About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
1987
>>
[1987] ZASCA 100
|
|
Fehr v Gordon and Another (102/87) [1987] ZASCA 100; [1988] 3 All SA 555 (AD) (24 September 1987)
IN THE SUPREME COURT OF SOUTH AFRICA
(APPELLATE DIVISION)
In the appeal of:
WERNER JAKOB FEHR
appellant
and
RAEL GORDON AND DAVID RENNIE NNO
.. 1st respondent,
and
STANDARD MERCHANT BANK LTD
2nd respondent
CORAM
: Corbett, Van Heerden, Grosskopf, JJA, Nicholas et Steyn,
AJJA.
DATE OF HEARING
: 25 Augustus 1987
DATE OF JUDGMENT
: 24 September 1987
JUDGMENT
CORBETT
JA
This appeal arises from the same factual circum-stances as did the
application for condonation and appeal
/ in
3
contract purchasers received a written notice in terms of sec 14(2) of
the Sale of Land on Instalments Act 72 of 1971, as amended
("the Act"), dated 17
August 1979. The notice was in terms identical to that sent to De Raedt, as
record-ed in the judgment in the
A
lan M Rennie
case,
supra
. Mr
Attorney Lewis, of the firm Philip Sarembock and Lewis, who was himself an
instalment contract purchaser of erven in the township,
replied to the notice on
his own behalf and on behalf of other instalment contract purchasers, including
appellant. On appellant's
behalf he wrote (on 6 September
1979):
"We refer to your notice addressed to Mr Fehr calling upon him in terms of
Section 14 of the Sale of Land on Instalments Act to elect
whether he wishes to
take transfer in terms of such Act or not. Please be notified that Mr Fehr does
not elect to take transfer in
terms of that Act. Please accordingly advise us
whether you will enforce the Deed of Sale and request our client to take
transfer
or not. If so we shall be pleased if you will advise us as soon as
possible as Mr Fehr has in turn sold one
/ of
4
of the properties and has now been called upon to give transfer to the
purchaser."
The purchaser to whom appellant had sold one of the erven was
a Mr Swart.
As will be recalled, the common law power
of the liquidator to enforce the
instalment contracts and
to require the purchasers to take transfer (they
having
chosen to react negatively to sec 14(2) notices) was tested
in the case of
Gordon NO v Standard Merchant Bank Ltd
.
supra
, wherein it was held by this Court that the liquidator
did not possess this power.
In May 1984 the appellant, Mr Lewis and certain other instalment contract
purchasers formed an association named the Rooderust Erf
Purchasers Asaociation
("REPA"). At the first meeting of the members of REPA a written con-stitution
was adopted, from which it appears
that the ob-jects of the association
are:-
/ "2.1 to
5
2.1 to institute such legal proceedings
on behalf of the members of
THE
ASSOCIATION as may be required in order to ultimately obtain the
regis-tration of transfer of erven purchased by members from ROODERUST
(PROPRIETARY) LIMITED (in liquidation) ("ROODERUST") and which erven were
purchased prior to the liquidation of ROODERUST, and, if
necessary, to
compromise or settle any legal proceedings which may have been instituted
2.2 to represent the members and to pursue,
promote and protect the
interests of
the members in any legal proceedings
so instituted."
At the same inaugural meeting it was resolved,
inter
alia, that
appellant be appointed to represent the association in the contemplated legal
proceedings.
Accordingly, in August 1984 appellant, "in his personal capacity and in his
capacity as representative of Rooderust Erf Purchasers
Association", commenced
notice of motion proceedings, citing as respondents the liquidators of Rooderust
- first respondent - and
Standard Merchant
/ Bank
6
Bank ("SMB") - second respondent - and claiming an order in
the following terms:
"(a) Declaring the Notice given by First
Respondent to erf purchasers in terms of Section 14(2) of the Sale of Land on
Instalments Act dated 17 August 1979 (Annexure 'Fl0'
to Applicant's founding
affidavit) to be
invalid
.
(b) Declaring the purported election of
Applicant pursuant to the notice
gi-
ven by Respondent in terms of Section
14(2) of the Sale of Land on
Instalments
Act dated 17 August 1979 to be ineffec-
tive and invalid.
(c) Calling upon Respondent to comply with
Section 21 as read with Section
32 of
The Alienation of Land Act No 68 (1981).
(d) Calling upon Respondent to thereafter
comply with the provisions of
Section
22 as read with Section 32 of The
Alienation of Land Act No 68
(1981).
(e) Interdicting Respondent from selling
any land (erf) purchased hy
Applicant
or any ERF PURCHASER in terms of
any agreement concluded prior to the liquidation of ROODERUST (PROPRIETARY)
LIMITED untll Respondent has complied with prayers (c)
and (d) of this
order.
/ (f) Further
7
(f) Further and/or alternative relief.
(g) That First Respondent pays Appiicant's costs."
The application was opposed by both respondents.
This matter also came before AARON AJ, who dis-missed the application with
costs. He subsequently granted leave to appeal to this
Court.
A number of the contentions raised in the Court a quo; and even included in
appellant's heads of argument, were not pursued in oral
argument before us.
Thus, it had been submitted in support of prayer (a) above that the sec. 14(2)
notices to instalment contract
purchasers were invalid because they were sent
prematurely, ie before the questions as to the validity of SMB's mortgage bond
and
as to the amount for which a purchaser intending to bake trans-fer would
have to make arrangements " for payment of bhe out-standing
balance under the
mortgage bond", had been resolved.
/ At
8
At the hearing before this Court, however, appellant's
counsel abandoned this contention and conceded the validi-
ty of the sec 14(2) notices. Furthermore, it had been
contended in the
Court below and in the heads of argument
(in support of prayers (ê), (d) and (e) ) that the Aliena-
tion of
Land Act 68 of 1981 was retroactive in its effect
and that in terms thereof all the instalment contract pur-
chasers were
given "a fresh right of election". Before
us, however, appellant's counsel
conceded that Act 68 of
1981 applied only if it were shown that the election ori-
ginally made in terms of sec 14(2) of the Act was invalid.
And it was the alleged invalidity of this original election
which constituted what counsel termed "the main thrust"
of his argument on appeal.
Before considering that argument there are two preliminary points which
should be mentioned. The first relates to the
locus standi
of REPA. In
this regard
/ first
9
first respondent's counsel submitted. upon various grounds. that REPA
had no loc
us
sta
ndi
in this matter and that con-sequently in so
far as the appellant brought the application as the representative of REPA it
should
be dismissed in ini
tio
for that reason. It seems to me that from
the practical point of view this point bears only on the ques-tion of costs.
Clearly appellant,
in his personal capa-city, has
locus standi
. This was
not disputed. Conse-quently the Court is required to deal on appeal with the
merits of the application. If the appeal fails,
then appel-lant will have to pay
the costs, including those attributable to his having brought the application
also on behalf of
REPA. If the appeal succeeds, then and then only would it
become relevant to enquire into REPA's
locus standi
, for if it has none,
then a special order for costs would seem necessary; al
ite
r if it has
locus standi
.
The second point relates to a special defence of
/res
10
res judicata
, argued mainly on behalf of SMB. Briefly, it was to the
effect that the validity of the election made by appellant was finally decided
by this Court in
Gordon N v Standard Merchant Bank Ltd
,
supra
, to
which case appel-lant was a party. As will appear from my consideration of the
issue as to the validity of appellant's election,
I do not find it necessary to
deal with the question of
res judicata
.
Turning to the validity of appellant's election, appellant's counsel argued
that when appellant exercised his choice in terms of sec
14(2) of the Act he
mistakenly thought that he need not elect to take transfer under the sub-section
because the liquidator would
in any event call upon him to take transfer under
the common law; that this mistake was induced by what he had been told by the
liqui-dator
and by the resolution taken at the second meeting of creditors; that
the mistake was
justus
or reasonable in
/ the
11
the circumstances; and that
consequently his election was vitiated by mistake, induced by appellant having
been mis-led; and that
in the circumstances appellant was entitled to be
relieved of the consequences of his election. This was the basis for prayer (b)
of the notice of motion.
It seems to me that this argument fails upon
more
than one ground. It may be accepted as a fact that
the reason why appellant chose not to take transfer in terms
of sec 14(2) was because he anticipated at the time that
the liquidator would seek to implement the resolution
taken at the second meeting of creditors, viz in respect
of each instaiment contract purchaser who elected not to
take transfer in terms of sec 14(2) —
"to enforce and complete such con-tracts provided that if the Liqui-dator
finds that the purchaser is unable to meet his obligations
in terms thereof, the
Liquidator ahall be entitled in his discretion to deal with that transaction and
the
/ land
12
land which forms the subject matter of that transaction in such a manner as
he may consider to be in the best interest
of the majority in value of the creditors" (resolution 2(m)(i) );
and because he considered that from the financial point of
view it would be to his advantage to receive transfer in
terms of the action foreshadowed by the resolution rather
than in terms of
sec 14(2). It is also true that this
proved to be a mistake ih the sense
that, as it turned
out, the action foreshadowed by the resolution was
not
legally feasible (see
Gordon NO v Standard Merchant Bank
Ltd,
supra). Nevertheless I do not think that
this mistake vitiates the choice made by appellant under sec 14(2) not to
take transfer or entitles the appellant to be relieved of
the consequences of
his choice.
In the first place, I am not persuaded that such a mistake is a relevant
consideration. In the statutory
/ dispensation
13
dispensation created hy sec 14 the purchaser is given a choice as to whether
to take transfer or not. He must exer-cise this choice
and take the required
action entitling him to receive transfer within the time limits laid down by
subsecs (3) or (4),as the case
may be. If he fails to exercise his choice or to
take the necessary action within I the appropriate prescribed period, then he
forfeits
his op-portunity to obtain transfer and the liquidator is enjoined to
sell the land in question. Such failure may be due to inaction
on his part, or
it may even result from his igno-rance of the position for, in terms of sec
14(2), where the address of the purchaser
is not known to the liquidator, the
latter may give notice by publication in a newspaper and the Gazette, and
obviously such notice
may not come to the knowledge of the purchaser. All this
leads me to believe that in enacting sec 14 the Legislature was not concerned
with the state of mind of each purchaser or with
/ the
14
the motives which may or may not have induced him to make his election:
it was merely concerned with what he did. ie whether he elected
to take transfer
of the land in the manner prescribed or not. The contrary interpretation would,
I think, seriously prejudice the
effective and ex-peditious sequestration or
liquidation of the estate con-cerned. I would just add, however, that I express
no opinion
as to what the position might be if the choice of the purchaser were
influenced by coercion or fraud.
However, even if I am wrong about this, I am of the view that appellant has
not shown on the facts that his choice not to take transfer
under sec 14(2) was
induced by any alleged misieading on the part of the liquidator or by reason of
the resolution of creditors.
Mr Attorney Lewis was himself an instalment
purchaser, knew the general po-sition and received all circular letters and
notices sent
out by the liquidator. He was present at tho second
/ meeting
15 meeting of creditors. He also acced, as attorney on behalf
of a number of instalment contract purchasers. in-cluding the appellant.
It
appears from a letter addres-sed by Mr Lewis to the liquidator on 3 May 1979
that Mr Lewis had by that date received instructions
to act on ap-pellant's
behalf in regard to the erven purchased by him. In this letter Mr Lewis
expressed in fairly emphatic terms
("[W]e have no doubt whatsoever that our
interpretation
of the Law as set out above, is in fact correct " )
his views on the legal position of instalment contract pur-chasers,
particularly with regard to the mortgage bond held by SMB, and
called upon the
liquidator to,
inter alia
, give written notice to appellant in terms of
sec 14(2) forthwith.
When appellant, among others, received his notice in terms of sec 14(2) he
evidently consulted Mr Lewis, who informed him of the contents
of resolution
2(m)(i) and advised him not to take transfer in terms of sec 14 as he
/ would
16
would nevertheless receive transfer in terms or che
reso-
lution. This was stated by appellant in his founding
affidavit and in a
supporting affidavit Mr Lewis said:
"I confirm that I advised all erf
purchasers who sought my advice that
in terms of Resolution 2(m)(i) they
would in any event receive transfer
of their erven even if they did not
elect to take transfer in terms of
Annexure 'F10' ".
(Annexure F10 was the notice sent by the liquidator in
terms of sec 14(2).)
It is a necessary inference that appellant accept-
ed and acted on Mr Lewis's advice for on 6 September 1979
Mr Lewis replied to the notice on appellant's behalf in
the terms quoted above. It is to be noted that in this
letter of 6 September 1979 the writer asks
"Please accordingly advise us whether you will enforce the Deed of Saie and
request our client to take transfer or not."
/ This
17
This seems to indicate a measure of uncertainty as to
whether or not transfer would be tendered under the common law and
that there was in appellant's decision to refuse transfer under sec 14 the
element of a calculated risk. Be that as it may, the evidence
establishes
clearly, in my view, that, in deciding to react negatively to the sec 14(2)
notice, the appellant relied on the advice
given to him by his attorney. It is
true that Mr Lewis in turn based his view on resolution 2(m)(i), but it was f or
him to eva-luate
the legal feasibility of the course of action proposed in that
resolution when advising his client. Appellant's counsel conceded
(correctly in
my view) that if appellant's decision not to take transfer under sec 14(2) was
motivated by his attorney's advice,
then the argument that the elec-tion was
vitiated by mistake could not succeed. That ef-fectively disposes of the
contention that
the election made by appellant was invalid (such invalidity
constituting the
/ basis
18
basis for prayer (b) of the notice of motion) and it is
not necessary to
consider the further questions debated
before us, viz whether appellant's
mistake was
justus
,
whether it was a mistake of fact or a mistake of
law and, !
if the latter, whether appellant could rely on a mistake
of law, and the question of
res judicata
. In the light
of concessions made, the finding that appellant has not
established the invalidity of his election leads to the
conclusion that Act 68 of 1981 has no application.
Por these reasons I hold that the Court a
quo
correctly dismissed the
application with costs. In re-gard to the grant of leave to appeal no order was
made as to the costs of the
application. Clearly, however, these must be
regarded as being costs in the appeal and I shall treat them accordingly.
/ The
19
The appeal is dismissed with costs. such costs
to
include the costs of two counsel. The costs of the
application for leave to
appeal are to be regarded as
costs in the appeal.
M M CORBETT.
VAN HEERDEN JA)
GROSSKOPF JA)
NICHOLAS JA)
STEYN AJA)