About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2018
>>
[2018] ZASCA 68
|
|
Douglasdale Diary (Pty) Ltd and Others v Bragge and Another (731/2017) [2018] ZASCA 68; 2018 (4) SA 425 (SCA) (25 May 2018)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 731/2017
In the matter between:
DOUGLASDALE
DIARY (PTY) LTD
FIRST APPELLANT
MATTHEWS,
ROWAN WAUCHOPE
SECOND APPELLANT
MATTHEWS,
MARK ROWAN
THIRD APPELLANT
MATTHEWS,
BIANCA ROSE
FOURTH APPELLANT
MATTHEWS,
ELIZABETH TALLULAH
FIFTH APPELLANT
and
BRAGGE,
ELIZABETH ANN
FIRST RESPONDENT
MATTHEWS,
MICHAEL BRIAN
SECOND RESPONDENT
Neutral
citation:
Douglasdale
Dairy & others v Bragge & another
(731/2017)
[2018] ZASCA 68
(25 May 2018)
Coram:
Shongwe
ADP, Willis and Swain JJA, Davis and Hughes AJJA
Heard:
09
May 2018
Delivered:
25
May 2018
Summary:
Rights
of
fideicommisaries
upon death of fiduciary – right of executor of fiduciary’s
estate to enforce eviction order granted to fiduciary –
scope
of
res
judicata
where
appeal does not deal with court a quo’s factual findings.
ORDER
On
appeal from:
Gauteng
Local Division, Johannesburg (Makhanya J sitting
as
court of first instance):
The
appeal is dismissed with no order as to costs.
JUDGMENT
Davis
AJA (Shongwe ADP, Willis and Swain JJA and Hughes AJA concurring):
[1]
A
family feud can often defy all laws of rationality. Invariably the
warring parties consider that if they are able to mass superior
legal
forces to those of their family rivals they will emerge victorious.
Sadly, litigation of this kind invariably ends in costly
trench
warfare and with no sensible resolution in sight.
[2]
This
case is a textbook case of a family feud followed by lavish,
extensive and acrimonious litigation. In 1957 Mr Brian Matthews
bought Farm Douglasdale (the farm) from which dairy operations were
conducted. In 1966 the dairy business was sold into a company
being
the first appellant. Brian Matthews retained ownership of the farm in
his own name. On 21 January 2000 Matthews died. The
critical
provision in his will in respect of the farm read thus:
‘
I
give, devise and bequeath of my wife, ELIZABETH ANN MATTHEWS, my
immovable property, being PORTION 8 OF THE FARM DOUGLASDALE 65,
PROVINCE OF GAUTENG, together with all buildings and improvements
thereon, subject to the condition that upon her death the following
shares in the property shall devolve upon my sons as to 60% thereof
to my son ROWAN WAUCHOPE MATTHEWS and as to 40% to my son MICHAEL
BRIAN MATTHEWS (or failing them or either of them, upon their issue
then alive, per stirpes), as
fideicommissaries
.
I
specifically direct that my said wife, ELIZABETH ANN MATTHEWS
,
shall be not entitled to sell the said property except with the
express written consent of my said sons, ROWAN WAUCHOPE MATTHEWS
and
MICHAEL BRIAN MATTHEWS. . . .’
[3]
Prior
to the death of Brian Matthews, the shareholding in first appellant
was as follows: Brian Matthews , 39%; first respondent
1%; their
daughter Helen Ward 20%; second respondent 20% and second applicant
20% .In 2001, as befits a narrative characterized
by acrimony a
fall–out ensued between Helen and the rest of the family. The
consequent litigation was ended by way of a settlement
when Helen was
paid out in settlement of the dispute and relinquished her 20%
shareholding to second respondent (7.7%) and, second
appellant
(12.3%). When Brian Matthews died he bequeathed 31% members interest
in first appellant, which at that time was a close
corporation, to
second appellant and 8% to second respondent.
[4]
Subsequent
to the death of Brian Matthews, a number of changes took place in
respect of the shareholding of first appellant. Following
the
distribution of Brian Matthews’ estate, first respondent held
1%, second appellant 63.3% and second respondent 35.7%
of the shares
of first appellant. Suffice to say for the purpose of this dispute, a
holding company, MERB (PTY) Ltd (MERB) was
created to hold 100% of
the shares of first appellant. When second appellant decided to
emigrate to Australia an agreement was
reached between the two
brothers so that each would hold 50% of the shares in MERB. Second
appellant held a casting vote in the
event of a deadlock, thereby
retaining control of MERB and therefore of first appellant. Second
appellant held his 50% interest
through Wauchope (Pty) Ltd and second
respondent held 26% of the shareholding himself and his nominee
company Bernahara Ltd held
24%.
[5]
Once
the ownership of the farm and the dairy business were separately
held, it was necessary to ensure that the dairy business could
operate on the farm. On 10 September 1986 a lease was concluded
between Brian Matthews and first appellant. The lease period
was for
ten years, terminating on 31 August 1996. The lease was renewed on 18
March 1996 by Brian Matthews and first appellant.
During the duration
of this lease Matthews died. His executors and second respondent,
acting on behalf of first appellant, entered
into a second lease
renewal which terminated on 31 January 2003. A third lease renewal
was concluded on 5 February 2003 which was
to last until 31 January
2006. Between 2006 and 2009 no formal written lease agreement was
concluded. Subsequently, first respondent,
who had been bequeathed
the fiduciary interest in the farm, entered into a further lease
renewal. As with all the other leases,
the lessee, being first
appellant, paid a rental on a monthly basis.
[6]
Within
three months after the expiry of this lease on 6 May 2014, first
respondent brought an eviction application. This prompted
a further
application in which the two
fideicommissaries
,
second appellant and second respondent, sought leave to intervene on
the basis of a direct and substantial interest in the eviction
application.
[7]
A
huge mass of paper was generated pursuant to these two applications.
Much of the affidavit evidence reflecting upon the disintegration
of
any semblance of family cohesion. In the light of the approach I
intend to adopt, it is sufficient to note that the court
a
quo
granted the eviction application but dismissed the intervention
application.
[8]
With
leave of this court, leave to appeal was granted against the order of
the court
a
quo
.
Subsequent thereto, on 06 September 2016, first respondent died. This
necessitated this court requesting of counsel representing
the
parties to address this court on the legal implications of the law
relating to the death of the fiduciary who had successfully
brought
the eviction application.
The
legal implications of the death of first respondent
[9]
In
British
South Africa Company v Bulawayo Municipality
1919 AD 84
at 95, this court laid down the key principles pertaining
to fiduciary and
fideicommissary
interests. Innes CJ said as follows: ‘
a
direction to an heir to hand over the inheritance to another upon the
happening of a condition is sufficient to constitute a
fideicommissum; if and when the condition happens the final
beneficiary acquires a real right in the inheritance
.’
[10]
Following
upon this principle, the court in
Eksteen
and another v Pienaar and another
1969
(1) SA 17
(O), dealt more fully with the question of ownership when
the
fideicommissum
matures, upon the death of the fiduciary. Smit JP laid down certain
key principles in particular at 19D: ‘
The
owners in the case of a
fideicommissum
which has matured, are without a doubt the
fideicommissaries
themselves and not the fiduciary’s estate. They obtained a real
right on the death of the deceased fiduciary
.’
Smit JP cited with approval at 19H a work by Tambyah Nadaraja,
The
Roman-Dutch Law of
Fideicommissa
as applied in Ceylon and South Africa
(1949): ‘
In
the modern law, it would seem that in all cases the transfer of
ownership takes place automatically at the time prescribed by
the
testator for the vesting of the fideicommissary’s interest, and
the fideicommissary is entitled from that time to the
use and
enjoyment of the property and to enforce his claims to the property
against the fiduciary, his representatives, or other
possessor
.’
[11]
Dealing
with the position upon the death of the fiduciary where the property
is registered in his name, the court confirmed that
upon his death,
ownership of the property was acquired by the
fideicommissaries
.
Accordingly as owners, it is the erstwhile fideicommissaries who were
the only ones who could claim the ejection of the lessee
(at 20 A-D).
[12]
This
approach was followed in
Ex
parte Puppli
1975 (3) SA 461
(D) at 464 and
Ex
parte Menzies et Uxor
1993 (3) SA 799
(C) at 805. Corbett, Hofmeyr and Kahn
The
Law
of Succession in South Africa
2 ed(2001) at 322 summarise the position thus:
‘
Inasmuch
as the rights of the fiduciary terminate automatically upon
fulfilments of the condition, ownership of the property could
hardly
continue to reside in the fiduciary or the fiduciary’s estate.
Moreover, this view is consistent with the fideicommissary
being
accorded a
rei vindicatio
for the recovery of the property from third parties.’
[13]
First
respondent’s counsel accepted, as he was constrained to do,
that ownership passes to the fideicommissaries on the death
of the
fiduciary. He raised three points in terms of which he sought to
contend that his concession did not apply in this case;
hence, in his
view, the order of eviction remained enforceable and of practical
effect.
[14]
He first
submitted that first respondent had sought eviction, not only on the
basis of her property right but also in terms of a
lease agreement.
Hence, as there was a cause of action and a possessory claim based
upon the lease, the fact that ownership passed
from the fiduciary, as
had been held in the cases cited above, was not relevant to these
proceedings.
[15]
This
submission requires a most imaginative reading of the founding
affidavit upon which the eviction was sought. The relevant portion
reads thus:
‘
11.
On or about the 25
th
of March 2009 I concluded an agreement of lease with the respondent,
in terms of which I let the property to the respondent subject
to the
terms and conditions set out in the written agreement of lease. . .
12.
As appears from clause 2.1.2 of the lease agreement. . . the lease
period commenced with
effect from the 1
st
of March 2009 and as appears from clause 4 thereof it is subsisted
for 60 months and then expired on the 28
th
of February 2014. The lease has not been renewed nor has any further
agreement of lease been concluded with the respondent who
presently
occupies the property without my consent and without any right to do
so
14.
As stated in paragraph 12 above the respondent occupies the property
without any right to
do so.’
[16]
Notwithstanding
the imagination brought to bear on this affidavit, the meaning is
clear: first respondent set out as the basis of
her cause of action
that she was the
owner
of the property. She then pointed out in her affidavit that the lease
expired in February 2014. Thereafter, she contended
that the
respondent in the eviction application had no legal right of
occupation by which to trump her rights of ownership; that
is in
respect of its possession. Nowhere is there any suggestion in this
affidavit that reliance was being placed on alternative
causes of
action, being both ownership as the fiduciary and as a lessor.
[17]
Faced with
this insurmountable difficulty, counsel for both the first and the
second respondent sought to invoke the provisions
of the Subdivision
of Agricultural Land Act 70 of 1970 (SALA). In particular, reliance
was placed upon s 3 of SALA, which to the
extent relevant, provides:
‘
Subject
to the provisions of section 2 –
.
. .
(b)
no undivided share in agricultural land not already held by any
person, shall invest
in any person;
(c)
no part or any undivided share in agricultural land shall vest in any
person, if such
part is not already held by any person;
.
. .
unless
the Minister has consented in writing.’
[18]
It was
argued by respondents’ counsel that ownership cannot pass to
the second appellant and second respondent until such
time as the
Minister consents to the transfer of their undivided shares. The
problem with this argument is that, on the evidence
before this
court, the land has not been classified as agricultural land and
hence the provisions of the Act do not apply. That
is made clear from
an email of 9 March 2017 generated by Annette Stoltz of the
Department of Agriculture Forestry and Fisheries:
‘
It
seems that this is no longer agricultural land as per definition of
SALA. I have send the application to our registry who will
open a
file and we will write a formal letter to confirm this.’
[19]
In his
founding affidavit in an application to intervene in these
proceedings, the second respondent refers to this email from the
Department to the effect that the property is no longer agricultural
land and that SALA does not appear to be of application. He
then
states:
‘
As
a result, I submit that I am, indeed, vested with real and personal
rights in respect of the immovable property. Upon the passing
of
Elizabeth Bragge, on 06 September 2016, I became the owner of a 40%
(forty percent) undivided share in the immovable property
and I am
entitled to registration of the undivided share in the immovable
property in my name, not in order to take transfer of
ownership, but
in order to record the fact of my ownership in the Dees Registry.’
[20]
Reference
was made to a further passage in the affidavit concerning the
implications which may apply if the approach adopted by
the
Department is found to be incorrect. There was also an attempt by
counsel for the first respondent to introduce evidence from
the bar
relating to possible review proceedings against the Department’s
decision. On all the admissible evidence placed
before this court
which deals with the position regarding the classification of the
property, it cannot be said that the Act holds
any implication for
the present dispute.
[21]
As a last
resort, it was contended that the executor of first respondent’s
estate was obliged to give the two owners, being
second appellant and
second respondent
vacua
possessio
which he could not do owing to the unlawful occupation of the
property by the first appellant. This represented an attempt to
raise, on appeal, a fresh cause of action which is nowhere to be
found in the record placed before this court. Even if such a cause
of
action could be invoked in this court, on appeal, once first
respondent died, ownership passed to second appellant and second
respondent and hence no obligations were left for the executor to
fulfil in this regard.
[22]
In summary,
after the death of first respondent ownership of the property passed
to second appellant and second respondent in undivided
shares of 60%
and 40% respectively. This had the consequence that the order
obtained in the court
a
quo
by
the first respondent is unenforceable and cannot have any practical
effect. The evictee had become an owner of the property.
The
executor, being the representative of the estate of the first
respondent, no longer had any entitlement to the property. There
was
not even a lease in existence which the executor could enforce.
[23]
For this
reason this case falls within the scope of s 16(2)(
a
)(
i
)
of the
Superior Courts Act 10 of 2013
, namely the issue before this
court, being an order granting the first respondent the right to
evict first appellant from the property
will have no practical effect
or result; nor are there any exceptional circumstances which would
justify an appeal. Thus the appeal
can and must be dismissed.
Res
Judicata
[24]
Given this
conclusion, appellants’ counsel voiced concern that the
findings of the court
a
quo
would remain undisturbed. On the basis of the doctrine of issue
estoppel and
res
judicata,
the finding of the court
a
quo
could now be used in pending litigation for the wrongful
holding over of the property, as alleged by respondents.
[25]
The
requirements of res judicata are well established. (1) the same
parties (2) the same cause of action and (3) the same relief.
As
Brand JA observed in
Prinsloo
NO & others v Goldex 15 (Pty) Ltd & another
[2012] ZASCA 28
;
2014 (5) SA 297
(SCA) at para 23, an excessively
rigid reliance on the second and third requirements ‘may result
in defeating the very purpose
of res judicata’. Accordingly,
‘issue estoppel allows a court to dispense with the two
requirements of same cause of
action and same relief, where the same
issue has been finally decided in previous litigation between the
same parties’. Brand
JA was astute to the problem which
presents itself in this case namely where the findings of the court
a
quo
were not subjected to the rigours of an appeal. For this reason he
qualified the ambit of issue estoppel as follows at para 26:
‘
.
. .our courts have been at pains to point out the potential inequity
of the application of issue estoppel in particular circumstances.
But
the circumstances in which issue estoppel may conceivably arise are
so varied that its application cannot be governed by fixed
principles
or even by guidelines. All this court could therefore do was to
repeatedly sound the warning that the application of
issue estoppel
should be considered on a case-by-case basis and that deviation from
the threefold requirements of res judicata
should not be allowed when
it is likely to give rise to potentially unfair consequences in the
subsequent proceedings.
[26]
It is
impossible to provide a clear test as to what could give rise to
unfairness. However, in the case of
Prinsloo
,
Brand JA provides an example which certainly resonates in the present
dispute, where the appeal is dismissed owing to a legally
relevant
new fact namely first respondent had died. Similarly, in
Prinsloo
,
the court
a
quo
had
made inappropriate findings of fraud which did not require a finding
on appeal. Given that these findings were irrelevant to
the judgment
on appeal Brand JA, said:
‘
In
these circumstances I believe it would be patently inequitable and
unfair to hold the appellants bound by those inappropriate
findings
in the present proceedings.’
Costs
[27]
The
approach adopted in this appeal means that the findings of the court
a quo
required no examination on appeal. For this reason it is not
possible, as was argued by appellant’s counsel, to disturb the
costs order so granted without a hearing and a decision on the
merits. Hence this court is not in a position to reverse the costs
order of the court
a
quo
as
requested by counsel for the appellant. Both parties sought to rely
upon the judgment in
John
Walker
Pools v Consolidated Aone Trade & Invest 6 (Pty) Ltd (in
liquidation) & another
(245/2017) [2018]
ZASCA
012
in
support of a positive cost order. In that case, the court made an
order as to costs on appeal on the basis of the ‘very
bleak
prospects on the merits had the proposed appeal not become moot’
(para 16).
[28]
In
the present case, there has been no need to canvass the merits of the
appeal as a result of a changed legal position caused by
the death of
first respondent after judgment in the court
a
quo
had been delivered. The point on which this case was decided was
raised by the court itself which required supplementary heads
of
argument from all parties. This in itself is sufficient reason to
hold that neither party is deserving of a costs order on appeal.
[29]
In
the result, I grant the following order:
The
appeal is dismissed with no order as to costs.
________________________
D Davis
Acting Judge of Appeal
APPEARANCES
For
the Appellant:
M R Hellens SC with G W Amm and L Peter
Instructed
by:
Livingstone Crichton attorney (First Appellant)
Steve
Mechak Attorneys, (Second – Fifth appellant)
Webbers attorneys,
Bloemfontein
For
the respondent:
J J Brett SC with D Mahon
Instructed
by
Hogan Lovels Inc. (First Respondent)
Schindlers
attorneys (Second Respondent)
McIntyre
van der Post
Honey
Attorneys, Bloemfontein