Naluno v Nanghala (SA 11-2020) NASC [2023] (10 October 2023)

Facts

The respondent (buyer) wanted to buy a residential property of her own in Ondangwa and a friend introduced her to an estate agent she instructed to find a house on sale her behalf. 

The respondent was later called to the estate agent’s offices to sign a deed of sale for the immovable property which she subsequently submitted, together with a loan application to finance the purchase, to a commercial bank. The loan application was approved and a second continuing covering bond was registered over the property in favour of the bank.

On 25 February 2011, the respondent was called to the offices of a law firm appointed to handle to the transfer of the immovable property, where she was
asked to sign certain documents as a house had been found for her. The documents in question had already been signed by the seller and the conveyancer. 

Two months later, the respondent was called to the same lawyers’ offices where she was given the deed of transfer of the property and was directed to the seller’s workplace to collect the keys to the house, which she duly did.  

Elated and keen to see her latest acquisition, the respondent proceeded to her newly acquired property only to be confronted with the reality that the house was still occupied by the seller’s family. Upon being told by the buyer to vacate the house, the appellant understandably refused, arguing that as an owner of the property, she had neither sold the house nor had she given anyone authority to sell it nor had she benefitted in any way from its sale. 

The respondent sought police intervention to evict the appellant but was correctly advised to seek an eviction order from a court of law. 

Unbeknown to the appellant (spouse/wife), the family house had been sold secretly to the respondent by her husband. Also unbeknown to the respondent, the seller was the appellant’s husband whose family was still living on the property. The couple was estranged at the time and the husband was not residing at the house. The fact that the house was co-owned by the couple and that the seller’s family occupied it at the time of the sale were not disclosed to the buyer.  After attempts to resolve the matter amicably fell through, the respondent (buyer) instituted eviction proceedings in the Northern Local Division of the High Court against the appellant and her husband (the seller). The appellant defended the action but her husband ignored the summons and took no part in the trial. 

The appellant raised a defence that she and her husband (seller) were the registered owners, alternatively bona fide
possessors of the property and that she did not in any manner authorize the registration of the property in the respondent’s name. The appellant had remained in possession of the immovable property by the date of trial and paid all municipal bills. The bank was not cited as a party in the action in so far as it may have had an interest in the relief sought or the outcome of the proceedings.

Counterclaim

The appellant in turn filed a counterclaim against the respondent, pleading that the transfer of the property into the respondent’s name was done fraudulently and unlawfully through the falsification of documents necessary to effect the transfer. The appellant, therefore, sought the following orders: (a) a declaratory relief that the deed of sale entered into between the respondent and her husband was null and void; (b) a direction that the respondent signs all documents necessary to have the property registered in the appellant’s name within seven days from the date of the order, failing which the Deputy Sheriff was to be authorized to sign the said documents on behalf of the respondent; and (c) costs of suit on an attorney and client scale.  

The Registrar of Deeds was cited and joined as a party to the proceedings in the counterclaim but did not oppose it. The respondent (buyer) seemingly did not oppose the counterclaim as no plea thereto was filed. The appellant then applied for a default judgment on the counterclaim, but no ruling thereto was made. 

Trial proceedings

The matter went to trial where much of the evidence on both sides was, to a large extent, common cause or at any rate could not be disputed. The High Court initially granted absolution from the instance at the end of the respondent’s case but changed that order without indicating the legal basis for doing so and substituted it with an order dismissing the application for absolution.  At the end of the trial, the court granted an order evicting the appellant from the property and dismissing her counterclaim. 

The appeal lies against the order and judgment of the High Court.

SHIVUTE CJ (MAINGA JA and HOFF JA concurring) considered the appeal as follows.

Issues for determination, 

Two interrelated issues were up for determination but the following issue is relevant for this summary:

Whether the court a quo erred in rescinding the absolution order it granted on 8 November 2019. 

Whether the court a quo was correct in granting the order ejecting the appellant from the property and dismissing her counterclaim. 

Discussion

‘Order of ejectment and dismissal of the counterclaim

[24] …It was common cause that the property in question was jointly registered in the names of the appellant and her husband, Mr Naluno. Section 1(1) of the Formalities in Respect of Contracts of Sale of Land Act 71 of 1969 provides as follows:

‘‘(1) No contract for the sale of land or any interest in land (other than a lease, mynpacht or mining claim or stand) shall be of any force or effect if concluded after the commencement of this Act unless it is reduced to writing and signed by the parties or by their agents acting on their written authority.’’

[25] As earlier noted, the sale and transfer of the property was not authorised by the appellant as she neither signed any document effecting transfer of the property nor had she authorised any agent to do so on her behalf. There is thus no evidence, contrary to the finding by the court a quo, that Mr Naluno had authority to alienate the property without the consent of the appellant and that he had done so in terms of a ‘co-ownership agreement’, whatever that may mean. 

[26] As discussed by Muller J in Oshakati Tower,  the requirements for passing ownership are two-fold. First, there must be an ‘underlying agreement’, which in the case of immovable property is perfected by the registration of the transfer in
the Deeds Office. Secondly, there must be a ‘real agreement’, which connotes an intention on the part of the transferor to transfer ownership, coupled with the corresponding intention on the part of the transferee, to become the owner of the property. Whilst a defect in the underlying agreement does not prevent a valid transfer,  ownership will not pass if there is a defect in the real agreement. The owner must have the intention to pass ownership without which ownership would simply not pass. 

[27] It is clear from the Deed of Transfer T 5188/2007 that the property in question was registered in the joint names of the appellant and Mr Naluno. As earlier mentioned, the respondent and the estate agent were under the impression that the property was registered in Mr Naluno’s name alone. That assumption was clearly wrong. The appellant testified that she had no intention to alienate the property, a claim borne out by her conduct when called
upon to vacate the house. As the appellant had no intention to pass ownership of the immovable property to the respondent nor had she manifested any conduct evincing such intention, it is self-evident that Mr Naluno alone could not validly pass ownership. The power of attorney allegedly given to the conveyancer by the appellant in all probabilities was not signed by her.

[28] The court a quo erred in finding that Mr Naluno had authority, qua co-owner, to transfer the property to the respondent also on behalf of the appellant. No authority was cited for this startling proposition. The finding that the transfer by him was done in accordance with a ‘co-ownership agreement’ is also puzzling. It was not the appellant’s case that there was such an agreement in existence. Co-ownership was not dependent on an agreement as the court a quo appears to have suggested. Co-ownership was apparent from Deed of Transfer T5188/2007 that was produced in evidence. It follows that the sale and transfer of the property by Mr Naluno to the respondent was not done lawfully and stands to be declared null and void. The appellant’s unopposed counterclaim should therefore have succeeded.

[34] A registered deed may be cancelled by the Registrar of Deeds but only upon an order of court. This is apparent from s 6 of the Deeds Registries Act 47 of 1937…

[35] If I understand s 6 above correctly, by virtue of these provisions, once the deed of transfer of the property to the respondent is cancelled by an order of court in this matter, ordinarily the legal status of the property revives to the former position, namely its registration in the joint names of the appellant and Mr Naluno. The registrar of deeds must then cancel the relevant endorsement evidencing the registration of the cancelled deed. The order this Court should be consistent with this provision. 

The order to be made would also coincide with the appellant’s wishes, which position was advanced with vigour by her legal practitioner in this court, albeit on a mistaken understanding of the status of the aborted application for amendment in the court a quo. The principal dramatis personae in this saga will be at liberty to exercise their rights as advised or minded. It follows that the appeal succeeds. What remains is the making of the order.

Held that:

The court a quo erred in rescinding the order granting absolution without a reason grounded in law.

It was common cause that the property in question was registered jointly in the names of the appellant and her husband.

It was also clear that the appellant had no intention to pass ownership of the property to the respondent. As such there was a defect in the real agreement, which defect precluded a valid transfer of ownership.

The appellant’s counterclaim should have succeeded.

As the transfer of the property was not done lawfully, the deed of sale entered into between the appellant’s husband and the respondent in terms of which the appellant’s husband purported to sell the property to the respondent be declared null and void. 

As a result, the appeal succeeded, and the decision of the court a quo rescinding the order granting absolution from the instance was set aside and substituted with an appropriate order. The counterclaim succeeded and the deed of sale entered into between the seller and the buyer was declared invalid and of no force and effect. The transfer of the property was declared null and void. No order as to costs was made.   

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