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REPORTABLE IN THE HIGH COURT OF SOUTH AFRICA

DURBAN AND COAST LOCAL DIVISION

CASE NO:20763/2004

In the matter between:

CLARE VERONICA SHEA PLAINTIFF

and

LEGATOR, MCKENNA INC. FIRST DEFENDANT

MHG MCKENNA SECOND DEFENDANT

JAMIE ERSKINE THIRD DEFENDANT

MASTER OF THE HIGH COURT

(NATAL PROVINCIAL DIVISION) FOURTH DEFENDANT

REGISTRAR OF DEEDS, PIETERMARITZBURG FIFTH DEFENDANT

ABSA BANK LIMITED SIXTH DEFENDANT

JUDGMENT

Delivered on : 16 November 2007

MOTALA, A J.

The primary issue requiring determination in this matter concerns the validity of the conduct of a curator bonis appointed to a patient declared to be incapable of managing her own affairs and the legal ramifications flowing from such conduct.

The Plaintiff Clare Veronica Shea instituted action against the Defendants for relief in the following terms:

“1. Claim 1

As against the Third Defendant:

(i) an Order:-

(a) declaring that the transfer of the immovable property described as 26 of 7 of 3062 and 29 of 9 of 3052 of Durban and having physical address 62 Marriott Road, Berea, Durban, KwaZulu-Natal from Plaintiff to Third Defendant was invalid; and setting aside such transfer;and

2. setting aside such transfer;

(ii) alternatively an Order directing the Third Defendant to transfer the said immovable property to the Plaintiff against payment by the Plaintiff to the Third Defendant of R540 000.

2. Claim 2

That judgment be entered for the Plaintiff against the First and

Second Defendants jointly and severally in the sum of R49 877

together with interest thereon a tempore morae at the rate of 15.5% per annum.

3. Claim 3 (alternatively to claim 1)

That judgment be entered for the Plaintiff against the First and Second Defendants jointly and severally for R1, 460,000.

4. That the First, Second and Third Defendants jointly and severally pay the costs of the action. ”

PRELIMINARY

The matter came before me for hearing on 14 February 2007. The parties on that occasion sought an order by consent in terms of the provisions of Uniform Rule 33 (4) for a separation of issues. They requested that the claim for relief in terms of Claim 1 and the issues inherent thereto be separated from and determined prior to the questions requiring determination in relation to Claim 2 and Claim 3 (I pause to observe that Claim 3 is in any event a conditional one requiring determination only in the event of the Plaintiff not succeeding in relation to Claim 1). I acceded to the requested separation. Considerations of justice and convenience, in my view, properly warranted such a course.

There were two other preliminary matters that were addressed and disposed of. The first of these related to an application on behalf of the Plaintiff to join the Third Defendant’s spouse, namely Tania Louise Erskine, as a co-Third Defendant in the action. I granted the required joinder by consent of the parties, including the party sought to be joined. The second matter was in respect of an application on behalf of the First and Second Defendants for an amendment of their plea by substituting the text of paragraph 6 thereof, as it then read, with a general denial in the following terms:

“The First and Second Defendants deny the contents of this paragraph.”

Such amendment was duly granted by consent of the parties.

THE ADMITTED FACTS / RELEVANT BACKGROUND

In order to enable me to adjudicate upon and determine the questions of law decisive of Claim 1, the parties agreed upon a written statement of facts pursuant to the provisions of Rule 33(1). Annexed to such written statement were copies of documents that the parties considered necessary to enable me to properly decide the questions of law in dispute between them. It is necessary, in my view, to recite the salient admitted facts for purposes of this judgment; after all they constitute the matrix within, and the relevant background against, which the questions requiring determination fall to be determined. They are the following:

1. The Plaintiff is Clare Veronica Shea, an adult female, who resides at 116 Claredon Road, Redhill, Durban, KwaZulu-Natal.

2. The First Defendant is Legator McKenna Inc., a body corporate incorporated in accordance with the company laws of the Republic of South Africa which carries on the professional practice of attorneys and conveyancers at 2100 Eagle Building, Murchies Passage, 357 Smith Street Durban.

3. The Second Defendant is Michael Hugh George McKenna, an adult male attorney, who practises as such at the address of the First Defendant.

4. The Third Defendants are jointly Jamie Erskine and Tania Louise Erskine who are married to each other, reside at and are the registered owners of the property situated at 62 Marriott Road, Durban.

5. The Fourth Defendant is the Master of the High Court.

6. The Fifth Defendant is the Registrar of Deeds.

7. The Sixth Defendant is ABSA Bank Limited, which was joined as it has a mortgage bond over the disputed property. It has entered into an arrangement with the Plaintiff that it is satisfied will protect its interests and it abides the decision of the Court.

8. The Plaintiff was injured in a motor vehicle collision on 5 February 2002 and her multiple injuries rendered her comatose until 9 March 2002 and immobile for many months.

9. The Plaintiff owned certain immovable property described as Portion 26 (of 7) of Erf 3062 and Portion 29 (of 8) of Erf 3062 Durban on which is built a dwelling and is known as 62 Marriott Road Durban (“62 Marriott Road”).

10. An application was brought by Plaintiff’s sister for the appointment of a curator bonis to Plaintiff’s estate during February 2002. The value of 62 Marriott Road was estimated in the founding papers in that application at R650 000.

11. The Second Defendant was appointed curator bonis by the High Court on 8 March 2002. In terms of the order so appointing him, the Second Defendant was:

1. conferred inter alia with the powers:

(i) to receive, take care of, control and administer all the property constituting the estate of the Plaintiff ;

(ii) to let, exchange, partition, alienate and for a lawful purpose to mortgage or pledge any property, movable or immovable, whether in whole or in part, belonging to the Plaintiff;

(b) required to exercise the powers conferred upon him subject to the approval of the Master.

12. On 27 March 2002 the Second Defendant signed an agreement with Wakefields Estate Agents granting it a sole and exclusive mandate until 27 May 2002 to sell the Plaintiff’s property at 62 Marriott Road Durban for R550 000. In the document Second Defendant in his own manuscript described the party granting the mandate in the following terms “Clare Veronica Shea herein represented by her curator bonis Michael Hugh George McKenna”. He also made an amendment to clause 3.2 in the standard agreement by substituting the name of the First Defendant as the entity to which payment in trust was to be made by the potential buyer.

13. On 3 April 2002 Wakefields Estate Agents wrote to the Plaintiff, care of the Second Defendant, thanking her for the instruction to offer 62 Marriott Road for sale on a sole agency basis and annexing a copy of its acceptance of the mandate given by the Second Defendant as curator of the Plaintiff. The letter contained an obvious error in that it recorded the purchase price at R330 000 and not R550 000.

14. On 7 April 2002 an advertisement offering 62 Marriott Road for sale at R550 000 was published in the Sunday Tribune.

15. On 10 April 2002 Second Defendant made application to Glenrand MIB for insurance cover to enable him to put up the necessary security in terms of section 77 of the Administration of Estates Act, No. 66 of 1965 (“the Act”).

16. On 11 April 2002 the Second Defendant wrote to a number of insurance companies purporting to do so in his capacity as curator bonis of the Plaintiff requesting the insurance companies to make the Plaintiff’s policies paid up.

17. On 14 April 2002 62 Marriott Road was again advertised in the Sunday Tribune.

18. On 19 April 2002 Second Defendant received an offer from Wakefields Estate Agents that had been signed by the Third Defendant (J Erskine) to purchase 62 Marriott Road for R520 000. It was addressed to “Mrs CV Shea (nee Tarr) [i.e the Plaintiff] c/o Mr McKenna Curator Bonis “.

19. The Second Defendant requested an increased offer of R540 000 and an amendment was made to the original offer on 20 April 2002. The altered pages were faxed to the Second Defendant on 22 April 2002. The amended offer was then signed as seller by the Second Defendant on 22 April 2002 and at the same time alongside his signature he added in manuscript the word “curator” and in brackets (subject to the approval of the Master of the High Court).

20. A copy of the signed document is annexed to the Particulars of Claim, marked “A”. It records the occupation date as “Thirtieth (30^th) May 2002” and provides for an occupational rental of R4 500 per month. He also nominated himself “of First Defendant” as the conveyancers. Wakefields Estate Agents signed the document, thereby accepting the benefits in their favour.

21. That at the time he signed the offer the Second Defendant was aware that the Court Order provided that his power to alienate the Plaintiff’s property had to be exercised subject to the approval of the Master of the High Court.

22. On 22 April 2002 the Second Defendant wrote to Wakefields Estate Agents and stated as follows “We refer to the above [-estate CV Shea – Sale of Immovable Property at 62 Marriott Road - ] and fax you hereunder the agreement of sale signed by the curator. We look forward to receiving in due course formal confirmation that the bond has been granted to the purchaser.

23. On 23 April 2002 Wakefields Estate Agents wrote to the Third Defendant confirming that the seller had accepted the offer and enclosing a copy of the agreement. The purchaser was reminded that if occupation took place before transfer then occupational interest of R4 500 per month was payable monthly in advance.

24. On 29 April 2002 the Second Defendant paid the premium he was required to pay for the issue to him of the necessary policy/bond of security to enable him to put up security to the Master of the High Court under section 77 of the Act.

25. On 29 April 2002 the required bond of security issued by Santam Limited was provided to the Second Defendant by Glenrand MIB.

26. On 3 May 2002 Sixth Defendant approved the mortgage bond for the Third Defendant.

27. On 7 May 2002 the Second Defendant wrote to a firm of attorneys in Pietermaritzburg instructing them to obtain letters of curatorship for him as soon as possible because he needed to attend to the transfer of the Plaintiff’s property without delay. He attached his application for appointment as curator, a bond of security and a copy of the court order appointing him as curator bonis.

28. On 8 May 2002 Wakefields Estate Agents recorded that the First Defendant was to proceed with the transfer and that the “seller”, i.e. Second Defendant, had elected to attend to and forward reports/certificates [electrical and wood borer] to the conveyancers.

29. Before issuing letter of curatorship to the Second Defendant the Master of the High Court required a preliminary inventory and the original of the undertaking Second Defendant had signed. These were sent under cover of a letter dated 22 May 2002. The attached inventory [which is dated 23 May 2003] gave a value of R650 000 for 62 Marriott Road, the same estimation given in the application papers referred to in paragraph 10 above.

30. On 3 June 2002 the Second Defendant received his letters of curatorship in terms of the section 72 of the Act. The letters direct attention to the provisions of section 102 of the Act.

31. On 4 June 2002 the First Defendant sent out a pro forma statement of account relating to the transfer of 62 Marriott Road from the estate of CV Shea [nee Tarr] to Third Defendant.

32. On 5 June 2002 the First Defendant wrote to creditors of the Plaintiff notifying them that the Second Defendant as curator had sold the immovable property of the Plaintiff and anticipating registration of transfer before the end of June 2002.

33. On 28 June 2002 the Second Defendant instructed his Pietermaritzburg correspondent, enclosing a motivation, to obtain the consent of the Master for the sale of the property to the Third Defendant.

34. On 14 June 2002 the Second Defendant signed a power of attorney as curator nominating and appointing Leslie Albert Weinberg to represent him to pass transfer to the Third Defendant.

35. The Power of Attorney was delivered to the Master who approved it on 16 July 2007.

36. It was a requirement of the Master that he be provided with such Power of Attorney.

37. On 17 July 2002 authority was granted by the Master of the High Court for the sale of 62 Marriott Road by private treaty for a selling price of not less than R540 000,00.

38. Transfer was effected on 26 July 2002, as appears from the report of the Registrar of Deeds, with the causa described as being “sold on the 22/4/2002 for the purchase price of R540 000”.

39. On 10 March 2003 an Order was granted declaring the Plaintiff to be incapable of managing her own affairs.

40. Third Defendant became aware of the Plaintiff’s contention that the transaction by which Third Defendant acquired ownership of 62 Marriott Road was void at a time when Third Defendant was still in possession of the property and Third Defendant remains the registered owner.

41. Section 102(1)(g) of the Act rendered infringement of section 71 a criminal offence.

THE RELEVANT LAW

It would be convenient, as a point of departure for discussion of the relevant law, to focus on the salient provisions of the Act having a bearing on the dispute between the parties. These are to be found in sections 71(1), 77(1), 80(1) and 102(1)(g), which I proceed to delineate hereunder:

SECTION 71(1)

“Every person appointed or to be appointed tutor or curator as

provided in section 72(1)(d) or (2) or under section 73 or 74, shall, subject to the proviso to section 57(3) of the Mental Health Act, 1973 (Act 18 of 1973), before letters of tutorship or curatorship are granted or signed and sealed, or any endorsement is made, as the case may be, and at any time thereafter when called upon by the Master to do so, find security or additional security to the satisfaction of the Master in an amount determined by the Master, for the proper performance of his functions.”

SECTION 77(1)

“Every person appointed or to be appointed tutor or curator as provided in section 72(1)(d) or (2) or under section 73 or 74, shall, …….. ,before letters of tutorship or curatorship are granted or signed and sealed, or any endorsement is made, as the case may be, ….. find security ….. to the satisfaction of the Master in an amount determined by the Master, for the proper performance of his functions.”

SECTION 80(1)

“No natural guardian shall alienate or mortgage any immovable

property belonging to his minor child, and no tutor or curator shall alienate or mortgage any immovable property which he has been appointed to administer, unless he is authorised thereto by the Court or by the Master under this section or, in the case of a tutor or curator, by any will or written instrument by which he has been nominated.”

SECTION 102(1)(g)

“Any person who contravenes or fails to comply with the provisions of section … 71 … shall be guilty of an offence and liable on conviction … to a fine or to imprisonment for a period not exceeding twelve months.”

Section 71(1) of the Act received judicial consideration in Bouwer NO v Saambou Bank Bpk 1993 (4) SA 492 (T). Hartzenberg J, after a careful review of the authorities and relevant legal principles, concluded that acts carried out or otherwise performed by a curator bonis who has been appointed by the Court but who was not yet in receipt of letters of curatorship issued by the Master were nullities and of no legal force or effect. The conclusion reached by the learned judge was informed by the material consideration that the intention of the Legislature in enacting section 71(1) of the Act was not to guard or protect the interests of third parties, but to protect the interests of the de cujus instead. It could, therefore, not be accepted that measures intended for the protection of the de cujus, such as the need for the curator bonis to find security to the satisfaction of the Master as a necessary precursor to the issue of letters of curatorship, were not intended by the Legislature to be of cardinal importance and that acts in conflict therewith would nevertheless be valid.

I agree with respect with the findings and conclusion of Hartzenberg J. Such findings and conclusion are also abundantly supported and fortified, in my judgment, by the later judgments in Simplex (Pty) Limited v Van der Merwe and Others NNO 1996 (1) SA 111 (W) and Van der Merwe v Van der Merwe 2000 (2) SA 519 (K). Both these cases were concerned with the provisions of section 6(1) of The Trust Property Control Act, No. 57 of 1988, which provides as follows:

“Any person whose appointment as trustee in terms of a trust instrument, section 7 (which I mention in parenthesis provides for the appointment of a trustee by the Master), or a court order comes into force after the commencement of this Act, shall act in that capacity only if authorised thereto in writing by the Master.”

It will readily be seen that such provision, like section 71(1) of the Act, precluded the relevant appointee from acting unless authorised thereto in writing in terms of letters issued by the Master. In my view, the proposition cannot be cavilled at that the intention of the Legislature behind the enactment of section 6(1) of the Trust Property Control Act, 1988 and section 71(1) of the Act (ie. the Administration of Estates Act, 1965) was informed by a common consideration, ie. the protection of the interests of the person (ie. the de cujus) on whose behalf the nominated functionary was in each instance appointed to act.

In Simplex Goldblatt J, in rejecting a contention on behalf of the Respondent that the prohibition in section 6(1) was merely directory and not peremptory, and in holding that it was a precondition of a trustee’s right to act as such that he be authorised so to do in terms of letters of authority issued under section 6(1) of the Trust Property Control Act, stated as follows (at 112J-113B):

“I am further of the view that section 6(1) is not purely for the benefit of the beneficiaries of the trust but in the public interest to provide proper written proof to outsiders of the incumbency of the office of trustee (Honore’s South African Law of Trust 4^th ed at 179). The whole scheme of the Act is to provide a manner in which the Master can supervise trustees in the proper administration of trusts properly and section 6(1) is essential to such purpose. By placing a bar on trustees from acting as such until authorised by the Master, the Act endeavours to ensure that trustees can only act as such if they comply with the Act…”.

Goldblatt J proceeded to find, in the result, that a contract concluded by trustees prior to receipt of the written authority of the Master referred to in section 6(1) was void ab initio. On the question of whether the agreement was capable of being resuscitated by subsequent ratification, either by the Master or by the trustees after receipt of the necessary authority, the learned Judge concluded that it was not. He invoked the well-established principle “that there can be no ratification of an agreement which a statutory prohibition has rendered ab initio void in the sense that it is to be regarded as never having been concluded” (per Kumleben JA in Neugarten and Others v The Standard Bank of South Africa Limited 1989 (1) SA 797 (A), especially at 808D – 809E).

In Van der Merwe Griesel J cited with approval the judgment in Simplex and similarly found that a contract concluded by trustees appointed in terms of a trust instrument prior to the issue to them of letters of authority in terms of section 6(1) of the Trust Property Control Act was a nullity and as such incapable of ratification ex post facto. I shall revert to the Van der Merwe case later in the course of this judgment.

The ratio decidendi of the Simplex and Van der Merwe cases was approved by Buys J in Kriel v Terblanche NO en Andere 2002(6) SA 132(NC) at 128F – 129B. This notwithstanding that the learned judge proceeded to distinguish those cases from the case with which he was concerned.

I find myself in respectful agreement with the findings in Simplex and Van der Merwe. I respectfully align myself with the criticism and rejection by Griesel J in Van der Merwe of the conclusion reached by MacArthur J in Kropman and Others NNO v Nysschen 1999(2) SA 567(T) to the effect that a Court in exercising its discretion can retrospectively validate the act of a trustee performed prior to the issue to him of letters of authority by the Master in terms of section 6(1) if the circumstances deem it fit to do so.

There is in my view a feature of the Act (ie. the Administration of Estates Act, 1965) that renders the principles set out in Simplex and Van der Merwe applicable, not merely simpliciter but a fortiori, to the conduct of curators prior to the issue to them of letters of curatorship in terms of section 71(1) thereof. Such is to be found in section 102(1)(g) of the Act, which provides for the imposition of a penal sanction for a breach of any of the provisions of section 71. This feature, in my judgment, fortifies the conclusion that the Legislature clearly intended to visit with nullity any act or conduct in contravention of section 71 (Schierout v Minister of Justice 1926 AD 99 at 109; Swart v Smuts 1971(1) SA 819(AD) at 829C – 830C; Tuckers Land and Development Corporation (Pty) Limited v Wasserman 1984(2) SA 157(T) at 159 – 160).

The Plaintiff’s case

Mr Pillemer SC in his Heads of Argument, and at the hearing before me, contended that the sale agreement concluded between the Second and Third Defendants in respect of 62 Marriott Road on 22^nd April 2002 was null and void ab initio on the ground that the Second Defendant was at the material time not in receipt of letters of curatorship issued by the Master in terms of section 71(1) of the Act. The nullity of the agreement precluded its resuscitation by ratification, whether by the Master or the Second Respondent when he became vested with the requisite authority. Reliance was placed in support of the foregoing contentions on the judgments in Bouwer , Simplex, Van der Merwe and Neugarten , supra. The effect of the nullity of the agreement, it was further contended, vitiated the subsequent registration of transfer pursuant thereto in the name of the Third Defendant, with the result that the Plaintiff was entitled to an order for cancellation of such transfer, alternatively an order directing the Second Defendant to re-transfer the property into the name of the Plaintiff.

The Plaintiff’s case finds direct support in Van der Merwe. The plaintiff in that case instituted action against her husband in his personal capacity as first defendant and as second defendant in his capacity as co-trustee of the Hennie Van der Merwe Trust. The father of the first defendant was cited as a co-defendant both in his personal capacity and in his capacity as trustee of the self same trust. The material facts of the case were as follows:

1. During the subsistence of a marriage between the plaintiff and the first defendant the latter became the owner of a certain farm (“the farm”). At a point in time thereafter the first defendant instituted divorce proceedings against the plaintiff in which he sought a decree of divorce and an order for forfeiture of the patrimonial benefits of the marriage;

2. During the pendency of such action an inter vivos trust was founded by first defendant’s father (the third defendant), with the first defendant and his father being appointed trustees in terms of the founding trust instrument. Shortly thereafter the first defendant purported to conclude a written agreement in terms of which he sold the farm to the trust for a purchase price of R320 180,00. The first defendant signed the written agreement of sale both in his personal capacity and in his capacity as authorised trustee of the trust;

3. As at the date of conclusion of such agreement neither the first defendant nor his co-trustee (ie. his father) were in receipt of letters of authority issued by the Master in terms of section 6(1) of the Trust Property Control Act. The requisite letters were only issued by the Master some sixteen days later;

4. Pursuant to the sale agreement the farm was transferred into the name of the trustees of the trust by way of registration in the deeds registry of an appropriate deed of transfer. This occurred some two months after the issue of such letters of authority;

5. The plaintiff sought a declarator to the effect that the sale agreement concluded between the first defendant and the trust in respect of the farm and the subsequent registration of transfer thereof in the deeds registry were null and void. The Court, in the person of Griesel J, came to the conclusion that the plaintiff was entitled to the relief sought by her. He made an order, in the result, declaring the agreement of sale, and the registration of transfer pursuant thereto, null and void.

THE FIRST, SECOND AND THIRD DEFENDANTS’ CONTENTIONS

The First, Second and Third Defendants (“the Defendants”) contend that the Second Defendant’s acceptance of the Third Defendant’s offer to purchase 62 Marriott Road upon the basis of its being “subject to the approval of Master of High Court” did not constitute an acceptance valid and effective in law. According to the Defendants, the insertion by the Second Defendant of such condition rendered the acceptance a qualified one that was effectively tantamount to a refusal of the Third Defendant’s offer; hence, the argument ran, it could not be said that the conduct of the Second Defendant amounted to any contravention of the provisions of section 71(1) of the Act- it neither constituted a “taking care of” or “administering of” any property belonging to the Plaintiff, nor did it bring about any legal consequences that in any way impacted on the Plaintiff’s estate.

The Defendants further contend that ownership of 62 Marriott Road in any event validly passed to the Third Defendant despite the absence of, or a defect in, the underlying causa. This, they contend, was the inevitable consequence of the abstract theory of the transfer of ownership of immovable property that has been held to apply in our law (Klerck NO v Van Zyl and Maritz NNO and Related Cases 1989(4) SA 263(SECLD) ). They point to the fact that at the time of execution by the Second Defendant of the power of attorney to transfer he was in receipt of letters of curatorship issued by the Master. The Master, moreover, sanctioned registration of transfer in the name of the Third Defendant by way of written endorsement of the power of attorney on 16 July 2002.

The Defendants submit that the passing of transfer to the Third Defendant precluded a claim for the return of the property in terms of the rei vindicatio. They contend that there was furthermore no basis for the Plaintiff’s claim for return of the property by way of condiction; this was because payment by the Third Defendant to the Second Defendant of the agreed consideration for the property precluded the possibility of any unjust enrichment on his part.

ABSTRACT AND CAUSAL THEORIES OF TRANSFER OF OWNERSHIP OF IMMOVABLE PROPERTY

The causal theory of the transfer of ownership makes the transfer of a real right dependent on a valid underlying contract. Such theory lays down that, if the cause for the transfer of a real right is defective, the real right will not pass, notwithstanding that there has been delivery or registration of the res (Klerck NO v Van Zyl and Maritz NNO and Related Cases, supra; Silberberg and Schoeman’s The Law Of Property Fourth Edition (“Silberberg”) at pages 82 – 83. In terms of the abstract theory, provided that the agreement for transfer of a real right (ie. the real agreement) is valid, the real right will pass in the pursuance and on implementation thereof, notwithstanding that the underlying contract is defective.

It is well established that the abstract theory for the transfer of ownership applies in our law in relation to movables. (see, for instance, Trust Bank Van Afrika Beperk v Western Bank Beperk 1978(4) SA 281(A), Air-Kel (Edms) Bpk h/a Merkel Motors v Bodenstein 1980(3) SA 917(A) ). With regard to the transfer of ownership of immovable property, the long-standing uncertainty that prevailed in our law in relation to the question of whether the causal or abstract theory applied would appear to have been finally settled in favour of the latter (Brits and Another v Eaton NO and Others 1984(4) SA 728(T), Klerck NO v Van Zyl and Maritz NNO and Related Cases, supra, at 273G – 274C, Radebe v Government of the Republic of South Africa and Others 1995(3) SA 787(N) at 803E - F, Kriel v Terblanche NO en Andere, supra, at pp 142C - 148F). I am satisfied upon a review of the authorities that such uncertainty as previously existed in our law on the question of the applicability of the abstract theory in relation to the transfer of immovable property has been removed.

FINDINGS

The written offer to purchase constituted by the Third Defendant’s signature of the instrument purporting to comprise the agreement of sale was, as is clear ex facie the document, addressed to the plaintiff “c/o Mr M. McKenna (curator bonis)” and intended to be accepted by the latter. In terms of section 80(1) of the Act and the order of this Court appointing the Second Defendant as curator, the latter’s powers of administration of the estate of the Plaintiff, including the power to conclude any agreement in relation to the property of such estate, necessarily fell to be exercised subject to the approval of the Master. Such was an obligation ex lege.

Assuming for the moment that the Second Defendant was indeed in receipt of letters of curatorship in terms of s 71(1) of the Act at the material time, the offer to purchase would only have been capable of being accepted by him on the basis of it being subject to the approval of the Master. The insertion by the Second Defendant of the words “subject to the approval of Master of High Court” in parenthesis alongside his signature, signifying his acceptance of the offer, was in my judgment wholly superfluous for the foregoing reasons. The Second Defendant’s signification of acceptance, even without the insertion of the inscription alluded to, would in any event have been subject to that very condition.

Inasmuch as the Third Defendant manifestly knew that the offer was being made to the curator bonis of the Plaintiff’s estate, he must be taken to have been aware of the legal basis on which the offer was capable of being accepted by the curator and to have made his offer on that very basis.

I am satisfied that the Second Defendant’s purported acceptance of the offer to purchase emanating from the Third Defendant was intended to be, and in fact was, unequivocal. Such purported acceptance on the part of the Second Defendant, in circumstances where he was not in receipt of letters of authority in terms of s 71(1) of the Act, constituted conduct in clear and direct prohibition of that provision. I am satisfied on the principles and authorities canvassed above that the agreement of sale purporting to have been concluded between the Second and Third Defendants was a nullity. It could not, and did not, provide a valid underlying causa for the subsequent transfer in pursuance thereof in the name of the Third Defendant. The Plaintiff should in terms of the authority of Van der Merwe be entitled, in the result, to the relief sought in terms of sub paragraph (i) of Claim 1 above.

The question that immediately arises is whether the Plaintiff is entitled to return of the property following the declaration of nullity of the underlying causa in the form of the sale agreement. The causal theory for the transfer of ownership of fixed property would have demanded that the question posed be answered in the affirmative. That does not assist the Plaintiff, however, once it is accepted, as I have done, that transfer of ownership of immovable property in our law fell to be assessed and determined in terms of the abstract theory outlined earlier in this judgment. As discussed hereinbefore, transfer of ownership under the abstract theory, sans a valid underlying causa, is dependent on the existence of a valid real agreement consisting of the firm intention of the transferor to transfer a particular real right to the transferee and a concomitant intention on the part of the transferee to acquire that right. A “meeting of minds” on the foregoing elements and an ensuing traditio by act of registration in the deeds registry (in the case of immovable property) would be sufficient for ownership to pass. It is central, therefore, that transfer of ownership in terms of the approach inherent in the abstract theory requires a valid and enforceable “real agreement”.

The Second Defendant’s intention to pass transfer in casu is evidenced by the power of attorney executed by him on 14^th June 2002. It is clear from the reading of such power that it explicitly recites the sale agreement purportedly concluded on 22^nd April 2002 as the causa for such intention. There can be no doubt in my view that the formation of such intention on the part of the Second Defendant had as its genesis the proposition that the agreement dated 22^nd April 2002 did not suffer the fate of nullity on the grounds of its prohibition under pain of penal sanction. The inference is in my view compelling that the Second Defendant did not in terms of the power of attorney intend to express an intention to transfer the property notwithstanding that the agreement recited as the underlying causa was null and void and incapable of ratification. It is not without significance in this regard that the Second Defendant is a practising attorney of this Court.

The power of attorney in question was signed by the Second Defendant at a time when the Master’s approval of the sale of the Plaintiff’s property had not been obtained. I would have expected the Second Defendant at the very least to defer signature of the power until after the consent of the Master to the sale foreshadowed therein had been sought and obtained.

In Silberberg (at paragraph 5.3.2.5, pp. 86-87) the learned authors discuss the circumstances that would have the effect in law of vitiating the real agreement so as to preclude transfer of the real right in terms of the abstract theory. After stating the general proposition that it is in each case a question of fact whether in all the circumstances of a given case the underlying contract or the real agreement or both are affected, they proceed-by way of illustration of such proposition-to refer to the following as one of the vitiating circumstances:

“Contracts which are unenforceable because the common law, or more often a statute, requires that the parties must comply with some or other condition. Thus it may be necessary for an agreement to be in writing, or that official permission must be obtained before the parties enter into it, or a certain manner is prescribed for the achievement of the object as, for example, in the case of agreements to which the Credit Agreements Act (75 of 1980) applies. If an attempt has never the less been made to carry out such unenforceable agreement, it is always necessary to inquire why the law demands that the parties should comply with certain formalities or other conditions precedent. ……….. Consequently it is necessary to inquire whether the achievement of the object itself is prohibited in the event of non-compliance with the said formalities or other conditions precedent. In the event of non-compliance with a statutory provision, this will depend on the construction of the statute - the courts will seek to ascertain the intention of the legislature from the statute itself.”

I am in respectful agreement with the approach so formulated in Silberberg. It is consistent with the approach set out in cases such as Preller and Others v Jordaan 1956(1) SA 483(A) at 496, the Air-Kel (Edms) Bpk case, supra, at 922F and Klerck NO v Van Zyl , supra, at 273H-274B

I am satisfied, in all the circumstances, that the so-called real agreement attending the transfer in this case suffers the same fate as the underlying agreement of sale. It cannot in my view, having regard to the intention of the Legislature as expressed in sections 71 and 102(1)(g) of the Act, be said to have escaped the sanction of nullity visited upon the underlying agreement. In my judgment, the achievement of the object contemplated by the Legislature would be substantially undermined, if not wholly defeated, if it were to be held that the real agreement in question was not defective but sufficient instead to sustain the passing of ownership of the property out of the estate of the Plaintiff to the Third Defendant. I am satisfied that to allow the enforcement of a legally prohibited contract on the basis of the recognition of a real agreement in terms of the abstract theory of transfer would be to undermine the policy of the law.

The conclusion reached by me is that the Plaintiff is entitled to the principal relief in terms of Claim 1 by virtue of the actio rei vindicatio.

Even if I were to hold that ownership of the property indeed passed out of the estate of the Plaintiff to the Third Defendant by virtue of the abstract theory of transfer, such would in my judgment not detract from the Plaintiff’s entitlement to return of the property by way of re-transfer. In Kriel v Terblanche NO and Andere, supra at 140 I-141 A, Buys J explained the consequences in practice of the difference between the causal and abstract theories of the transfer of ownership in the following terms:

“Die verskil tussen die twee stelsels van eiendomsoorgang het praktiese gevolge vir ‘n derde wat die saak verkry van die persoon aan wie dit ingevolge ‘n gebrekkige titel gelewer is. Ingevolge die kousale stelsel gaan eiendom in so ‘n geval nie op die verkryger oor nie en daarom ook nie op sy regsopvolgers nie. Die vervreemder kan steeds die saak met die rei vindicatio van die verkryger of enige regsopvolger opvorder ongeag die bona fides van laasgenoemde. Ingevolge die abstrakte stelsel, egter, gaan bona fides van laasgenoemde. Ingevolge die abstrakte stelsel, egter, gaan eiendom wel op die verkryger oor en kan hy op sy beurt weer ‘n geldige title aan derdes oordra. Die vervreemder sal, indien die aanleidende verbintenis wegval, hoogstens ‘n persoonlike reg teen die verkryger op grond van ongeregverdigde verryking hê. Sien Van der Merwe op 306. Dit is dus van wesenlike belang vir die partye in hierdie saak of ons reg ‘n kousale of abstrakte stelsel van eiendomsoorgang volg by onroerende sake. Indien ‘n kousale stelsel geld moet die applikant slaag. Indien die abstrakte stelsel geld moet sy aansoek van die hand gewys word.”

In Kriel the determination of whether ownership of the immovable property that was the subject matter of the dispute in that case had passed was of decisive importance inasmuch as the property was subsequently transferred from the purchaser (an inter vivos trust) that took transfer pursuant to an invalid purchase and sale agreement (on the ground that the individual who signed the agreement as duly authorised trustee was at the material time not authorised to act in terms of letters of authority duly issued under section 6(1) of the Trust Property Control Act) in favour of a third party. The Court in Kriel found that ownership of the property indeed passed to the trust in terms of the real agreement under the abstract theory notwithstanding the invalidity of the underlying purchase and sale agreement. The bid of the applicant (ie. the “seller” under the invalid sale agreement) to vindicate the property in the hands of the third party by invoking the rei vindicatio accordingly failed. The applicant was held at best to have a personal right of action against the trust on the ground of unjust enrichment.

Silberberg, at page 85, expounds as follows on the practical distinction between the abstract and causal transfer theories:

“Inter partes the main difference in the protection granted to a transferor in terms of the abstract and causal systems respectively, is simply the basis (my emphasis) on which the transferor may act against the transferee. As indicated above the transferor would, in terms of the abstract system, have a personal action for the return of a delivered thing, provided of course that there has been a valid act of transfer as a result of which the real right has passed to the acquirer… .”

It is significant that in the present case, like in the Van der Merwe case, the transferee pursuant to the invalid agreement of sale (ie. the Third Defendant) remains the registered owner of the subject property. If, therefore, ownership indeed passed, with the result that the rei vindicatio is not available to the Plaintiff, the Plaintiff would then be entitled in my judgment to reclaim the property from the Third Defendant by condiction.

While condiction, which presupposes that ownership has been transferred, appears to provide the appropriate remedy in such circumstances, the question that arises is: ‘which condictio ?’. The answer is the venerable condictio ob turpem vel iniustam causam (De Vos Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg 3rd ed at 160; Jajbhay v Cassim 1939 AD 537 at 540, 545-547 and 558; First National Bank of Southern Africa Limited v Perry NO and Others 2001(3) SA 960 (SCA) at 968I-969G).

The requirements of the condictio ob turpem vel iniustam causam are defined in The Law of South Africa ‘Enrichment’ volume 9 para 38 as follows:

(i) that ownership of the property must have passed with the transfer (on the assumption that ownership of the property in casu indeed passed in terms of the abstract theory upon registration thereof in the deeds registry in the name of the Third Defendant, this requirement is clearly satisfied);

(ii) that the property must have been transferred under an illegal agreement, ie. an agreement prohibited by law or contrary to good morals or public policy (such requirement too finds satisfaction in the present matter inasmuch as the subject property was transferred under an “agreement” expressly prohibited by statue – section 71(1) read together with section 102(1)(g) of the Act);

(iii) that the plaintiff himself/herself must have been free from turpitude. While the foregoing was an invariable requirement in both Roman and Roman-Dutch Law, in our law this requirement might be overlooked in circumstances where justice calls for it (Jajbhay v Cassim, supra. There is clearly no need for the exercise of any such equitable discretion in the present matter as there is no suggestion whatsoever that the Plaintiff did not come to court with clean hands).

A difficulty that arises in applying the condictio ob turpem vel iniustam causam to the circumstances of this case is the next requirement, ie. turpitude on the part of the Third Defendant. The question that arises is whether it was necessary for the Third Defendant to have knowledge of the illegality of the underlying “agreement” at the time of transfer. If so, then the resort to the condictio cannot succeed because there is no suggestion but that the Third Defendant received transfer of the property innocently. The problem alluded to, however finds resolution in the following dicta of Schutz JA in First National Bank of Southern Africa Limited v Perry NO and Others, supra, at 970 para 24 – 25:

“But to return to the problem, whether for the condictio ob turpem causam to apply the defendant must have knowledge at the time that he acquires the tainted thing, or whether subsequently acquired knowledge might suffice, I think that the Digest provides an appropriate point of departure. Book 12 title 5 is devoted to this condictio. D 12.5.6 in the Watson edition attributes the following to Ulpian:

‘Sabinus always said the early jurists were right in holding that the condictio would go for anything in someone’s hands on an unlawful basis. Celsus shares that view.’

……………

This passage, to my mind, supplies the missing link. It is not only the person who receives with knowledge of illegality but also one who learns of it while he is still in possession. This does not mean that he is treated as liable for a delict as, among other things, his liability is limited to his enrichment …… .”

(see also Pucjlowski v Johnston’s Executors 1946 WLD 1)

While the Third Defendant probably had no knowledge of the illegality of the underlying “agreement”, the Third Defendant remains in possession of the property qua registered owner and clearly became aware of such illegality at the very latest on service of the process initiating the present action. On the authority of First National Bank v Perry, supra, the condictio ob turpem vel iniustam causam accordingly lies against the Third Defendant to make restitution (see also M.C.C. Bazaar v Harris & Jones (Pty) Ltd 1954(3) SA 158(T) at 162; Dugas v Kempster Sedgwick (Pty) Ltd 1961(1) SA 784(D); Enocon Construction (Pty) Ltd & Another v Palm Sixteen (Pty) Ltd 1972(4) SA 511(T) at 513F - 514D)

Counsel for the Third Defendant, namely Mr P.H.N. Schumann, sought to persuade me that the Plaintiff was not entitled to recover the subject property from the Third Defendant on the basis of an enrichment action (such argument of course presupposed that ownership of the property indeed passed to the Third Defendant in terms of the abstract transfer theory). Mr Schumann relied in support of his contention to that effect on the following dictum of Innes JA in Wilken v Kohler 1913 AD 135 at 144:

“………It by no means follows that because a court cannot enforce a contract, which the law says shall have no force, it would therefore be bound, to upset the result of such a contract which the parties had carried through in accordance with its terms. Suppose, for example, an unconditional underhand agreement of sale of fixed property for a definite price, a payment of the purchase price and due transfer of the land. Neither party would be able to upset the concluded transaction on the mere ground that the causa stated in the deed of transfer was called a contract of sale, whereas it was in reality an agreement to sell, invalid and unenforceable in law, but which both seller and purchaser proposed to carry out. No good ground of action could be alleged in such a case : neither in the shape of a restitutio in integrum nor by way of a condictio could relief be claimed. Neither party could say that he had been enriched at the expense of the other; and the traditio duly made with knowledge of all the facts and with the intent to pass the dominium and the price duly paid with similar knowledge and with the object of acquiring dominium would bind the respective parties.”

There can be no doubt that the said dicta on the part of Innes JA were clearly obiter. In the Kohler case the appellant unsuccessfully contended for an entitlement to damages against the Respondent in consequence of a breach on the part of the latter of a term of a contract that was a nullity for reason of non-compliance with certain prescribed formalities. In finding that the nullity of the agreement precluded the appellant’s claim for damages, Innes JA considered it necessary to distinguish between the enforcement of a term of such an “agreement” alleged to have been disregarded and the setting aside of the result of an invalid agreement completely performed. The Court there was not concerned with a claim for return of the property, whether by vindication or condiction. It is significant, moreover, that the obiter dicta of Innes JA must be read in the context of an agreement invalid for want of compliance with certain prescribed formalities (a situation that now finds expression in terms of section 28(2) of the Alienation of Land Act, No. 68 of 1981) and not an agreement prohibited as a matter of law. The learned judge of appeal was, for purposes of his formulation of such obiter dicta, clearly concerned with the condictio indebiti and not the condictio ob turpem vel iniustam causam.

The fact that transfer of the property in the present matter might have passed to the Third Defendant (again assuming the correctness of such proposition for purposes of the present discussion) was no bar to the recovery of the property under the condictio ob turpem vel iniustam causam. Each of the parties was clearly enriched to the extent of the performance received from the other under the invalid agreement, and each was in turn impoverished to the extent of the performance rendered. The effect of the aforegoing in casu is to entitle the Plaintiff to return of the property against payment to the Third Defendant of the purchase consideration under the ‘sale agreement’, ie. the sum of R540 000,00. The Plaintiff clearly tenders such payment.

(see De Vos, Verrykingsaanspreeklikheid in die Suid Afrikaanse Reg, 3^rd ed at 160 et seq, Sieg Eiselen & Gerrit Pienaar, Unjustified Enrichment (A Casebook) (1993 ed) at pp. 6-7; M.C.C Bazaar v Harrison & Jones (Pty) Ltd, supra at 162-162; the Enocon Construction (Pty) Ltd case, supra, ibid Nortje v Pool 1966(3) SA 96(A) at 134D; Wolmarans & Another v Tuckers Land & Development Corporation (Pty) Ltd 1979(1) SA 663(T) at 674G – 676B).

THE QUESTION OF COSTS

The Plaintiff’s claim for relief in terms of Claim 1, being the claim requiring determination by me, was from the outset vigorously contested by all three of the First, Second and Third Defendants. This is amply borne out by a conspectus of the pleadings. A great deal of the argument in the matter, both at the hearing before me and in terms of written submissions made, was devoted to the lis between the Plaintiff and the Third Defendant.

This is an appropriate case, in the circumstances, warranting the application of the usual rule that costs should follow the result.

Counsel for the Third Defendant in the course of his written argument submitted that, in the event of my finding for the Plaintiff, it would be iniquitous for the Third Defendant to be mulcted in costs at all. He contended that the entire sorry state of affairs playing itself out in casu was attributable directly to the conduct of the Second Defendant. Such consideration, in the result, warranted the exercise of my discretion - in accordance with the dictates of fairness and equity – in favour of an order directing the First and Second Defendants to pay the costs of both the Plaintiff and the Third Defendant. I disagree. The bellicose posture adopted by the Third Defendant against the claim of the Plaintiff from the very inception of the matter, and the resultant protraction of the proceedings, are to my mind considerations material to the appropriate exercise of my discretion in relation to costs. The stance taken up by the First, Second and Third Defendants in relation to the Plaintiff’s claim does not in my judgment warrant the drawing of any distinction between them in relation to the question of liability for the Plaintiff’s costs.

CONCLUSION

For the reasons set out above, I come to the conclusion that the Plaintiff is entitled to relief in terms of Claim 1. In the result, I make the following order:

(a) the agreement of sale purporting to have been concluded between the Second and Third Defendants on 22^nd April 2002 in respect of the immovable property described as Portion 26 (of 7) of Erf 3062 Durban and Portion 29 (of 8) of Erf 3062 Durban and having physical address 62 Marriott Road, Berea, Durban is hereby declared to be null and void ab initio.

(b) the registration of transfer of the said immovable property in the

name of the Third Defendant on 26^th July 2002 is hereby declared to be null and void.

(c) against payment by the Plaintiff to the Third Defendant of the sum of R540 000,00:

(i) the Fifth Defendant is hereby authorised and directed to cancel the registration of transfer of the said immovable property in the name of the Third Defendant;

alternatively and to the extent that such may in any event be necessary

2. the Third Defendant is directed to take all steps and to do all such things as may be necessary to effect registration of transfer of the said immovable property in the name of the Plaintiff;

(d) the First, Second and Third Defendants are ordered jointly and severally, the one paying the other to be absolved, to pay the Plaintiff’s costs.

Counsel for the Plaintiff : Mr M Pillemer SC

Instructed by : Berkowitz Kirkel Cohen Wartski

Counsel 1^st & 2^nd Defendants : Mr RJA Callum

Instructed by : Woodhead Bigby & Irwing Inc

Counsel for 3^rd Defendant : Mr PHN Schumann

Instructed by : ER Brown & Sons

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