Rens v Standard Bank of South Africa Limited and Others (371/14) [2015] ZAECPEHC 14 (17 March 2015)

Not Reportable

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE LOCAL DIVISION – PORT ELIZABETH

Case No: 371/14

In the matter between:

THEMBEKA EUNICE RENS..............................................................................................Applicant

and

STANDARD BANK OF SOUTH AFRICA LIMITED

(REGISTRATION NUMBER: 196/000738/06).......................................................First Respondent

MASTER OF THE HIGH COURT:

PORT ELIZABETH..............................................................................................Second Respondent

OFFICE OF THE REGISTRAR OF DEEDS........................................................Third Respondent

VUYANI LISA NGCOLOMBA.............................................................................Fourth Respondent

NOMZAMO FLORENCE NGCOLOMBA............................................................Fifth Respondent

MADOKWE & MADOKWE..................................................................................Sixth Respondent

THOBEKA SAM..................................................................................................Seventh Respondent

JUDGMENT

REVELAS J

[1] The applicant, a legatee whose bequest was unlawfully sold, seeks the following orders:

1.1 That the letter of authority issued by the second respondent on 12 February 2008 to the seventh respondent be declared invalid from the date of issue.

1.2 That the sale of Erf 4719, Ibhayi to the fourth and fifth respondents be declared invalid.

1.3 That the first respondent be directed to cancel the mortgage bond registered over Erf 4719, Ibhayi, in favour of the first respondent.

1.4 That Erf 4719, Ibhayi is forthwith returned to the estate of the late Moyakhe Griffiths Mhlahlela (the deceased).

1.5 That the first respondent be ordered to pay costs of this application.

1.6 That the sixth respondent be ordered to pay the costs.

[2] The applicant’s father (the deceased) died on 1 July 2006. A firm of attorneys (DEV. B. Madokwe and Associates), presently trading under the name and style of Madokwe and Madokwe (the sixth respondent), was appointed as the executors of the deceased’s estate. In his will, executed on 17 June 2003, the deceased bequeathed his house in Kwazakhele, (Erf 4719 Ibhayi, or ‘the property’) to the applicant.

[3] The deceased had purchased the property during 1996 and the transfer of the property was registered in his name on 8 July 1996. The seventh respondent is his former wife. At the time of his death they were no longer married.

[4] The deceased’s marriage to the seventh respondent was terminated by a decree of divorce issued in the Southern Divorce

Court in Port Elizabeth on 20 February 1992. A copy of the decree of divorce was attached to the founding affidavit. In the death certificate of the deceased and the deed of transfer of the property, refer to him respectively as “never married” and “unmarried”.

[5] The seventh respondent misrepresented to the Master that she was the deceased’s surviving spouse and heir, despite the dissolution of her marriage to the deceased a decade and a half ago, and thus obtained a letter of Authority as the ‘Master’s

Representative’ in the deceased’s estate from the second respondent (The Master). In that capacity, the seventh

respondent sold the property to the fourth and fifth respondents (Mr and Mrs Ngcolomba or ‘the Ngcolombas’)) on 20 February 2008. In the interim, the property was occupied by a person who is not a party herein. In 2008, the occupant brought to the applicant’s attention that the Ngcolombas had launched eviction proceedings against her as the registered owners of the property. The deed of sale was attached to the application for eviction in The Magistrates’ Court.

[6] In October 2013, the Sheriff of this Court arrived at the property with a writ of execution against immovable property. The applicant handed the writ to Mr Madokwe of the sixth respondent, and did not hear from him again. She therefore approached her present attorney in 2013 and learnt that a mortgage bond was registered over the property, in favour of the first respondent (the bank’), as security for the loan it had advanced to the Ngcolombas, who had purchased the property during 2008. On 13 December 2013, the applicant’s attorneys of record wrote to the second respondent (the Master) advising that the letter of authority issued to the seventh respondent was “erroneous” and demanded cancellation thereof. The applicant’s attorneys also wrote a letter to the bank on 8 January 2014, requesting that the sale of execution be held over, pending the present application.

[7] The bank, relying on the abstract theory[1] disputed the applicant’s contention that the sale was void ab initio, on the basis that the seventh respondent clearly had the intention to transfer ownership of the property to the Ngcolombas and the

Ngcolombas had the intention to become owners of the property. The bank’s attorneys indicated to the applicant’s that it intended for the sale in execution to proceed. Hence the present application.

[8] The bank in limine, raised the point of extinctive prescription. It argues that the obligation to have a property which was fraudulently appropriated

restored to an estate, is a debt in terms of section 11 (d) of the Prescription Act, 68 of 1996 (‘The Prescription Act’),

which prescribes after three years. Since the agreement of sale relating to the property was concluded in 2008, and the applicant

became aware of it in that same year, and thus also of the fraud perpetrated by the seventh respondent, prescription of her claim

commenced running during that year. The applicant’s claim therefore prescribed after three years, at the end of 2011 or at the latest during 2012, two years before the present application was brought.

[9] Section 12 of the Prescription Act reads as follows:

“When prescription begins to run.

(1) Subject to the provisions of subsections (2), (3) and (4), prescription shall commence to run as soon as the debt is due.

(2) If the debtor wilfully prevents the creditor from coming to know of the existence of the debt, prescription shall not commence to run until the creditor becomes aware of the existence of the debt.

(3) A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises: Provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable

care”.

[10] When the eviction application was initiated by the Ngcolombas in 2008, the applicant formed the view that “Sam was a fraudster,” as is evidenced from her affidavit filed in those proceedings. She also handed the eviction papers to the sixth respondent (her erstwhile attorneys and the executors of the estate) “regarding the return of the property to the deceased” in 2008.

[11] The applicant argues that since she only became aware of the bank’s interest in the property as late as 2013, her claim did not prescribe. In other words, that she did not know the identity of the debtor and the facts from which the claim arose. In addition she argued that, since the transfer of the property was effected pursuant to a fraud, ownership of the property did not pass to Ngcolombas after the purported transfer to them and in this regard relied on the judgment in Nedbank Limited v Mendelow N.O.[2]

[12] On the facts before me, the applicant knew of the fraud in 2008. Someone else (the Ncolombas) had become the owner of the property which she had inherited. This occurred because the seventh respondent, who had no entitlement to the property had sold it.

[13] There was no legal basis on which the seventh respondent could have lawfully concluded an agreement of sale of the property since she was not the owner of the property, nor a beneficiary of the will, and nor was she the surviving spouse as she had misrepresented to the Master. The Letter of Authority was attached to the agreement of sale. The applicant therefore became aware of the fraud and the identity of the debtor and the facts from which the debt arose at the end of 2008. The fact the applicant visited the offices of the sixth respondent to find out what was happening with the matter, does not assist her. She ought to have enforced her claim much sooner. It is improbable that she did not know her of rights or she is naive in the extreme, in which case such knowledge can be imputed to her.

[14] It should also be considered whether the relief sought by the applicant which is mostly declaratory in nature, constitutes a ‘debt’ as envisaged in section 11(d) of the Act. In the Namibian case of Ongopolo Mining Limited v ! Uris Safari Lodge and Others[3] referred to by counsel for the bank, the court considered a special plea of prescription raised in almost similar circumstances as in the present case. The plaintiff in that relied on an alleged fraudulent transfer of immovable property, for declaratory relief, namely that transfer did not pass to the first defendant. The plaintiff also sought an order that the Registrar of Deeds (the third defendant in that matter) be ordered to rectify the title deed of the property to reflect that the plaintiff (and not the first defendant) was the owner of the property, and that the property be re-transferred to the plaintiff.

[15] The plaintiff argued that it did not seek a rei vindicatio, but a declarator which was not susceptible to prescription and neither was the rectification of the title deed. Since in law it never ceased to be the owner of the property, the relief it sought did not constitute a debt as meant in the Prescription Act. A further argument advanced was that even if the relief sought by the plaintiff was found to be a debt, the alleged unlawful possession of the immovable property by the first defendant constituted a continuing wrong which arises from moment to moment, as long as the unlawful possession continues, and that such a continuous wrong interrupted the operation of prescription.

[16] In paragraph [18] of Ongopolo, Damaseb JP pointed out that a declaration that ownership did not pass because of fraud, would be academic without a corresponding order that the property be re-transferred to the plaintiff. That order would depend on the right to take transfer and to evict the first defendant because of an illegality (a fraudulent transfer) and “constitutes a ‘debt’ which should have been prosecuted within three years from the date the facts giving rise to it became known to the plaintiff, but was not.

[17] In paragraph [19] the learned judge said the following:

“In my view, what matters is not the label a party assigns to the relief it seeks but the effect it is sought to have. Whatever label the plaintiff gives to the present claim, the cause of action is the alleged absence of a lawful causa for the transfer of the Farm from it to the first defendant – fraud. Prescription is a legal fiction which disentitled the claimant of a right, a debt, from enforcing it, not so much because he lost the right or ownership of a res through a duly executed act, but because he did not enforce that right within a period arbitrarily determined by the legislature. The special plea is not a fight over whether the plaintiff is the true owner of the farm but whether it ought to have, but failed to enforce its right to the Farm within three years”.

[18] In my view, the aforesaid approach to the meaning of ‘debt’ which is not defined in the Prescription Act is, makes much sense and clearly applies to the application under consideration. In Desai NO v Desai and Others[4] the court, referring to the fact that the term “debt” is not defined in the Prescription Act, stated: “but in the context of section 10(1) it has a wide and general meaning, and includes an obligation to do something or refrain from doing something”. An undertaking to procure registration of transfer was accordingly held to be a debt as envisaged in the Prescription Act. It follows that the setting aside of registration of transfer should also be regarded as a debt.

[19] In the present case one the obligation to have the property which was fraudulently appropriated restored to the deceased estate, as sought by the applicant, is clearly a debt as envisaged in section 11(d) of the Prescription Act, and it prescribed after three years.

[20] On her own version, the applicant took no steps, to enforce her claim as envisaged in section 12(3) of the Prescription Act. Visits to the sixth respondent’s offices to find out what was happening do not constitute prosecuting her claim. Prescription began to run against the applicant in 2008, when she was made aware of the eviction proceedings in the Magistrate’s Court when she had the minimum evidence at hand to institute legal proceedings and prosecute her case in setting aside the Letter of authority and the sale of the property.[5] It is also not open to the applicant to argue that she only became aware of the identity of the debtor, i.e. the bank in 2013, and therefore her claim was not affected by prescription. The relief sought by the applicant against the bank is dependant on her being successful in setting aside the Letter of Authority and having the property re-transferred to the deceased’s estate, and that claim or debt had lapsed after three years.

[21] The relief sought against the bank pertains to the bond registered over the property and the loans advanced in respect of the purchase of the property. When the applicant became aware that the property she was about to inherit was sold, she ought to have taken steps to establish the identity of the seller who sold the property and who the bondholders were, if any were appointed. That is what a reasonable person in the applicant’s position would have done.

[22] In the circumstances, the applicant’s claims prescribed at the end of 2011 or the beginning of 2012 which is more than two years prior to the institution of the present application.

[23] Accordingly, the application is dismissed with costs.

______________

E REVELAS

Judge of the High Court

Appearances:

Counsel for the applicant, Adv Naran, instructed by Maci Incorporated

Counsel for the respondent, Adv Bands, instructed by BLC Attorneys

Date Heard: 12 March 2015

Date Delivered: 17 March 2015

[1] As described in Legator McKenna Inc and Another v Shea and Others (2009 1 ALL SA 45 (SCA).

[2] (686/13) [2013] ZASCA 98 (5 September 2013.

[3] 3544/20100 [2014] NAHCMD 55 (dated 2014, a decision by Damaseb JP). See also: Leketi v Tladi N.O. 2010 (3) ALL SA 519.

[3] 3544/20100 [2014] NAHCMD 55 (dated 2014, a decision by Damaseb JP).

See also: Leketi v Tladi N.O. 2010 (3) ALL SA 519.

[4] 1996 (1) SA (A) at 146 I-J.

[5] Minister of Finance v Gore NO 2007 (1) SA 111 SCA paragraph [11].