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Salie v Bales NO and Others (7462/2009) [2012] ZAWCHC 32 (29 March 2012)

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CASE NO: 7462/2009

in the matter between:

ZAITOEN SALIE …........................................................................................................Applicant

versus

TONY BALES N.O. …...............................................................................................................1^st Respondent

ADAM VICTOR PITMAN N.O. ….............................................................................................2^nd Respondent

KATHRYN MARY DU PLESSIS N.O. …..................................................................................3^rd Respondent

MOGAMAT YUSUF ABRAHAMS ….........................................................................................4^th Respondent

CHANGING TIDES 17 (PTY) LTD …........................................................................................5^th Respondent

THE REGISTRAR OF DEEDS, CAPE TOWN …......................................................................6^th Respondent

JUDGEMENT: 29 MARCH 2012

BOZALEK J:

[1] On 27 January 2009 a residential property situated at 97 Waie Street Cape Town was sold in execution. The applicant, who has at all material times resided at the property, now appiies for rescission of the order granted by the Registrar of this Court on 25 June 2008 declaring the immovable property in question ("the property") to be specially executable.

[2] First to third respondents are the trustees of the Wizard Investment Trust, the purchaser of the property pursuant to the sale in execution. The fourth respondent is the applicant's former husband and the party against whom the default judgment, to which was coupled the order for special executability of the property, was granted. The fifth respondent is a large scale bond financier and the judgment creditor in the sale of execution of the property whilst the sixth respondent is the Registrar of Deeds.

[14] RESCISSION OF JUDGMENT

The applicant seeks, in the first place, rescission of the order made by the Registrar of this Court declaring the property specially executable. She relies on the provisions of Rule 42(1) which provide for rescission where an order or judgment is erroneously sought or erroneously granted in the absence of any party affected thereby.

[15] The applicant's case is that as the owner of the property, either as the owner of an undivided half share or as full owner thereof, albeit not the registered owner, and a long-time occupant of the property which had been her home for years, she was entitled to be heard before an order of special executability was made.

[16] In Promedia Drukkers en Uitgewers (Edms) Bpk v Kaimowitz and Others 1996 (4) SA 411 it was held that the provisions of Rule 42(1)(a) constitute a procedural step designed to correct expeditiously an obviously wrong judgment or order. It was held further that the court has a discretion whether or not to grant an application for rescission under the sub-ruie and relief would be granted thereunder if there was an irregularity in the proceedings, if the court lacked legal competence to have made the order or if the court, at the time that the order was made, was unaware of facts which, if known to it, would have precluded the granting of the order. The Court held further that it was not necessary for the applicant to show good cause for the ruie to apply.

[17] There can be little doubt that had a court, or in the present case the Registrar, been aware that the beneficial owner of the property in question was the applicant, that the fourth respondent was in breach of the terms of the divorce order in failing to maintain payments in respect of the original mortgage bond, that the bulk of the mortgage bonds registered over the property had been registered pursuant to loans concluded by the fourth respondent at a time when he was no longer the owner of the property (notwithstanding that the title deeds continued to reflect him as sole owner) and that the property was the home of the applicant and her children, the order for special executability wouid, in all probability, not have been granted.

[18] It was contended on behalf of the first to third respondents that, in the exercise of its discretion, the Court should refuse to grant rescission because of the applicant's inordinate delay in bringing the application.

[19] The facts are that the application was launched in April 2009 some nine months after default judgment was granted. The applicant states that she was informed of the default judgment shortly after it was issued and then contacted the advocate referred to earlier who made contact with the fifth respondent. He referred her to an attorney, also mentioned earlier, but his attempts to obtain certain information came to naught. At this stage the applicant was unemployed and financially in no position to take any further steps. She then applied to the Legal Aid Board for assistance. This was refused whereupon the applicant approached the Registrar of this Court for in forma pauperis assistance and was eventually referred to her present attorneys of record in January 2009. They in turn approached the Bar Council who appointed counsel to assist her. The entire process was time consuming and the applicant only consulted with counsel for the first time on 10 March 2009. None of these facts can be gainsaid by the respondents. The applicant is indeed represented on an in forma pauperis basis by her attorneys of record and Adv ipser.

[20] In Promedia Drukkers Van Reenen, J held, in the context of an application for rescission brought under the common law, that it must be brought within a reasonable time and what is reasonable depends on the facts of each individual case, (at 421 F - G). Having regard to the applicant's particular circumstances viz her general ignorance in the legal predicament in which she found herself, her financial difficulties which rendered it difficult for her to secure proper iegai representation and the time which it took her to exhaust all available channels to seek legal representation before she finally obtained in forma pauperis representation, I consider that the application for rescission, although delayed, was brought within a reasonable time and that rescission of the order should not be refused on the basis of such delay.

[21] There is a further basis upon which the applicant is entitled to rescission of the order, namely, in accordance with the judgment of the Constitutional Court in Gundwana v Steko Development and Others 2011 (3) SA 608 (CC). There the Court was required to deal with the constitutionality of the practice of Registrars of the High Court granting default judgment and in particular ordering the special executability of immovable property where such constituted the homes of indigent debtors, after judgment on a money debt. It was held that this practice was unconstitutional for lack of judicial oversight bearing in mind the constitutionally entrenched right to housing. By way of relief in relation to orders which had already been granted to that effect, the Court ruled that aggrieved debtors will have to show - in addition to the normal requirements for rescission - that a court, with full knowledge of all the relevant facts existing at the time of granting of default judgment, would nevertheless have refused leave to execute against the debtors home; thereafter the question of the effect of invalid execution sales and subsequent transfers would have to be considered in the iight of the applicable principles.

[22] in my view the combined effect of the provisions of Rule 42(1) and the ruling in Gundwana applied to the circumstances of the present matter, require that rescission of the disputed order be granted.

[23] SETTING ASIDE THE WARRANT QF EXECUTION AND THE SALE IN EXECUTION

The first tranche of the consequential relief sought by the applicant pursuant to the rescission of the order of special executability is the setting aside of the warrant of execution issued in respect of the property as well as the sale in execution of the property to first to third respondents.

[24] The general rule is that execution will be set aside if it is no longer supported by the underlying causa which is the debt and the judgment based thereon. See Le Roux v Yskor Landgoed (Edms) Bpk 1984 (4) 252 at 257 B - C. In the present matter the situation is somewhat different. The applicant does not purport to challenge the validity of the default judgment taken against the fourth respondent - his indebtedness to the fourth respondent is not disputed. What is in dispute is the order for special executability, the warrant of execution issued pursuant to that order and the sale in execution which followed.

[25] For the same reasons that I concluded that the Registrar or the Court would not have made the order had they been aware of the applicants interest in the immovable property and the circumstances which gave rise to the registration of bonds against the property, particularly those registered in 2005 and 2006, i consider that the underlying causa for the warrant of execution must be taken to have fallen away. It then follows that the attachment of the property pursuant to the writ in execution and the sale in execution of the property falls to be set aside

[26] CERTAIN RELIEF ABANDONED

The applicant initially sought all the relief claimed in the notice of motion. This entailed a challenge to the validity of the mortgage bonds registered over the property both before and after the parties were divorced. The rationale behind the challenge to the pre-divorce mortgage bond was that the applicant, as an owner of a undivided half share of the property by virtue of her marriage in community of property, had not consented to the encumbering of the property through the registration of that bond and, in terms of s15(9)(a) of the Matrimonial Property Act, 88 of 1984, could be not deemed to have consented thereto.

[27] The difficulty which the applicant encountered in challenging the validity of the pre-divorce bond was that the terms of the divorce order itself make it clear that the applicant had, by then at ieast, become aware of the fact that the property was encumbered by a mortgage bond. The divorce order provided that she would only be entitled to take transfer of the property once the debt underlying the mortgage bond had been discharged by the fourth respondent. It was common cause that the fourth respondent has not discharged the indebtedness under that particular bond, the outstanding balance being somewhere in excess of R200 000. it was put to counsel that the applicant could not logically lay claim to the property unencumbered by any mortgage bond where, through the divorce order and in effect by agreement, she had acquired dominium over the property but subject to any mortgage bond then in existence. Faced with this difficulty, applicant's counsel abandoned the relief sought impugning the validity of the pre-divorce bond and, as a consequence thereof, any claim to immediate transfer of the immovable property into her name or ancillary relief. Accordingly the applicant ultimately did not proceed with the relief claimed under prayers 6, 7, 11, 12 and 13.

[28] DECLATORY RELIEF AS TO THE OWNERSHIP OF THE PROPERTY

Under prayers 4 and 5 the applicant seeks a declaration that she has been the sole owner of the immovable property since 14 May 2003 and directing the sixth respondent to endorse the title deeds accordingly.

[29] It is common cause that the effect of the marriage in community of property between the applicant and fourth respondent was to vest an interest in a half share in the property in favour of the applicant. The terms of the divorce order were that a division of the joint estate was ordered and in particular it was stipulated that the applicant would become the sole owner of the property albeit subject to transfer only being effected to her once the property was free of the existing encumbrance viz the mortgage bond registered over the property by the fourth respondent in 2002.

[30] It is applicant's case that she became owner of the entire immovable property as at the date of divorce notwithstanding that this position was not reflected in the title deeds of the property. In Knysna Hotel cc v Coetsee N.O. [1997] ZASCA 114; 1998 (2) SA 743 (SCA) it was held that according to our system of land or title registration (which is sometimes called a "negative" system in contrast to a "positive" system where registration is irrefutable proof of ownership), it could not simply be said that the person in whose name the property was registered was necessarily the owner of the property.

[31] in Commercial Liquidators (Pty) Lid and Another v Wiggill and Others 2007 (2) SA 520 (TPD), the Court was required to deal with a situation similar in many respects to the present matter. The dispute involved immovabie property which fell into the joint estate of parties married in community of property, one portion of which was, on dissolution of the marriage, to be transferred unencumbered to the wife and the other to the husband. Notwithstanding the terms of the divorce order the former husband, without authority, borrowed further funds on the strength of an existing mortgage and failed to effect sub-division and transfer of the portion into his ex-wife's name. The High Court held that on dissolution of the marriage dominium in the immovabie property in question had vested in the ex-wife immediately and that sub-division of the erf and registration in her name were merely formalities. On appeal this viewpoint was upheld by the full bench which held that registration of transfer of the properties in question was not a prerequisite for the vesting of dominium in each of the spouses. It was further held, in respect of the monies borrowed by the ex-husband under cover of the bond, that after the divorce he had had no authority to encumber the portion due to his ex-wife and consequently the bond holder had no claim against the former wife and was not secured in respect of that property. Finally, it was held that the ex-wife was the owner of the unencumbered portion and was entitled to cancellation of the bond over that particular portion and to transfer of the property into her name.

[32] The full bench considered the judgment of this Court in Ex Parte Menzies et

Uxor where King, J, as he then was, discussed, after extensive research into the

authorities, both the proprietary consequences of a marriage in community of

property and the dissolution of such a marriage. The following passage from

Wiggill's case is instructive:

"If the parties instead of a personal computer and s lounge suite own two fixed properties, A and B. and the parties agree that the husband gets A and the wife gets B, and the Court then makes the agreement an order of Court, the effect of the order is that the joint estate is immediately divided in terms of the order. I cannot think of any conceivable reason why dominium in A does not vest in the husband immediately and dominium in B in the wife. It is in any event in accordance with the common law as expounded in Rosenberg v Dry's Executors and Others (supra). Registration of transfer of the property to the different spouses is not a requisite for dominium to vest in them. Our system of deeds registration is a negative one where the deeds registry does not necessarily reflect the true state of affairs." (at pg 527 para 6)

See aiso Eksteen v Pienaar 1969 (1) SA 17 (O) at 20 C.

[33] On behalf of the fifth respondent Mr Roos submitted that the divorce order relating to the parties is evidence of nothing more than the applicant having a personal right or claim against the fourth respondent in respect of acquiring ownership of the property or, more specifically, for payment by him of the bond obligations whereupon she could then claim registration of transfer of the property into her name.

[34] I cannot agree with this submission. The ratio in Wiggill, in turn based on Ex Parte Menzies. makes it clear in my view that the applicant acquired dominium over the property consequent upon the order of divorce. Dominium has been described as "that attribute of a thing whereby a person, though not actually in possession of it, may acquire the same by legal process" (Marcus v Stamper and Zoutendyk 1910 (AD) 58). Although the applicant, by virtue of the initial bond over the property, did not enjoy full ownership "dominium plenum" but incomplete ownership "dominium minus plenum", this was nevertheless dominium over the property and not merely a personal right against the fourth respondent. In the circumstances I consider that the applicant is entitled to a declaration that she has, since 14 May 2003, been the sole owner of the immovable property and directing the sixth respondent to make an appropriate endorsement onto the title deeds of the property.

[35] REMAINDER OF THE RELIEF SOUGHT

The remainder of the substantive relief sought by the applicant viz prayers 8 to 10, revolves around the four bonds registered against the property pursuant to loans made to the fourth respondent after the divorce in 2005 and 2006. The applicant seeks a declaration that these bonds are not binding upon the applicant, that they are cancelled and directing the sixth respondent to cancel the bonds registered against the title deeds of the property.

[36] A declaration that the bonds are not binding on the applicant as sought under prayer 8 is, strictly speaking, misplaced relief since bonds are registered against immovable property alone. Should the applicant be granted the relief sought in prayers 9 and 10, namely, the cancellation of the bonds registered against the immovable property together with an order directing the sixth respondent to cancel the bonds, she will in effect gain the relief which she seeks.

[37] The applicant's case in this regard is straightforward, namely, that upon her divorce on 14 May 2003 she acquired dominium over the property, in those circumstances the fourth respondent thereafter had no authority to encumber the property. Accordingly, the fifth respondent has no secured claim in respect of the property pursuant to the new bonds registered over it and the applicant is entitled to their cancellation.

[38] Counsel for the parties devoted little attention to interpreting the clause in the divorce order regulating the disposition of the property. However, its correct interpretation appears to be that the applicant became the owner of the property subject to the fourth respondent only being obliged to pass transfer once he had settled the debt underlying the sole mortgage bond then registered over the property and being responsible for the payment of the monthly instalments in respect of the underlying loan. The clause is silent as to whether the fourth respondent could further encumber the property but in my view it must be interpreted as precluding any such right on the part of the fourth respondent both on the basis of the contra proferentem rule and since to interpret it otherwise so would render the applicant's rights in and to the property nugatory.

[39] Adopting this interpretation, and no different meaning was contended for by any party, it is clear that post-divorce, the fourth respondent had no dominium over the property and was principally obliged to service the bond and settle the outstanding indebtedness thereon. Although the title deeds reflected the fourth respondent as the owner of the property this was incorrect and misleading and he had no authority to further encumber the property.

[40] In arguing for the validity of the post-divorce bonds it was contended on behalf of the fifth respondent that, based on the title deeds and fifth respondents acceptance at face value of the fourth respondent's statement that he was the owner of the property and that he was married only by muslim rights, the further loans advanced and secured by the additional four mortgage bonds were incurred in good faith and without any negligence on its part. It was further argued that the fifth respondent did not know until at least 2008 that the applicant laid claim to ownership in the property and she was negligent in not effecting an appropriate endorsement to the title deeds, thereby notifying the public at large in that she had an interest in the property.

[41] in this regard it must be noted that in terms of s45 bis of the Act where an immovable property formed an asset in the joint estate of spouses who have been divorced and one of them has lawfully acquired the share of his or her former spouse in the property, the Registrar of Deeds may on written application by the spouse concerned endorse on the title deed of the property that such spouse is entitled to deal with such property. Thereupon such spouse shall be entitled to deal with such property as if he or she has taken formal transfer into his or her name of the share of former spouse in the property.

[42] I am unaware of any statutory provisions which hold that an unregistered owner who does not take this prudent step is bound by any bonds registered against the property by an innocent third party who, deceived by someone falsely claiming to be the owner of the property, loans money against the security of the property. Nor was I referred to any case where immovable property was held to be encumbered by bonds passed over such property as a result of unauthorised bans made against the security of the property without the owner's consent, knowledge or connivance.

[43] It is so that an anomalous and undesirable situation can arise in such circumstances, namely, that loans are advanced on the strength of security in the form of a mortgage bond over immovable property only for it to transpire that, notwithstanding the title deeds reflecting the debtor as the sole owner of the property, in reality he is not and the security is worthless. However, in my view it does not follow that the innocent true owner of the property is in effect held bound by the security over the property where this was effected pursuant to a false representation on the part of the debtor. To the extent that there may be have been negligence on the part of the applicant as the true owner in not registering her title then the bond holder can raise the defence of estoppel or can pursue an action for damages; non constat that the mere allegation of negligence on the part of the true owner renders the unauthorised bonds binding on the property.

[44] It was contended on behalf of the first to third respondents that the applicant was estopped from reiving on her ownership of the property and her ignorance of

the fact that the fourth respondent was purporting to encumber the property as security for loans from the fifth respondent. The doctrine of estoppel limits the availability of the owners vindicatory rights where he has by culpable misrepresentation induced an outsider to believe that a third party is the owner of the property or has the right to dispose of it. The essentials for estoppel are: a representation by words or conduct of a certain factual position, that the party-acted upon the correctness of the facts as represented to his detriment and that the representation was negligently made. An essential element of estoppel is that there must have been a "representation of some kind consisting of words or conduct, including acts, omissions or silence". In the present matter the respondents' reliance would be on the applicant's omission to register her interest in the property on the title deeds. See Union Government v Viannini Ferro­concrete Pipes (Pty) Ltd 1941 AD 43 at page 49-50.

[45] But the reliance on such representation must have been the proximate cause of the claimant's detriment. The person raising the estoppel cannot prove reliance on the representation if the possessor's representation and not the owner's was the proximate cause of his/her detriment. See Universal Stores (Pty) Ltd v OK Bazaars (1929) (Ltd) 1973 (4) SA 747 (A) at 761.

[46] Although an estoppel may be created by negligence it would appear that the

doctrine is limited in its application. See in this regard Union Government v

National Bank of South Africa Ltd 1921 AD 121 where innes CJ stated as follows:

"Legal negligence consists in a failure to exercise that degree of care which, under the circumstances it was the duty of the person concerned to use towards another. It involves therefore the existence of a duty to take care owed to the complainant. Such a duty may arise in various ways. It may be specially imposed, as by statute: but, speaking generally, it either springs from a privity of relationship (contractual or other) between the parties concerned or is created by the circumstances of the case."

[47] Referring to the circumstances of the case before him the learned Chief Justice proceeded:

"If there was any duty to take care owed by the post master to future holders of postal notes, it must be looked for not in relationship, for there was none, but in the circumstances of the case. Ever)' man has a right that others shall not injure him in his personal property by their actions or conduct, but that involves a duty to exercise proper care. The test as to the existence of the duty is, by our law, the judgment of a reasonable man. Could the infliction of injur]' to others have been reasonably foreseen. If so, the person whose conduct is in question must be regarded as having owed a duty to such others - whoever they might be - to rake due and reasonable care to avoid such injury. There are innumerable cases in which South African Courts have dealt with these questions by an application of the extended principles of the Aquilian Law. But, speaking generally there will be found in them this element: that the injury to personal property relied upon was the direct result of the act done or the force set in motion. The obstruction placed in the road, the vehicle unskilfully driven, the fire carelessly kindled, in these and numerous other cases the injury was due to the direct operation of the act or agency complained of. Here the alleged injury did not result from the direct operation of the conduct complained of."

[48] Similar considerations are at play in the present matter. That the fourth respondent loaned large sums of money on the strength of the security offered by the property is primarily attributable to a misrepresentation by the fourth respondent. He represented that he was the true and exclusive owner of the property and entitled to encumber it with further mortgage bonds when in truth he knew that this was not the case and at the very least he required the applicant's consent to any such step. It is so that the fifth respondent was presumably encouraged or strengthened in its view by reason of the titie deeds to the property indicating that the fourth respondent was its sole owner. However, in my view, the primary representation was not the applicant's failure to have her interest endorsed on the title deeds but the fourth respondents fraudulent misrepresentation that he was the sole owner of the property and entitled to encumber same.

[49] Having regard to the fact that the doctrine of estoppel is equitable I consider that in the circumstances of this matter, even assuming that the applicant was negligent in failing to assert her rights by having her interest endorsed on the title deeds, it would be unfair in the circumstances of this matter to hold that as a result the property must held to be burdened by the further mortgages incurred by the fourth respondent after the divorce, in reaching this conclusion I also take into account that the beneficiary of those loans was the fourth respondent alone and that the fifth respondent retains a full claim against the fourth respondent f©r such monies.

[50] In the circumstances I hold that the defence of estoppel put up by the respondents cannot succeed and that the applicant is entitled to the relief sought in prayers 9 and 10 (prayer 8 being superfluous), namely, a declaration that the post-divorce bonds are cancelled and directing the sixth respondent to cancel the bonds as registered against the title deeds to the property.

COSTS

[51] The applicant seeks the costs of this application as well as the costs of the anterior urgent application which interdicted the transfer of the property following the sale in execution. Those costs were reserved for the determination of the trial court in this application. The applicant sought all costs on an attorney/client basis but I can see no warrant for a punitive costs order not least because the various respondents who actively opposed this application were fully entitled to do so.

[52] In the result the following order is made:

1. Rescinding the order granted by the Registrar of the Western Cape High Court on 25 June 2008 under case number 12689/07, whereby it was ordered that the immovabie property known as Erf 129302 Cape Town at Cape Town in the City of Cape Town, Cape Division, in the Province of the Western Cape, in extent 70 square metres, held by deed of transfer no T23994/1988 (hereinafter referred to as the 'the immovabie property') is declared to be specially executable;

2. Setting aside the warrant of execution issued in respect of the immovabie property under case number 12689/07;

3. Setting aside the sale in execution of the immovable property to the Wizard Investment Trust on 27 January 2009;

4. Declaring applicant to have been the sole owner of the immovabie property since 14 May 2003;

5. Directing sixth respondent to endorse the title deeds of the immovabie property to reflect the fact that applicant is the sole owner of the immovabie property and has been the sole owner thereof since 14 May 2003;

6. Directing the sixth respondent (the Registrar of Deeds) to cancel the bonds numbered B48673/2005; B110763/2005; B23862/2006 and B87088/2006 as registered against the title deeds to the immovabie property;

7. Directing the first to fifth respondents to pay the applicant's costs in the application, which costs shall include the costs incurred in respect of the interlocutory application brought under case number 5419/09, jointly and severally, the one paying the others to be absolved.

BOZALEK, J

JUDGE OF THE HIGH COURT