Nedbank Ltd v Mendelow and Another NNO

• Jurisdiction: South Africa
• Judge: Lewis JA, Maya JA, Malan JA, Shongwe JA and Zondi AJA
• Judgment Date: 05 September 2013
• Citation: 2013 (6) SA 130 (SCA)
• Docket Number: 686/12 [2013] ZASCA 98
• Hearing Date: 16 August 2013
• Counsel: JG Wasserman SC for the appellant. AO Cook SC (with M Seape) for the respondents.
• Court: Supreme Court of Appeal

Lewis JA (Maya JA, Malan JA, Shongwe JA and Zondi AJA concurring):

[1] Mrs Emily Valente owned immovable property in Gauteng. She J executed and signed a will in 1994, leaving her estate in equal shares to

Lewis JA (Maya JA, Malan JA, Shongwe JA and Zondi AJA concurring)

her two sons, Evan Valente and Riccardo Valente, the eighth respondent A in the high court. At that stage the property formed part of the estate. Some three years later she signed a codicil, bequeathing money to each of her grandchildren.

[2] On 23 January 2001 the property was sold to a company, U Valente Africa (Pty) Ltd (the company), in liquidation at the time of the B proceedings before the high court. Mrs Valente's signature on the deed of sale was forged by Riccardo. A week later Mrs Valente died. An attorney (the seventh respondent a quo) and Riccardo were appointed as co-executors of the will and as administrators of the estate. Although nominated as an executor and administrator, Evan declined the appointments since he was living in the United Kingdom at the time. The C attorney resigned as an executor of the estate in May 2007.

[3] At the time of Mrs Valente's death her estate comprised shares in the company, the property, cash and miscellaneous movable items. The directors of the company before her death were Mrs Valente, Evan and Riccardo. The respondents, Mr R Mendelow and Mr L Ledwaba NNO D (to whom I shall refer as the executors), in their capacities as the joint executors of Mrs Valente's deceased estate (appointed in 2009), applied to the North Gauteng High Court, Pretoria, for an order in effect setting aside a purported transfer of the property to the company, and the registration of a bond over the property in favour of Imperial Bank Ltd, registered in October 2008. That bank was acquired by the appellant, E Nedbank Ltd (Nedbank), in 2010.

[4] In their application the executors alleged that the sale and transfer of the property to the company, and the registration of the bond in favour of Nedbank, had been vitiated by fraud: Riccardo had forged F Mrs Valente's signature on the deed of sale and forged Evan's signature on a document entitled 'consent to sale'. Riccardo had also had Evan removed as a director of the company and obtained a mortgage bond over the property first from BoE Bank Ltd (cancelled when the subsequent bond was registered) against a loan of some R2 million and later the mortgage bond in favour of Nedbank, the cancellation of which the G executors sought. It should be noted that the bond in question (granted as security for a loan advanced to the company of R6 million) was registered over the property shortly before the provisional winding-up order was granted. I shall return to the allegations of fraud and forgery later in the judgment, but should note at this point that in my view they are central to and decisive of the dispute. H

[5] The basis of the application was initially s 341(2) of the Companies Act 61 of 1973 and s 42(2) of the Administration of Estates Act 66 of 1965, the executors arguing that the company had mortgaged its property when in the process of being wound up and unable to pay its I debts, and that the provisions of s 42(2) had not been complied with since the Master had signed a certificate permitting the transfer of the property as a result of the fraudulent misrepresentation by Riccardo that the deed of sale of the property was genuine.

[6] Those causes of action were transformed at the hearing in the high court to a review in terms of the Promotion of Administrative Justice Act J

Lewis JA (Maya JA, Malan JA, Shongwe JA and Zondi AJA concurring)

A 3 of 2000 (PAJA). The high court (Baqwa AJ) characterised the relief sought as follows: the executors sought to review and set aside the certificate issued by the Master in terms of s 42(2) of the Administration of Estates Act since his action had been induced by the fraud of Riccardo; the property should be returned 'at administrative law'; and B the bond should be cancelled. The high court ordered that the property should be returned to the deceased estate, not by virtue of a condictio or rei vindicatio, since the former remedy was not pursued at the hearing and the latter was mistakenly considered by the legal representatives of the executors to be unavailable to the estate, but by virtue of 'administrative law'. The 'decision' of the Master in signing a certificate C authorising the transfer and (by implication) the ensuing act of the Registrar of Deeds in registering the property in the name of the company constituted 'administrative action' reviewable under the PAJA. I shall deal with this finding in due course.

D [7] As the high court pointed out, Nedbank did not dispute that Riccardo's conduct was fraudulent. It raised various other defences, principally that s 341(2) of the Companies Act did not entitle the executors to set aside the bond, and that the executors did not have locus standi. It argued that, in the event of those contentions failing, the court was not required to set aside the bond as being void since the only person E who would derive any benefit from the relief sought was Evan who, despite being aware of the sale of the property to the company, and the registration of the bond, had taken no action to set the transactions aside. He was content, Nedbank argued, to ignore the fraud and asked only for equal representation on the board of the company. He had known of the fraudulent transactions at least since July 2007, and had applied for the F winding-up of the company in 2008.

[8] In December 2008 the company was placed under provisional winding-up at the instance of Evan. The winding-up order was made final in April 2009. The application for winding-up was premised on s 344(h) of the Companies Act: that it would be just and equitable to G wind up the company.

[9] The grounds for the review, said the high court, were Riccardo's forgeries of the signature of his mother (on the deed of sale of the property) and of Evan on the consent to sale: the Master had been H fraudulently induced to sign a certificate permitting the transfer of the property to the company. The Registrar of Deeds had registered the bond in favour of Imperial Bank as a result of Riccardo's fraudulent scheme. The Master's certificate was thus set aside and the Registrar was ordered to transfer the property to the estate and to cancel the bond. A number of ancillary orders were also made by the high court. I Nedbank, the only respondent to oppose the application and the only...