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[2020] ZAGPPHC 103
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Lakeside City Trading 286 (Pty) Ltd v Lindicento Proprietary Limited and Others (31459/2018) [2020] ZAGPPHC 103 (20 February 2020)
IN THE HIGH COURT OF SOUTH
AFRICA
(NORTH GAUTENG HIGH COURT,
PRETORIA)
Case
No: 31459/2018
20/2/2020
In
the matter of:
Lakeside
City Trading 286 (Pty)
Ltd
Applicant
And
Lindicento
Proprietary
Limited
First Respondent
First
Rand Bank Limited
Second Respondent
The
Registrar of Deeds,
Pretoria
Third Respondent
Priscilla
Mumsie Baby
Samuels
Fourth Respondent
JUDGMENT
Maumela
J.
1.
This is an application for an order
aimed towards the following:
1.1.
Setting aside the transfer of the
property described as Erf 1579 Midstream Estate Extension 18
Township, Registration Division J.R.
Province of Gauteng held by Deed
of Transfer Number T75753/14 of 29 September 2014;
1.2.
Declaring the sale agreement between the
Applicant and the First Respondent fraudulent and unlawful;
1.3.
Setting aside the registration of the
Mortgage Bond of R 3 000 000-00 in favour of the Second
Respondent over the property
described as Erf 1579 Midstream Estate
Extension 18 Township, Registration Division J.R. Province of Gauteng
registered on 28 August
2015 and held under Bond Number B 39771/15;
1.4.
Ordering the Third Respondent to
re-register the property being Erf Midstream Estate Extension 18
Township Registration Division
J.R, Province of Gauteng into the
Applicants names and
1.5.
Ordering the First Respondent to pay the
costs of this application on a scale as between attorney and client.
The application is opposed.
should no longer feature as
director because she was married to her former husband in community
of property. It was explained that
her marital status poses a threat
since shares of the Applicant could be negatively affected in the
process of the division of
the marital property.
3.
In
April 2011, Mkhize and the Fourth Respondent bought a vacant stand in
Midstream Estate. The property is described as Erf 1579
Midstream
Estate Extension 18 Township, Registration Division JJR, in the
Gauteng Province ("the Property''). These proceedings
were
launched on the backdrop of attempts to evict the Applicant from this
immovable property. The attempts to evict the Applicant
from the
Property were at the instance of the First Respondent, who contends
that it has an ownership rights over the property.
The Applicant
contends that the First Respondent's alleged title, in relation to
the Property, arises on account of fraud.
4.
As
such, the Applicant seeks a declaratory order declaring the
alleged title to be void
ab initio
in
law, and thus unenforceable. Ancillary to the declaration of
invalidity, the Applicant seeks the restoration of the status
quo
ante
the fraud.
THE
DISPUTE.
5.
The
primary dispute between the parties is factual in nature. The
applicant contends that signatures towards the transfer and ancillary
documents were forged. The case does not raise a constitutional
issue, and the Court is not required to extend and/or develop common
law principles.
6.
In
demonstrating that the Fourth Respondent's title is tainted by fraud,
the Applicant relies on the following contentions:
(i).
That the person who allegedly authorized
the sale of the immovable property was manifestly not authorized to
do so in law.
(ii).
That the purchase price allegedly paid
in the sale transaction was manifestly far below the market value of
the Property at the
time of the sale.
(iii).
That there exists no credible evidence
demonstrating that the alleged purchase price was ever paid; let
alone to the Seller
of the Property.
(iv).
That the parties responsible for the
alleged sale and purchase of the immovable property conducted
themselves in a manner expressly
prohibited by law.
FACTUAL BACKGROUND.
7.
The
Applicant, is a shelf company that was bought by Makhosazane Emeldah
Mkhize, 'the owner'. In April 2011, she purchased Property
in the
form of a vacant stand. The purchase price was R500 000-00 (Five
Hundred Thousand Rand). A house was erected on the vacant
stand
around October 2013, at a cost of R2 000 000-00 (Two Million Rand).
The controlling minds of the Applicant are Makhosazane
Emeldah
Mkhize, (Deponent on behalf of the Applicant), and Priscilla Mumsie
Baby Samuels, (the Fourth Respondent). They both served
interchangeably as Directors of the Applicant, until the Fourth
Respondent resigned in May 2014.
8.
Ever
since the resignation of the Fourth Respondent, (Priscilla Mumsie
Baby Samuels), Mkhize and the Fourth Respondent's mother,
(Ms
Samuels), are the only persons who served as directors of the
Applicant. The Property was eventually transferred to the First
Respondent, pursuant to a process that commenced on the 9th of July
2014. The transfer is alleged to have been against the payment
of an
amount of R1 100 000-00 (One Million One Hundred Thousand Rand). The
authenticity of this transfer is disputed by Mkhize.
9.
On
the2 ?1h of March 2018, the First Respondent addressed a
letter demanding that the Fourth Respondent vacate the premises.
The
First Respondent maintained that the Fourth Respondent is
not in possession a valid lease agreement authorising
it to occupy
the Property.
10.
The
Applicant spent over R2 000 000.00 (two million rand), raised by both
the Fourth Respondent and Mkhize through various projects
carried out
over a period of about three years. The two contend that through
these efforts, they secured a valuable asset for future
investments.
They contend that the current worth of the property as per a recently
commissioned valuation conducted by Property
Valuer, Mr. BN Makgakaga
of Demicol (Pty) Ltd, stands at R 6 300 000.00 (six million three
hundred thousand rand).
[1]
11.
Mkhize
points out that at that time, the Fourth Respondent was undergoing a
divorce in which a final order was eventually granted
on the 19
th
of April 2013
[2]
.
Mkhize and the Fourth Respondent agreed that the latter moves into
the Applicant's property until she would have attained stability
and
a dwelling for herself and her children.
12.
In
October 2013, the Mkhize started a clothing business with her
husband. Due to the nature of the business she started; also due
to
new commitments; which included regular overseas travelling; she
resigned from her directorship of the Applicant with effect
from the
26
th
of September 2013. This was as agreed between her and the Fourth
Respondent. Mkhize then focused on her new business venture. After
the First Respondent left the directorship of the Applicant, the
Fourth Respondent took over and became the sole director of the
Applicant from the 2
nd
of October 2013. She assumed directorship of the Applicant and
was entrusted with its entire management until she resigned
in
February 2014. Mkhize contends that after this, no real changes
happened regarding the tenure of the Fourth Respondent as a
director
of the Applicant.
13.
The directorship of the Fourth
Respondent was short-lived, However, over the time the Fourth
Respondent
was in charge of the Applicant, the
entire management of the Applicant was in her hands, (in the hands of
the Fourth
Respondent) . After the resignation of the Fourth
Respondent, she requested that Mkhize be
reappointed as the
director of the Applicant because the position had
become vacant. Because Mkhize understood the situation of the Fourth
Respondent,
also because she needed to secure her interest
she, Mkhize, accepted the request to
serve
as a director for the second time, but she suggested to the
Fourth Respondent that they consider someone else in the interim as
she could only assume directorship in May 2014. This
was due to other commitments she had at
the
time. In order to fill in the vacant
directorship position, the Fourth Respondent and Mkhize
agreed that
the mother to the Fourth Respondent, Sibongile
Veronica Samuels (Mrs. Samuels) be appointed
as
a director of the Applicant forthwith and that Mkhize
would consequently assume her directorship from May
2014. Mkhize was
reappointed -: on the 26
th
of May 2014. She served uninterruptedly with Mrs. Samuels as
co-directors to date.
[3]
14.
Mkhize stated that in February 2014, the
Fourth Respondent told her that she resigned as a result of advice by
the then Sheriff
of Kempton Park; the late Mr. Abadul Carrim Tayob
(herein referred as "Mr. Tayob"). This was because ABSA
Bank Ltd had
instituted a sequestration application against her. She
had been warned of possibility for her assets to be attached and sold
by
her creditors. Considering that Tayob had Insight into matters of
the law, she took the advice.
15.
Mkhize stated that she was shocked when
on the 5
th
of April 2018, she received a call, followed by a letter from
the First Respondent' s Attorneys advising her that the property
is
owned by warned of possibility for her assets to be attached and sold
by her creditors. Considering that Tayob had insight into
matters of
the law, she took the advice.
15.
Mkhize
stated that she was shocked when on the 5th of April 2018, she
received a call, followed by a letter from the First Respondent’s
Attorneys advising her that the property is owned by the First
Respondent and that she will be evicted from the property due to
non-payment of rental. Up until then, she knew nothing about the
property having been sold. At all times she thought that the property
of the Applicant is still safe. This was so because the Fourth
Respondent was still in occupation thereof. The letter from the
first
Respondent is attached as Annexure "MEM7".
16.
Mkhize
then consulted a lawyer to investigate the fraud committed in the
process through which ownership of the property was transferred
to
the First Respondent. On the basis of legal advice, she briefed the
same lawyers to oppose this application.
17.
In
a meeting with the Fourth Respondent held on the 6th of April 2018,
the latter told Mkhize that the transfer of ownership of
the property
was done on advice by the late Tayob who indicated that transferring
ownership of the property would secure protection
of the property in
the face of the threat from possible sequestration and a possible
division of property due to an impending divorce\
The Fourth
Respondent told Mkhize that the transfer of the property was
disguised as a sale but she did not make any payment for
it. The
Fourth Respondent told Mkhize that she was not aware that Tayob was
not acting in good faith. Mkhize stated that she could
not verify
rumors to the effect that Tayob died. The Fourth Respondent told
Mkhize that she was under the impression that Tayob
was only
assisting in ensuring the safety of the property. Mkhize stated that
she never suspected that ownership of the property
may come under
threat since the Fourth Respondent had resigned from the First
Respondent.
18.
Mkhize
stated that investigations conducted by the Applicant's Attorneys of
record revealed that there is a document which was purportedly
signed
by her co-director, Mrs. Samuels on the 4
th
of August 2014 in Midrand and in this document, it is recorded
that the property is transferred to the Fourth Respondent.
Mkhize
stated that when she asked Mrs. Samuels about her signature towards
the transfer of the property, the latter was adamant
that she never
appended her signature to any document purporting to transfer the
property to anyone. Due to the fraud committed
in the process of the
transfer of the property, Mkhize, on behalf of the Applicant, caused
an investigation, and eventually this
application to be instituted.
19.
Mkhize
stated that on the 16th of April 201B, she had an urgent meeting with
the Fourth Respondent who revealed that the transfer
of the property
was· done at the instance of the late Sheriff, Mr. Tayob. She
heeded the advice by Tayob because Tayob advised
that the property is
under threat of getting negatively affected in the process of the
division of marital property due to the
impending divorce that she
faced at the time. Tayob made her to understand that the transfer of
the property shall not be effective
since it would only be a strategy
to ensure the safety of the Applicant's property.
[4]
20.
Mkhize
stated that during the course of the investigation, she discovered
information indicating that in Midrand, her co-director,
Mrs.
Samuels, signed a document on the
4
th
of
August 2014, towards the transfer of the property. She stated that
Mrs. Samuels vehemently denied this upon being confronted
about it.
Mkhize contends that the Third Respondent was misled into registering
the transfer of the property in that false information
was given in
order to cause a power of attorney to be wrongly issued.
21.2.
Muhammed Mujtaba
Tayob had been in charge of the affairs of the First Respondent since
the 1
st
of May 2014.
[5]
21.3.
Muhammed Mujtaba Tayob' s alleged
repayment to his Uncle, Mr Ace Tayob. appear soon after the First
Respondent received payments
from First Rand Bank in respect of the
mortgage over the Property.
[6]
21.4.
His Uncle, Mr Ace Tayob, received a
total payment of R1 716 800-00 (One Million Seven Hundred and Sixteen
Thousand, Eight Hundred
Rand), which is in excess of the purchase
price.
[7]
CONTINUED
OCCUPATION OF THE PROPERTY.
22.
The First Respondent took transfer of
the Property on the 9
th
of July 2014. The Fourth Respondent remained in occupation of
the Property without any lease agreement having been concluded
between the parties. The Fourth Respondent did not pay a single cent
for the rental of the premises and no attempts were ever made
to
collect rental or to evict the Fourth Respondent from the Property
until April of 2018. That was notwithstanding the fact that
the
purported agreement directs that occupation shall be given to the
First Respondent on signature of the agreement.
[8]
23.
The Applicant makes the point that when
viewed against the reality that the First Respondent could only
afford to fund the purchase
of the Property with the assistance of
the Bank, it seems most unlikely that the situation would have been
allowed to continue
as it did.
[9]
The best that the foregoing state of affairs contributes is to the
issue of prescription. The sale price appears to be extremely
far
below the market value. The amount of R1 100 000-00 (One Million One
Hundred Thousand Rand) alleged to be the fair value of
the Property,
in April 2014, is patently untrue.
24.
In all probabilities, the Second
Respondent would not have granted a loan of R3 000 000-00 (Three
Million Rand) against the property
whose value was less than half of
the required loan amount.
SIGNATURE
OF THE TRANSFER DOCUMENTS.
25.
A large number of documents relating to
the transfer appears not to have been dated. The purported
resolution, of the Applicant,
for the transfer of the property
evidently requires that signatures of each and every director of the
Applicant be appended.
[10]
The incorporation certificate of the Applicant would have revealed
that the Applicant had two directors, and as such the document
ought to have been signed by two directors.
[11]
The alleged signature of the Fourth Respondent's mother is patently
not the same as the signature appearing on the confirmatory
affidavit.
[12]
26.
The Applicant is adamant that contents
of the certificate of transfer from a company, together with the
contents of a report by
an independent reviewer, are patently false.
Applicant states the following to substantiate its argument:
26.1.
The Property was indicated to be a
vacant stand.
26.2.
The suggestion that the Property was not
the only major asset or the greater part of the assets or undertaking
of the Company is
evidently untrue.
[13]
26.3.
If at all an inspection was conducted of
the register of directors as alleged, it would have revealed that the
Applicant has two
directors.
[14]
27.
On the basis of the above reasons. The
Applicant argues that it has made-out a case for the setting aside of
the transfer of the
immovable property because it was based on acts
that amount to fraud. It contends that the registration of a mortgage
bond on the
Property, which was preceded by fraudulent acts stands to
be set aside. The Applicant contends that the Third Respondent
should
accordingly be directed to restore the status
quo
ante
the fraudulent conduct.
THE
VERSION OF THE FIRST RESPONDENT.
28.
The First Respondent requested leave to
file a supplementary affidavit asking the Court for leave to file.
This was with a view
to respond to allegations by the Applicant to
the effect that the Fourth respondent forged the signature of
"Samuels"
(a director of the Applicant at the time of the
sale) on all relevant documents for the sale and transfer of the
property in dispute.
29.
Motivating towards condonation by the
Court towards filing by First respondent of a supplementary affidavit
in terms of Uniform
Rule 6(5)(e), the following was submitted:
29.1.
That a matter ought to be adjudicated
upon all the facts relevant to the issues in dispute
[15]
.
29.2.
That special circumstances may exist
where something unexpected or new may emerge from the applicant's
replying affidavit
[16]
and
29.3.
That it is
essentially a question of fairness to both sides as to whether or not
further sets of affidavits should be allowed
[17]
.
30.
The First Respondent stated that the
court has to consider the following factors:
(a)
The reason why the
evidence was not produced timeously.
(b)
The degree of
materiality of the evidence.
(c).
The possibility that it may have been
shaped to 'relieve the pinch of the shoe'.
(d).
The balance of prejudice to the
applicant if the application is refused and the prejudice to the
respondent if it is granted.
(e).
The stage which the particular
litigation has reached. Where judgment has been reserved after all
the evidence has been heard and,
before judgment is delivered, an
applicant applies for leave to place further evidence before the
court, it may well be that he
or she will have a greater burden
because of factors such as the increased possibility of prejudice to
the respondent, the need
for finality, and the undesirability of a
reconsideration of the whole case, and perhaps also the convenience
of the court
(f).
The 'healing balm' of an appropriate
order as to costs.
(g).
The general need for finality in
judicial proceedings and
(h). The appropriateness, or
otherwise, in all the circumstances, of visiting the fault of the
attorney upon the head of his or
her client
[18]
.
31.
The First Respondent makes the point
that it provides a proper and satisfactory explanation which rules
out
mala fides
or
culpable remissness as to the reason for the facts or information not
having been put before the court at an earlier stage
[19]
.
The First Respondent made the point that courts have levelled heavy
criticism against parties who employ the tactic where evidence
is
held back in the hope that the other side will first commit itself to
an untruthful version, which can be resoundingly demolished
in
further affidavits
[20]
.
The Applicant has not tendered such explanation for its replying
affidavit subsequently revealing a completely differently premised
set of facts it was privy to prior to the launching of the
application.
32.
First Respondent submitted that the
Applicant stood to suffer no prejudice as it willingly chose only to
reveal facts regarding
the Fourth respondent's, and not the First
respondent's, forgery in reply. Thus, despite not adequately making
its case out in
its founding papers, that in turn prejudices the
First respondent in any event, it would prejudice the First
respondent inextricably
if it were not able to answer the new
allegations.
33.
First Respondent contends that
considering the circumstances in this matter as explained, that the
Applicant's replying affidavit
contains new facts and revelations,
and the manner in which the Applicant has conducted the evidence
presented in its founding
and replying affidavit, and as a result of
the Applicant essentially making out a completely different case in
its founding affidavit
compared to its replying affidavit; as per
paragraph 5 hereunder, the application ought to be dismissed with
costs
alternatively
the
supplementary affidavit of the First respondent ought to be permitted
on the premise of factors (d), (e) and (h) above.
34.
First Respondent states that it has been
under the false Impression that the Fourth respondent was Samuels
until the replying affidavit
was read
[21]
.
As is apparent from paragraph 8.1 and 8.6 of the First respondent's
opposing affidavit it was presumed, albeit subsequently incorrectly,
that the Applicant was accusing Mr. MM Tayob and the deceased Mr. ACE
Tayob of forging the signatures, specifically if one interprets
paragraphs 23.1, 23.2 and 23.4 of the Applicant's founding affidavit.
35.
The First Respondent argues that all the
necessary allegations upon which the applicant relies must appear in
its founding
affidavit, as it will not generally be allowed to
supplement the affidavit by adducing supporting facts in a replying
affidavit
[22]
.
It argues that the onus is on the applicant to establish the facts on
which his case is based in his founding papers, which constitute
and
must contain both the pleadings and evidence
[23]
.
It is also trite that an applicant must make out his case in his
founding affidavit and that he must stand or fall by the allegations
contained therein. It follows therefore that the applicant must set
out sufficient facts in his founding affidavit which will entitle
him
to the relief sought
[24]
.
36.
It was point-ad out that the general
rule is thatt the court will not permit an applicant to assert new
facts in his replying affidavit
which should have been set out in his
founding affidavit. The court has a discretion to allow new matter to
remain in a replying
affidavit; this indulgence, however, will only
be allowed in special or exceptional circumstances
[25]
.
The First Respondent argues that a variety of factors can be taken
into consideration by the court when exercising such a discretion.
What is of overriding importance in the consideration of those
factors is that the applicant should not be permitted to make a
case
in reply where no case at all was made out in the founding
affidavit and 'none is authority for the proposition that
a totally
defective application can be rectified in reply
[26]
.
37.
In the case of
Director
of Hospital Services v Mistry
[27]
,
Diemont JA said the following:
"When, as in this
case,
the proceedings are launched by way
of notice of motion, it is to the founding affidavit which a Judge
will look to determine
what the complaint is. As was pointed out by
Krause J in Pountas' Trustee v Lahanas
[28]
and as has been said in many other cases: " ...an
applicant must stand or fall by his petition and the facts alleged
therein and that, although sometimes it is permissible to supplement
the allegations contained in the petition, still the main
foundation
of the application is the allegation of facts stated therein, because
those are the facts which the respondent is called
upon either to
affirm or deny". Since it is clear that the applicant stands or
falls by his petition and the facts therein
alleged, "it is not
permissible to make out new grounds for the application in the
replying affidavit” (per VAN WINSEN
J in SA Railways
Recreation Club and Another v Gordonia Liquor Licensing
Board
[29]
.)
38.
The First Respondent submitted that in
the premises of the circumstances of this case and the authorities
cited, the application
ought to be dismissed with costs.· It
stated that should the Honourable Court, however, permit the new
facts in the replying
affidavit, then the defenses raised by the
First respondent are requested to be considered, as set out in
the First respondent's
supplementary affidavit.
THE
FIRST RESPONDENT'S POINTS
IN LIMINE.
39.
The First Respondent
submitted that the
point
in limine
regarding
a dispute of fact arising from the papers, still remains, as the
authority of the Fourth respondent to sell and transfer
the property
to the First respondent has, upon the replying affidavit, become a
factual material dispute between the parties. Both
parties allege
that they are
bona
fide
victims of
misrepresentation; (1) the Applicant holds that Ace Tayob
misrepresented to the Fourth Respondent and the Applicant that
the
property is required to be sold to the First respondent due to the
personal circumstances of the Fourth respondent so as to
prevent the
property falling to her spouse in her divorce; (2) the First
Respondent, subsequent to the replying affidavit, holds
that the
Fourth respondent misrepresented her identity and that she had
ostensible authority from the Applicant to sell and transfer
the
property to the First respondent.
40.
The First Respondent contends that the
fraud alleged does not assist the Applicant and that the authority to
dispose of the asset
was raised in the founding papers
[30]
.
It argues that the Applicant should have raised the aspect of
authority in its founding papers. The First Respondent makes the
point that the Applicant chose to proceed on motion at its own peril.
It alleged that the forgery occurred as alleged.
41.
The First Respondent contends that a
"Real, genuine and
bona fide
dispute of fact can exist only where
the court is satisfied that the party who purports to raise the
dispute has in his affidavit
seriously and unambiguously addressed
the fact said to be disputed. According to the First Respondent,
there will be instances
where a bare denial meets the requirement
because there is no other way open to the disputing party and nothing
more can therefore
be expected of him. But even that may not be
sufficient if the fact averred lies purely within the knowledge of
the averring party
-and no basis is laid for disputing the veracity
or accuracy of the averment. In the premises, and on the basis of
Transnet Limited v Erf 152927 Cape
Town (Pty) Ltd
&
others
[31]
,
the First respondent maintains that
the application ought to be dismissed with costs and not necessarily
referred for oral evidence
or to trial.
42.
The Respondent states that the evidence
regarding the deceased Mr. Ace Tayob remains hearsay and is in
non-compliance with
section 3(1)
of the
Law of Evidence Amendment Act
45 of 1988
which is clear that
if
such person, person upon whose credibility the probative value of
such evidence depends, does not later testify in such proceedings
and
the court on further considerations admits the evidence,
the
hearsay evidence shall not be taken into account.
In
the premises, the Applicant's evidence in relation to the deceased
Mr. Ace Tayob is not consistent with the
Law of Evidence Amendment
Act and
is, therefore inadmissible and should be disregarded.
43.
The Respondent states that save to point
out that the Applicant states that the application is not a claim
founded on a debt or
damages, the Applicant does not raise any
further grounds for disputing prescription, and will therefore be
precluded from doing
so in argument; the
point
in limine
regarding prescription of
the Applicant's claim for return of the property is retained and
paragraph 5 of the First respondent's
original heads of argument are
reiterated in support hereof.
44.
The point
in
limine
regarding non-joinder /
misjoinder of the Midstream Home Owners Association is retained and
paragraph 6 of the First respondent's
original heads of argument are
reiterated to in support hereof. Should the Honourable Court allow
the new evidence as contained
in the replying affidavit and should
the points
in limine
of
the First Respondent not succeed, then premised on the new facts, the
following
bona fide
defence
is relied upon by the First respondent.
UNDUE
INFLUENCE.
45.
The Respondent points out that the cause
of action as alleged by the Applicant,
inter
alia
appears to be of undue
influence in that the deceased, Mr Ace Tayob raised a false alarm
about a threat against the property of
the Applicant. It is alleged
that this pressured the person acting on behalf of the Applicant to
enter into the transaction towards
the sale and transfer of the
property. On that basis, the Applicant sought an order rescinding the
transaction, citing undue influence
purportedly made on behalf of the
First respondent as the basis. It is alleged that the Fourth
Respondent, as a third party acting
on behalf of the Applicant,
forged the signature of Samuels and concluded the sale as a result of
undue influence by the late Mr.
Ace Tayob, on behalf of the First
Respondent
[32]
.
46.
In this regard, it has been held that
undue influence brought to bear by a third party gives the party
influenced no right to rescind
unless the other party to the contract
was aware at the time the contract was made that undue influence had
been exercised
[33]
.
Neither the Applicant nor First Respondent was aware of undue
influence by Ace Tayob at the time of the contract. The Applicant
raises lack of authority, granted by the shareholders through special
resolution "of the signatory of the purported Power
of Attorney"
and that "none of the directors participated in a resolution
giving effect to the alleged sale" in
the founding
affidavit
[34]
.
The First respondent alleges (via the deponent to the affidavits on
behalf of the First Respondent and the sole director of the
First
Respondent) that it was under a false impression that the Fourth
Respondent was Samuels (the material director at the time
of the sale
and the person whose signature was forged)
[35]
.
47.
The Respondent states that it is a
general rule of our law that if the fraud, which induces a contract,
does not proceed from one
of the parties, but from an independent
third person, it will have no effect upon the contract. The fraud
must be the fraud of
one of the parties or of a third party acting in
collusion with, or as the agent of, one of the parties
[36]
.
If the Applicant relies on the Fourth Respondent not having the
authority to act on behalf of the Applicant, then the Fourth
Respondent is not an agent but a third party and, therefore, her
fraud has no effect on the contract.
48.
The First Respondent puts forward that
the Fourth Respondent purported to have authority on behalf of the
Applicant at the time
of sale as per the Resolution, granting the
Fourth Respondent (portraying herself as Samuels) authority to
perform the transaction
[37]
.
49.
Ostensible authority came under
discussion in the case of
Makate
v Vodacom (Pty) Ltd
[38]
where the court stated the
following:
"It is apparent that
estoppel and ostensible authority are different, even though there
may be some overlap between them. Ostensible
authority is the power
to act as an agent indicated by the circumstances, even if the agent
may not truly have been given the power.
Whereas estoppeI
is
the rule that precludes the principal
from denying that she gave authority to the agent”
[39]
.
50.
"While this kind of authority
[ostensible or apparent] may not have been conferred by the
principal, it is still taken
to be the authority of
the agent as it appears to others
[40]
.
The presence of authority is established if it is shown that a
principal by words or conduct has created an appearance that the
agent has the power to act on its behalf. Nothing more is
required
[41]
".
"It is clear that, even if the party represented is not an
outsider, under apparent authority the liable in terms of
the
agreement
[42]
[43]
.
52.
The Respondent submitted that by
purporting to be Samuels and the presentation of the mentioned
Resolution authorizing "Samuels"
to deal with the
transaction on behalf of the Applicant, there was sufficient
ostensible or apparent authority upon which the First
Respondent to
hold the Applicant bound to, and can rely upon same, to conclude that
the sale agreement and subsequent transfer
is valid, despite the
apparent lack of actual authority of the Fourth Respondent.
53.
The first Respondent contends that
either on the points
in limine,
or
the probabilities on the
bona fide
de
fence raised, the application ought to be dismissed with costs. The
parties involved in the transaction towards the sale and
transfer of
the property were all in a position to be abreast with all details
pertaining to the First Respondent. The First Respondent
cannot rely
on the notion of ostensible authority where the members acting on its
behalf were in an ideal position to know that
there are two
co-directors in charge of the Applicant, both of whom have to be on
board within the process towards the sale and
transfer of the
property.
EVALUATION.
54.
The First Respondent contends that the
she bought the property and registered it in her names. However, the
proof of sale or purchase
produced is beset with a number of
anomalies. Evidence by Mkhize to the effect that she- only resigned
from directorship of the
First applicant because she had to travel
abroad with her husband. No explanation was provided for the fact
that two different
signatures attributed to the stand appended to the
documents pertaining to the purported sale and transfer of the
property documents
pertaining to the purported sale and transfer of
the property
55.
A large number of documents relating to
the transfer appears not to have been dated. The alleged signature of
the Fourth Respondent's
mother is patently not the same as the
signature appearing on the confirmatory affidavit.
[44]
56.
The Applicant is adamant that contents
of the certificate of transfer from a company, together with the
contents of a report by
an independent reviewer, are patently false.
The Applicant states the following to substantiate its argument:
56.1.
The Property was indicated to be a
vacant stand.
56.2.
The suggestion that the Property was not
the only major asset or the greater part of the assets or undertaking
of the Company is
evidently untrue.
[45]
57.
The sale price appears to be extremely
far below the market value. The amount of R1 100 000-00 (One Million
One Hundred Thousand
Rand) alleged to be the fair value of the
Property, in April 2014, is patently untrue. The Applicant avers that
First Respondent's
account of events leading to the transfer of the
Property is less than satisfactory, much as it does not raise a
genuine dispute
of fact. In the case of
Wightman
t/a J W Construction v Headfour (Pty) Ltd and Another
[46]
,
the Court stated the following:
"A
real, genuine and bona fide dispute of fact can exist only where the
court
is
satisfied
that the party who purports to raise the dispute has in his affidavit
seriously and unambiguously addressed the fact said
to be disputed.
There will of course be Instances where a bare denial meets the
requirement because there is no other way open
to the disputing party
and nothing more can therefore be expected of him. But even that may
not be sufficient if the fact averred
lies purely within the
knowledge of the averring party and no basis Is laid for disputing
the veracity or accuracy of the averment.
When the facts averred are
such that the disputing party must necessarily possess knowledge of
them and be able to provide an answer
(or countervailing evidence) if
they be not true or accurate but, instead of doing so, rests his
case
on a bare or ambiguous denial the
court will generally have difficulty in finding that the test is
satisfied. I say· generally'
because factual averments seldom
stand apart from a broader matrix of circumstances all of which needs
to be borne in mind when
arriving at a decision. A litigant may not
necessarily recognize or understand the nuances of a bare or general
denial
as
against
a
real
attempt to grapple with all relevant factual allegations made by the
other party. But when he
signs
the
answering affidavit, he commits himself to its contents, inadequate
as they may be, and will only in exceptional circumstances
be
permitted to disavow them. There is thus a serious duty imposed upon
a legal adviser who settles an answering affidavit to ascertain
and
engage with facts, which his client di5Putes and to reflect such
disputes fully and accurately in the answering affidavit If
that does
not happen it should come
as
no
surprise that the court takes a robust view of the matter.”
58.
The Applicant contends that apart from
not raising a genuine dispute of fact, the First Respondent's version
is riddled with inconsistencies
and unusual occurrences which
demonstrate the said aversion to be untrue. In that regard, the
Applicant detailed the following
examples:
58.1.
Inception of the acquisition:
The sole director of the First
Respondent, Muhammed Mujtaba Tayob, who was around 25 years old in
2014, when the transfer occurred,
was informed and alerted to the
Property by his late Uncle Mr. ACE Tayob, who was a Sheriff at
Kempton Park, who also used to inform
him of possible investment
opportunities and properties available on auction, presumably during
the course of his employ as Sheriff.
[47]
On the available evidence there is nothing that suggests that the
Property would have become available for purchase, in the normal
cause of events, which would have come to the specific attention of
the Sheriff of Kempton Park. The Property was not put up for
sale,
and it was not subject to attachment by an Order of Court. In any
event, the execution of any judgment against the property
would have
occurred through the Sheriff of Centurion.
58.2.
Payment of the purchase price:
The sale agreement was concluded
between the Applicant and the First Respondent, on or about the 09th
of July 2014.
[48]
The agreement included a provision that payment of the amounts
involved would be made to Messrs Vezi & De Beer lnc.
[49]
Payment of the purchase price would have been made to Messrs Vezi &
OeBe.er Inc at best soon after the 09th of July 2014, or
after the
completion of the transfer process as envisaged in terms of
Section
26
of the
Alienation of Land Act 68 of 1981
.
59.
On acquisition of the Applicant, the
Fourth Respondent and her former husband were on the verge of
dissolving their
marriage. Her former husband issued divorce
summons against her in April 2011 and the divorce was finalized on
the 19th of April
2013. After the divorce was finalized, the Fourth
Respondent moved out of her matrimonial home with her children.
Mkhize states
that bearing in mind the Fourth Respondent's
frustration, she then agreed with the Fourth Respondent
that the latter
could move into the Applicant's property with her
children until she becomes financially stable to secure herself and
her
children a residential property. The final
order of divorce is attached hereto as Annexure "MEMS".
60.
Mkhize stated that she at all reasonable
times she thought that the Applicant's asset is still safe,
especially because the Fourth
Respondent was still in occupation
thereof. I refer the court to a cop of the letter from the First
Respondent' s Attorneys and
sent to the Fourth Respondent dated 27
March 2018 attached hereto as annexure "MEM7".
61.
In the wake of the said developments and
in consultation with my co-director, Mrs. Samuels, I then sought an
assistance of an attorney
and agreed to appoint Applicant's Attorney
of record, whom we instructed to assist with the investigations of
the matter and to
subsequently advise us on a way forward. In light
of the advice I received from the Applicant's Attorneys, I then
instructed them
that the alleged ownership of the property by the
First Respondent was acquired fraudulently and further that the
Applicant is
intending to bring this application and on the grounds
which were succinctly highlighted therein. The court is referred to a
copy
of the said letter dated 6 April 2018 and marked annexure
"MEM8''.
62.
On 6 April 2018, I arranged an urgent
meeting with the Fourth Respondent in order to ascertain if she has
any knowledge of the transfer
of the property from the Applicant to
the First Respondent. During our meeting, the Fourth Respondent
acknowledged that she had
knowledge of the said transfer and further
advised that the transfer was instigated by the late Mr. Tayob, who
induced her to avoid
the property form forming part of the
sequestration process and consequently attached. I was taken aback by
the said revelations
but I was reassured by the Fourth Respondent
that the transaction was merely to place the property safe as was
advised by Mr. Tayob
and that the First Respondent did not make any
payment to acquire same and that the transfer was only disguised as
sale
of
the property. According to the Fourth Respondent, she did not know
the Mr. Tayob had mischievous intentions. I have advised that
Mr.
Tayob died sometimes in February 2018 but I could not verify the
correctness of this information.
63.
The Fourth Respondent advised me further
that she was ill advised by the said Mr. Tayob that until the
sequestration process
is finalized the property will be at risk
because it would be traced to the Fourth Respondent. I was also
advised by the Fourth
Respondent that it was on the strength of the
dishonest advice by the said My Tayob that she accepted to hand over
the property
documents to Mr. Tayob and agreed that the property be
transferred into the First Respondent’s named with an
understanding
that Mr. Tayob was only helping the Applicant to evade
the possible loss of its property.
64.
At all times I was under the impression
that since the Fourth Respondent was advised to resign as a dire tor,
her sequestration
application would not affect the Applicant in any
way, much to my surprise , the Fourth Respondent continued to receive
further
advices from Mr. Tayob, which advices were not communicated
to any of the directors of the Applicant.
65.
During the investigation conducted by
the Applicant's Attorneys of record, it was discovered that there was
a document which was
purportedly signed by my co-director, Mrs.
Samuels on the 4
th
of August 2014 in Midrand. She enquired from Mrs. Samuels whether the
latter signed such document and Mrs. Samuels vehemently denied
having
knowledge of such. Mrs. Samuels also denied that the signature
appearing thereon is hers. Attached hereto as annexure "MEM9"
is a copy of the purported Power of Attorney dated the 4th of August
2014.
66.
Mkhize who was also in charge of the
Applicant at together with the Fourth Respondent the time of the
transfer of the property did
not participate while the transfer was
processed. No special resolution was made by the shareholder s of the
company, the Applicant;
towards the transfer of the property.
The signatory of the power of attorney on the basis of which the
transfer was
processed did not have authority to sell and to alienate
the property of the Applicant. No valid sale and transfer of the
property
took place. In the light of lack of authority to authorize
the transfer on the part of the person who purports to have
authorized
the sale, the acts purporting to have done so amount to a
nullity.
67.
As indicated above, the property was
originally acquired at a cost of R 500 000-00.
Improvements or developments
were then effected on it -at
a cost exceeding R 250 000-00. A valuation report compiled by
Demicol (Pty) Ltd places
the value of the property
at R 6 300 000-00 at the time of the alleged sale and transfer. It
begs the question why Mkhize,
the co-owner of the property would have
acceded to any overture on the part of anyone towards the
sale and transfer
of the property at such a price as ridiculous as
to be R 1 100 000-00. The absence of Mkhize's approval of such
a deal points
to its lack of authenticity. Despite the improvements
effected on the property at a huge cost. in the documents concerning
the
sale and transfer of the property, the property is still
indicated to be a vacant stand.
68.
Forgery of the signature of one Samuels
preceded the transfer of the property in issue in this case. This
forgery is not disputed.
All the First Respondent submits is that it
was not party to the commission of the fraud and neither was it aware
of the fraud.
It argues that its title as against the property should
remain unaffected because it neither participated in the commission
of
fraud nor had knowledge of it. However, no plausible explanation
is advanced for the anomalies around signatures and the apparent
lack
of authority on the part of the person behind the generation of the
Power of Attorney that facilitated the sale and transfer
of the
property. Neither is there a sound reason advanced for why the
property could be sold without the knowledge and participation
of its
co-directors. The role of the late Sheriff in the entire matter where
no liquidation was underway, is difficult to understand.
The court
finds that the sale and transfer of the property was preceded by
commission of fraud.
69.
In the case of
Nedbank
Limited v Ronald Mendelow No and Lazarus Ledwaba;
the
court stated: “
Where the Master
of the High Court and the Registrar of Deeds perform clerical acts
that result in the registration of transfer
of immovable property
pursuant
to
a
fraud, and there is no intention on the part of
a
beneficiary of a deceased estate to
transfer ownership, registration does not effect
a
transfer of ownership; the person in
whose name the property is registered is not the owner and
cannot grant
a
valid
mortgage bond over the property. Purely clerical
acts
do not amount to administrative
action reviewable under the
Promotion of Administrative Justice Act 3
of 2000
.”
70.
Considering that the purported sale and
transfer of the property is laden with nullity, the
status
quo
as it obtained before efforts
towards the sale and transfer, remains in place. In the result, the
sale and the transfer of the property
from the Applicant to the First
Respondent dated the 29
th
of September 2014 stands to be set aside.
71.
Having heard counsel on both side, the
following order is made:
ORDER.
71.1.
The
transfer of the property described as Erf 1579 Midstream Estate
Extension 18 Township, Registration Division J.R, Province of
Gauteng, held by Deed of Transfer Number T757534/14 of 29 September
2014 is set aside.
71.2.
The
sale agreement between the applicant and the First Respondent is
declared to be fraudulent and unlawful.
71.3.
Registration
of the Mortgage Bond of R3 000 000,00 in favour of the Second
Respondent over the property described as Erf1579
Midstream Estate
Extension 18 Township, Registration Division J.R, Province of
Gauteng, registered on 28 August 2015 and held under
Bond number B
39771/15 is set aside.
71.4.
The
Third Respondent is ordered to re-register the property being Erf
1579 Midstream Estate Extension 18 township, Registration
Division
J.R, Province of Gauteng into the Applicants names.
71.5.
The
First Respondent is ordered to pay the cost of this application on an
ordinary scale.
T.A
Maumela
Judge
of the High court of South Africa.
[1]
See copy of the Valuallon Report attached as Annexure "MEM4"
[2]
See Annexure' MEMS"
[3]
See annexure"MEM6”· , copy of the
Applicant's Disclosure Certificate dated 16 April 2018
[5]
See: Motion Record Paginated Page 115.
[6]
See: Motion Record Paginated Page 116-117.
[7]
See Motion Record Paginated Page 115-117.
[8]
See: Mobon Record Paginated Page.147
[9]
See: Mobon Record Paginated Page 116-117
[10]
See: Motion Record Paginated Page 128
[11]
See: Motion Record Paginated Page 61
[12]
See: Motion Record Paginated Page 75
[13]
See: Motion Record Paginated Page 132 Para 8 & Page 133 Para 7.
[14]
See Motion Record Paginated Page 133 Para 4
[15]
See
Bader v Wesoton
1967(1) SA 134 (C) at 138D;
Dickinson v
South African General Electric Co (Pty) Ltd
1973(2) SA620 (A) al
628F;
Cohen NO v Nel
1975 (3) SA 963
(W) at 970B.
Dawood
v Mahomed
1979 (2) SA 361
(D) at 365H;
Nampesca (SA)
Products (Pty ) Ltd v Zaderer
1999 (1) SA 886
(C) at 892J-893A,
Dhladhla v
Erasmus
1999 (1) SA 1065
(LCC) at 1072D ; South
Peninsula Municipality v Evans
2001 (1) SA 271
(C) at 283A-H
[16]
Afric Oil ( Pty) Lid v Ramadaan Investments CC2004 (1) SA 35
(N)
at 38J--39A
[17]
Milne NO v Fabric House (Pty) Lid
1957 (3) SA 63
(N)
at 65A .
[18]
Porterstraat 69 Bendomme (Pty) Ltd v PA Venter Worcester (Pty) Ltd
2000 (4) SA 598
(C) at 617 E, where Davis J summarised
the considerations laid· down in Mkwanazi v Van der Merwe
1970 (1) SA 609
(A) at 626A-G.
[19]
See Erasmus
Superior Court Practise
RS 45, 2014 Rule
B1-p4
7-
48.
[20]
See
Nick's
Fishmonger Holdings (Pty) Ltd v Fish Diner in
Bryanston CC
2009
(5) SA
629
(W) at 641G-6420
[21]
See paragraph 5.1 of the First respondent's supplementary affidavit.
Paginated page 204.
[22]
National Council of Societies tor the Prevention of Cruelty to
Animals v Openshaw
[2008] ZASCA 78
;
2008 (5) SA 339
(SCA) at 349 A-B.
[23]
Titties Bar and Bottle Store (Pty) Ltd v ABC Garage (Pty) Ltd
1974
(4) SA 362
(T) at 368 H to 269 8, Director of Hospital Services v
Mistry 1979 (1) SA628 (A).
[24]
Business Partners Ltd v World Focus 754 CC
2015 (5) SA 525
(KZD) at
par [8].
[25]
Business Partners
supra
at
par
[9]
[26]
Business Partners
supra
at par [10].
[27]
1979 (1) SA626 (A), at 635H-636B.
[28]
1942 WLD 67
at 68.
[29]
1953 (3) SA 256
(C) at 260
[30]
See paragraph 21.1 and 21.2 of the founding affidavit, paginated
page 18.
[31]
(79812010)
[2011] ZASCA 148
(26 September 2011)
[32]
See paragraph 23 of the founding affidavit. paginated page·20.
[33]
Stride v Wepener
1903 TH 383
;
Katzenellenbogenv
KBtzenellenbogen and Joseph
1947 (2) SA 528
(W) 540:
Sliver
Garbus
& Co
(Pty) Ltd v Teichert
1954 (2) SA 98
(N)
105F
[34]
See paragraph 21.2 and 21 .3 of the found in g affidavit. paginated
page 18.
[35]
See paragraph 5.1 or the First respondent's supplementary affidavit,
paginated page 104
.
[36]
Korabus Motors (1959) Ltd v Von Eck
1962 (1) SA 451
(C) 453 ;
Slip Knot Investments (Pty) Ltd
v
Du
Toit
2011
(4)
SA 72
(SCA) [18]
[37]
See annexure " MMT10", paginated page 128.
[38]
2016 (4) SA 121
(CC)
[39]
Ad par [75]
[40]
Ad par [46]
[41]
Ad par [47]
[43]
Ad par [55]
[44]
See ; Motion Record Paginated Page 75
[45]
See· Motion Record Paginated Page 132 Para8 & Page 133
Para 7
[46]
2008(3) SA 371 (SCA} al Para 10.
[47]
See. Motion Record Paginated Page 86 Para 7.2.
[48]
See Motion Record Paginated Page 60 & 129 (last line).
[49]
See Motion Record Paginated Page 111 Para 8