Riley v Sliep N.O and Others (461/2007) [2008] ZANCHC 22 (9 May 2008)

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[2008] ZANCHC 22
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Riley v Sliep N.O and Others (461/2007) [2008] ZANCHC 22 (9 May 2008)

Reportable: Yes / No
Circulate to Judges:
Yes / No
Circulate
to Magistrates: Yes / No
IN
THE HIGH COURT OF SOUTH AFRICA
(Northern Cape Division)
Case
no: 461/2007
Date
heard: 2008-04-25
Date
delivered: 2008-05-09
In
the matter of
:
RM
RILEY APPLICANT
versus
CJ
SLIEP NO FIRST RESPONDENT
CJ SLIEP SECOND
RESPONDENT
MASTER
OF THE HIGH COURT THIRD RESPONDENT
REGISTRAR
OF DEEDS FOURTH RESPONDENT
UNIBOARD
TRUST LIMITED FIFTH RESPONDENT
PA
BEKKER SIXTH RESPONDENT
Coram:
MAJIEDT
J
JUDGMENT
MAJIEDT
J:
The
applicant, who is the plaintiff in the main action (and to whom I
shall refer to hereinafter as “the applicant”), applies
for an
interdict
pendente
lite
against
the second respondent (second defendant in the main action, and
referred to as “the second respondent” hereinafter).
The relief sought by
the applicant is for an order interdicting and restraining the
second respondent from
“
alienating,
encumbering or in any way dealing with immovable property being Erf
1246, a portion of Erf 327, Warrenton, Magareng Municipality,
pending
the outcome of the action instituted by applicant against (first)
respondent and others under the above case number”.
The applicant also seeks
a costs order against the second respondent on an attorney client
scale.
In the main action the
applicant seeks the setting aside of the transfer of the property
into second respondent’s name, transfer
of the property into her
own name and alternative claims based on delict and on unjustified
enrichment.
The second respondent
is cited in her personal capacity and is cited as first respondent
in her representative capacity as executrix
of her late husband’s
estate.
The Master and the
Registrar of Deeds are cited in their official capacities as third
and fourth respondents respectively.
The fifth respondent is
Uniboard Trust Limited, a company appointed by the second
respondent to assist her in the administration
of her late
husband’s estate. The sixth respondent is employed by the fifth
respondent.
Relief is sought only
against the second respondent. The other respondents have been
joined only because of their potential interest
in the matter.
The
facts pertaining to this matter are common cause and can succinctly
be stated as follows:
On
22 July 2003 the applicant purchased immovable property being Erf
1246, a portion of Erf 327, Warrenton, Magareng Municipality
(hereinafter referred to as “
the
property”
)
from Mr Sliep, the second respondent’s late husband. A
written deed of sale was duly entered into between the applicant
and Mr Sliep in respect of the property.
Some five months later,
namely on 5 January 2004, Mr Sliep passed away before transfer
of the property had been effected
into the applicant’s name.
On 9
January 2004 the second respondent was appointed by the Master of
this Court as executrix in the estate of her late husband.
The
second respondent, in turn, appointed Uniboard Trust Ltd
(“
Uniboard
”),
the fifth respondent herein, as her agent to assist with the
administration of her late husband’s estate.
On
12 February 2004 the applicant informed Uniboard, as agent of the
second respondent, of the deed of sale concluded in respect
of the
property between her and the late Mr Sliep. On the next day,
i.e. 13 February 2004, the applicant also telefaxed
a copy of the
said deed of sale to Uniboard.
On 3 November 2004 the
final liquidation and distribution account in respect of the
deceased estate was prepared by Uniboard and
same was advertised
during the course of December 2004 in the Diamond Fields Advertiser
as well as in the Government Gazette.
The said account also laid
for inspection until 14 January 2005 at the Master’s Office and
at the Warrenton Magistrates’
Court. No objection was lodged
against the said liquidation and distribution account.
In
the liquidation and distribution account the property was allocated
to the second respondent as heir, despite the applicant’s
communication to Uniboard in respect of the deed of sale signed by
her and the late Mr Sliep in respect of the property.
Pursuant to the
aforementioned allocation in the liquidation and distribution
account, the property was transferred into the name
of the second
respondent on 31 January 2006.
An
earlier application to this Court in similar form and claiming
substantially similar relief, under case number 662/2006, was
dismissed with costs, but not on the merits.
An
important aspect which emerges from the aforementioned common cause
facts, is that it is not disputed by the second respondent
that the
property was allocated to her in the liquidation and distribution
account and in pursuance thereof transferred into her
name, while
she had full knowledge of the fact that the applicant concluded a
deed of sale in respect of the property with the
late Mr Sliep
and that no effect had been given to the aforementioned deed of
sale. From the papers it is also clear that
certain communications
had been exchanged between the applicant and second respondent
regarding the former’s purchase of the
property from the late
Mr Sliep.
A
number of defences had been raised by the second respondent in her
opposing papers. In argument, Mr Benade who appeared for the
second
respondent, very wisely abandoned most of these defences and
proceeded with only two of them, namely:
That, based on the
abstract system of property ownership in our law, the act of
transfer of the property would remain in force if
it had already
been effected, notwithstanding the fact that the underlying
agreement is invalid.
That
alternative remedies are available to the applicant, who is seeking
an interdict
pendente
lite
herein.
Mr
Riley for the applicant has, on the other hand, contended that the
doctrine of notice in the law of contract is applicable in
the
present matter and that the applicant has fulfilled all the
requirements for an interdict
pendente
lite
.
Mr
Riley has not taken issue with the contentions of Mr Benade
regarding the application of the abstract system of property
ownership
in our law. In this regard they are
ad
idem
that the following decisions are applicable in this regard:
Kraphol
v Oranje Koöperasie Beperk 1990(3) SA 848 (A)
at 864 E-G;
Kriel
v Terblanche 2002(6) SA 132 (NKA)
at
142 C – 148 G.
Mr
Benade has contended that there is an important distinguishing
feature in the facts of the present matter, namely the underlying
legal process which preceded the transfer of ownership of the
property to the second respondent, in terms of the provisions of
s35(12)
of the
Administration of Estates Act, No 66 of 1965
. In
support of this submission Mr Benade has pointed out that the
applicant has not objected to the final liquidation and distribution
account which laid for inspection as required in the aforementioned
Act. The applicant’s response to this is that she had no
knowledge whatsoever, being a lay person, that the said account had
laid for inspection at the Master’s office and at the Warrenton
Magistrates’ Court. She stated in her affidavit that she was
bona
fide
under
the impression that, since she had lodged a claim in respect of the
property and had forwarded a copy of the deed of sale
to the second
respondent’s agent, who was tasked with the administration of the
estate, that she needed to do nothing further.
In my
view, Mr Benade is correct in his submission that a decision on the
first leg contended for by him (see par 6(a) above) must
be made
through a consideration of the abstract system of property ownership
on the one hand and the doctrine of notice in the
law of contract on
the other.
The
requirements for for an interdict
pendente
lite
are well established, namely that in order for an applicant to
succeed he/she/it must prove the following:
A
right which, though
prima
facie
established,
may be open to some doubt;
A well grounded
apprehension of irreparable injury;
The absence of an
alternative ordinary remedy; and
The balance of
convenience.
In the
latter regard see:
Eriksen
Motors Welkom Ltd v Protea Motors Warrenton and another 1973(3)
SA 685 (A)
at
692:
“
In
exercising its
discretion
the Court weighs, inter alia, the prejudice to the applicant, if the
interdict is withheld, against the prejudice of the
respondent if it
is granted. This is sometimes called a balance of convenience.”
In my
view it is either common cause on the papers or it has not been
seriously disputed that the applicant has fulfilled the requirements
in (b) and (d) above, namely that she has a well grounded
apprehension of irreparable injury that the second respondent may
alienate
the property or encumber it with a mortgage bond and that
the balance of convenience favours the granting of an interdict,
provided
all the other requirements are met.
The
two requirements which are in serious dispute are the applicant’s
prima
facie
right (and here a consideration of the abstract system of property
ownership and of the doctrine of notice is required) and the
absence
of alternative remedies.
In
Reynders
v Rand Bank Bpk 1978(2) 630 (T)
at 637A, Nestadt J discussed the exception to the general rule
(that a real right generally prevails against a personal right
when
they are in competition with each other in relation to an asset of a
common debtor), namely where the holder of the real right
had,
before acquiring same, knowledge of an existing personal right. The
learned Judge held that the basis of this principle was
“(that)
it
is
a
species of fraud to attempt to acquire a res which is known to have
been promised to another”.
In
De
Jager v Sisana
1930 AD 71
at
74 Curlewis JA referred to the principle which has been laid down in
various decision of our courts that a purchaser of property
“
who
buys with the knowledge of the rights of a third party to or in such
property, is bound thereby, and that it would be a species
of fraud
on his part if he attempted to defeat such third party’s rights.”
See
also:
Dream Supreme Properties 11 CC v Nedcor Bank Ltd and others 2007(4)
SA 380 (SCA)
at
387 E-H (par. 15).
Mr
Benade, in a valiant effort to counter the force of these
aforementioned decisions, especially the
Dream
Supreme Properties
matter,
supra
,
contended that no fraud or conspiracy to deceive had been proved on
the part of the second respondent on the facts of this matter.
He
contended that the fact that the transfer of the property was done
openly and transparently and through a legal process set
forth in
s35
of the
Administration of Estates Act, namely
the administration
of a deceased estate, distinguishes the matter from other decisions
in which fraud had been proved. I do not
agree with this
contention. In my view mere knowledge on the part of the second
respondent of the applicant’s existing right
to the property is
sufficient. See in this regard:
Kazazis
v Georghiades en andere 1979(3) SA 886 (T)
at 893 B-D per Spoelstra AJ:
“
Dit
is duidelik van hierdie
aanhaling
dat die beginsel wat neergelê word, bloot kennis van die bestaan van
‘n derde party se regte vereis. Die verwysing na
bedrog is duidelik
slegs ‘n verklaring van die grondslag waarom die latere koper nie
toegelaat word om sy regte af te dwing nie.
Hierdie stelling van die
Appélhof is in ooreenstemming met die gemene reg……. wat ook die
gevolgtrekking van kwade trou of bedrog
aanvoer as rede waarom aan
die eerste koper se regte voorkeur verleen word bo die regte van die
tweede koper. Die gevolgtrekking
van bedrog volg uit die blote feit
van ‘n koop met kennis van die bestaan van ‘n vorige koper se
vorderingsreg en ‘n daaropvolgende
aanspraak wat teenstrydig is met
die eerste koper se regte.”
Later
in the judgment, at 893 G the learned judge states as follows:
“
Daar
hoef geen oogmerk of motief bewys te word dat die latere koper beoog
het om die vroeëre koper se regte te verydel nie. Die blote
feit dat
hy bewus is van die reeds bestaande regte en die feit dat hy, ondanks
daardie kennis, voortgaan om sy eie regte af te dwing
waardeur die
vroeëre regte verydel word of daarop inbreuk gemaak word, word
beskou as ‘n vorm van bedrog teen die party met die
vroeëre
regte.”
The
doctrine of notice in the law of contract is premised on the general
principle that “
nobody
will be allowed to derive a benefit or advantage from his own bad
faith”
.
See in this regard:
Badenhorst,
Pienaar, Mostert: Silberberg and Schoeman’s THE LAW OF PROPERTY
5
th
ed
at
83. The learned authors point out that the doctrine of notice
applies where a purchaser acquires ownership of a thing sold knowing
that it has previously been sold to another person;
op
cit 83 footnote 100
.
The
aforementioned authorities to the effect that mere knowledge of the
rights of a third party is sufficient, are confirmed in
the
following judgments:
Cussons
en andere v Kroon 2001(4) SA 833 (HHA)
at 839 C-D:
“
Waar
A sy goed aan B verkoop en daarna dieselfde goed verkoop en oordra
aan C, wat bewus was van die regte van B, is B geregtig op
kansellasie van die verkoping en van die oordrag van die goed, op
grond daarvan dat die verkoper en C geag word op ‘n bedrieglike
wyse teenoor hom op te getree het … Werklike bedrog word nie
vereis nie. Blote kennis aan die kant van C van die bestaan van
B se
vorderingsreg is voldoende …. Die verwysings na bedrog in sake van
hierdie aard dien slegs as aanknopingspunt in die regsisteem
ter
onderskraging van die kennisleer.”
See
also :
Bowring
No v Vrededorp Properties CC and another 2007(5) SA 391 (SCA)
at
395 G-H.
Based
on the aforementioned authorities, I am of the view that mere
knowledge on the part of the second respondent of the preceding
deed
of sale concluded between her late husband (as seller of the
property) and the applicant (as purchaser) would be sufficient
in
the circumstances to assail the second respondent’s rights in the
present matter. There can therefore be no doubt whatsoever
in my
view that the applicant has made out a
prima
facie
right
with regard to an interdict
pendente
lite
.
With
regard to the second defence (see par. 6(b),
supra
),
Mr Benade has merely made the bald submission that the applicant
has other remedies available, namely a claim for damages and
a
claim based on unjustified enrichment. He pointed out that the
applicant has in fact included these claims as alternatives
to the
main claim in her Particulars of Claim.
I do not agree with Mr
Benade’s argument. It must be borne in mind that the applicant
is claiming specific performance. The
second respondent has,
despite a request to do so, refused to furnish an undertaking to
the applicant that the property would
not be alienated or
encumbered in any way pending the outcome of the main action. A
consideration of this aspect is closely
linked with the balance of
convenience. Moreover, it is a matter which falls in my
discretion, to be exercised upon a consideration
of all the facts.
See:
Moroka
Swallows Football Club Ltd v The Birds Football Club & others
1987(2) SA 511 (W)
at 536 E-F.
In
the exercise of my discretion, I take heed of the fact that the
applicant has fairly strong prospects of success in the main
action
(for the reasons advanced above) and there is therefore less of a
need for the balance of convenience to favour the applicant.
See:
Ndauti
v Kgami and others 1948(3) SA 27 (W)
at
36-7.
Having
carefully considered the facts and the law, I have come to the
conclusion that there is no adequate alternative remedy
available
to the applicant, particularly because she is claiming specific
performance. All the requirements for an interdict
pendente
lite
have accordingly been met.
Lastly, with regard to
costs, I am of the view that this is not a matter where a punitive
costs order on the attorney-client scale,
sought by the applicant,
is warranted.
I issue the following
order:
The
second respondent is interdicted and restrained from alienating,
encumbering or in any way dealing with the immovable property
being
Erf 1246, a portion of Erf 327, Warrenton, Magareng Municipality,
pending the outcome of the action instituted by the applicant
against the respondents under case number 461/2007.
The second
respondent is ordered to pay the costs of this application.
_____________
SA MAJIEDT
JUDGE
FOR
THE APPLICANT : MR N RILEY
INSTRUCTED BY FLETCHER’S ATTORNEYS
FOR
THE DEFENDANT : ADV HJ BENADE
INSTRUCTED BY BOOYSEN MCLEOD
ATTORNEYS