Quartermark Investments (Pty) Ltd v Mkhwanazi and Another

• Jurisdiction: South Africa
• Citation: 2014 (3) SA 96 (SCA)

Quartermark Investments (Pty) Ltd v Mkhwanazi and Another
2014 (3) SA 96 (SCA)

2014 (3) SA p96

Citation	2014 (3) SA 96 (SCA)
Case No	768/2012; [2013] ZASCA 150
Court	Supreme Court of Appeal
Judge	Maya JA, Bosielo JA, Theron JA, Pillay JA and Petse JA
Heard	August 20, 2013
Judgment	November 1, 2013
Counsel	AW Pullinger for the appellant.; N Mkhize for first respondent.

Flynote : Sleutelwoorde B

Appeal — New grounds on appeal — Mero motu raising of by court — Court not only entitled but compelled to do so — This, however, subject to provisos C that facts supporting new ground covered in pleadings, and doing so not unfair to party against whom it is directed.

Land — Sale — Transfer — Fraud inducing transfer — Underlying transaction tainted by fraud — Real agreement defective in that no intention on part of owner to transfer ownership — Ownership not passing despite registration.

Headnote : Kopnota

D The initial issues in this appeal were whether the high court was correct, firstly, in declaring the sale agreement leading to the transfer of immovable property from first respondent (M) to the appellant (Q) null and void, on the basis that the transaction had been induced by fraud; and, secondly, in directing that the property concerned be retransferred to M under the restitutio in integrum, despite her failure to restore the benefits she had E received under the impugned agreements.

The Supreme Court of Appeal (the court) agreed with the high court's finding on the first issue but not on the second, holding that M was entitled to the relief granted, but not by virtue of the restitutio in integrum. Instead, the court invited the parties to make further submissions on whether, firstly, the F claim was vindicatory in nature; and, secondly, whether such 'new issue' could be raised at that stage of the proceedings. (Paragraphs [17] – [19] at 102B – G.) The court, in considering these submissions,

Held: The essential function of an appeal court was to determine whether the court below came to a correct conclusion. For this reason the raising of a new point of law on appeal was not precluded, provided the point was G covered by the pleadings and its consideration on appeal involved no unfairness to the party against whom it was directed. In fact, in such a situation the appeal court was bound to deal with it, as to ignore it may 'amount to the confirmation by it of a decision clearly wrong', and not performing its essential function. This in turn would infringe upon the principle of legality. M's failure to record this legal position in her affidavits, H or the failure of her legal representatives to properly formulate her claim both in the high court and in this court, did not preclude this court from mero motu raising and considering the correct legal principles. (Paragraphs [20] – [21] at 102G – 104B.)

Ownership will not pass — despite registration of transfer — where the underlying I transaction was tainted by fraud, or where the essential requirements of the 'real agreement', viz an intention on the part of the transferor to transfer ownership of the property; and on the part of the transferee to become owner thereof, were not met. It was clear from M's uncontradicted evidence that she was fraudulently induced to sign the sale agreement as well as the documents authorising transfer of the property, and had had no intention to transfer ownership of the property to Q. It followed that the J purported registration of transfer to Q had no effect, and that M remained

2014 (3) SA p97

the owner of the property. A party that proceeds by way of the rei vindicatio need not A tender restitution of what had been received pursuant to a contract sought to be set aside, because the cause of action was complete without such tender. For these reasons M was entitled to vindicatory relief. (Paragraphs [23] – [25] and [26] – [27] at 104D – 105B and 105B – E.)

Cases Considered

Annotations B

Case law

Cole v Government of the Union of SA 1910 AD 263: dicta at 272 and 273 applied

Cuninghame and Another v First Ready Development 249 (Association Incorporated under Section 21) 2010 (5) SA 325 (SCA) ([2010] 1 All SA 473): C referred to

CUSA v Tao Ying Metal Industries and Others 2009 (2) SA 204 (CC) (2009 (1) BCLR 1; [2009] 1 BLLR 1; (2008) 29 ILJ 2461; [2008] ZACC 15): dictum in para [68] applied

Die Dros (Pty) Ltd and Another v Telefon Beverages CC and Others 2003 (4) SA 207 (C): dictum in para [28] applied D

Feinstein v Niggli and Another 1981 (2) SA 684 (A): dictum at 700G – 701A applied

Gainsford and Others NNO v Tiffski Property Investments (Pty) Ltd and Others 2012 (3) SA 35 (SCA): referred to

Greenfield Manufacturers (Temba) (Pty) Ltd v Royton Electrical Engineering (Pty) Ltd 1976 (2) SA 565 (A): dictum at 570 applied E

Harper v Webster 1956 (2) SA 495 (FC): dictum at 500A applied

Lecuona v Property Emporium CC [2010] JOL 25266 (GSJ): dictum in para [4] applied

Legator McKenna Inc and Another v Shea and Others 2010 (1) SA 35 (SCA): dicta in paras [20] and [22] applied

MEC for Health, Gauteng v 3P Consulting (Pty) Ltd 2012 (2) SA 542 (SCA): dictum in para [28] applied F

Meintjes NO v Coetzer 2010 (5) SA 186 (SCA): referred to

Mkhwanazi v Quarterback Investment (Pty) Ltd and Another 2013 (2) SA 549 (GSJ): [*] upheld for different reasons

Nedbank Ltd v Mendelow and Another NNO 2013 (6) SA 130 (SCA) ([2013] ZASCA 98): dictum in para [17] applied G

North West Provincial Government and Another v Tswaing Consulting CC and Others 2007 (4) SA 452 (SCA) ([2007] 2 All SA 365): dictum in para [17] applied

Novick and Another v Comair Holdings Ltd and Others 1979 (2) SA 116 (W): applied

Paddock Motors (Pty) Ltd v Igesund 1976 (3) SA 16 (A): referred to H

Preller and Others v Jordaan 1956 (1) SA 483 (A): dictum at 496 applied

R v Hepworth 1928 AD 265: dictum at 277 applied

Rhoode v De Kock and Another 2013 (3) SA 123 (SCA) ([2012] ZASCA 179): dictum in para [24] applied

Sager v Smith 2001 (3) SA 1004 (SCA): dictum in para [21] applied

Sithole v Ingwe Collieries and Another (2005) 26 ILJ 2136 (T): dictum in I para [19] applied

2014 (3) SA p98

Swissborough Diamond Mines (Pty) Ltd and Others v Government of the Republic of South Africa and Others 1999 (2) SA 279 (T): dicta at 323F – G and 323J – 324A applied A

Take and Save Trading CC and Others v Standard Bank of SA Ltd 2004 (4) SA 1 (SCA) ([2004] 1 All SA 597): dictum in para [3] applied

Thompson v South African Broadcasting Corporation 2001 (3) SA 746 (SCA) B ([2001] 1 All SA 329): referred to

Transnet Ltd v Rubenstein 2006 (1) SA 591 (SCA) ([2005] 3 All SA 425): dictum in para [28] applied

Van Rensburg v Van Rensburg en Andere 1963 (1) SA 505 (A): referred to

Van Schalkwyk v Griesel 1948 (1) SA 460 (A): dictum at 470 – 471 applied.

Case Information

AW Pullinger for the appellant. C

N Mkhize for first respondent.

An appeal from the South Gauteng High Court, Johannesburg (Spilg J).

Order

D The appeal is dismissed with costs.

Judgment

Theron JA (Maya JA, Bosielo JA, Pillay JA and Petse JA concurring):

[1] The first respondent, Ms Pinky Mkhwanazi (Ms Mkhwanazi), E instituted application proceedings against the appellant, Quartermark Investments (Pty) Ltd (Quartermark), a property investment company, claiming that it had fraudulently induced her into signing certain sale and lease agreements in respect of her immovable property. In the South Gauteng High Court Ms Mkhwanazi sought and obtained an order F setting aside the transfer of the property to Quartermark; declaring the sale agreements that led to the transfer null and void; directing that the second respondent transfer the property into her name, and other ancillary relief. [1] Quartermark appeals against the decision of the high court (Spilg J) with the leave of that court. The second respondent, the Registrar of Deeds, Johannesburg, has not taken part in the proceedings G and abides the decision of this court.

[2] In 2004 Ms Mkhwanazi purchased the immovable property known as Erf 1795 Klipfontein (the property), with a loan obtained from Nedbank Ltd (Nedbank), which was secured by registering a mortgage H bond over the property. Subsequently, Ms Mkhwanazi fell into substantial arrears in respect of her loan obligations to Nedbank, as well as her obligations to another financier in respect of her motor vehicle. Nedbank obtained default judgment against Ms Mkhwanazi some time prior to 13 March 2007, when the property was judicially attached by it.

[3] During 2007 Ms Mkhwanazi approached Mr George Mthebe (Mr Mthebe), I an agent of Quartermark, for financial assistance. She explained to Mr Mthebe that she required a loan in the amount of

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Theron JA (Maya JA, Bosielo JA, Pillay JA and Petse JA concurring)

R30 000. To this end she signed documents presented to her for A signature by Mr Mthebe. Ms Mkhwanazi said she did not read the documents prior to signing them because Mr Mthebe did not give her an opportunity to do so. On the assurance given to her by Mr Mthebe, she assumed they related to her loan application. Shortly after signing the documents a portion of the loan amount, R12 000, was paid into her B bank account. This amount represented the arrears due in respect of her motor-vehicle instalments. Mr Mthebe advised her that the arrears in respect of the mortgage bond would be paid directly to Nedbank and thereafter Quartermark would continue...