant may sue out a summons in the form
prescribed for that purpose in Annexure 1 calling upon the claimants
to appear and state the nature and particulars of their claims and
have such claims adjudicated upon.”
[16]
The jurisdictional facts required to be present before Rule 44 or its
equivalent in the High Court,
Rule 58, were described by Nestade J in
the matter of
Kamfer
v Redhot Haulage (Pty) Ltd
[1]
as
follows:
“…
What
is clear, however, is that, essential to its operation, is that the
applicant alleged that he is being or expects to be sued
by two or
more parties making adverse claims to property or money held by him.”
[17]
In brief therefore the jurisdictional facts required are:
17.1
An applicant or a third party who divests himself of the dispute
between the rival parties
must be in
possession of property; and
17.2
Two or more parties must make adverse claims to the property in the
possession of the applicant or third
party. The adverse claims
mentioned in the second jurisdictional fact must be valid and
enforceable. Without valid and enforceable
claims, the employment of
the Rule is irregular.
[18]
Insofar as non-joinder is concerned, the Second Respondent has
referred this Court to the case of
Bowring
NO v Vrededorp Properties CC and Another
[2]
where
the following was stated:
“…
.
the enquiry relating to non-joinder remains one of substance rather
than the form of the claim. (See eg Amalgamated Engineering
Union v
Minister of Labour 1949 (3) SA
637 (A) at 657.) The substantial
test is whether the party that is
alleged to be a necessary party for purposes of joinder, has a legal
interest in the subject
matter of the litigation, which may be
affected prejudicially by the judgment of the
court in the
proceedings concerned (see eg Aquatur (Pty) Ltd v Sacks
1989 (1) SA 56
(A) at 62A-F; Transvaal Agricultural Union v Minister
of Agriculture and Land Affairs
2005 (4) SA 212
(SCA) paras 64 66).”
[19]
As is evident from the cases referred to in the Bowring judgment, the
SCA was merely restating the
principle as articulated by other cases
decided earlier. The fact that the principle was echoed in Bowring
does not make it relevant
to the current facts confronting this
Court. As a matter of fact, other than the restatement of the
principle, it was
not even applied in the Bowring case
because the papers were subsequently amended thereby obviating the
prejudice that could have
ensued. This is manifest from the contents
of Paragraphs 22 and 23 of the judgment.
EVALUATION
EMPLOYMENT OF
RULE 44 IN THE CIRCUMSTANCES OF THIS MATTER
[20]
The jurisdictional facts mentioned in the
Kamfer
case
supra
are the only means through which interpleader proceedings can be
employed. Absence of any one of the two will be fatal to such
a
claim. In the circumstances, for this Court to decide this matter, it
is critical to determine whether or not both these jurisdictional
facts are present. The First Respondent who is not part of the
dispute between the Appellant and Second Respondent is in possession
of rentals due, payable and owing to the CPA. This much is common
cause between the parties.
TWO PARTIES
MUST LAY VALID ADVERSE CLAIMS AGAINST THE PROPERTY IN POSSESSION OF
THE THIRD PARTY
[21]
The first jurisdictional fact is not contentious at all and so is the
requirement that two parties
must claim the property in the custody
of the third party. Here we have the Appellant and the Second
Respondent. However, it is
the validity of the conflicting or
competing or adverse instructions to the First Respondent that pose a
challenge. The Court a
quo
characterized these instructions
emanating from the Appellant and Second Respondent as adverse claims
as contemplated in Rule 44.
The Second Respondent asserts that the
Court a
quo
was correct in doing so because there was no other
means for the First Respondent to resolve the dispute.
[22]
It is plain from the argument of the Second Respondent that he draws
no distinction between ‘adverse
instructions’ and
‘adverse claims’. It is this conflation of meanings of
the two that brought the Court a
quo
to this untenable
conclusion. Once both parties agree that the rental belongs to the
CPA then the notion of adverse claims ceases
to exist. It is totally
immaterial that each rival party has given instructions to the First
Respondent to pay the rental into
different trust accounts of
attorneys of their respective choices alleging it to belong to the
CPA.
[23]
Adverse instructions denotes no dispute in the entitlement of the
property in possession of the applicant
or third party. This is akin
to the situation in this matter. Both parties are claiming the rental
for the same party – the
CPA. This is not the understanding of
‘adverse claims’ as intended in Rule 44. Adverse
therefore in the context of
Rule 44 is that each party must claim the
property as its own it being irrelevant whether the party so claiming
does so on behalf
of a principal or not.
[24]
The basis on which each party gave instructions to the First
Respondent bears no relevance to the party
to which the rental
belongs. The parties are always at liberty to fight over who of them
has authority to represent the CPA but
that does not give rise to the
invocation of Rule 44 because that is no dispute that pertains to
ownership of the property in the
possession of the First Respondent.
Accordingly, I can find no excuse of the Court a quo to bring the
claim under the auspices
of Rule 44. The characterization of the
claim as an interpleader was invalid, erroneous and irregular and the
case ought to have
been dismissed on that ground alone. This should
be the end of the road for the Second Respondent but I deem it
necessary to deal
with the other issues raised by both parties at
length.
NON-JOINDER OF
THE CPA
[25]
The approach of the Court a quo on this issue was that the joinder of
the CPA was not strictly required
as both parties have professed to
be claiming the rental on behalf of the CPA. This is an unconcealed
misdirection by the Court
a quo for the test to determine whether or
not a party should be joined depends on its substantial and direct
interest in the matter,
which if not observed, will result in it
suffering prejudice. See, the Bowring case
supra.
The direct
and substantial interest of the CPA in the matter is evident –
the rental in the trust account of the First Respondent
belongs to
it. That on its own is satisfactory but the enquiry should go a step
further. Will the CPA suffer any prejudice if not
joined to these
proceedings?
[26]
Of course the answer to the question posed in the preceding paragraph
is unquestionably in the affirmative.
The fact that there are two
parties each claiming to be acting on behalf of the CPA should raise
concern to anyone. What will happen
if the rental is paid to the
wrong party and that such party utilizes the funds for purposes other
than that designated in the
Constitution of the CPA? The long and
short of this is that the CPA has a direct and substantial interest
in the matter, which
will cause prejudice if disregarded.
Accordingly, and contrary to what the Second Appellant would have
this Court believe, its
joinder is strictly required.
ADMINISTRATIVE
ACTION OF THE DEPARTMENT
[27]
In my opinion this point is completely ill-advised but for purposes
of completeness, this Court ought
to reflect on it briefly. The case
authority and other related information to which the Second
Respondent committed so much time
discussing would have found
pertinence in a matter dealing with a challenge to his authority to
represent the CPA. This application
has nothing to do with his
authority but has everything to do with the appropriateness of the
interpleader proceedings in the circumstances
of this matter.
[28]
The Second Respondent has expressed some despondence over his
inability to claim the rental in the
possession of the First
Respondent if the interpleader proceedings are set aside. For what it
is worth, this Court needs to reiterate
that the employment of
interpleading proceedings in this matter was improper. I deliberately
choose not to suggest a solution to
the parties lest the Court
becomes a legal advisor of the parties. This brings me to the
questions of who should bear the costs.
COSTS
[29]
The interpleader proceedings were launched by the First Respondent as
it believed it to be a means
of resolving the dispute between the
parties. Needless to state that its decision was miserably incorrect.
That said, it should
be noted that the First Respondent did not shove
its views on how the two parties could have their dispute decided
down their throats.
They have always been at liberty to reject it but
they chose to abide because they thought that was the right thing to
do. If that
is the case, how can they turn around and blame the First
Respondent? Anyway, the point is that they both thought that they
were
legitimately acting on behalf of the CPA. It cannot be right
under those circumstances that they should be made to pay the costs
in their personal capacity. The CPA should, as suggested by the
Appellant, be liable for the costs of this appeal including those
of
the proceedings before the Court a
quo.
ORDER
[30]
In the result, I propose the following order:
1. The appeal
is upheld, the order of the Court
a quo
is set aside and is
substituted for the following:
2. The
application is dismissed;
3. The CPA is
directed to pay the costs of the Rule 44 proceedings.
______________________________
B A MASHILE
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
MPUMALANGA DIVISION,
MBOMBELA
I
agree,
______________________________
N R SHABANGU-MNDAWE
ACTING JUDGE OF THE
HIGH COURT OF SOUTH AFRICA
MPUMALANGA DIVISION,
MBOMBELA
This judgment was
handed down electronically by circulation to the parties and/or
parties’ representatives by email. The date
and time for
hand-down is deemed to be 04 February 2021 at 10:00.
APPEARANCES:
Counsel for the
Appellant:
Adv JH Roelofse
Instructed
by:
Kruger & Partners Inc
Counsel for the first
Respondent:
Mr SA Cilliers
Instructed
by:
Du Toit
Smuts Attorneys
Counsel for the Second
Respondent:
Mr HT Manana
Instructed
by:
ME Mazibuko Attorneys
Date of
Hearing:
04 December 2020
Date of
Judgment:
04 February 2021
[1]
1979 (3) SA 1149 (W) 1152
[2]
2007 (5) SA 391
(SCA) para 21)