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[2019] ZAKZDHC 17
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FNB Fiduciary (Pty) Ltd N.O v Anappa and Others (D2913/2018) [2019] ZAKZDHC 17; [2020] 1 All SA 163 (KZD) (10 September 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE NO: D2913/2018
In
the matter between:
FNB
FIDUCIARY (PTY) LTD N.O.
APPLICANT
and
KUMARAVASAN
ANAPPA
FIRST RESPONDENT
DIRENDRA
RAJARUTHNAM
SECOND RESPONDENT
SUGHANDHINI
RAJARUTHNAM
THIRD
RESPONDENT
PONNUSAMY
RAJARUTHNAM
FOURTH RESPONDENT
VIOLET
PILLAY
FIFTH RESPONDENT
THE
MASTER OF THE HIGH COURT, DURBAN
SIXTH RESPONDENT
IAN
WYLES AUCTIONEERS
SEVENTH
RESPONDENT
ORDER
The
following order will issue:
The
application is dismissed with costs.
JUDGMENT
HENRIQUES
J
Introduction
[1]
This opposed application concerns the validity of the fifth
respondent’s appointment
as executrix and the disposal by her
of the member’s interest in MN Pillay Properties Investments
CC.
[2]
The applicant instituted urgent proceedings on 23 March 2018 in which
it sought a
rule nisi with interim relief. Such interim relief was
for the respondents, excluding the sixth respondent, to be
interdicted and
restrained from dealing with, alienating or
encumbering the said member’s interest, alternatively, the
assets or properties
of MN Pillay Properties Investments CC, being 48
Hunslett Road, Phoenix Industrial Park, and directing all income and
rentals receivable
in relation to such assets be paid to the
applicant’s attorneys to be held in trust.
[3]
On 23 March 2018, a rule nisi was not issued, and the interim relief
foreshadowed
in para 3 of the notice of motion was granted by
consent. Further orders were issued as follows:
‘
1.
Pending finalisation of this application the 1
st
to 5
th
Respondents are interdicted from in any way dealing with, alienating
or encumbering the members’ interest or the assets and
properties belonging to MN Properties Investments CC (being 48
Hunslett Road, Phoenix Industrial Park), and directing that all
income and rentals receivable in relation to such assets be paid to
the Applicant’s attorneys, to be held in trust.
Provided
that the said attorneys will be entitled to release such amounts for
payment of expenses of MN Properties CC, provided
all the Respondents
aforesaid consent in writing thereto, or with the consent of the
Court.
’
[4]
The Rajaruthnams (the second, third and fourth respondents) were
given leave to withdraw
their opposition and abide the court’s
ruling or judgment on the basis that the costs order originally
sought in the notice
of motion was no longer being pursued. The first
and fifth respondents were directed to deliver any answering
affidavits and the
applicant, any replying affidavit. The application
was adjourned sine die and costs reserved.
[5]
Essentially the relief foreshadowed in the notice of motion was the
following:
‘
2.
That a
rule
nisi
do hereby issue calling upon the respondents to show cause, if any,
to this court on the day
of
2018
why an order in the following
terms should not be granted:
2.1
the appointment of the fifth respondent as executrix in the deceased
estate of Ganasen Pillay,
who died on 26 September 2017, by the sixth
respondent be and is hereby declared null and void
ab initio
,
alternatively is set aside;
2.2
it is declared that the applicant is the only duly appointed executor
in the said deceased
estate, having been appointed as such by the
sixth respondent on the 26
th
of January 2018;
2.3
the purported dispositions of the members’ interest in MN
Pillay Properties Investments
CC by the fifth respondent to the first
respondent and thereafter by the first respondent to the second,
third and fourth respondents
be and are hereby declared null and
void, alternatively are set aside;
2.4
declaring that the said members’ interests are owned by the
said deceased estate;
2.5
directing the second, third and fourth respondents to do all things
necessary, and sign
all documents required, to allow registration of
the members’ interests in MN Pillay Properties Investments CC
to be transferred
back into the deceased estate of Ganasen Pillay, to
be administered by the first applicant
[1]
in accordance with the deceased’s will dated 12 October 2012;
2.6
that the costs of this application be
paid by the respondents jointly and severally.
’
Issues
[6]
The issues for determination in this application are:
(a)
whether the appointment of the fifth respondent by the sixth
respondent (the Master) as
executrix is void
ab initio
and
falls to be set aside; or
(b)
where there has been an irregularity in the appointment of an
executrix and a contract is
concluded by her pursuant to such
appointment, is such contract void
ab initio
;
(c)
if not, then despite the irregularity in the appointment can a
contract concluded
by her be set aside subsequent to performance?.
[7]
The issues in the application relate to the disposition of the
member’s interest
by the fifth respondent to the first
respondent and the Rajaruthnams, which is the immovable property. If
the applicant is correct,
then the sale of the member’s
interest is null and void and will have to be transferred back to the
deceased’s estate.
Factual matrix
[8]
It is common cause that during her lifetime, the fifth respondent was
married in community
of property to the deceased being Ganasen Pillay
(the deceased), who died on 26 September 2017. On 12 October 2012,
the deceased
executed a will in terms whereof the applicant was
appointed by the deceased as the executor of his estate.
[9]
Following the deceased’s death, the fifth respondent applied to
the Master to
be appointed as executrix of the deceased’s
estate. At the time of doing so, the fifth respondent laboured under
the impression
that the deceased had “cancelled” his will
and did not have a will. Consequently, the existence of this will was
not
disclosed to the Master. Pursuant to the fifth respondent’s
request, the Master appointed her as executrix of the deceased’s
intestate estate in terms of letters of executorship issued on 2
October 2017. Such appointment was made in terms of s 18 of the
Administration of Estates Act 66 of 1965 (the Act) in circumstances
where the deceased died without having executed a will and
nominating
an executor/executrix.
[10] As
a result of such appointment, the fifth respondent became the
executrix of a one-half undivided
share in the joint community of
property estate. In addition, she applied to transfer to herself the
deceased’s entire member’s
interest in MN Pillay
Properties Investments CC (the CC) and thus acquired the 100 per cent
member’s interest in the CC which
owned nine mini factories in
Phoenix Industrial Park at 48 Hunslett Road, Phoenix described as Erf
134, Portion 3, Phoenix Industrial
Park.
[11] In
her capacity as executrix and surviving spouse, the fifth respondent
sold the joint
estate’s 100 per cent member’s
interest in the CC to the first respondent in terms of s 35 of the
Close Corporations
Act 69 of 1984 (Close Corporations Act) for a
gross sale price of R7 million.
[12]
After ownership of the 100 per cent member’s interest had
passed to the first respondent,
and he had been registered as the
sole member of the CC, he in turn sold and transferred ownership of
the 100 per cent member’s
interest in the CC to the
Rajaruthnams for a purchase consideration of R8.5 million.
[13] It
is common cause that at the time of the fifth respondent’s
appointment as executrix
of the deceased estate and the sale of the
100 per cent member’s interest in the CC, a will which the
deceased had executed
was in existence, although the fifth respondent
indicates she was not aware of the existence thereof.
[14]
Subsequently, on learning of the death of the deceased, the applicant
through its authorised
representative made enquiries in December 2017
with the fifth respondent in relation to the deceased and his estate.
The fifth
respondent on being made aware of the existence of the will
and the applicant’s nomination therein as executor, and
following
legal advice received, surrendered the letters of
executorship issued by the Master in her name. The applicant
subsequently applied
to the Master to be appointed as executor in
accordance with the will and was appointed under letters of
executorship by the Master
on 26 January 2018.
[15] It
is common cause that the nine mini factories were and are rented out.
An initial valuation
of the immovable property conducted by the
seventh respondent reflected a value of R13 747 402 on the
open market and
R9 623 000 in a forced sale. The valuation
also referred to rental income from the property in the sum of
R174 480.65
per month. However, a subsequent revised income and
expenditure statement prepared by the seventh respondent reflected a
lower
rental income of R149 480.65.
The first respondent
[16]
The first respondent, in his answering affidavit, opposes all the
relief foreshadowed in the
notice of motion. His involvement in the
matter is limited to that of an innocent purchaser of the member’s
interest in the
CC from the executrix of the deceased’s estate
and from the fifth respondent personally, being the surviving spouse
of the
deceased.
[17] He
submits that at the time of her appointment by the Master, the fifth
respondent was entitled
to deal with her 50 per cent interest in the
CC by virtue of her marriage in community of property to the
deceased. He further
submits that the fifth respondent was entitled
to deal with the deceased’s 50 per cent share of the joint
estate in light
of her appointment as executrix. In addition, he
submits that the fifth respondent was registered as a member of the
CC and consequently
in terms of
s 54
of the
Close Corporations Act,
the
CC is bound by the acts of the fifth respondent in concluding the
purchase and sale agreement with him.
[18]
Further, when he contracted with the fifth respondent, he did so at
all material times in good
faith. The first respondent in addition
also attacks the appointment of the applicant as executor of the
joint estate and submits
that it is defective as there is no basis
for the Master to have appointed the applicant as executor of the
estate of the surviving
spouse, the fifth respondent. The letters of
executorship make reference to the executor being authorised to
liquidate and distribute
the deceased’s estate and that of the
surviving spouse, the fifth respondent.
[19]
Based on the representations of the fifth respondent as well as the
Master, he was induced, to
his prejudice, into concluding the
purchase and sale agreement for the member’s interest in the CC
and consequently, the
applicant is estopped from denying the validity
and enforceability of the purchase and sale agreement.
The
Rajaruthnams
[20]
The Rajaruthnams initially opposed the application but at the hearing
on 23 March 2018 withdrew
such opposition save for the aspect of
costs. Subsequently, their opposition was withdrawn in its entirety,
as the issue of costs
was resolved. However, it is necessary to
consider what they said in answer to the application as their rights
are affected by
any order this court makes.
[21] In
the initial answering affidavit filed by the Rajaruthnams, the
following is averred:
(a)
On 18 January 2018, the first respondent sold them his 100 per cent
member’s interest
in the CC for the sum of R8.5 million.
(b)
The first respondent misrepresented that he was entitled to sell such
interest. Consequently,
pursuant to the agreement of sale, the said
respondents made the following payments to the first respondent: on
25 January 2018
the sum of R300 000, on 6 February 2018 the sum of
R1.5 million and, on 2 February 2018 the sum of R7 million was paid
into the
trust account of the seventh respondent at the request of
the first respondent. A further payment in the sum of R332 000
was
paid in respect of arrear rates for the immovable property.
(c)
The Rajaruthnams became registered members of the CC on 3 January
2018. Subsequently,
on 8 February 2018 the applicant’s
attorneys of record advised them of the situation and requested they
contact the applicant’s
attorneys of record.
(d)
By a letter dated 9 February 2018, it was agreed that a meeting
scheduled to take place
on 16 February 2018 would attempt to resolve
the matter amicably and the Rajaruthnams confirmed that they were
bona fide purchasers
of the property. However, by email dated 15
February 2018, the applicant’s attorneys of record advised that
the meeting would
not take place as its instructions were to
institute an application to court to set aside the sale of the
member’s interest.
(e)
On receipt of the application papers, the Rajaruthnams took the view
that the first respondent
was not entitled to sell the member’s
interest and did not oppose any of the relief sought, with the
proviso that no costs
orders would be pursued against them.
(f)
In addition, they submitted that the interim relief should go further
and direct the
seventh respondent to hold in trust the moneys paid to
it together with the accumulated interest, as it was their intention
to
rescind the agreement and proceed against the first respondent for
the recovery of all amounts paid to him.
The fifth respondent
[22]
Although the fifth respondent filed an answering affidavit, she did
not oppose the application
at the hearing of the matter and
essentially left the matter in the hands of the court. At the hearing
of the opposed application,
Ms
Dheoduth
made submissions on
behalf of the fifth respondent in order to assist the court and filed
explanatory heads of argument.
[23] The
fifth respondent records in her answering affidavit that in the event
of the court being
disposed to granting any orders, she does not
oppose the granting of the relief in paras 2.3, 2.4, 2.5 and 3 of the
notice of motion;
however, she does oppose the granting of the relief
in paras 2.1 and 2.2 of the notice of motion.
[24] In
her answering affidavit, the fifth respondent indicated that she did
not know of the existence
of the deceased’s will and that same
only surfaced and was communicated to her on 28 December 2017 and to
her attorney in
writing on 15 January 2018.
[25]
Furthermore, she was appointed as executrix by the Master in terms of
the laws of intestate succession
on 2 October 2017. She indicated
that the applicant was aware of the will in December 2017 and about
the sale of the member’s
interest in the CC on 9 February 2018,
yet it did nothing prior to the institution of the application,
despite knowing full well
what the factual position was.
[26] She
submits that the letters of executorship which appointed her as
executrix by the Master authorised
her to deal with her husband’s
estate as well as her half share to such estate. As a consequence of
dissention between herself
and the children of the deceased, after
his death she sought legal advice in relation to the administration
of her husband’s
estate. When her attorney enquired whether the
deceased had a will, she indicated that she was not in possession of
a will and
her knowledge of any previous will was limited to what the
deceased had informed her, namely, that he had “cancelled”
his will.
[27] In
that there was no will, her attorney assisted her in completing the
documents to report her
husband’s estate to the Master, which
she did. She did not make any misrepresentations to the Master. In
the process of winding
up the deceased’s estate and reporting
it, her attorney had two meetings with attorney Rishen Maharaj who
represented the
deceased’s children. At the meeting Melaine,
[2]
the deceased’s daughter, informed her attorney that she was
aware that her father had died intestate and was willing to work
with
the fifth respondent’s attorney to wind-up the estate. The
deceased’s daughter had also placed an advert in the
local
newspapers calling for anyone to come forward if they had her late
father’s will or had any information pertaining
thereto.
[28] In
addition, the fifth respondent’s attorney of record contacted
attorney Raj Badal who
had attended to legal matters on the
deceased’s behalf and he confirmed that her late husband had
not made a will with him.
Badal however, informed her attorney that
it would not surprise him if a will was subsequently found. She
records that as a consequence
she was of the ‘correct and
unmistaken view that [her] late husband had died intestate at the
time’.
[29] She
further submits that as a consequence of her marriage in community of
property to the deceased,
the deceased’s will only deals with
his portion of the joint estate. The will was not a joint or a massed
will and even if
it was, the applicant then ought to have sought her
consent to adiate or repudiate the massing. The applicant did not do
so as
the will of the deceased only deals with her husband’s
undivided half share in and to the joint estate by virtue of their
marriage in community of property.
[30]
Having regard to annexure “A” (the deceased’s
will), the deceased records his
bequests to her and the other heirs
and as a consequence is dealing with his estate, being the 50 per
cent of the joint estate
and not their entire estate. Consequently,
when she dealt with the member’s interest in and to the CC by
virtue of her marriage
in community of property and on the
dissolution of her marriage by death, the fifth respondent became
entitled to 50 per cent of
the value of the member’s interest
and a further 33 per cent of her late husband's 50 per cent share in
terms of his will.
[31] The
fifth respondent submits that the will restricts the applicant to the
administration of the
deceased’s estate and not hers. She
confirmed that she was aware that in 2014/2015 her husband had
cancelled all previous
wills and was to draft a new will. Had she
been aware of the existence of the will she would not have sought the
assistance of
an attorney but would have approached the applicant.
She pertinently denies misleading the Master or making any fraudulent
misrepresentations
in this regard.
Submissions by the applicant
[32]
The applicant submits that in relation to the first respondent, he
has no legal as opposed to
a financial interest in the appointment of
the fifth respondent as executrix and has no interest in any of the
relief being sought.
[33] The
applicant further submits that the application falls to be decided on
a question of law,
namely, either the Master had the power to appoint
the fifth respondent as an executrix but mistakenly exercised that
power, or
was purporting to exercise the power which he did not have
at all. If he had the power to appoint the fifth respondent and
mistakenly
exercised that power, then the appointment would be valid
until withdrawn and the fifth respondent would have the right to deal
with the immovable property until her appointment was withdrawn. If
he exercised a power he did not have at all, then his power
to
appoint the fifth respondent was lacking and rendered the fifth
respondent’s appointment void
ab
initio
. In support of this
submission, Mr
Stokes SC
,
who appeared for the applicant, relied
on the decision in
Mvusi v
Mvusi NO & others
.
[3]
[34] It
is common cause that the Master appointed the fifth respondent in the
absence of a contrary
nomination in a will in terms of s 18 of the
Act. The applicant however submits that as there was a valid will in
which it was
appointed as executor, the Master could only act in
accordance with s 14 of the Act and consequently, the Master
exercised a power
he did not have. It is for this reason that the
appointment of the fifth respondent is rendered void
ab initio
.
[35]
Following on the appointment of the fifth respondent being void
ab
initio
, then her dealing
with the assets in the deceased’s estate is of no force or
effect. The fifth respondent was therefore not
entitled to pass
ownership to the first respondent and consequently, the first
respondent was not entitled to then pass ownership
to the
Rajaruthnams. It is under these circumstances that the applicant
submits that the member’s interest purportedly disposed
of by
the fifth respondent must be returned to the deceased estate. In
addition, the applicant relies on the decision in
Mngadi
NO v Ntuli & others.
[4]
[36] In
relation to the passing of dominium, the applicant submits that our
law does not concern itself
with the validity of the underlying causa
as South African law follows the abstract theory approach.
Consequently, for a valid
transfer of ownership the following
requirements must be met:
(a)
the parties to the transfer must be in a position to pass and acquire
ownership. In the
instance of a deceased’s estate, the
transferor must be the executor or a representative or a person
authorised by such executor;
(b)
the parties must be legally competent to give and receive transfer of
ownership; and
(c)
the parties must intend passing ownership.
[37] It
is for these reasons the applicant submits that as the fifth
respondent’s appointment
by the Master was void
ab initio
,
she had no authority to deal with the assets in the deceased’s
estate and consequently could not pass ownership to the first
respondent.
[38] Mr
Stokes SC
submitted that the Master was only entitled to
appoint the fifth respondent in the absence of a contrary nomination
in the deceased’s
will. His power to appoint the fifth
respondent derived from s 18 of the Act, which had no application as
the deceased left a will.
Consequently, as there was a will, the
Master could only appoint the applicant in accordance with s 14 of
the Act.
[39]
Among the submissions made by the applicant is that the fifth
respondent obtained appointment
as executrix through fraud,
alternatively, misrepresentation, the submission being that she was
aware of the existence of the will
when she applied to the Master for
appointment as executrix. In support of this, the applicant relies on
the contents of a letter
received from the fifth respondent’s
attorney of record, K Maharaj, on 9 February 2018. In such letter,
she surrendered her
letters of executorship to the Master and
‘conceded she was never entitled to be appointed as executrix’.
The applicant
also relies on a transcript of the telephonic
discussion held between a representative of the applicant and the
fifth respondent
in December 2017 annexed to the papers as exhibit
“F”.
[40] In
addition, the applicant alleges that the fifth respondent has been
receiving income from the
rental income of the properties, which is
being distributed to herself and some of the heirs. In addition, it
alleges she disposed
of the immovable property at a fraction of its
value, as there were two earlier offers, which substantially exceeded
the sale price
of the property to the first respondent, and she did
so with the full knowledge of her attorney of record.
[41]
According to the applicant, what is further suspicious in relation to
the disposal of the immovable
property, is the fact that the sale
occurred on 20 November 2017 and the registration of the member’s
interest in the first
respondent’s name took place relatively
soon thereafter on 7 December 2017, a period of approximately 17
days. In addition,
the onward sale to the Rajaruthnams was also
concluded fairly swiftly as they were appointed members of the CC on
3 January 2018.
Submissions by the first respondent
[42]
Mr
Harcourt
SC
who appeared for the first respondent,
submitted in his heads of argument that the issues for determination
in this application
are the following, namely:
(a)
Where there has been an irregularity in the appointment of the
executrix by the Master,
is the contract concluded by the executrix
void
ab initio?
(b)
If not, then where there has been an irregularity in the appointment
of the executrix, can
a contract concluded by such executrix be set
aside after there has been performance?
[43]
He submits that the appointment of executors, be it testate or
intestate, are made by the Master
pursuant to, inter alia, ss 14 to
18 of the Act. A testator nominates a proposed executor/executrix of
his/her estate and the Master
has a discretion to either appoint the
nominated executor or to appoint another executor in terms of s 22
read with s 54 of the
Act.
[44]
Relying on the decision in
Jacobs
& others v Baumann NO & others,
[5]
the submission is that the appointment of an executrix constitutes an
administrative act which even if irregular, remains valid
until set
aside
in
terms of the
Oudekraal
principle.
[6]
[45]
Even in circumstances where the appointment of an executrix was
irregular, any contract in terms
of which performance has occurred
and in particular, where ownership of immovable property has passed,
cannot be set aside. For
this submission, he relies on the decision
in
Legator McKenna Inc &
another v Shea & others.
[7]
[46] He
submits that the relief sought by the applicant fails to recognise
that the member’s
interest in the CC is not owned solely by the
deceased’s estate but in equal, undivided shares by the joint
estate of the
widow (the fifth respondent) and the deceased.
Analysis
Preliminary
legal question to be determined - locus standi in iudicio of the
first respondent
[47]
The preliminary legal question to be determined is the issue raised
by the applicant relating
to the locus standi of the first respondent
to oppose the relief sought. The applicant submits that as the
property had been onward
transferred to the Rajaruthnams, the first
respondent does not have a direct and substantial interest in the
application entitling
him to oppose it. The submission being that he
has no legal interest as opposed to a financial interest in respect
of the validity
of the appointment of the fifth respondent, nor can
he oppose the orders seeking the transfer back to the deceased’s
estate
of the member’s interest from the Rajaruthnams.
[48]
Locus standi in iudicio refers to the legal standing and capacity of
a party to litigate and
it is often said that this involves
determining whether a party has a ‘direct and substantial
interest’ in the right
forming the subject matter of the
litigation and in the outcome of the litigation.
[8]
Whether a litigant has standing in a matter is determined by having
regard to the particular facts and law applicable. In
JDJ
Properties CC & another v Umngeni Local Municipality &
another,
[9]
the court held the following:
‘
Whether
a litigant’s interest is sufficient to clothe him or her with
standing involves a consideration of the facts, the
statutory scheme
involved (in public-law disputes, a statutory power is almost
inevitably involved) and its purpose: the issue
must, in other words,
be determined in the light of the factual and legal context.
’
(Footnote
omitted.)
[49]
Such a determination requires a court to assume that the allegations
made by the first respondent
in the affidavits are true and
correct.
[10]
In
Giant Concerts
CC v Rinaldo
Investments (Pty) Ltd & others
,
the Constitutional Court held the
following:
‘
And
in determining Giant’s standing, we must assume that its
complaints about the lawfulness of the transaction are correct.
This
is because in determining a litigant’s standing, a court must,
as a matter of logic, assume that the challenge the litigant
seeks to
bring is justified. As Hoexter explains:
“
The
issue of standing is divorced from the substance of the case.
It is therefore a question to be determined
in
limine
[at the outset], before the merits are considered
.”’
[11]
(Footnotes
omitted.)
[50] The
applicant submits that the only interest, which the first respondent
has in the application,
is a financial as opposed to a legal
interest. The submission of Mr
Stokes
SC
in this regard is that in seeking the transfer back to the deceased’s
estate of the member’s interests from the Rajaruthnams,
the
first and fifth respondents have no interest, as they do not oppose
such relief. The first respondent only has a financial
interest in
the validity of the appointment of the fifth respondent as executrix.
What must be borne in mind is the fact that the
applicant indicates
that as the deceased at the time of his death had executed a will and
appointed the applicant as executor,
the Master only had the power to
appoint the applicant and not the fifth respondent. The Master had to
make such appointment and
act
in
terms of the provisions of s 14 of the Act.
[51] If
one considers the authorities on the issue of locus standi, the
courts have held that a person
has locus standi if they have a direct
and substantial interest in the outcome of litigation or any orders,
which may affect their
rights. Part of the relief, which the
applicant seeks, is for the fifth respondent to pay over the purchase
price paid for the
immovable property. It is common cause between the
parties that such moneys have been paid into the applicant’s
attorneys
trust account.
[52]
It must be borne in mind that certain of the relief, specifically
paras 2.3 and 2.4 of
the orders in the notice of motion affect the
first respondent. In my view, given the nature of the relief which
the applicant
is pursuing in the notice of motion, the first
respondent has a direct and substantial interest in the proceedings.
[53]
Consequently, it cannot be said that he does not have locus standi to
oppose the relief, specifically
that part of the relief sought in
paras 2.3 and 2.4 of the notice of motion. If the transfer of the
member’s interest to
the fifth respondent is set aside, the
first respondent would be faced with an action from the Rajaruthnams.
In any event, the
applicant would not have cited him as a party in
these proceedings if he did not have a direct and substantial
interest in the
proceedings.
The appointment of the fifth
respondent as executrix
[54]
In order to deal with the parties’ submissions, it is useful to
consider the relevant provisions
of the Act. Section 14 of the Act
reads as follows:
‘
14
Letters of the executorship to executors testamentary
(1)
The
Master shall, subject to subsection (2) and sections 16 and 22, on
the written application of any person who –
(a)
has
been nominated as executor by any deceased person by a will which has
been registered and accepted in the office of the Master;
and
(b)
is
not incapacitated from being an executor of the estate of the
deceased and has complied with the provisions of this Act,
grant
letters of executorship to such person
.’
[55]
Section 18 reads as follows:
‘
18
Proceedings on failure of nomination of executors or on death,
incapacity or refusal to act, etc
(1)
The
Master shall, subject to the provisions of subsections (3), (5) and
(6)-
(a)
if
any person has died without having by will nominated any person to be
his executor; or. . .
appoint
and grant letters of executorship to such person or persons whom he
may deem fit and proper to be executor or executors
of the estate of
the deceased, or, if he deems it necessary or expedient, by notice
published in the
Gazette
and in such other manner as in his
opinion is best calculated to bring it to the attention of the
persons concerned, call upon
the surviving spouse (if any), the heirs
of the deceased and all persons having claims against the estate, to
attend before him
or, if more expedient, before any other Master or
any magistrate at a time and place specified in the notice, for the
purpose of
recommending to the Master for appointment as executor or
executors, a person or a specified number of persons.’
[56] It
is common cause on the papers that the Master appointed the fifth
respondent in terms of s
18 of the Act at a time when it was believed
that the deceased died intestate. Although there was a suggestion in
the papers that
the fifth respondent misrepresented the true
position, was mala fide and acted in a fraudulent manner, Mr
Stokes
did not strenuously pursue this line of argument.
[57] In
the course of making submissions, Mr
Stokes
relied on the decision in
Mvusi.
[12]
In this decision, Davies AJ considered the case of
Mngadi.
[13]
In such matter, the deceased had been married twice and had executed
a will in which his first wife had been appointed as the executrix
of
his estate. He entered into a second marriage at the time of which
the will had not been revoked. After his death, the will
was accepted
and registered by the Master. However, his second wife had been
appointed by an additional Bantu Affairs Commission
as representative
of the deceased’s estate in terms of reg 4(1) of the
Regulations for the administration and distribution
of the estates of
deceased Bantu, GN R34,
RG
1331, 7 January 1966. Both
the Bantu Affairs Commissioner and the second wife were unaware of
the existence of the will. The second
wife had sold and transferred
certain immovable property in the estate to the second defendant who
in turn sold and transferred
it to the third defendant.
[58]
Page J declined to follow the reasoning underlying the decision in
Brand, NO v Volkskas Bpk &
another.
[14]
He was of the view that the decision in such case was distinguishable
and held that the appointment of the first defendant being
the second
wife was void
ab initio
and that she had no power to transfer the ownership of the immovable
properties to the second defendant. The ownership of the properties
remained vested in the estate of the deceased of which the first wife
was a duly appointed representative.
[15]
[59] In
Mvusi
,
the Transkei High Court took the view that when the magistrate
appointed Jotham (J), he was ‘“mistakenly exercising
a
power which he had” and was not “purporting to exercise a
power which he did not have at all”’. The appointment
of
J was valid until such time as the appointment was withdrawn and J
had the right to deal with the immovable property.
[16]
[60] In
my view, the facts of
Mvusi
are distinguishable from the
present matter. In
Mvusi’s
matter, J who had been
appointed as the representative of the deceased’s estate had
represented that he was the sole beneficiary
of the deceased’s
estate, transferred the property onto his name and then on-sold it to
a third party. Such third party was
aware of the defect in J’s
title. There was no innocent third party purchaser and in any event,
J had misrepresented to the
magistrate when he obtained his
appointment that he was the sole heir to the estate of the deceased.
The court took the view that
J acted in fraud of the true heirs when
he transferred the immovable property to a third party. Unlike in the
present matter, there
is nothing to show that the first respondent
and the Rajaruthnams were aware of any defect in the fifth
respondent’s title
to transfer the membership interest and sell
the immovable property.
[61] The
decision in
Mngadi
is also distinguishable as different
statutes were applicable. The court in
Mngadi
’s case was
of the view that the regulations only empowered a commissioner to
appoint an executor where a deceased person
had died leaving no valid
will. In the current matter, the Master is empowered by statute to
appoint an executor with or without
a valid will. Consequently, the
Master when appointing the fifth respondent, exercised a power which
he had in terms of the
Administration of Estates Act, without
knowledge of the existence of a will, and consequently such exercise
of power cannot be void
ab initio
.
[62] In
my view, one must accept that as the fifth respondent was unaware of
the existence of the
deceased’s will at the time she applied
for appointment as executrix, her application to the Master was not
fraudulent nor
did she misrepresent the factual position. She
genuinely believed in my view that the deceased had “cancelled”
his
old will. Steps were taken and enquiries were made to ascertain
whether or not the deceased left a will.
[63]
This is borne out by the advertisement that was placed in the local
newspapers by the deceased’s
daughter as well as the enquiries
made by the deceased’s attorney and even with the applicant.
Furthermore, the telephonic
exchange with the applicant’s
representative does not indicate any knowledge on the fifth
respondent’s part of the
existence of a will; in fact, she
relied on the deceased’s say so that he had cancelled the will.
There is nothing to indicate
that the fifth respondent’s and
the deceased’s family’s efforts to either locate and/or
establish whether the
deceased had left a will are unreasonable. I am
satisfied that the fifth respondent did not act mala fide and at all
times acted
in a bona fide and reasonable belief that the deceased
died intestate.
[64] The
recording of the telephonic conversation between the fifth respondent
and the applicant’s
representative was made without any
disclosure to the fifth respondent that it was being recorded. A
reading of the exchange in
my view reveals that the fifth respondent
assumed, after having being told by her late husband, that he had in
fact ‘cancelled
his old will’, that there was no will in
existence. On a number of occasions during the telephonic
conversation the fifth
respondent indicates that she is not aware of
a later will and is only aware of the old one, which the deceased
informed her was
cancelled.
[65] She
also during such telephonic exchange indicates that she would request
her attorney of record
to get in touch with the applicant to deal
with any queries they had in respect of a will. What is also evident
from the papers
is that the applicant had been informed by the fifth
respondent’s attorney of the deceased’s death. At the end
of the
conversation, she indicates that there was no will.
[66]
There is a material dispute of fact as to whether the fifth
respondent knew of the existence
of the will, which is incapable of
being resolved on the papers, and consequently Ms
Dheoduth
is correct that the court
must follow the principles set out in the decision of
Room
Hire Company (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd.
[17]
There has been no request for the matter to be referred for the
hearing of oral evidence.
[67] The
application papers contain correspondence exchanged by the fifth
respondent’s attorneys
of record, K Maharaj Incorporated to
First National Bank as well as the seventh respondent. The
correspondence was sent to First
National Bank with a view to
ascertaining the accounts held by the deceased with their institution
and to further inform them that
they were assisting the fifth
respondent in attending to winding up the estate of the deceased.
There appears to have been no response
in relation to such request
and consequently the version of the fifth respondent in this regard
must be accepted. Such correspondence
was submitted to the applicant
in December 2017.
[68]
What is not clear is why the applicant did not immediately inform the
Master and the fifth respondent
of the existence of the will.
Consequently, at the time the Master made the appointment in terms of
s 18 of the Act, such appointment
was ‘mistakenly exercised’.
[69]
Once the fifth respondent and her attorney became aware of the
existence of the will, she surrendered
the letters of executorship.
The first respondent’s conduct in this regard strengthens my
view that the fifth respondent
did not act mala fide or that she was
aware of the existence of the will and fraudulently misrepresented
this fact to the Master
when she applied to be appointed as
executrix.
[70] In
fact, when viewed holistically, the probabilities are in my view
overwhelmingly in the fifth
respondent’s favour that she did
not know that the will had
not been cancelled
. Her interaction
with the applicant’s representative during the telephonic
exchange is inconsistent with the conduct of someone
acting mala fide
and intent on misrepresenting the true position.
[71] It
is trite that the Master is a functionary and any act performed by
him pursuant to the
Administration of Estates Act constitutes
administrative action. It is now trite that unless the act is set
aside by a court in proceedings for judicial review, such act
exists
in fact and has legal consequences which cannot be overlooked.
Even an unlawful administrative act is capable of producing
legally
valid consequences for so long as the unlawful act is not set
aside.
[18]
[72] The
Supreme Court of Appeal in
Oudekraal
Estates (Pty)
Ltd v City of Cape Town
,
per Howie P and Nugent JA, in dealing with the apparent anomaly,
relied on an analysis by Christopher Forsyth. Forsyth expatiated
that:
‘
.
. .
while
a void administrative act is not an act in law, it is, and remains,
an act in fact, and its mere factual existence may provide
the
foundation for the legal validity of later decisions or acts. In
other words
“
.
. . an invalid administrative act may, notwithstanding its
non-existence [in law], serve as the basis for another perfectly
valid
decision. Its factual existence, rather than its invalidity, is
the cause of the subsequent act, but that act is valid since the
legal assistance of the first act is not a precondition for the
second.
”’
[19]
(Footnote omitted.)
[73] In
addition, in deciding whether or not to set aside the administrative
act, one often has to
do so considering the consequences such act
produced. In
Oudekraal,
the court said the following:
‘
I
t
will be apparent from that analysis that the substantive validity or
invalidity of an administrative act will seldom have relevance
in
isolation of the consequences that it is said to have produced –
the validity of the administrative act might be relevant
in relation
to some consequences, or even in relation to some persons, and not in
relation to others – and for that reason
it will generally be
inappropriate for a court to pronounce by way of declaration upon the
validity or invalidity of such an act
in isolation of particular
consequences that are said to have been produced
.’
[20]
[74] The
Oudekraal
principle received endorsement from the Constitutional Court in the
decision of
MEC for Health,
Eastern Cape & another v Kirland Investments (Pty) Ltd t/a Eye &
Lazer Institute.
[21]
[75] In
addition, although the applicant raised concerns in relation to the
purchase consideration
paid by the first respondent for the property,
in correspondence exchanged between K Maharaj Incorporated and the
seventh respondent,
the following becomes evident and these
suspicions in my view appear unfounded:
(a)
The seventh respondent indicates that they reviewed their initial
valuations of the property
dated 7 November 2017 as the value was
arrived at utilising the investment method. In arriving at a market
related appraisal, the
rentals generated, which were provided by
Melaine Pillay, were used to make the calculations. After submission
of the initial appraisal,
they were made aware that the rental
amounts provided were incorrect and the true rental generated only
amounted to the sum of
R149 480.65 rather than the amount of
R174 480.65 as previously advised.
(b)
This discrepancy emerged when their offices undertook rental
collections and revealed that
the family members who occupied
sections 19
and
20
of the immovable property did not pay rent and
that one of the heirs, Mark Pillay, was paid the sum of R12 500
per month from
the rentals. In addition, the initial appraisal was
revised as it was subsequently brought to their attention that
unauthorised
structures (for which there were no approved building
plans) had been erected, certain improvements had to be reinstated,
and the
entire storm water and sewerage system had to be replaced.
This would result in substantial amounts having to be expended on the
immovable property.
(c)
In relation to the two offers that were made to purchase the member’s
interest,
which were not accepted, the seventh respondent indicated
that in respect of the first offer, no deposit had been paid and no
resolutions
had been submitted by members of the CC confirming such
offer. In addition, there was a request for additional information.
In
respect of the second offer made, no deposit was submitted in
compliance with clause 1.1 of the conditions of sale.
(d)
Although rentals were collected for a period of three months,
expenses being rates, water,
electricity and security as well as
other miscellaneous expenses incurred for the property, reduced the
income significantly.
(e)
The applicant entertained suspicions of an existing relationship
between the seventh respondent
and the first respondent. The nature
of the relationship was clarified in that the seventh respondent
confirmed that first respondent
had been a client of the company for
a period in excess of 15 years. He is a property
speculator/entrepreneur and was included
on their database of clients
who are notified of properties that they are instructed to sell. The
first respondent had also purchased
a number of properties on auction
and regularly attended auctions conducted by the seventh respondent.
(f)
Although there was a suggestion that the fifth respondent received
payment of certain
moneys, it is clear that this was in relation to
her monthly maintenance. She did not receive payment of the purchase
price as
these moneys less commission was held by the seventh
respondent, which was subsequently paid to the applicant’s
attorneys
of record to be held in trust.
[76] Ms
Dheoduth
in her submissions indicates that it is only if the fifth respondent
is shown to have acted mala fide, and was aware of the existence
of
the will and thereafter fraudulently misrepresented this fact to the
Master, that her appointment can be considered void
ab
initio.
However, in that
regard there is a material dispute of fact, which is incapable of
being resolved on the papers, and consequently
the court must follow
the principles set out in the decision of
Room
Hire.
[22]
[77] In
the absence of fraud it would mean that when the fifth respondent
applied to the Master for
her appointment as executrix, she acted
bona fide and this would have the consequence of not nullifying her
appointment and any
transactions made pursuant to her appointment as
executrix. In addition, the first respondent is the party to whom the
fifth respondent
sold her member’s interest in the CC and the
deceased’s interest and is consequently a bona fide third
party. As a
consequence thereof, the deceased estate is bound by the
purchase and sale agreement.
[78]
Having concluded that the Master and all persons concerned laboured
under the mistake that the
deceased did not leave a will, the result
thereof is that the fifth respondent’s appointment and all acts
done pursuant thereto
would be valid. This would be until she
returned the letters of executorship to the Master and the applicant
was appointed as executor
in terms of the will. Consequently, the
effect of the fifth respondent’s appointment is valid until she
handed in the letters
of executorship.
[79] The
fifth respondent derived her power as executrix from her appointment
as executor by the Master
and not from the will. Consequently, the
Master as appointing her executrix, absent knowledge of a will,
conferred authority on
her, which he was by virtue of the provisions
of the
Administration of Estates Act entitled
to confer. In
Brand,
NO v Volkskas Bpk
the full court of the Transvaal division as it
then was held the following:
‘
The
revocation of the first executor’s appointment did not, in my
view, have the effect of rendering what he had done null
and void.
What he had done was under the authority of the Master given in
accordance with the statute and it was clearly not illegal,
even
though it may turn out after investigation that the will under which
the estate was being administered was invalid through
revocation. To
hold that everything done in the first administration was null and
void, would lead to most absurd results which
it seems unnecessary to
particularise
.’
[23]
What is the legal effect of a
marriage in community of property?
[80]
A marriage in community of property results in all assets, including
the right of occupation
of premises by one spouse, and liabilities,
whether subsisting at the time of the marriage or acquired or
incurred during the course
of the marriage, being pooled to form a
single joint estate.
[81] The
author H R Hahlo, in
The South African Law of Husband and Wife
,
explains the nature of a marriage in community of property as
follows:
‘
The
joint estate consists of all the property and rights of the spouses
which belonged to either of them at the time of the marriage
or which
were acquired by either of them during the marriage. . .As regards
acquisitions stante matrimonio, whatever either spouse
acquires
during the marriage falls automatically into the joint estate, no
matter whether it is acquired by onerous or gratuitous
title; by a
contract or succession; in pursuance of a condictio or of a delictual
claim; as the result of legal or illegal activities.
. .Nor does it
make any difference whether the acquisition is made in the name of
the husband, of the wife or both spouses jointly.’
[24]
(Footnotes omitted.)
[82] The
joint estate is held by both spouses in co-ownership, in equal
undivided shares. This includes
all assets and all liabilities of
both spouses subject to certain exceptions, one such exception being
property donated or bequeathed
by a third party containing a proviso
that it shall not fall into the joint estate and shall be the
spouse’s separate property.
Spouses married in community of
property can also own separate properties, which are excluded from
the joint estate.
The disposal of an interest of a
deceased member in terms of
s 35
of the
Close Corporations Act
[83
]
Section 35
of the
Close Corporations Act reads
as follows:
‘
Subject
to any other arrangement in an association agreement, an executor of
the estate of a member of a corporation who is deceased
shall, in the
performance of his or her duties –
(a)
cause the deceased member’s
interest in the corporation to be transferred to a person who
qualifies for membership of a corporation
in terms of
section 29
and
is entitled thereto as legatee or heir or under a redistribution
agreement, if the remaining member or members of the corporation
(if
any) consent to the transfer of the member’s interest to such
person; or
(b)
if any consent referred to
in paragraph
(a)
is not given within 28 days after it was requested by the executor,
sell the deceased member’s interest –
(i)
to the corporation, if there is
any other member or members than the deceased member;
(ii)
to any other member or members
of the corporation in proportion to the interests of those members in
the corporation or as they
may otherwise agree upon; or
(iii)
to any other person who
qualifies for membership of a corporation in terms of
section 29
, in
which case the provisions of subsection (2) of
section 34
shall
mutatis mutandis
apply in respect of any such sale
.’
[84] The
provisions of
s 29(2)(
c
) and 29(3)(
c
)-(
e
) must
be kept in mind when applying the provisions of
s 35
of the
Close
Corporations Act. Section
29(2)
(c)
reads as follows:
’
a
natural or juristic person,
nomine
officii
,
who, in the case of a member who is insolvent, deceased, mentally
disordered or otherwise incapable or incompetent to manage his
or her
affairs, is a trustee of his or her insolvent estate or an
administrator, executor or curator in respect of such member
or is
otherwise a person who is his or her duly appointed or authorized
legal representative.’
[85] The
provisions of
s 29(3)(
c
)-(
e
) read as follows:
‘
(
c
)
A trustee of an insolvent estate, administrator, executor or curator,
or other legal representative,
referred to in subsection (2) (
c
),
in respect of any member of a corporation, who is not obliged or who
does not intend to transfer the interest of the member in
the
corporation in accordance with the provisions of this Act within 28
days of his or her assuming office to any other person,
shall within
that period, or any extended period allowed by the Registrar on
application by him or her, request the existing member
or members of
the corporation to lodge with the Registrar in accordance with
section 15 (1) an amended founding statement designating
him or her,
nomine
officii
,
as representative of the member of the corporation in question.
(
d
)
Where the corporation has no other member, any such representative
himself or herself
shall, in the circumstances contemplated in
paragraph (
c
), act on behalf of the corporation in accordance
with the provisions of section 15 (1), read with the said paragraph
(
c
).
(
e
)
The provisions of paragraphs (
c
)
and (
d
)
shall not affect the power of such representative, as from the date
of his or her assuming office, and whether or not any such
amended
founding statement has been lodged, to represent the member concerned
in all matters in which he or she himself or herself
as a member
could have acted, until the interest of that member in the
corporation has in accordance with the provisions of this
Act been
transferred to any other qualified person
.’
[86] The
executor becomes the member
nomine officii
and is empowered to
act on behalf of the close corporation in terms of these provisions
even before the registration of the amended
founding statement. Where
a close corporation is the registered owner of immovable property as
defined in
s 102
of the
Deeds Registries Act 47 of 1937
, the close
corporation can sell its immovable property, it being represented by
the executor acting in terms of the authorities
cited above.
[87]
From the facts of the matter we know that at the time the fifth
respondent dealt with and sold
the immovable property to the first
respondent, she did so at a time when the deceased member’s
interest was transferred
to herself. She as executrix became the
member
nomine officii
and was empowered to act on behalf of
the CC. As the CC was the registered owner of the immovable property,
she would in her capacity
as executrix be entitled dispose of the
property. In addition, the Master’s consent would not be
necessary for her to sell
the immovable property, as the deceased was
the sole member of the CC.
[88] In
the case of a sole member, the executor would also be entitled to
cause the close corporation
to do any act which the deceased could
have done had the deceased been alive and that would include the
power to cause the close
corporation to sell its immovable property.
[89]
In
Boerboonfontein
BK v La Grange NO en ‘n ander
,
[25]
the court held that for purposes of
s 29(3)(
e
)
of the
Close Corporations Act, an
executor of an estate of a deceased
member is ‘a representative’. The executor can act in
respect of all the affairs
of the corporation as if he/she is a
registered member of the corporation notwithstanding that an amended
founding statement has
not been registered.
How does one then interpret the
provisions of
s 35
of the
Close Corporations Act?
[90
]
In
Livanos
NO & others v Oates & others
,
[26]
the court concluded that in terms of
s 35(
a)
,
an executor must first transfer a deceased member’s interest to
a legatee or heir if the remaining members of the corporation
consent
to the transfer. If they do not do so, then the executor is entitled
to sell the deceased member’s interest in terms
of the
provisions of
s 35(
b
).
In para 10 of the judgment the court held the following:
‘
The
section does not oblige the executor to sell the member’s
interest to the corporation or the remaining members. The intention
of the legislature is clearly that in the event of
s 35(
a
)
not being applicable, the executors can dispose of the members’
interest in one of the three manners provided for in
s
35(
b
).’
[91]
In addition, one must also be mindful of the provisions of
s 54(2)
of
the
Close Corporations Act, wh
ich provides that a corporation is
bound by the act of a member ‘whether or not such act is
performed for the carrying on
of the business of the
corporation’.
[27]
[92]
Section 54
of the
Close Corporations Act provides
as follows:
‘
(
1)
Subject to the provisions of this section, any member of a
corporation shall in relation
to a person who is not a member and is
dealing with the corporation, be an agent of the corporation.
(2)
Any act of a member shall bind a corporation, whether or not such act
is performed
for the carrying on of the business of the corporation
unless the member so acting has in fact no power to act for the
corporation
in the particular matter and the person with whom the
member deals has, or ought reasonably to have, knowledge of the fact
that
the member has no such power
.’
[93]
Lewis JA stated the following in
Northview
Shopping Centre (Pty) Ltd v Revelas Properties Johannesburg CC &
another
[28]
para 17 insofar as authority of a member of a close corporation is
concerned:
‘
Section
54(2)
does no more than express the usual rules relating to
ostensible authority. And
s 54(1)
simply confers on a member
authority to act for a close corporation, as the common law confers
on a partner the power to bind the
partnership. The section does not
regulate the question of written authority for the purpose of s 2(1)
of the Alienation of Land
Act, as it is assumed s 69 of the Companies
Act does. It is clear, however, that, on the reasoning in
Potchefstroom
Dairies
,
a member, who by law can represent a close corporation, need not have
written authority. But why should that be true of
an agent of
the close corporation who is not a member, as is the case with
Christelis?’
[94]
The purpose of
s 2(1)
of the
Alienation of Land Act 68 of 1981
ensures certainty in respect of contracts for the sale of land. Such
object or purpose is not defeated if a functionary of a company
or a
close corporation signs such contract as there can be no uncertainty
about the functionary’s authority as it derives
from law.
If however, authority arises from the expression of will, for example
an expressed authorisation, it must be in
writing as if it is not,
the uncertainty of the authority defeats the object or purpose of
s
2.
[29]
[95]
In interpreting the provisions of
s 54
, our courts have held that a
member of a close corporation is an agent even if no authority,
express or implied, has been conferred
on him or her. The corporation
is bound by the acts of such member unless a third party knew or
ought reasonably to have known
that there was the absence of
authority.
[30]
[96] In
this matter, the fifth respondent was, once appointed as executrix of
the deceased’s
estate, entitled to transfer his member’s
interest. Not only would she have been entitled by virtue of her
appointment to
deal with her fifty per cent interest in the estate by
virtue of her marriage in community of property, but she would as
executrix
be entitled to deal with his fifty per cent interest in the
joint estate and his member’s interest.
Was the sale of the member’s
interest to the first respondent valid?
[97]
Until such time as the fifth respondent returned the letters of
executorship to the Master, she
was entitled to effect the sale of
such member’s interest. Essentially, the applicant, as I
understand the submissions, submits
that ownership could not have
passed to the first respondent and subsequently to the Rajaruthnams,
as there was a defect in the
fifth respondent’s right to
transfer ownership to the first respondent.
[98]
The submission being that as her appointment was void
ab
initio
, she could not have
transferred the deceased member’s interest to herself, nor
could she have acted
nomine
officii
in terms of
s 35
of
the
Close Corporations Act nor in
terms of the letters of
executorship and sell the immovable property to the first respondent.
For this submission, the applicant
relies on the decision of
Mngadi.
[31]
I have for reasons already alluded to earlier on in the judgment
dealt with the effect of the decision in
Mngadi
and why same is distinguishable.
What then of the sale of the
immovable property and its transfer to the first respondent?
[99]
It is clear that the abstract theory of transfer applies to both the
transfer of movable and
immovable property. This was confirmed by
Brand JA in the Supreme Court of Appeal in the decision of
Legator
McKenna Inc v Shea
where he
said ‘[a]ccording to the abstract theory the validity of the
transfer of ownership is not dependent upon the validity
of the
underlying transaction such as, in this case, the contract of
sale’.
[32]
The abstract theory of transfer in respect of the passing of
ownership in the case of immovable property is effected by the
registration
of transfer in the deeds office coupled with the
so-called real agreement. The essentials of a real agreement are an
intention
on the part of the transferor to transfer ownership and the
intention of the transferee to become the owner of the property.
[100] In terms of the
abstract theory of transfer, the validity of transfer of ownership is
not dependant on the validity
of the underlying transaction,
notwithstanding, that the causa which gave rise to such transfer is
defective, a valid transfer
of ownership can occur.
[101] In respect of the
abstract theory of transfer, there are two requirements for the
passing of ownership, namely:
‘
(a)
delivery, in the case of movable property and in respect of immovable
property registration
of transfer in the deeds office;
(b)
coupled with the so-called real agreement, the essential elements are
the intention on the
part of the transferor to transfer ownership and
intention on the part of the transferee to become the owner of the
property
.’
[33]
[102] The Supreme Court of
Appeal has authoritatively held that the abstract theory of transfer
applies in our law to
the sale of both movable and immovable
property.
[34]
It therefore follows in the absence of fraud, notwithstanding the
existence of the will which none of the parties were aware
of at the
time of the sale of the member’s interest and the immovable
property, the transfer is in accordance with the abstract
theory of
transfer and must stand.
The Rajaruthnams as bona fide
purchasers
[103]
The Rajaruthnams are bona fide purchasers who cannot be dispossessed
of ownership of the property. As explained
by Brand JA in
Bowring
NO v Vrededorp Properties CC & another
[35]
relating to double sale of property and the doctrine of notice:
‘
The
legal basis advanced by Vrededorp for its claim to the blue portion
is again derived from the doctrine of notice. This time
it relies on
the application of the doctrine in the sphere of successive sales.
The usual operation of the doctrine in this instance,
as explained in
our case law, is essentially as follows: if a seller, A, sells
a thing – be it movable or immovable
– to B and
subsequently sells the same thing to C, ownership is acquired, not by
the earlier purchaser, but the purchaser
who first obtains transfer
of the thing sold. If the first purchaser, B, is also the first
transferee, his or her right is unassailable.
If the second
purchaser, C, is the first transferee, his or her right of ownership
is equally unassailable if he or she had purchased
without knowledge
of the prior sale to B. But, if C had purchased with such prior
knowledge, B is entitled to claim that the transfer
to C be set aside
so that ownership of the thing sold can be transferred to B. (See eg
Cohen
v Shires
,
McHattie
and King
(1882) 1 SAR 41 at 46;
McGregor
v Jordaan and Another
1921 CPD 301
at 308;
Tiger-Eye
Investments (Pty) Ltd and Another v Riverview Diamond Fields (Pty)
Ltd
1971 (1) SA 351
(C) at 358F - G;
Kazazis
v Georghiades en Andere
1979 (3) SA 886
(T) at 894B - D;
Cussons
en Andere v Kroon
2001 (4) SA 833
(SCA) ([2002]
1 All SA 361)
at 839C - E (SA);
Badenhorst, Pienaar & Mostert
op
cit
89; Gerhard Lubbe ‘A doctrine in search of a theory:
reflections on the so-called doctrine of notice in South African Law’
1997
Acta
Juridica
246
et
seq
.
Again it is unnecessary to enter into the unresolved debate referred
to earlier, ie whether knowledge acquired by C between purchase
and
transfer would make any difference.)
’
[36]
[104]
At the time the Rajaruthnams purchased and took transfer of the
property they were unaware of the existence of
the will and
accordingly the doctrine of notice cannot apply to them.
[37]
They are therefore bona fide purchasers who acquired the property
without any knowledge of any defect in title and therefore cannot
be
dispossessed of ownership of the property. The sale and transfer of
the property to them is accordingly valid and cannot be
set aside.
[105] Having reached the
following conclusion that:
(a)
the fifth respondent’s appointment although “irregular”
was valid until
she returned the letters of executorship;
(b)
the transfer of the deceased’s member’s interest in MN
Properties CC to the
fifth respondent was valid;
(c)
the first respondent and the Rajaruthnams were bona fide purchasers
of the member’s
interest; and
(d)
bearing in mind that the applicant was appointed as executor with
effect from 26 January
2018,
there is no basis to grant the relief
which the applicant seeks and consequently the application falls to
be dismissed with costs.
Costs
[106]
As the applicant has been unsuccessful, there is no reason to depart
from the usual rule in relation to costs.
Order
[107]
In the result, the following order will issue:
The
application is dismissed with costs.
HENRIQUES J
CASE
INFORMATION
APPEARANCES
Counsel
for the Applicant
:
Advocate A
Stokes SC
Instructed
by
:
Livingston Leandy Inc
1
st
Floor, Building No. 3
Glass House Office Park
309 Umhlanga Rocks Drive
La Lucia Ridge
Durban
Ref: MNolan/05P088001
Tel: (031) 536 7500
Fax: (031) 566 2470
Email:
mnolan@livingston.co.za
Counsel
for the First Respondent :
Advocate A W M Harcourt SC
Instructed by
:
Ravindra Maniklall & Company Inc
Suite 301, 3
rd
Floor
African Palms
9 Palm Boulevard Gateway,
Umhlanga Ridge, Durban
Tel: 032 533 7488
Email:
rmcattorney@gmail.com
Attorneys for Second, Third
and Fourth Respondents
:
Rajaruthnam &
Associates
4
th
Floor, Suite 401
Maxwell Centre
71/73 Ismail C Meer Street
Durban
Tel: 031 309 4868
Email:
sugan@rajattorneys.co.za
Counsel for Fifth Respondent
:
Advocate
D Dheoduth
Instructed by
: K
Maharaj Incorporated
Suite 301
40 Masonic Grove Chambers
Dullah Omar Grove,
Durban
Ref: RM/mg/p134
Tel: 031 305 4925
Fax: 031 305 4924
Email:
maharajr@kmaharajinc.co.za
Sixth
Respondent
:
The Master of the High Court, Durban
Attorneys for Seventh
Respondent
:
Johnston & Partners
81 Richefond Circle, Umhlanga Ridge
Durban, 4001
Tel: 031 536 9700
Date of Hearing
:
18 February 2019
Date
of Judgment
:
10 September 2019
[1]
This is a reference to the applicant.
[2]
The transcript of the telephone
conversation records the spelling of the name as Marlene.
[3]
Mvusi v Mvusi NO & others
1995 (4) SA 994
(TkS) at 1000.
[4]
Mngadi NO v Ntuli & others
1981 (3) SA 478
(D) at 484D-E.
[5]
Jacobs & others v Baumann NO &
others
2009 (5) SA 432
(SCA).
[6]
This principle was confirmed in the
decision of
Merafong City v
AngloGold Ashanti Ltd
2017
(2) SA 211 (CC).
[7]
Legator McKenna Inc & another
v Shea & others
2010
(1) SA 35 (SCA).
[8]
Jacobs en ‘n ander v Waks en
andere
[1991] ZASCA 152
;
1992 (1) SA 521
(A)
at 534A-E;
Wishart &
others v Blieden NO & others
[2013]
1 All SA 485
(KZP) para 41.
[9]
JDJ Properties
CC & another v Umngeni Local Municipality & another
2013 (2) SA 395
(SCA) para 27.
[10]
Zulu & others v eThekwini
Municipality & others
2014 (4) SA 590
(CC) para 21;
Giant
Concerts CC v Rinaldo Investments (Pty) Ltd & others
2013 (3) BCLR 251
(CC) para 32.
[11]
Giant Concerts
ibid
para 32.
[12]
Mvusi v Mvusi NO & others
1995 (4) SA 994
(TkS) at 1000.
[13]
Mngadi NO v Ntuli & others
1981 (3) SA 478 (D).
[14]
Brand, NO v Volkskas Bpk &
another
1959 (1) SA 494
(T).
[15]
See fn 13 above at 484E-G.
[16]
See fn 12 above at 1000F-G.
[17]
Room Hire Company (Pty) Ltd v
Jeppe Street Mansions (Pty) Ltd
1949 (3) SA 1155
(T) at 1163.
[18]
See
Oudekraal
Estates (Pty) Ltd v City of Cape Town
2004 (6) SA 222
(SCA) para 26.
[19]
See fn 18 para 29.
[20]
See fn 18 para 38.
[21]
MEC for Health, Eastern Cape &
another v Kirland Investments (Pty) Ltd t/a Eye & Lazer
Institute
2014 (3) SA 481
(CC).
[22]
See fn 17 above.
[23]
Brand, NO v Volkskas Bpk &
another
1959 (1) SA 494
(T) at 498E-H.
[24]
H R Hahlo
The
South African Law of Husband and Wife
5ed
(1985) at 161-163.
[25]
Boerboonfontein BK v La Grange NO
en ‘n Ander
2011 (1)
SA 58 (WCC).
[26]
Livanos NO & others v Oates &
others
2013 (5) SA 165
(GSJ).
[27]
Axal Properties 2 CC v Kotze
2013 (JDR) 2086 (SCA).
[28]
Northview Shopping Centre (Pty)
Ltd v Revelas Properties Johannesburg CC & another
2010 (3) SA 630
(SCA).
[29]
Northview Shopping Centre
ibid
para 26;
Divine Heights 5
CC v Greg & Sons Enterprises CC
2011 JDR 1691 (FB).
[30]
J & K Timbers (Pty) Ltd t/a
TEGS Timbers v G L & S Furniture Enterprises CC
2005 (3) SA 223
(N) at 227F-H;
Klaas
v Summers & others
2008 (4) SA 187
(C) para 18.
[31]
Mngadi NO v Ntuli & others
1981 (3) SA 478 (D).
[32]
Legator
McKenna Inc & another v
Shea & others
2010 (1)
SA 35
(SCA) para 21.
[33]
Legator
McKenna
Inc & another v Shea & others
2010 (1) SA 35
(SCA) para 22.
[34]
Kriel
v Terblanche NO en andere
2002
(6) SA 132
at 134B-F;
Prophitius
& another v Campbell & others
2008
(3) SA 552
(D) at 558G;
Legator
McKenna v Shea
ibid
para 21;
Du
Plessis v Prophitius & another
2010
(1) SA 49
(SCA) para 10.
[35]
Bowring NO v Vrededorp Properties
CC & another
2007 (5)
SA 391 (SCA).
[36]
Ibid
para 11.
[37]
Harley v Upward Spiral 1196 CC &
others
2006 (4) SA 597
(D)
at 603-605.