Klerck NO v Van Zyl and Maritz NNO and Another and Related Cases

• Jurisdiction: South Africa
• Judge: Kroon J
• Judgment Date: 15 September 1987
• Citation: 1989 (4) SA 263 (SE)
• Court: South Eastern Cape Local Division

Klerck NO v Van Zyl and Maritz NNO and Another and Related Cases
1989 (4) SA 263 (SE)

1989 (4) SA p263

Citation	1989 (4) SA 263 (SE)
Court	South Eastern Cape Local Division
Judge	Kroon J
Heard	September 28, 1987; September 29, 1987
Judgment	September 15, 1987

Flynote : Sleutelwoorde B

Land — Transfer — Abstract theory as to passing of ownership, ie provided the agreement to transfer ownership was valid ownership would pass in pursuance and on implementation thereof notwithstanding that C the causa was defective, applicable to immovable property as well as to movable property — Owner of immovable property (sectional title unit) forging signature of purchaser on deed of sale — Such purchaser having no intention to accept transfer of ownership and owner having no intention to transfer ownership — Property remaining vested in D trustee of owner's insolvent estate — Owner also forging mortgage bond documents resulting in bond being registered against property purportedly by purchaser — Mortgagee raising estoppel as defence to claim for retransfer of property unencumbered and free of the bond — Exception to plea of estoppel succeeding.

E Estoppel — By conduct — Property owner forging a signature (of purchaser) on deed of sale and mortgage bond documents — Mortgagee, after registration of transfer and bond, paying amount of money in terms of bond — Trustee of property owner's insolvent estate claiming retransfer of property unencumbered and free of bond — F Mortgagee pleading that property owner had, by her conduct, represented to mortgagee that a valid deed of sale concluded, that transfer of property to purchaser passed in terms of deed of sale, that purchaser had thereby become the owner of the property, that purchaser was thus entitled to register the bond in favour of the mortgagee and was desirous of doing so and that mortgagee, relying on such G representations, had paid an amount in terms of the bond to its detriment — Accordingly averred that trustee estopped from claiming retransfer on the basis of property being free of the bond — Practical effect of estoppel would be to recognise mortgagee as secured H creditor in insolvent estate in that trustee would be obliged to do what was necessary to free property from the bond (ie to pay mortgagee in full or subject proceeds of property to the security of the bond) — Would also have effect of elevating mortgagee's unsecured claim for damages to a secured claim, thereby frustrating the statutory distribution of an insolvent's estate — Further, as the bond did not I comply with peremptory requirements of reg 21 of regulations made in terms of Sectional Titles Act 66 of 1971, published in Government Notice R475 of 1973, in that it was not signed by mortgagor or his authorised agent, it was a nullity - Estoppel could not be permitted to clothe J with legal efficacy that which the law had decreed was a nullity — Exception to plea of estoppel upheld.

1989 (4) SA p264

A Mortgage — Validity of — Mortgage bond hypothecating sectional title unit — Bond required by reg 21 of regulations made under Sectional Titles Act 66 of 1971 and published in Government Notice R475 of 1975 to be signed by mortgagor or his agent — Where such not the B case, bond a nullity — Seller of sectional title unit forging signature of purchaser/mortgagee on deed of sale and bond documents — Mortgagee raising defence of estoppel to claim by trustee of seller's insolvent estate for retransfer of unit free of bond — To allow such defence would amount to clothing invalid bond with legal efficacy and that a plea of estoppel could not be permitted to do — Exception to C plea of estoppel upheld.

Insolvency — Creditors — Secured creditors — Who are — Transfer of property and mortgage bond over such property founded on a forgery by seller of signature of purchaser on deed of sale and bond D documents — Bond a nullity — Mortgagee raising a plea of estoppel to claim by trustee for retransfer of property free of mortgage bond — Effect of estoppel would be the recognition of the right of the mortgagee to be recognised as a secured creditor in insolvent estate of seller — Would also have the effect of elevating an unsecured claim for damages to a secured claim — Such would disturb and frustrate the E statutory distribution of proceeds of assets of insolvent's estate — Exception to plea of estoppel upheld.

Practice — Pleadings — Exception — Claim based on invalid cause of action and uncertainty as to whether plaintiff was relying on any other cause of action — Where there is uncertainty as to pleader's F intention, pleader cannot avail himself thereof unless he can show that, upon any construction of the pleadings, the claim is excipiable.

Headnote : Kopnota

One J had allegedly forged the signature of a certain C on a purported deed of sale of a sectional title unit. The deed of sale purported to set out the terms of a sale of the sectional title unit by J to C. C G did not sign the agreement nor was he aware of its existence. Registration of transfer of the unit in the name of C was subsequently effected and a mortgage bond was registered over the unit. The signature of C on the mortgage bond documents was also allegedly forged and the bond passed without C's knowledge or consent. After the sequestration of the estate of J, her trustee instituted action in a Local Division for the retransfer of the sectional title unit on the basis that it was unencumbered and free of the mortgage bond registered against it. The H first defendants were the joint trustees in the insolvent estate of C and the second defendant was a building society, the mortgagee in terms of the bond above referred to. In its plea the second defendant averred that J, by her conduct, had represented to the second defendant that a valid deed of sale had been entered into between J and C, that transfer of the unit had been duly passed to C in terms of the deed of sale, that C had thereby become the owner of the said unit, that he was entitled to register the mortgage bond in favour of the second defendant and that I he desired to do so. It was consequently averred that the second defendant had relied on the said representations and that, by making payment in terms of the said mortgage bond, it had acted to its detriment. It was accordingly alleged that the plaintiff was estopped from claiming retransfer of the property on the basis that it was unencumbered and free of the said mortgage bond. The plaintiff excepted to the defendant's plea on the grounds that the principles of estoppel could not bind the plaintiff as trustee in the insolvent estate of J to deviate from the provisions of the Insolvency Act 24 of 1936 insofar J as the distribution of the estate

1989 (4) SA p265

A assets was concerned nor could the principles of estoppel give the second defendant a security which it would otherwise not have.

Held, that the abstract theory relating to the passing of ownership, ie provided that the agreement to transfer ownership (the real agreement or 'saaklike ooreenkoms') was valid, ownership would in general pass in pursuance and on implementation thereof notwithstanding that the causa (the 'verbintenisskeppende ooreenkoms') was defective, applied to immovable property as well as movable property.

B Held, further, that, as on the postulated facts there was no intention on the part of C to accept transfer of ownership of the sectional title unit nor an intention on the part of J to pass such transfer of ownership (there was in fact no agreement between them at all), ownership in the property did not pass to C, but remained vested in J and accordingly vested in the plaintiff in his representative capacity.

Held, further, that the plaintiff, in such capacity was entitled to vindicate the property and, to that end, claim retransfer thereof into his name.

C Held, further, that, although the effect of the estoppel as pleaded might not be to fix the plaintiff with a contractual liability as debtor under and in terms of the bond, it could not be gainsaid that the practical effect of the estoppel would be the recognition of the right of the second defendant to be recognised as a secured creditor in the insolvent estate of J in that it would impose on the plaintiff the obligation to do what would be necessary to free the property from the bond, ie to pay the second defendant in full or to subject the D proceeds of the property to the security of the bond as a first charge: that would be a most unusual obligation in the sense that the bond could not be actively enforced by the second defendant.

Held, further, that the passive enforcement of the bond, which, by reason of the obligations which it would impose on the plaintiff, would be the corollary of upholding the estoppel pleaded, would have the practical effect of elevating an unsecured claim for damages to a secured claim and would pro tanto disturb the statutory E distribution under the insolvency law; there were insufficient considerations of equity which would permit the estoppel to frustrate the statutory distribution of an insolvent's estate.

Held, further, that the effect of upholding the estoppel would be to render the bond valid in the sense of imposing an obligation on the plaintiff to do what was necessary to free the property from the bond and, as the bond did not comply with the peremptory requirements of reg 21 of the regulations published in Government Notice R475 of 1973 F under the Sectional Titles Act 66 of 1971 requiring a bond hypothecating a sectional title unit to be signed by the mortgagor or his duly authorised agent, it was a nullity.

Held, further, that the estoppel could not be permitted, on the authorities, to clothe with legal efficacy something which the law had decreed was a nullity. Exception upheld.

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