MAKONI J: The applicants seek an order cancelling the
first to seventh respondents' title in immovable properties mentioned hereunder
and the reinstatement of the second applicant's title in the properties.
The properties in issue are:
(a) Stand
number 90 Glen Lorne Township 8 of Lot 40A Glen Lorne
(b) Stand number 91
Glen Lorne Township 8 of Lot 40A Glen Lorne
(c) Stand
number 92 Glen Lorne Township 8 of Lot 40A Glen Lorne. (hereinafter
referred to as the properties).
The background to the matter is that prior to May 2007 the
properties were owned by the second applicant. Ownership of the second
applicant was vested in the first applicant (The Trust) administered by
trustees Michael Robert McNaught, John Pybus and Gona Burmeister on behalf of
its beneficiaries. The directors of the first applicant are Sandra Jean
Humpreys and John D. Histin Humphreys (Sandra and John). On 24 May 2007
the trustees and the beneficiaries of the Trust on one side, and the third
respondent on the other side entered into and signed a Cession and Assignment
Agreement (Cession Agreement). The Trustees ceded the Trust to the third
respondent for a consideration of two hundred and forty thousand United States
dollars ($240 000.00) (consideration). In terms of clauses 3, 4 and 6 of
the Cession Agreement the full consideration should have been paid by the 15
September 2007 on which date all the benefits arising from the Trust's assets,
second applicant and the properties inclusive, would accrue to the third
respondent. In turn, delivery of all Trust documents inclusive of
(i)
company documents relating to second applicant
(ii)
all the title deed, in respect of the properties,
(iii)
Trustees' resolution approving the cession and assignment of all interest and
obligation in and to the Trust
(iv)
Resolution appointing the third respondent or his nominee as a Trustee or
Trustees to the Trust.
(v)
Letters of resignation by all Directors secretaries and public officers of the
second applicant and Trustees of the Trust would be delivered to the third
respondent upon payment of the full consideration.
Third respondent breached the Cession Agreement by failing
to make payments in terms of clause 3 of the agreement. He also refused
to sign a re-negotiated agreement revising the payment conditions.
In the result the Trust documents were not delivered to the
third respondent. Consequently, no formalities were made transferring ownership
of the Trust and its assets to third respondent.
Sometime in May 2008, second applicant instructed its
accountants and secretaries Combined Accounting Services, (CAS) to perform a
routine inspection of second applicant's company documents at the offices of
the ninth respondent. They discovered that the third respondent had, on
25 June 2007 filed a fraudulent CR 14 in respect of second applicant, in terms
of which him together with third, fourth and fifth respondents were listed as
directors of the company replacing Sandra and John. The CR 2 was not
changed. The third respondent was listed as the company secretary
replacing Sandra. The appointments were done without the knowledge and or
consent of the second applicant.
Further investigations revealed that the third respondent
had pledged the properties to first respondent to secure a personal debt and
using the fraudulent CR 14 and fraudulent company resolutions had purportedly
represented the second applicant in the transfer of the properties from second
applicant to first respondent. One of the properties, stand number 90
Glen Lorne was further transferred from the first respondent to the seventh
respondent. To facilitate the transfers, the third respondent
fraudulently uplifted caveats registered against the properties.
The applicants then instituted these proceedings seeking
the cancellation of title in respect of the properties in first and seventh
respondents' names and restoring such title to the second applicant. The
application was opposed by the first and second respondents and the seventh
respondent. The third, fourth, fifth, sixth, eighth and ninth respondents
did not file any papers in opposition.
The first and second respondents did not file Heads of
Argument neither did they appear on the day of hearing. The third to
sixth respondent and the eighth and the ninth respondent did again not appear
on the day of hearing.
The third to sixth respondents and eighth and ninth
respondent are therefore barred in terms of R 233 (3) for failing to file
notices of opposition and opposing affidavits. The first and second
respondents are also barred in terms of R 238 (2) for failing to file Heads of
Argument within the stipulated time. The absence of the first to sixth
respondent means there is no opposition in respect of the claim for the cancellation
of the title deed, in respect of stands number 91 and 92. I will
therefore proceed to grant para(s) 1, 2, 4, 5 and 9. Paragraphs 7 and 8
will be granted as far as they related to stand number 91 and 92. This
leaves me with the issue of stand number 90 registered in the name of the
seventh respondent.
The seventh respondent in his opposing affidavit opposes
the application on the basis of two main grounds. He avers that he has no
knowledge of the fraudulent transfers and denies any participation in any
fraud. He is a bona fide purchaser.
It was contended on behalf of the applicants that the
transfers from the second applicant to the third respondent were fraudulently
done and are therefore void ab initio. The second applicant was
entitled to vindicate its properties from wherever they were (innocent
purchasers). It was further contended that estoppel, as pleaded by the
seventh respondent does not arise. The acts done by the third respondent
were not lawful in that he disposed of the whole undertaking of the second
applicant (without a resolution from the shareholders) in contravening of s 183
(1) (b) of the Companies Act [Cap 24:03] and further the transfer to
first respondent was void as the cause was a pledge.
It was contended, on behalf of the seventh respondent, in
his Heads of argument and in submissions that the applicants did not adduce
evidence that satisfactorily excludes third respondent's authority to represent
the second applicant in the 1st transfer. There is
therefore no basis for impeaching the transfer. The seventh respondent acquired
the property innocently and for value. It was further contended that the
inaction on the part of the applicant from the time they uncovered the fraud to
the time they filed the present proceedings estops them from denying third
respondent's authority to effect the transfers. It was further contended
that ownership of the property lawfully passed to the seventh respondent.
The applicants are restricted to pursuing a personal claim against the third
respondent.
The circumstances, giving rise to the transfers as outlined
by the applicants in their founding papers have not been controverted due to
the absence of first to sixth respondent. These are that the third
respondent did not perform in accordance with the agreed terms of the Cession
and Assignment agreement. As a consequence the Cession Agreement was
canceled and no cession of rights, title, benefits, interests and obligations
attached to the second applicant took place. The third respondent did not
have any rights to the immovable properties at the time he transferred same to
first respondent.
The absence of the first to sixth respondents put the
seventh respondent in a difficult situation. He cannot stave off the
allegations that the first transfer to the first respondent was void.
Therefore no rights derive from that transfer and in turn the transfer to him.
However the seventh respondent advanced argument that the
third respondent had authority to act on behalf of the second applicant and
that by their inaction the applicants are estopped from pursuing a vindicatory
claim. The records at the registrar of companies reflected the third
respondent as a director. The mandatory statutory returns to the
Registrar of Companies serve as notice to the world of the facts they
contain. The applicant's own papers suggest that they co-operated with
the third respondent in relation to the CR14. The applicants handed over
the entire secretarial file to third respondent. Thereafter third
respondent changed the company documents. It should therefore be held, on
a balance of probabilities that there was no want of authority on the part of
the third respondent in effecting the first transfer.
It was further submitted that it took the applicants four
years to file the present application after uncovering the fraud. This
supports the inference that the applicant's co-operated with the third
respondent but it is also such as estops them from denying his authority to
effect the first transfer.
Most of the facts relied upon by the seventh respondent for
the above submissions were not canvassed in his opposing affidavit. They
are alluded to in the Heads of Arguments and in submissions. The
applicant was not given an opportunity to deal with them in the answering
papers. However the point made by the applicants remain which is that
what is not disputed in affidavits is taken to be admitted, ie the fact that
the third respondent did not have any rights to pass transfer to first
respondent and that he did not have authority to represent the second
applicant.
The other point raised by the applicant is whether, even if
third respondent was a director, he could lawfully do what he did, in
view of the provisions of s 183 (1) (b) of the Companies Act [Cap 24:03].
“S 183 provides
(1) Notwithstanding
anything in the articles, the directors of a company shall not be empowered,
without the approval of the company in several meeting
(a)
-----------------------
(b) To dispose of
the undertaking of the company or the whole or greater part of the assets of
the company.”
Paragraph 16 and 17 of the founding affidavit makes it
clear that the second applicant only owned the properties in issue. They
are the whole undertaking of the second applicant and a director could not
dispose of them without a resolution of the shareholders. Therefore even
assuming the third respondent had authority, he could not dispose of the 3
properties.
It appears the seventh respondent, in his argument,
abandoned the issue of a bona fide purchaser. This might have
been for two reasons. The first one is that the seventh respondent would
have conceded that the third respondent fraudulently effected the
transfers. This would have been in contradiction to his argument regarding
the authority of the third respondent. Secondly it might have been the
fact that the law is settled. Vindication of immovable property is
allowed where the transfer would have no power to pass transfer.
Authority for this can be found in Mngadi N.O v Ntuli and Ors
1981 (3) SA 478.
In that case an executor whose appointment was held to be
void had passed transfer to immovable properties belonging to the estate. It
was held that the ownership of the properties remained vested in the estate of
the deceased. It held further that, therefore, as a bona fide possessor
could not by virtue of that fact alone withhold the possession of the property
from the owner thereof, and as no additional factors such as a right of
retention, a contractual right to possession or an estoppel which would entitle
the second and third respondents to retain possession of the property had been
raised, that, no valid transfer having taken place, the applicant's right of
ownership had to prevail and that she was entitled to the relief sought by her
despite the manifest hardships which would probably result to the second and
third respondents. See also Glatthear v Hussan 1912 TPD 322
at p 327.
The author Silberberg and Schoemans The Law of property 3rd
edition at p 75 makes the same point in the following words:-
“A thief cannot acquire
ownership or any other real right (except a jus possessions) in the things
which he had stolen and since nobody can acquire ownership in stolen goods, a
third party can never acquire ownership/or other real right in property that
has been obtained by fraud.” My emphasis.
What Lord DENING said in Macfoy v United
Africa Co. Limited (1961) 3 A/D ER 1169 at p 11721 as quoted with approval
in Minister of Lands v Mkushi 1988 (1) ZLR 209, sums it all
up.
“if an act is void, then it is
in law a nullity. It is not only bad, but incurably bad. There is
no need for an order of the court to set it aside. It is automatically
null and void without more ado. And every proceeding which is founded on
it is also bad and incurably bad. You cannot put something on nothing and
expect it to stay there. It will collapse.”
The seventh respondent finds himself in the same position
as the respondents in the Mngadi case supra. The second
applicant's right of vindication must succeed despite the harships that the
seventh respondent will face, A Silberberg supra puts it at p
218
“an owner who has been deprived
of his property against his will is (unless he is estopped) entitled to
vindicate it from any person who is in possession of it.”
I will therefore make the following order.
It is ordered that:
1. Deed of Transfer (Reg No.
1555/2009) dated the 12th of March registered in the name of Zimcor
Trustees (Private) Limited, 1st Respondent, in respect of Stand
No. Stand 91 Glen Lorne, Township 8 of Lot 40A Glen Lorne measuring
1,3464 hectares be and is hereby cancelled in terms of section 8 (1) of Deeds
Registry Act [Cap 20:05]
2. Deed of Transfer (Re No.
1556/2009) dated the 12th of March 2009 registered in the name
of Zimcor Trustees (Private) Limited, 1st Respondent, in respect of
Stand No. Stand 92 Glen Lorne, Township 8 of Lot 40A Glen Lorne measuring
1,6363 hectares be and is hereby cancelled in terms of section 8 (1) of Deeds
Registry [chapter 20:05]
3. Deed of Transfer
Reg. No 3777/2009) dated the 7th of September 2000 registered
in the name of Patson Sithole, 7th Respondent, in respect of Stand
No. Stand 92 Glen Lorne, Township 8 of Lot 40A Glen Lorne measuring 1,6363 hectares
be and is hereby cancelled in terms of section 8 (1) of Deeds Registry [chapter
20:05]
4. Deed of Transfer Register
No. 9154/2006 dated the 29th of December 2006 registered in the name
of Lacerose Investments (Private) Limited, 2nd Applicant, Stand No.
Stand 9 Glen Lorne, Township 8 of Lot 40A Glen Lorne measuring, 1,3464 hectares
be and is hereby revived in terms of section 8(2) (a) of the Deeds Registry Act
[Chapter 20:05]
5. Deed of Transfer Register
No. 9140/2006 dated 29th of December 2006 registered in the name of
Lacerose Investments (Private) Limited, 2nd Applicant, Stand No. 92
Glen Lorne, Township 8 of Lot 40A Glen Lorne measuring 1,6363 hectares be and
is hereby revived in terms of section 8 (1) of Deeds Registry [chapter 20:05]
6. Deed of Transfer
Register No. 9153/2006 dated 29th of December 2006 registered in
the name of Lacerose Investments (Private) Limited, 2nd
Applicant, , in respect of Stand No. Stand 92 Glen Lorne, Township 8 of Lot 40A
Glen Lorne measuring 1,6363 hectares be and is hereby revived in terms of
section 8 (1) of Deeds Registry [chapter 20:05]
7. The Registrar of Deeds, 8th
Respondent, be and is hereby ordered and authorized to attend to the
cancellation of Deed of Transfer Nos. 1554/2009; 1555/2009; and 1556/2009 and
the revival of Deed of Transfer Nos. 9140/2006; 9153/2006; and 9154/2006 in the
name of Applicant and to make the appropriate endorsements on the relevant
deeds and entries in the registers in terms of section 8(2) (b) of the Deeds Registry
Act (Chapter 20:05]
8. 8th Respondent
be and is hereby empowered and ordered to do all acts necessary to reinstate
the Applicant as the lawful owner of Stand No. 90 Glen Lorne Township 8 of Lot
40A Glen Lorne Measuring 1,3348; Stand No. 91 Glen Lorne Township 8 of Lot 40A
Glen Lorne measuring 1,3464 hectares; and Stand No. 92 Glen Lorne Township 8 of
Lot 40A Glen Lorne measuring 1,6363 hectares.
9. The Registrar of
Companies, 9th Respondent, is hereby empowered and ordered to do all
such acts necessary to reinstate John Dillistin Humphreys and Sandra Jean
Humphreys as the Direstors of Lacerose Investments (Private) Limited and Sandra
Jean Humphreys as the Company Secretary of Lacerose Investments (Private)
Limited.
10. That all the costs of the Applicant be paid by
Respondents save 8th and 9th Respondents on a legal
practitioner/client scale jointly and severally, the one paying the others
being absolved.
Linda Chipato Legal Practitioners, applicants' Legal Practitioners.
Coghlan,
Welsh & Guest, respondents' Legal
Practitioners
