Elderberry Investments 91 (Pty) Ltd v Reddy NO and Others (7194/2009) [2010] ZAKZDHC 15 (13 April 2010)

IN THE KWAZULU-NATAL HIGH COURT DURBAN

REPUBLIC OF SOUTH AFRICA

CASE NO: 7194/2009

In the matter between:-

ELDERBERRY INVESTMENTS 91 (PTY) LTD Applicant

and

VEERABAGU NARAINSAMY REDDY N.O. First Respondent

(in his capacity as Executor in the Estate

of the Late Marimuthu)

ARJUNAN REDDY N.O. Second Respondent

of the late Perumal)

THAGRAJH CHINNASAMY Third Respondent

of the late Chinnasamy Reddy)

LOGANAYAGIE GOVENDER N.O. Fourth Respondent

(in her capacity as Executor in the Estate

VEERABAGU NARAINSAMY REDDY Fifth Respondent

PATHMABATHIE REDDY Sixth Respondent

THE MASTER OF HIGH COURT Seventh Respondent

PIETERMARITZBURG

MAPIPMAN MABASO & ASSOCIATES Eighth Respondent

REGISTRAR OF DEEDS KWAZULU-NATAL Ninth Respondent

J U D G M E N T

Msimang AJP

[1] This is an Application for a declarator declaring that the Purchase and Sale Agreement concluded by and between the Applicant and the First Six Respondents to be binding between the said parties and for a mandamus directing the said Respondents to, within five (5) days, execute all such documents as may be necessary to cause certain properties to be transferred into the name of the Applicant and, in the event of those Respondents’ failure to do so, ordering the Sheriff of this Court to do so and further ordering the Eighth Respondent to proceed with the lodgment of the said documents at the offices of the Ninth Respondent and, in the event of the Eighth Respondent failing to do so, ordering the Sheriff of this Court to do so. Finally, the mandamus sought by the Applicant seeks to compel the Ninth Respondent to proceed with the registration of transfer of these immovable properties.

[2] The Applicant in this matter is an incorporated company and the First Four Respondents are being cited in their capacities as Executors in the deceased Estates, the First Respondent in the Estate of the late one MARIMUTHU, the Second Respondent in the Estate of the late one PERUMAL while the Third and Fourth Respondents are cited in their capacities as Executors in the Estate of the late one CHINNASAMY REDDY. Each one of them was appointed pursuant to the Letters of Executorship issued by the Master of the High Court, Pietermaritzburg, the Seventh Respondent in this matter. The Eighth Respondent is a firm of Attorneys while the Ninth Respondent is the Registrar of Deeds, KwaZulu-Natal.

[3] The underlying facts giving rise to the present proceedings are briefly that on or about 26 January 2006 an Agreement of Sale was concluded on behalf of the Applicant, as the purchaser, and the First Three Respondents, in their capacities aforesaid, as well as the Sixth and Seventh Respondents, as Sellers and the res venditae were three (3) pieces of immovable property the particulars of which are set out in the Founding Affidavit. During the conclusion of the said Agreement the sellers were being represented by the Eighth Respondent.

[4] The purchase price for all three properties was five hundred thousand rand (R500,000.00), one hundred thousand rand (R100,000.00) of which was payable within seven (7) days into the Trust account of the Eighth Respondent and the balance upon registration of transfer.

[5] A mandate giving the Eighth Respondent authority to represent the sellers in the conclusion of the Agreement was contained in a document titled:-

“Letters of Authorization to initiate, conduct as well as finalize the negotiations of Purchase and Sale of Immovable Property.”

and was signed by the First, Second, Third, Fifth and Sixth Respondents. After referring to the properties concerned the document recites the following clauses:-

“B.1 WHEREAS we, the parties hereto, on the 15 January 2001 entered into an Agreement of Settlement (which Agreement we humbly pray that it be incorporated hereto be reference) whereby Messrs Mapipman Mabaso & Associates, the Attorneys of Pinetown, were mandated by us as registered owners of the properties therein enumerated:

To find any prospective purchaser/s therefore, whether by private treaty or otherwise; and

To negotiate with the said prospective purchaser/s the purchase price thereafter, but before such negotiation could be finalized and converted into an effective Sale Agreement, the said purchase price/s offered shall be communicated to us for either acceptance or rejection thereof.”

“B.3 AND WHEREAS, by virtue hereof, we thus fully mandate the said Attorneys to proceed to enter into an effective Sale Agreement with the said prospective purchaser/s on terms they would negotiate and agree upon and at a certain purchase price they would then fix with the above conditions borne in mind and forming the basis thereof.

NOW THEREFORE, it is hereby agreed that the said Attorneys are fully mandated to proceed with the said negotiations and finalize the intended Agreement of Sale herein with the prospective purchaser/s as contemplated above.”

[6] In any event, on 6 September 2008, the Applicant duly paid the amount of one hundred thousand rand (R100,000.00) into the trust account of the Eighth Respondent and a further amount of four hundred thousand rand (R400,000.00) was paid into the said trust account to be payable to the sellers upon registration of transfer.

[7] However, due to the problems relating to gross over valuation of one of the properties by the local authority, it was not possible to effect transfer of the properties into Applicant’s name. Notwithstanding a number of representations made to the said local authority, the impasse could not be resolved. It was against this background that the Applicant proposed that transfer proceed in respect of the two properties not affected by the valuation impasse, that two thirds of the purchase price be paid to the sellers upon registration of transfer of those properties and that the balance be held in trust until the impasse in respect of the third property was resolved.

[8] The proposal was communicated to the sellers but, inspite of the long period of time that subsequently elapsed and a number of communications between the parties, no response could be elicited from the sellers. It was for this reason that the Applicant launched the present Application.

[9] In response, the First Six Respondents gave Notice of their intention to oppose the Application and filed an Opposing Affidavit and a Counter-Claim seeking their own declarator in terms which the Agreement of Sale would be declared null and void ab initio or, alternatively, that it be cancelled. In that Counter-Application they also sought an order that the Eighth Respondent refund to the Applicant the sum of one hundred thousand rand (R100,000.00) together with interest. Needless to say, the Counter-Application was opposed by the Applicant.

[10] The opposition to the Main Application and the Counter-Application were based on certain points in limine. However, during argument MR. DHEODUTH, who appeared for First, Second, Third, Fourth, Fifth and Sixth Respondents, was constrained to concede that those points had no merit whatsoever. He, nevertheless, was permitted to broaden his attack on the Application by submitting that the authorization in favour of the Eighth Respondent referred to above fell foul of the provisions of Section 52 of the Administration of Estates Act 66 of 1965 and therefore that it was void ab initio. That being the position, his submission continued, all acts done or performed pursuant to such an invalid authorization, which included the conclusion of the Sale Agreement by the Eighth Respondent on behalf of the Sellers, were equally void ab initio.

[11] Section 52 of the Administration of Estates Act 66 of 1965 provides that:-

“It shall not be competent for any executor to substitute or surrogate any other person to act in his place.”

[12] MR. DHEODUTH’s submission, as I understood it, is accordingly that when the First, Second and Third Respondents who, at the time, acted in their capacities as duly appointed Executors in the Estates of the deceased, gave authority to the Eighth Respondent to proceed and enter into an effective Sale Agreement with the Applicant, they were substituting or surrogating that Respondent to act in their place which conduct was prescribed by the provisions of the Section.

[13] Interpreting these provisions COLMAN J had the following to say in Bramwell and Lazar, NN.O. v Laub 1978 (1) SA 380 (W) at 383H – 384 A:-

“It is common practice, and a convenient one, for an executor to authorize his co-executor or some other person to carry out some or all of his functions on his behalf. It is not lightly to be assumed that such conduct is invalidated by sec.52 … and in my view such an assumption would be unjustified.

Counsel inform me that there is no decision in which a Court has interpreted or explained sec.52 … I must, therefore, act on my own view of the section, unfortified by authority, which is this: That it prohibits abdication, not delegation. An executor, as I see the matter, may not appoint someone to act instead of himself, so as to relieve himself of responsibility: but he may appoint someone, for whose acts he will be responsible, to act on his behalf, and that is what, in my judgment, the second plaintiff did in the present case.”

[14] Reverting to the facts of the present case, it is clear from the perusal of the “Letters of Authorization” that the Executor Respondents who, in terms of that document, were granting authority to the Eighth Respondent had no intention of abdicating their powers as Executors in the relevant Estates. Though the Eighth Respondent was mandated to conclude the Sale Agreement for the sale of the properties, nowhere did the said mandate relieve those Respondents of their responsibilities as Executors in those Estates. MR. DHEODUTH’s submission is therefore without substance.

I accordingly grant an order in terms of paragraphs 1, 2, 3, 4, 5, 6 and 7 of the Notice of Motion and dismiss the Counter-Application with costs.

Date of Hearing : 12 February 2010

Date of Judgment : 13 April 2010

Counsel for Applicant : Advocate D. Naidoo

Instructed by : Segie Moodley & Associates

Counsel for Respondents : Adv. N. Dheoduth

(1st, 2nd, 3rd, 4th, 5th & 6th)

Instructed by : Navin Govender & Associates