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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

 

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION – GRAHAMSTOWN

                                                         Case No.:  CA27/2016

In the matter between:

T. KENENE N.O.	Appellant
and
INVELA FINANCIAL CORPORATION (PTY) LTD	First Respondent
NOBULALI PAULINE KENENE	Second Respondent
ELIZABETH MAGEWU	Third Respondent
TIMOTHY KENENE	Fourth Respondent
AMANDA NOLUTHANDO KENENE	Fifth Respondent
SHERESE NEL	Sixth Respondent
BURMEISTER DE LANGE SONI INC	Seventh Respondent
THE REGISTRAR OF DEEDS	Eighth Respondent
THE SHERIFF OF THE MAGISTRATE’S COURT PORT ELIZABETH NORTH	Ninth Respondent
BRENT IVAN GERHARD	Tenth Respondent
PHILLIP FARREL GALVAN	Eleventh Respondent
ELEO CAPITAL (PTY) LTD	Twelfth Respondent

JUDGMENT

REVELAS J:

[1] The appellant, represented by Mr Friedman, litigates in forma pauperis in these proceedings. The appellant appeals against the dismissal of an application she had brought in her capacity as the executor in the estate of the late Dudu Tryphina Kenene (“the deceased”), in the Magistrates’ Court where she sought orders:  

(a)        Rescinding the Default Judgment granted in favour of the first respondent in the Magistrates’ Court on the 25^th of August 2009;

(b)        Rescinding the Order of the Magistrates’ Court dated the 10^th of November 2010 declaring the property owned by the deceased, to be executable;

(c)         Setting aside the Warrant of Execution issued by the Clerk of the Magistrates’ Court dated the 11^th of November 2010 and the Sale in Execution of the 4^th of March 2011 held by the Ninth Respondent during which the property was sold in execution;  

(d)        Setting aside the Sale in Execution of the 4^th of March 2011;

(e)        Directing the Sixth Respondent to retransfer the property to the Applicant (the appellant) in her representative capacity as Master’s Representative in the Estate Late D T Kenene;

(f)          Cost of suit, to be paid by such of the Respondents as may oppose this Application;

(g)        Ordering the Respondents responsible for the transfer (the first and sixth respondents) to pay the costs, jointly and severally, of the retransfer;

(h)        That wasted costs of the first action brought by the First Respondent against the Second Respondent, be paid by the First Respondent.

[2] The appellant also sought other ancillary orders not listed above, which were abandoned in the appeal and therefore not relevant for purposes of this judgment.

[3] The appellant is the granddaughter of the deceased who died intestate on 7 December 2004.  The second respondent is one of the deceased’s daughters and the mother of the appellant.   

[4] The following events gave rise to the present appeal:  The litigation which preceded this appeal, which is not opposed, has a fairly protracted history and centers around the house owned by the deceased in her lifetime, namely erf [...], also known as [...] S. S., Motherwell, Port Elizabeth (“the property”).  The deceased lived there until her death with the appellant and the second to fifth respondents, some of whom are still living in the house on the property.  The property was first sold in execution on 4 March 2011 to the tenth respondent and subsequently sold on the open market to the eleventh, twelfth and sixth respondents respectively. The appellant challenged the validity of the sale in execution, the transactions which gave rise thereto, as well as all subsequent sales thereof. 

[5] When the deceased’s died, one of her daughters, the second respondent, was appointed as the Master’s Representative of her estate in terms of section 18(3) of the Administration of Estate’s Act, 66 of 1965 (“the Act”).  The appellant was appointed as Executor in 2010. 

[6] In October 2008, the second respondent concluded an agreement of sale of the property with a Mr and Mrs Moli for R158,000.00.   The transfer of the property was to be effected by the seventh respondent.  The second respondent wished to carry out certain renovations to the property, which still formed part of the deceased’s estate.   To that end the second respondent, in her capacity as Master’s Representative borrowed money from Invela, in the form of bridging finance in the sum of R30,000.00.  The loan was arranged through the seventh respondent, as agent.   The Moli’s cancelled the agreement of sale.  The bridging finance advanced by Invela however, remained due and payable to it.

[7] Since the loan for the bridging finance was not repaid, Invela issued summons in the Magistrates’ Court against the second respondent in her capacity as Master’s Representative of the deceased’s estate, claiming repayment of the amount lent (R30,000.00), plus interest thereon and costs.  The second respondent did not enter an appearance to defend the action and on 25 August 2009 default judgment was granted against the second respondent in her representative capacity. 

[8] When in May 2010, Invela applied to have the property declared executable, the second respondent and Invela concluded a settlement agreement in terms whereof the second respondent agreed to repay the loan by way of monthly installments in the amount of R1, 000.00.   The second respondent concluded the aforesaid settlement agreement of 24 June 2010, also in her purported capacity as the Representative of the Master in the deceased’s estate.  The second respondent did not honour her obligations in terms of the settlement agreement.  In concluding the transactions in question the second respondent also acted in her capacity as Master’s Representative. 

[9] At that stage (June 2010) the appellant had been substituted by the Master as executor in the deceased’s estate pursuant to a family meeting and agreement amongst the deceased’s daughters to that effect.   The “Letters of Authority” from the Master, appointing the appellant as executor are dated 10 July 2009, five years after the death of the deceased.  Therefore, according to the appellant, when the second respondent concluded the settlement agreement, she had no authority to bind the deceased’s estate. 

[10] Since no payments were made in terms of the agreement of settlement, Invela successfully applied in the Magistrates’ Court for default judgment and later for the property to be declared executable.  The appellant alleged she was not made aware of these applications and therefore did not oppose it.  A warrant of execution was subsequently issued in the Magistrates’ Court for the amount of R42,861.30  and the property was sold on auction on 4 March 2011 to the tenth respondent, who thereafter sold it to the eleventh respondent, who in turn, sold it to the sixth respondent.  At present, the property is still in the possession of the appellant, her mother, uncle and aunts (the second to fifth respondents).  An application to evict them has been brought by the sixth respondent who is the current holder of a title deed in respect of the property.   The eviction application was held in abeyance pending the outcome of the rescission application.

[11] The crux of the magistrate’s reasoning in the court a quo, in dismissing the rescission application, is evident from the following passages in his judgment: 

“[10] The second respondent has been granted authority by her siblings to administer the estate with the powers to liquidate and distribute the assets with the express endorsement by the Master as provided for in Section 18(3) and 11(1) of the Administration of Estates Act 66 of 1965 (as per annexure “CDL 1”).  None of the dependents of the deceased opposed the actions of second respondent whilst acting as the representative of the Master, instead benefitted from her actions.  When the agreements binding the estate with the first and seventh respondent were entered into, the second respondent was still acting in the said capacity.  The applicant, second, third, fourth and the fifth respondent reside in the said property and as alleged by the second respondent that she was raised by the deceased in the said property where all the legal documents were served.  The said summons were properly served, hence the application for a default judgment was granted.

[11] It is still unclear as to how all these legal proceedings (default judgment, notice to declare the immovable property executable and sale on auction) would bypass the second respondent including the initial sale of the property dated 14 October 2008, which did not materialise.  It is also inconceivable that the applicant when she was so appointed on the 10 July 2009 to administer the said estate as it appears in the inventory, was not informed by the Master and the dependents of the deceased, that the said asset has since been endorsed to be transferred with their permission.” 

[12] The appellant appeals against the judgment on the grounds that the magistrate ought to have found that:

[15.1]        good cause was shown for rescinding the judgments in question;

[15.2]        the second respondent, who was not issued with Letters of Authority or Executorship from the Master, did not have the necessary authority in terms of section 18(3) of the Act (read with section 13 of the Act),[1]  to burden the estate in question with debt or to dispose of property and accordingly, the appellant had a valid bona fide defence;

[15.3]        the lack of authority on the part of the second respondent resulted in all subsequent agreements being void ab initio;

[15.4]        the order declaring the property owned by the deceased estate to be executable, was not made in terms of section 30 (a) and (b) of the Act and any sale in contravention thereof was a nullity and the order thus erroneously made.  All subsequent transfers of the property were consequently null and void.  Therefore, the general rule that immovable property validly sold in execution and judicial sales cannot be vindicated from a bona fide purchaser is not an absolute rule.

The Second Respondent’s Authority

[13] Section 18 of the Act, which deals with situations where the deceased died intestate and no executor is appointed, 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

(b)     …

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.

…

(3) If the value of any estate does not exceed the amount determined by the Minister by notice in the Gazette, the Master may dispense with the appointment of an executor and give directions as to the manner in which any such estate shall be liquidated and distributed.”  (Emphasis added)

[14] In support of her argument, the appellant emphasized the distinction between an executor who has been issued with Letters of Authority by the Master, and a Master’s representative. Reliance was placed on a Circular issued by the Department of Land Affairs to the public in this regard. Its preamble records that the Master of the High Court, the Registrar of Deeds and the Cape Town Attorneys’ Association, held a meeting and agreed on several matters, one that pertains to deceased estates.  Item 3 of the Circular distinguishes between an executor (charged with the liquidation of a deceased’s estate) and a Master’s Representative, appointed by the Master in terms of section 18 (3) of the Act.  Item 3 explains that a Master’s Representative is appointed “merely” to “distribute the assets” of the estate where the value is below R125,000.00.  Item 3 further explains that the Master’s Representative “cannot ‘liquidate’ an estate” (emphasis added) and that in turn meant that the Master’s Representative may not sell the assets.  Item 3 goes on to state that when registration is sought, after a section 18(3) Master’s Representative had sold a property directly from the deceased estate, the matter must first be referred to the Master.

[15] It is clear from the aforesaid that a Master’s Representative has limited powers.  The magistrate however found that the sale of the property had been endorsed by the second to fifth respondents with the Master’s apparent approval.  It is not entirely clear why in this particular matter, the appointment of an executor was dispensed with by the Master at that early stage but five years’ later the appellant was appointed as executor, replacing the Master’s Representative.   On the face of it, the loan agreement concluded with Invela, was not authorized and thus invalid. 

The Validity of the Sale in Execution

[16] The appellant argues that the sale of the property in execution was invalid since it was prohibited by section 30 of the Act which reads:

“30.   Restriction on sale in execution of property in deceased estates.—No person charged with the execution of any writ or other process shall—

(a)     before the expiry of the period specified in the notice referred to in section twenty-nine; or

(b)     thereafter, unless, in the case of property of a value not exceeding R5 000, the Master or, in the case of any other property, the Court otherwise directs,

[Para. (b) substituted by s. 3 of Act No. 15 of 1978 and by s. 9 of Act No. 86 of 1983.]

sell any property in the estate of any deceased person which has been attached whether before or after his death under such writ or process: Provided that the foregoing provisions of this section shall not apply if such first-mentioned person could not have known of the death of the deceased person.”  (Emphasis added)

[17] Section 1 of the Act defines “Court” as the High Court having jurisdiction, or “any judge thereof”.  In Gounder NO v ABSA Bank Ltd and Another[2] the Court held that a magistrates’ court’s order, obtained by a judgment creditor, declaring immovable property to be executable, could never be construed to mean, or to include the judicial supervision or directive envisaged in section 30(b) of the Act.  The Court’s directive referred to in section 30(b) of the Act envisages a separate directive, delivered for a pertinent purpose, by a High Court.  A sale in contravention of section 30 of the Act is also sanctioned by criminal penalty in terms of section 102(1)(h) of the Act. 

[18] In Sookdeyi and Others v Sahadeo and Others[3] the Appellate Division stressed the common law principle that a perfected sale in execution should after transfer or delivery of the subject matter, not be impugned lightly and that the reluctance to rescind perfected sales in execution has been accepted the case law. 

[19] In Joosub v J I Case SA (Pty) Ltd (now known as Construction and Special Equipment Co (Pty) Ltd) and Others[4] it was held that the owner of property, which had been transferred pursuant to a sale in execution to a bona fide third party may recover the property sold from the purchaser under circumstances where the sale in execution was a nullity for non-compliance with the provisions of Rule 49 (3) of the Uniform Rules of Court.[5]  The common law principle is thus that an immovable property sold in execution cannot be vindicated from a bona fide purchaser, even when it is sold by mistake, provided the sale is a valid sale complying with the applicable rules of court and statutory measures.  Based on the abstract theory of transfer, the Supreme Court of Appeal accepted that the transfer of immovable property could take place validly, notwithstanding the invalidity of the underlying agreement which created obligations between the parties.[6]

[20] In the court a quo the first, sixth and seventh respondents relied on section 70 of the Magistrates’ Court Act, 32 of 1944, which echoes the common law rule regarding the protection of bona fide purchasers, it reads:

“70.   Sale in execution gives good title.—A sale in execution by the messenger shall not, in the case of movable property, after delivery thereof, or in the case of immovable property, after registration of transfer, be liable to be impeached as against a purchaser in good faith and without notice of any defect.”

[21] In Schierhout v Minister of Justice[7] it was stated by Innes CJ that:

“It is a fundamental principle of our law that a thing done contrary to the direct prohibition of the law is void and of no effect … So that what is done contrary to the prohibition of the law is not only of no effect, but must be regarded as never having been done – and that whether the law giver has expressly so decreed or not;  the mere prohibition operates to nullify the act … And the disregard of peremptory provisions in a statute is fatal to the validity of the proceeding affected.”

[22] The general rule set out in Schierhout is not absolute.  It has been held in some cases that, if the Legislature intended a different result, effect must be given to such an intention.[8]   In Swart v Smuts, Corbett AJA also noted[9] that another important and relevant consideration in assessing contraventions of statutory prohibitions, is that the resulting nullity, in some instances, may create even more inconvenience and more undesirable consequences as the prohibited act itself.  That is clearly evidenced by the unenviable position of the sixth respondent, a bona fide purchaser.

[23] In Wright v Westelike Provinsie Kelders Bpk[10] Binns-Ward AJ (as he then was) observed that “it is clear that the provisions of the statute [section 30 of the Act] have displaced the common law….” and further held that a judgment obtained by a judgment creditor is not executable against any property which is part of the deceased estate, including immovable property. In De Faria,[11] it was decisively concluded by de Vos J that section 30 of the Act, read with section 102(1)(h) thereof, led to the inescapable conclusion that the Legislature intended the general rule to apply, i.e. that non-compliance with the prescripts of the Act will result in a nullity.[12]

[24] Section 70 of the Magistrates’ Court Act requires an applicant who wishes to impeach a sale in execution must accordingly to prove bad faith or knowledge of the defect on the part of the purchaser at the time of the purchase.  There is no indication that the sixth respondent had knowledge of the defect or that she was mala fide.  However, in Jaftha v Schoeman and Others; Van Rooyen v Stoltz and Others,[13] the sale of property pursuant to a writ of execution without a directive of the High Court, was held to be invalid for socio-economic considerations and on constitutional imperatives regarding the right of access to adequate housing.  The bona fide purchaser in that matter was accordingly not protected by section 70 of the Magistrates’ Court Act.[14] 

[25] In Menqa and Another v Markom and Others, [15] the Court held that sales in execution of immovable property (and all subsequent sales) were invalid if the warrant of execution was issued without judicial supervision, as in the present case.  The court’s reasoning in Menqa was further, that if one were to hold that the provisions of section 70 of the Act rendered such a sale in execution unimpeachable, the whole rationale behind the Constitutional Court’s ruling in Jaftha would be defeated.[16]

[26] Non-compliance with section 30 of the Act, in effect disposes of the question of validity of the sale of the property in execution.   The Sheriff of the Magistrates’ Court (the ninth respondent in this appeal) was charged with the execution of the warrant in respect of the property.  Since the property was attached while it still formed part of the deceased’s estate, the ninth respondent was required by section 30 of the Act, to first obtain an order from the High Court directing him to execute.  In the absence of such an order the ninth respondent therefore did not have the necessary authority to transfer the property.

[27] It therefore follows that a sale of property out of a deceased estate without the authorization of a High Court order, would be invalid and in these circumstances section 70 of the Magistrates’ Court Act finds no application.  

[28] In the court a quo, the sixth respondent alleged that the appellant and the second respondent colluded with each other to avoid eviction at the expense of Invela and the sixth respondent.  Although there is insufficient proof of an intention to deliberately defraud any party hereto, there are grounds for finding that:

(a)        the appellant’s mother, i.e. the second respondent, had acted negligently – at the very least – in concluding agreements when she did not have the necessary authority to do so; 

(b)        the appellant could not have been entirely ignorant of all her mother’s actions which resulted in the sale in execution.  She also benefits from her mother’s negligence in that she still lives in the house with her mother.

[29] If one has regard to the common cause facts, the magistrate’s scepticism expressed in his judgment (cited above), is with respect, not unjustified.  It is entirely probable that the “Letters of Authority” were issued to the appellant, to avoid fulfilling the estate’s obligations to Invela.  I have already remarked on the lateness in issuing the “Letters of Authority” to the appellant.  Since this appeal is unopposed, no submissions were made in that regard and I can take that no further. Even though one might share the magistrate’s scepticism about the appellant’s ignorance, the magistrate, with respect, erred in her application of the relevant legal principles and her judgment ought to be set aside.  

[30] The appellant’s application ought to have succeeded in the Magistrates’ Court, not because the judgments were obtained in the absence of the second respondent and the appellant (section 36(1)(a) of the Magistrates’ Court Act), but by virtue of the provisions of section 36(1)(b) of the aforesaid act which provides that a magistrate may rescind any judgment granted if it was “void ab origine”. 

Reregistration of the Property

[31] The appellant sought an order in the court a quo, to direct the  sixth respondent to transfer the property to the deceased estate.  The Registrar of Deeds, is the correct party who ought to be directed to do so.  In Menqa [17] the Court was disinclined to direct the Registrar of Deeds to re-register the property in the name of the seller and suggested that the appropriate remedy for the seller under the circumstances was to institute vindicatory proceedings.  Van Heerden JA reasoned that an order directing re-registration does not take into account what the bona fide purchaser had paid for the property and the extent to which she had been impoverished.  It also does not take into account the extent to which the seller had been enriched. Van Heerden JA held, with regard to the possibility that the bona fide possessor may institute an action based on unjust enrichment, that the party who challenged the validity of the sale in execution would have to claim reregistration in vindicatory proceedings because that would be “much fairer to both parties if these claims are dealt with simultaneously, in future proceedings, which will be no doubt instituted in due course”.

[32] The sixth respondent purchased the property for R55,000.00 from the eleventh respondent.  The property was sold on auction to the tenth respondent for about R42,861.30.  Invela was not repaid for the bridging finance it had advanced.  The sixth respondent may very well wish to sue based on enrichment.  In my view, the different potential claimants distinguishes this case from Menqa, where there was only one. 

[33] In Knox, David Boyd NO (in his capacity as executor in the late estate Knox) v Mofokeng and Others[18] van der Merwe AJ was of the view that in the absence of any defences such as estoppel or enrichment being raised on the papers, the seller in that matter was entitled, not only to a declaratory order, but also to the remainder of the relief sought.  The learned judge reasoned[19] that

“[t]he court should be slow, in my view, to introduce issues which the parties, for reasons known to themselves, have elected not to raise in the proceedings before the court… I am fortified in this conclusion by the judgment in Vosal Investments (Pty) Ltd v City of Johannesburg and Others  2010 (1) SA 595 (GSJ), where the full bench ordered retransfer of an immovable property … under similar circumstances, without requiring that the judgment debtor should compensate the purchaser for the purchase price.”

[34] In the present matter where the appeal is unopposed, I believe I ought to follow the same approach. 

The Default Judgment

[35] The appellant also sought an order rescinding the default judgment obtained by Invela.  Since the second respondent as Master’s Representative did not have the necessary authority to burden the deceased’s estate with debt, it follows that the loan agreement for bridging finance was also not valid and ought to have been set aside. 

Costs

[36] Rule 40(7) provides that the attorney of a litigant in forma pauperis proceedings, may include in his bill of costs such fees and disbursements to which he ordinarily may be entitled.  In other words he is entitled to any costs which he may recover on taxation.

[37] Mr Friedman submitted that the appellant ought to be awarded her costs as against the first, fifth, sixth, tenth, eleventh and twelfth respondents, on the following basis:

(a)        The costs of opposing the appellant’s rescission application in the Magistrates’ Court;

(b)        The appellant’s costs on appeal.

[38] In my view, the appellant is not entitled to such a costs order.  Through the conduct of the second respondent, the first and sixth respondents acted to their detriment.  The appellant benefitted therefrom.  By virtue of the operation of section 30 of the Act, the sixth respondent was excluded from the protection which she would have enjoyed under the common law and section 70 of the Magistrates’ Court Act.  Clearly the first, sixth and further respondents should not be liable to pay any costs in the circumstances. 

[39] In the result, the following order is made:

The order of the Magistrate dated 30 September 2015 is hereby set aside and substituted with the following:

1.           The default judgment dated 25 August 2009, obtained by the first respondent, is rescinded.

2.           The judgment dated 10 November 2010, in terms whereof [...] S. S., Motherwell, Port Elizabeth, also known as erf [...], Motherwell “the property” was declared executable, is rescinded.

3.           The Warrant of Execution dated 11 November 2010, issued by the Clerk of the Magistrates’ Court in respect of the property, is set aside.

4.           The sale in execution of the property dated 4 March 2011 is set aside, and all subsequent sales of the property thereafter, are hereby set aside.

5.           The transfer of the property from the estate of Mrs D T Kenene and all subsequent transfers of the property, are hereby cancelled.

6.           The eighth respondent, the Registrar of Deeds is hereby directed and authorized to re-register the property, erf [...], also known as [...] S. S., Motherwell, Port Elizabeth, into the name of the estate of the late Dudu Tryphina Kenene. 

____________________

E REVELAS

Judge of the High Court              

BESHE, J:

I agree.

 

____________________

N G BESHE

Judge of the High Court              

 

Appearances:

 

For the appellant:    Mr Friedman instructed by Nettelton Attorneys, Grahamstown

 

For the first and sixth respondents:   Unopposed

Date heard:        10 February 2017

 

Date delivered:   01 June 2017

 

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