Margaret Marume v Gutu Properties Limited and Pearson Mzilikazi and Yvonne Mzilikazi and The Registrar of Deeds

### Preamble
1
HH 197-13
HC 2228/10
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MARGARET MARUME

versus

GUTU PROPERTIES LIMITED

and

PEARSON MZILIKAZI

and

YVONNE MZILIKAZI

and

THE REGISTRAR OF DEEDS

IN THE HIGH COURT OF ZIMBABWE

MTSHIYA J

HARARE, 10 and 19 June 2013

Advocate R.M. Fitches, for 2nd& 3rd defendants

Harvey, for the plaintiff

MTSHIYA J:  On 9 April 2010 the plaintiff issued summons against the defendants for the following relief:

“(i) That the purported agreement of sale entered into by and between plaintiff and

first defendant be and is hereby declared null and void and off no force or effect.

(ii)   That fourth defendant be and is hereby ordered to cancel the transfer from first

defendant to third defendant of Stand 384 Athlone Township of Lot 2A of

Green  Grove under Deed of Transfer No. 474/2010 dated 10th February, 2010.

(iii)   That 4th defendant transfer the property to the plaintiff.

(iv)   That the interest rate of 9% per month charged by first defendant on the loan of

$30 000 which it granted to plaintiff be and is hereby declared usurious and

illegal and that plaintiff instead pays interest on the loan at the prescribed rate

of interest.

(v)    That plaintiff tenders payment of the sum of US$30 000 to first defendant plus

interest at the prescribed rate of interest from 4th August, 2009, less the sum of

US$3 000 already paid by plaintiff to first defendant.”

(vi)   That first defendant pays costs of suit an attorney and client scale.

The declaration to the summons read, in part, as follows:

“6.    on or about 4th August, 2009, first defendant, duly represented by Frank

Buyanga entered into an agreement with plaintiff whereby first defendant lent

and advanced the sum of US$30 000 to plaintiff.

7.   The parties agreed that plaintiff would surrender the title deeds of her property,

namely Stand 384 Athlone Township of Lot 2A of Green Grove (also known as

42 Cleveland Road, Greendale, Harare) to first defendant as security for the

loan.

8.   First defendant insisted that as further security, plaintiff should sign an

agreement of sale purportedly selling her above property to first defendant for

the sum of US$30 000 and also that plaintiff should sign a Power of Attorney to

Pass Transfer and Declaration by Seller regarding the purported sale of the

property.

9.   Plaintiff signed the Agreement of Sale, Power of Attorney to Pass Transfer and

Declaration by Seller in order to secure the debt.  It was however expressly

agreed by the parties that the signature of the above documents by plaintiff did

not constitute the actual sale of the property by plaintiff to first defendant but

additional security for the loan.

10.  In terms of the loan agreement plaintiff would pay interest on the loan at the rate

of 9% per month and repay the capital sum of US$30 000 plus 9% per month

interest at the end of the third month.

11.  The interest charged by the first defendant on the loan is usurious and illegal.

12.  The interest charged by the sum of US$3 000 to date and she hereby tenders to

repay the balance of the capital sum and interest at the prescribed rate of interest

from 4th August, 2009 to date of payment.

13.  First defendant then transferred plaintiff’s above property to itself under Deed of

Transfer No. 474/2010 dated 10th February 2010 without the knowledge or

consent or plaintiff.

14.  The 1st defendant has since fraudulently transferred the property to the 2nd and 3rd

defendants on the 18th March 2010 without the plaintiff’s Knowledge and

Consent.

15.  Plaintiff accordingly prays that the purported agreement of sale to the 1st

defendant be declared null and void and of no force or effect and that the 4th

defendant be ordered to cancel the transfer of the property to the 2nd and 3rd

defendants and the property be registered in the name of the plaintiff.

16.  Since the parties expressly agreed that the purported agreement of sale was in

fact security for the loan, the transfer of the property to first defendant was

effected fraudulently.”

On 15 June 2010 the second and third defendants (excipients) filed their plea and counter claim followed by an exception which read as follows:

“1.  Plaintiff’s claim to cancel first defendant’s title is bad in law as it militates against

the established abstract system of transfer, in terms of which, the effectiveness of

delivery is not dependent upon the validity of the underlying contract.

2.   Ex facie paragraph 9 of the plaintiff’s declaration: Plaintiff executed the

necessary documents to effect transfer of ownership of the immovable property in

question to second and third defendants.

3.   Plaintiff, as owner, was empowered to effect transfer and did so voluntarily.

The intention to pass ownership appears from paragraph 9.  The first defendant

took transfer and his title or real right thereby constituted is unimpeachable.

4.   Thereafter, first defendant passed title to second and third defendants.

Similarly, this is unimpeachable.

5.   By reason of this averment, plaintiff’s declaration discloses no cause of action,

owing to the fact that, as a matter of law, transfer is a separate justice act, from

the cause for transfer.  Accordingly, as a matter of established law, the

underlying cause has no bearing on the real right.

6.   Ex facie paragraph 13 of the plaintiff’s declaration: The allegation is made that:

“First defendant then transferred plaintiff’s property to itself, [first defendant]

under Deed of Transfer No. 474/2010 dated 10th February 2010.”

7.   Ex facie paragraph 14 of the plaintiff’s declaration: Plaintiff then alleges that:

“The 1st defendant has since fraudulently transferred the property to 2nd and 3rd

defendants on the 18th March 2010.  There are no allegations of fraud to

substantiate the alleged fraudulent transfer; and in any event, this allegation is

bad in law as the law is settled that even if plaintiff’s consent was obtained by

means of a fraudulent misrepresentation, the transaction was voidable only, and

ownership passed to first defendant, who, accordingly passed good title to

second and third defendants.

8.   In terms of the abstract theory, plaintiff only has a personal action, but if

transfer has passed to a bona fide third party, plaintiff has no remedy against

such third party.  The declaration accordingly discloses no cause of action

against second and third defendants.

9.   Plaintiff then prays in paragraph 15 of the declaration that that transfer to second

and third defendants be cancelled without reference to the erstwhile Deed of

Transfer held by first defendant.

10.  Prayer (ii) to the declaration claims cancellation of the transfer from first

defendant to third defendant under Deed of Transfer No. 474/2010 dated 10th

February 2020.  This is vague and embarrassing to defendants by reason of the

fact that the plaintiff’s own admission in paragraphs 13 and 14, Deed of

Transfer No. 474/2010 no longer exists as it was replaced by transfer to second

and third defendants.”

The exception was not set down before the trial date in accordance with Rule 138 of the High Court Rules 1971 which provides as follows:

“138. Procedure on filing special plea, exception or application to strike out

When a special plea, exception or application to strike out has been filed-

(a) the parties may consent within ten days of the filing to such special plea, exception

or application being set down for hearing in accordance with subrule (2) of Rule

223;

[Paragraph amended by s.i. 126 of 1989 and s.i. 120 of 1995]

(b) failing consent either party may within a further period of four days set the matter

down for hearing in accordance with subrule (2) of rule 223;

[Paragraph substituted by s.i. 126 of 1989]

(c ) failing such consent and such application, the party pleading specially, excepting

or applying, shall within a further period of four days plead over to the merits if

he has not already done so and the special plea, exception or application shall not

be set down for hearing before the trial.”

As already indicated, when the main matter was set down for trial, the defendants had already pleaded over to the merits.  The parties then agreed to deal with the exception under Rule 138 (c) above.

On 30 November 2011 the parties signed a consent order to amend their pleadings without effect to the issues that had been agreed to at the close of the Pre-Trial Conference before Mutema J on 1 March 2011.

The consent order of 30 November 2011 read as follows:

“TAKE NOTICE that plaintiff, 2nd and 3rd defendant, respectively do hereby Consent to the amended of the parties respective pleadings.

AND THAT the issues for which the matter was referred to trial by the Honourable Justice MUTEMA on 1st March 2011 shall remain the same, namely:

1. Whether or not Plaintiff sold the property to 1st Defendant and subsequently

caused transfer,

2. Whether or not the transfer to 1st Defendant is null and void,

3. Whether or not 2nd and 3rd Defendants are bona fide purchasers’

4. Whether 2nd and 3rd Defendants are entitled to holding over damages.”

Following the above consent order, the plaintiff filed a formal application to amend summons and declaration.  This was after the excipients had indicated their opposition to the proposed amendments.  The plaintiff’s application to amend summons and declaration was however, abandoned on 20 May 2013 when the parties agreed to proceed with the pleadings as originally filed.

On 15 June 2012, the 2nd and 3rd defendants amended their plea as follows:

“Be pleased to take notice that, consistent with terms and direction of consent order

filed of record on 3rd November 2011, 2nd and 3rd Defendants file the following amendment to their plea filed of record on 15 June 2011:

“2A. Ad paragraphs 7, 8, 9, 13 and 14, 15 and 16 of the plaintiff’s declarations:

Second and third defendants deny that plaintiff is the owner of the property.  Plaintiff is bound by her signature on the said documents enabling transfer of the property, and accordingly, plaintiff is estopped from denying the intention to pass ownership to first defendant, who then passed unimpeachable title to second and third defendants.  More particularly, plaintiff was negligent in signing the transfer documents thereby signifying her consent to the transfer, and in not recording anything to the contrary with fourth defendant.”

There is no indication of opposition to the above amendment. I shall therefore take it as part of the pleadings.

The exception before me is therefore largely based on the original pleadings – particularly the summons and declaration. Admittedly the submissions in support of the exception make reference to the above amendment.

In support of the exception, Advocate Fitches for the excipient, submitted that the matter could be disposed of on the basis of

“(i) the abstract theory of transfer of immovable property; and

(ii) estopped in that plaintiff is bound by her signature on the said documents

enabling transfer of the property.”

Advocate Fitches defined the abstract theory as follows:

“2.  As stated by Silberberg The Law of Property second edition at page 78:  “In terms

of the abstract theory of transfer, the effectiveness of delivery is not dependent

upon the validity of the underlying contract.  Neither the voidness nor the

voidability of such transaction can affect the question whether a real rights has

indeed passed to the transferee on delivery.”

3.  As regards the position of third parties such as second and third defendants, the

learned authors state at page 81: “In terms of the abstract system that the

transfer or only has a personal action against the transferee inter partes.

Consequently, if the transferee has meanwhile delivery the thing in question to a

bona fide the third party, The original transferor would in terms of the abstract

system have no remedy as against such a third party.  In terms of the abstract

theory causa underlying the first transfer has become entirely irrelevant when

third parties have appeared on the scene and the only question that can and should

be asked is whether the transferor and the transferee had the intention that

ownership (or some other real right) in the thing should pass when the delivery

was made and accepted.”

On the basis of the above definitions he then went on to say:

“4. As regards plaintiff’s intention that ownership would pass to first defendant,

plaintiff signed all the necessary documents to enable transfer to first defendant.

She is bound by her signature on the said documents enabling transfer of the

property, and accordingly, she is estopped from denying the intention to pass

ownership to first defendant, who then passed unimpeachable title to second and

third defendants.  Plaintiff was negligent and careless in the exteme in signing the

transfer documents thereby signifying her consent to the transfer, and in not

recording anything to the contrary with fourth defendant.

5.  Accordingly, plaintiff is estopped from denying the intention to pass ownership to

first defendant, who then passed unimpeachable title to second and third

defendants.

6.  As regards estoppel, Silberberg page 300ff puts the matter succinctly:

“… in appropriate circumstances, an owner can be estopped from vindicating,

whether it be a movable four and immovable, when he has placed it into the

hands of another person in circumstances which may lead third parties to believe

that such other person is in fact the owner of the thing that has been entrusted to

him or that he has been duly authorised to dispose of it on the owner’s behalf.”

This is precisely what plaintiff did.”

Advocate Fitches submitted that the 2nd and 3rd defendants were “innocent downstream third party purchasers.”

For the plaintiff Mr Harvey argued that the exception was being raised incorrectly because the issue of estopped was a matter of evidence where the excipient had to prove careless or negligent conduct on the part of the plaintiff.  Whilst accepting that the principles behind the abstract theory were being adopted by our courts, Mr Harvey submitted that the plaintiff’s declaration did not show that “either the plaintiff or first defendant intended to pass or take transfer.”  The plaintiff alleged fraud and accordingly, he argued, “If a person is deprived of his property by furtive or fraud, it can be vindicated from third parties.”

I take note of the fact that paragraph 7 of the exception acknowledges the plaintiffs allegation of fraud.  I believe that the alleged fraud can only be substantiated through evidence.  I say this because in para(s) 13, 14 and 16 of her declaration, the plaintiff actually brings into focus the issue of lack of consent and fraud.  Surely the plaintiff has to prove those averments.

Notwithstanding the principles of the abstract theory, as is the case with estoppels, it becomes a matter of evidence.   This reasoning, however, does not necessarily throw away the principles of the abstract theory as eloquently advanced by the excipients.  What this simply means is that the theory is not cast in stone.  My view is that the principle ought to be applied in a flexible manner which will ensure that justice prevails in any particular situation. The true story behind the transaction(s) should be told and the theory should then be applied on the basis of that true story. The particulars of the claim, as can be seen, are quiet clear and allow the defendants to plead as already done.

In the South African case referred to by the plaintiff (i.e. Van de Merwe N.O and Anor v Van de Merwe (16182/2012) (2013) ZAWCK 45 (28 February 2013), where, in a similar situation involving estate property, the abstract theory was debated, CLOETE, AJ made the following important qualification to the theory:-

“Although the abstract theory does not require a valid underlying contract, e.g sale,

ownership will not pass-despite registration of transfer – if there is a defect in the

real agreement.” (my own underlining)

I take the above to mean that the real agreement must be based on sustainable elements of the law of contract. One cannot therefore, in the absence of the clear intentions of the parties, rule out the possibility that the first defendant never had any transferrable right.

Assuming that our courts have adopted the abstract theory, I want to believe that where a party successfully proves any fraud/misrepresentation through evidence, such proof may result in a defect in the real agreement.  Such defect may therefore nullify the real agreement.  This, in my view, is what the plaintiff seeks to do in the main case.  It would therefore be against the interests of justice to shut out the plaintiff from court on the basis of the said theory.  The plaintiff wants to prove that there was fraud/misrepresentation and that the defence of estopped cannot be sustained.  Accordingly, the plaintiff should be given her day in court where she wants to demonstrate the existence of fraud or misrepresentation so as to nullify the transaction(s).

My view is that the above extract from the Van de Merwe case (supra) renders flexibility to the rigid application of the abstract theory alluded to in the number of case authorities cited by the excipients.  It is on that basis that I find myself unable to uphold the exception.

Accordingly, I make the following ruling:-

1. The exception is dismissed.

2. The matter shall proceed to trial, and

3. Costs shall be cost in the cause.

Messrs Granger & Harvey, Plaintiff’s Legal Practitioners

Messrs H.Mukonoweshuro& Partners, 2nd& 3rd Defendant’s Legal Practitioners