Louw N.O. and Others v Van Der Merwe N.O. and Others (4793/2012) [2014] ZAFSHC 122 (21 July 2014)

Louw N.O. and Others v Van Der Merwe N.O. and Others (4793/2012) [2014] ZAFSHC 122 (21 July 2014)

The court held that section 118(3) of the Companies Act 61 of 1973 is directory, not peremptory, and that non-compliance does not render the debenture bond invalid if it was registered. The trust deed and debentures do not constitute contracts of sale prohibited by the Subdivision of Agricultural Land Act or the Free State Townships Ordinance, as conversion to sale would only occur upon execution of a separate agreement, which never happened. The registration of the debenture bond was properly authorised through accepted conveyancing practice. The waiver of preference executed by only one trustee was ultra vires and not binding, as the trust deed required joint action by both trustees....

Citation
[2014] ZAFSHC 122
Parties
Applicant: Andries Nicolaas Everhardus Louw N.O.; Applicant: Rustu Guven Atala N.O.; Applicant: Carl Bothma N.O.; Applicant: Leon Wessels N.O.; Respondent: Dawid Ryk Van Der Merwe N.O.; Respondent: Gavin Cecil Gainsford N.O.; Respondent: Barend Petersen N.O.; Respondent: Sivalutchmee Moodliar N.O.; Respondent: Investec Bank Limited; Respondent: The Master of the Western Cape High Court, Cape Town; Respondent: The Master of the Free State High Court, Bloemfontein; Respondent: The Registrar of Deeds, Bloemfontein; Respondent: Pieter Adriaan Goosen; Respondent: Aubrey Phago Ledwaba; Respondent: Routledge Modise Inc.
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
21 July 2014
Case Number
4793/2012
Procedural Posture
Civil Application / Judgment on Application and Counter Application
Outcome
Application granted; counter-application dismissed.
Judges
Van Der Merwe
Legal Topics
Mortgage Bond Preference, Trustee Powers, Debenture Security, Statutory Compliance, Invalidity of Waiver, Prescription
Commercial and Corporate Land and Property Civil Procedure Mortgage Bond Preference Trustee Powers Debenture Security Statutory Compliance Invalidity of Waiver +1 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 5 Authorities cited 21 Party arguments 2 Amounts and remedies 5
Sign in to unlock

Parties

Andries Nicolaas Everhardus Louw N.O.

Applicant

Rustu Guven Atala N.O.

Applicant

Carl Bothma N.O.

Applicant

Leon Wessels N.O.

Applicant

Dawid Ryk Van Der Merwe N.O.

Respondent

Gavin Cecil Gainsford N.O.

Respondent

Barend Petersen N.O.

Respondent

Sivalutchmee Moodliar N.O.

Respondent

Investec Bank Limited

Respondent

The Master of the Western Cape High Court, Cape Town

Respondent

The Master of the Free State High Court, Bloemfontein

Respondent

The Registrar of Deeds, Bloemfontein

Respondent

Pieter Adriaan Goosen

Respondent

Aubrey Phago Ledwaba

Respondent

Routledge Modise Inc.

Respondent

Procedural Posture

Civil Application / Judgment on Application and Counter Application

Legal Issues

  1. 1 Is the waiver of preference of the debenture bond by a single trustee valid and binding on the trust?
  2. 2 Does non-compliance with section 118(3) of the Companies Act 61 of 1973 render the debenture bond invalid?
  3. 3 Do the trust deed and debentures constitute prohibited contracts of sale under the Subdivision of Agricultural Land Act and the Free State Townships Ordinance?

Ratio Decidendi

The court held that section 118(3) of the Companies Act 61 of 1973 is directory, not peremptory, and that non-compliance does not render the debenture bond invalid if it was registered. The trust deed and debentures do not constitute contracts of sale prohibited by the Subdivision of Agricultural Land Act or the Free State Townships Ordinance, as conversion to sale would only occur upon execution of a separate agreement, which never happened. The registration of the debenture bond was properly authorised through accepted conveyancing practice. The waiver of preference executed by only one trustee was ultra vires and not binding, as the trust deed required joint action by both trustees....

Court Disposition

Application granted; counter-application dismissed.

Orders

  • It is declared that the ninth respondent acted ultra vires in waiving the ranking order of preference of the first mortgage bond registered with the Registrar of Deeds, Bloemfontein under reference number B10121/2005 in favour of the mortgage bond registered in favour of the fifth respondent under reference number...
  • It is declared that mortgage bond B10121/2005 retains its status as ranking first and in preference to mortgage bond B7073/2006.