THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT

Reportable

CASE  NO: 490/05

In the matter between:

DREAM SUPREME PROPERTIES 11CC
Appellant

and

NEDCOR BANK LIMITED
First Respondent
TANJA MICHELLE KIRKHAM
Second Respondent
CHRISTOS COSTAS
Third Respondent
______________________________________________________________________
Before:
STREICHER, FARLAM, MTHIYANE, MLAMBO JJA &
MALAN AJA
Heard:
16 NOVEMBER 2006
Delivered:
13 MARCH 2007
Summary:
Doctrine of notice – does not apply to attachment of property
belonging to judgment debtor but sold by judgment debtor
prior to attachment.

Neutral citation:
This judgment may be referred to as Dream Supreme
Properties 11CC v Nedcor Bank [2007] SCA 8 (RSA).

______________________________________________________________________

J U D G M E N T
______________________________________________________________________

STREICHER  JA

STREICHER JA:
[1] The Cape High Court dismissed an application by the appellant,
alleged to be a prior purchaser of a property, for the setting aside of an
attachment of the property; the setting aside of the sale in execution of the
property to the second respondent; and for an order directing the third
respondent to transfer the property to the appellant. An application for
leave to appeal was dismissed by the court a quo but a further application
to this court for leave to appeal was referred for oral argument in terms of s
21(3)(c)(ii) of the Supreme Court Act 59 of 1959. In the event the parties
addressed us as if the matter was on appeal, it being common cause that
should it be held that the court below correctly dismissed the initial
application, leave to appeal should be refused.

[2] The third respondent is the owner of the property being Sections 6,
13 and 64 in a sectional title scheme known as Glen Waters situated at
Camps Bay, City of Cape Town. The property consists of an apartment and
two garages. According to Mrs Theodosiou, the mother in law of the third
respondent, who is a member of the appellant and the deponent to the
appellant’s founding affidavit, the property was purchased by the third
respondent during or about 1993 and has since then been used as a holiday
home by his family and relatives.

[3] The Johannesburg High Court, on 8 June 2000, granted judgment by
default against the third respondent for payment of the sum of R1 144 409,
21 plus interest and costs. On 1 March 2001 Standard Bank Financial
Nominees (Pty) Ltd also obtained judgment against the third respondent for
the payment of R720 441,18.

[4] Mrs Theodosiou states that the third respondent confided in her
during 2001 that he was in financial difficulties and that he wanted to sell
the property since he could no longer afford it. As she did not want their
family to lose the use of the property she proposed to the third respondent
that he should sell the property to her daughter ie to his wife to whom she
undertook to provide the necessary funds. She adds: ‘Since I did not want
to exploit his financial difficulties, I proposed to the third respondent that
we conduct the sale through an estate agent and that he obtains advice as to
the fair and reasonable market value of the property.’ The third respondent
did so. In a letter dated 26 November 2001 an estate agent responded:
‘Under existing market conditions, it is our opinion that your property
should be marketed at R900 000 to expect offers between R850 000 and
R880 000.’

[5] According to Mrs Theodosiou a written agreement of sale was,
pursuant to her advice, concluded between the third respondent and his
wife Mrs Elizabeth Costas. In this regard she relies on a document in terms
of which the third respondent on 15 November 2001 sold the property to
‘Mrs Elizabeth Costas or such nominees appointed within 30 days’ for a
purchase price of R860 000. It provides for the payment of a deposit of
R210 000 in cash upon signature and for the payment of the balance of
R650 000 upon registration of transfer of the property into the name of the
purchaser. The third respondent agreed to pay ‘agent sales commission in
an amount of 7.5% including VAT of the purchase price . . . on the date of
signature’. On 4 December 2001 Mrs Costas nominated the appellant as the
purchaser. Mrs Theodosiou and Mrs Drakopoulos’ members’ interest in the
appellant was registered on 29 January 2002 and they immediately
thereafter ‘ratified and adopted the sale’.

[6] The first respondent became aware of the aforesaid transaction and
its attorneys, in a letter to the third respondent’s attorneys advised them of
the judgment against the third respondent and of the first respondent’s
intention to attach the property. The first respondent thereafter caused a
writ of execution against immovable property to be issued by the registrar
of the court a quo and on 14 March 2002 the property was attached in
execution. Pursuant to the attachment the sheriff arranged for the sale to
take place on 12 November 2002. On 6 September 2002 Standard Bank
Financial Nominees (Pty) Ltd also attached the property in execution of the
judgment it had obtained against the third respondent.

[7] Notwithstanding the provision in ‘the agreement of sale’ that the
deposit had to be paid upon signature (15 November 2001), such deposit
was only paid in October 2002 by way of a payment of R100 000 on 14
October 2002 and a payment of R200 000 on 16 October 2002. Mrs
Theodosiou instructed the third respondent’s attorneys to apply an amount
of R10 000, which they were holding in trust on her behalf, in payment of
the balance of the deposit. The third respondent never requested payment
of the costs incidental to the transfer and it was only in the founding
affidavit in the application to the court a quo that the appellant tendered
payment of these costs.

[8] The appellant’s attorneys, on 1 November 2002, advised the first
respondent’s attorneys that the appellant had purchased the property, that
Mrs Theodosiou was intent on pursuing the sale, that she had paid certain
amounts to give effect to the transfer of the property and that such
payments were obviously refundable to her in the event of the sale in
execution proceeding. On 4 November 2002 the appellant’s attorneys again
wrote to first respondent’s attorneys. They recorded that Standard Bank

Financial Nominees (Pty) Ltd had also attached the property in terms of a
warrant of execution for a debt of R720 041,18 and that the property had in
terms of an agreement of lease dated 21 May 2002 been leased to JE
Conroy. On 7 November 2002 the appellant’s attorneys wrote yet another
letter to the first respondents’ attorneys. They demanded the postponement
or withdrawal of the sale in execution alternatively the acceptance of a
settlement proposal and stated:
‘Unless we receive [your agreement to any of the proposals] at our office, by the
time appointed, we will have no alternative but to approach the court for urgent relief
preventing the sale in execution . . .’

[9] The appellants’ attorneys also wrote to the sheriff. They said that the
property had been purchased by the appellant, that the appellant had
performed fully in terms of the agreement, that the sale of the property
could for that reason not proceed, that the prospective purchaser should be
advised that a pre-existing sale had been concluded, that any attempt to
obtain transfer would be resisted and that an application would be brought
to set aside the sale. The first respondent’s attorneys responded that the sale
would proceed as the first respondent was of the view that the property’s
value exceeded the ‘current purchase price’.

[10] The second respondent purchased the property, subject to the lease,
at the sale in execution for a purchase price of R1 175 000. It is this sale
that the appellant sought to have set aside in the court a quo. It alleges in
the founding affidavit that in the light of the first respondent’s knowledge
of ‘the agreement of sale’ between the appellant and the third respondent
the second respondent’s right to obtain transfer cannot prevail against the
appellant’s earlier right to transfer.

[11] The first respondent contends in its answering affidavit that the
‘agreement of sale’ amounts to nothing more than a sham. In this regard the
first respondent refers to the fact that in terms of the agreement of sale
commission in an amount R64 500 was payable to an estate agent who was
not instrumental in causing the sale, states that the sale was done in an
effort to prejudice the third respondent’s creditors and to dissipate the third
respondent’s assets at a stage when judgment had been granted against the
third respondent and that the value of the property was well in excess of
R860 000. For these reasons the first respondent applied for the agreement
of sale to be set aside.

[12] It is not in dispute that the second respondent did not know of the
agreement of sale when she purchased the property at the sale in execution.
She only became aware of the alleged sale when the application in the court
a quo was instituted. She contends that even if the alleged sale by the third
respondent was bona fide, whatever rights the appellant may have had to
the transfer of the property terminated on the sale of the property to her at
the sale in execution. She contends, furthermore, that the appellant waived
whatever rights it might have had to interfere with the transfer of the
property by the sheriff pursuant to the sale in execution. She also denies
that the agreement of sale was a bona fide transaction.

[13] The court a quo referred to the maxim ‘qui prior est tempore potior
est jure’ (‘the priority rule’) ie the rule that a prior personal right is stronger
than a later personal right but stated that the rule was subject to equities and
that the competing personal right must have been created by the same
person. It considered that the equities were against the appellant in that the
agreement of sale was not a bona fide agreement to sell but that it was
entered into in order to frustrate a later sale and also in that the appellant

failed to stop the later sale. For this reason there was in the view of the
court a quo no reason to extend the priority rule to this case where the two
competing personal rights had been created by different persons namely the
third respondent and the sheriff. In regard to the doctrine of notice which is
to the effect that a real right1 acquired with knowledge of an existing
personal right may have to yield to the personal right2 the court a quo held
that it appeared that the appellant acquiesced in the execution sale and
allowed it to proceed, that the inescapable inference from the papers was
that in an attempt to shield the property from judgment creditors there was
some degree of collusion which places doubt on the genuineness of the sale
and that undue hardship will be caused to the second respondent as the
bona fide purchaser of the property, if effect was not given to the sale in
execution. For these reasons the court a quo held that the prior personal
right should not prevail over the subsequently acquired real right.

[14] By attaching the property in execution the first respondent acquired a
real right, known as a pignus judiciale, to the property. That real right
entitled the first respondent, subject to certain qualifications, to proceed
with the sale in execution and to an entitlement to the proceeds of the sale
of the property. However, relying on the doctrine of notice the appellant
submits that in the light of the fact that the attachment took place with the
knowledge on the part of the first respondent that the appellant had
purchased the property from the third respondent and had acquired a
personal right against the third respondent for the delivery of the property
against performance by the appellant of its obligations, the appellant was
entitled to have the attachment set aside. In this regard the appellant relies
heavily on Hassam v Shaboodien 1996 (2) 720 (C) in which Friedman JP

1 By attaching the property the first respondent acquired a real right to the property (see para [14] below).
2 Lubbe ‘A doctrine in search of a theory: reflections on the so-called doctrine of notice in South African
Law’ (1997) Acta Juridica 246 p 247.

with whom Traverso J concurred disagreed with the following conclusion
reached by Nestadt J in Reynders v Rand Bank Bpk 1978 (2) SA 630 (T) at
641G-H:

‘I am unpersuaded that either in principle or on authority there is any warrant for
extending the rule or applying the principle, that knowledge of a prior personal right in
respect of property will destroy the validity of a subsequently acquired real right in it, to
the case of a judgment creditor levying execution against the property of his debtor. My
conclusion is that such creditor is entitled to attach and have sold in execution the
property of his debtor notwithstanding that a third party has a personal right against
such debtor to the ownership or possession of such property which right arose prior to
the attachment of even the judgment creditor’s cause of action and of which the
judgment creditor had notice when the attachment was made.’

[15] In Reynders the applicant applied for the setting aside of an
attachment by Rand Bank of a property which in terms of a prior court
order had to be transferred by her ex-husband to her minor children,
custody of whom had been awarded to her. Nestadt J referred to ‘the basic
principle of our law that a real right generally prevails against a personal
right (even if it is prior in time) where they are in competition with each
other in relation to an asset of a common debtor’3 and noted that ‘it was
clear that the rule . . . is not of general application where the holder of the
real right had, before he acquired it, knowledge of such personal right’.4
He accepted that the basis of the principle was that ‘it is a species of fraud
to attempt to acquire a res which is known to have been promised to
another’.5  In this regard he referred to De Jager v Sisana 1930 AD 71 at 74
where Curlewis JA referred to the fact that it had been laid down in various
decisions of the courts that a purchaser of property ‘who buys with the
knowledge of the rights of a third party to or in such property, is bound

3 Reynders 634F-G.
4 Reynders 636C.
5 Reynders 637A.

thereby, and that it would be a species of fraud on his part if he attempted
to defeat such third party’s rights’. He also referred, amongst others, to
Ridler v Gartner 1920 TPD 249 at 259-260 where it was said by Wessels J
that there ‘must be an element of deceit, an element of chicanery in the
transaction before the Court will set it aside on the ground of knowledge’.6

[16] Nestadt J was, however, of the view that the conduct of a purchaser
with knowledge of the prior sale of the property to another could not be
equated with that of a judgment creditor who attached the property in
execution of the judgment debt. In the case of a double sale, so he
reasoned, the purchaser and the seller voluntarily enter into a type of
fraudulent conspiracy the result of which is to deprive the first purchaser of
his contractual claim to the property. In the case of an attachment there is
no question of the debtor and the creditor acting fraudulently or
dishonestly. He added that the debtor presumably cannot avoid it and the
creditor ‘has or might have no option in order to obtain payment of its debt
but to execute against the property’.7 For these reasons Nestadt J failed to
see how Rand Bank’s (the creditor’s) knowledge could avail Reynders (the
third party with a prior personal right).

[17] At the time when Reynders was decided there were two earlier
judgments in which the court came to a different conclusion. In Meyer v
Botha and Hergenroder 1882 Kotze 47 Meyer attached movable property
which belonged to Botha but which had been pledged by notarial deed to a
bank but had not been delivered to the bank. Meyer was aware of the
pledge to the bank and advanced money to Botha notwithstanding such
knowledge. Kotze CJ held that the right of the bank prevailed. In this
regard he referred to the fact that it was quite clear ‘that knowledge, or

6 Reynders 637E.
7 Reynders  637H.

notice, of the existence of a pledge places a person, who purchases or
otherwise obtains possession of the property pledged, in no better position
than the debtor and pledgor himself’.  However, the same judge
subsequently, in Van Niekerk v Fortuin 1913 CPD 457, held in respect of
an application for an order for the attachment of immovable property
belonging to the judgment debtor but previously donated to a third party:

‘It seems to me that the plaintiff being a judgment creditor, and the property
being still registered in the name of the defendant, prima facie the plaintiff has the right
to ask that the property shall be seized in execution unless the party interested can show
that there are special circumstances why such an order should not be granted. Here there
was an alleged donation prior to the debt, and there is nothing to lead me to consider
that it was not bona fide; but under the circumstances of the case that does not seem
sufficient to deprive the judgement creditor of his right to seize the property in
execution.’

[18] It should be added that in terms of the uniform rules not even a real
right such as a pledge precludes attachment of a property subject to that
real right. Rule 45 (10) provides that property subject to a real right of any
third person is sold subject to the rights of such third person unless he
otherwise agrees.

[19] The only other case, pre Reynders, to which we were referred as
authority for the proposition that a judgment creditor may not attach a
property in relation to which, to his knowledge, a third party has a personal
right, is Hodgson v Emery (1902) 23 NLR 360. Hodgson had attached a
horse in execution of a judgment debt against a third party after having
been advised by letter that the horse, which belonged to the judgment
debtor, had been sold by the debtor to Mrs Emery. The court held:

‘It is true that Hodgson was not a purchaser, but can he be in a better position
than a purchaser? If good faith is required in the second purchaser, surely it should also
be required in the case of an execution creditor.

So long as the property remained in the possession of the vendor, the plaintiff would
have been entitled to specific performance and it seems contrary to right principle that
Hodgson should be allowed to defeat that right with Mr Emery’s letter in his
possession.’

[20] Some academic writers criticised the Reynders judgment and
expressed the view that it was wrong. Van der Merwe and Olivier Die
Onregmatige Daad in die Suid-Afrikaanse Reg 4 ed p 277 said:8
‘Waar C weet van die bestaan van B se vorderingsreg, maar nietemin
beslaglegging verkry, is sy optrede nie minder regskrenkend of minder verwytbaar as in
die geval waar hy met volle kennis die saak wat reeds aan B verkoop is, van A koop en
transport ontvang nie. Daar die effek  van die kennisleer by `n dubbele verkoping is dat
die tweede koper wat transport verkry het, se eiendomsreg eventueel moet swig voor die
vorderingsreg van die eerste koper, is dit anomalies dat `n vonnisskuldeiser wat, met
kennis van die bestaan van `n vroeëre vorderingsreg ten opsigte van `n saak, op daardie
saak beslag gelê het en slegs `n beperkte saaklike reg aldus verkry het, in `n sterker
posisie verkeer as die eienaar in die eerste geval.’

[21] Muller ‘Die Kennisleer: Waarom die Dubbele Standaarde’ 1979 De
Jure p 284 said at p 288:
‘[I]ndien `n tweede koper bedrieglik handel indien hy `n kontrak aangaan in
stryd met die eerste koper se persoonlike reg waarvan hy bewus is, kan ek moeilik
insien hoe die skuldeiser eerbaar kan handel indien hy beslag lê op die eiendom wat hy
weet reeds verkoop is aan `n derde persoon. Sal dit enige verskil maak indien die
skuldeiser se beslagleggingsbevel gebaseer is op `n vonnisskuld wat spruit uit `n
koopkontrak met die skuldenaar wat aangegaan is nadat die skuldenaar die saak reeds
verkoop het aan `n derde?’

8 Repeated in 6ed p 275.

[22] In Kazazis v Georghiades 1979 (3) SA 886 (T) at 893 Spoelstra AJ
with reference to the passage from De Jager v Sisana and certain common-
law authorities, stated that the inference of fraud is drawn from the mere
fact of knowledge on the part of the second purchaser of the prior
purchaser’s right. No purpose or motive that the subsequent purchaser
intended to frustrate the first purchaser’s right need be proved. In
Associated South African Bakeries (Pty) Ltd v Oryx & Vereinigte
Bäckereien (Pty) Ltd 1982 (3) 893 (A) at 910E-G Van Heerden JA agreed
and stated: ‘Bedrog word dus uit blote kennis regtens gekonstrueer.’
Nestadt J, in so far as he held that a type of fraudulent conspiracy is a
requirement for the operation of the doctrine of notice, was therefore
authoritatively held to have been wrong.

[23] In Hassam v Shaboodien 1996 (2) SA 720 (C) at 728D-F Friedman
JP, referring to the abovementioned authorities, disagreed with the
conclusion reached by Nestadt J. In line with the criticism of the academic
writers and the judgment in Hodgson v Emery he added that there did not
appear to be any justification for the limitation on the doctrine of notice
suggested by Reynders and for excluding a sale in execution from its
operation. In dealing with the argument that when a judgment creditor
causes a judgment debtor’s property to be attached and sold in execution,
he is doing something that the law allows him to do, Friedman JP said:
‘It is correct that the law allows a judgment creditor to attach the judgment
debtor’s property and to have it sold in execution. Non constat, however, that the
judgment creditor is entitled to do so if his action in so doing amounts to what the law
regards as a species of fraud.’

[24] However, it does not follow that because an inference of fraud on the
part of a second purchaser is drawn from the mere fact of knowledge of a
prior sale that an inference of fraud likewise has to be drawn from such

knowledge on the part of an execution creditor who attaches property
which his debtor has sold in execution of a judgment. In terms of the
common law such an execution creditor could, with some exceptions,
attach the assets of which his debtor was the owner in order to obtain
satisfaction of his debt.9  Effect is given to that right in s 36 of the Supreme
Court Act 59 of 1959 read with rule 45 of the Uniform Rules. Rule 45
provides that a party in whose favour any judgment of the court has been
pronounced may, at his own risk, sue out of the office of the registrar one
or more writs for execution thereof, provided, subject to certain exceptions,
that no such process may be issued against the immovable property of any
person until execution has been levied in respect of his movable property
and the Registrar is satisfied that the debtor does not have sufficient
movable property to satisfy the writ. Section 45 of the Act provides that the
sheriff should execute all writs of the court directed to him. There are
certain statutory exceptions to this general right of an execution creditor to
execute against the assets of his debtor.10 One such statutory exception is
contained in s 39 of the Act. It provides that the sheriff may not seize in
execution the items listed in the section such as bedding and wearing
apparel, tools to a certain value, food or drink to a specified extent,
professional books to a certain value and certain arms and ammunition. Not
surprisingly no mention is made of property subject to a personal right of
which the judgment creditor is aware.

[25] The third respondent sold the property to the appellant but has not
transferred it. He is still the owner of the property and it is still an asset in
his estate to which creditors are entitled to look for the satisfaction of their
claims. Should he be sequestrated the property will fall into his insolvent

9 The South African Tattersall’s Subscription Rooms v Myers Brothers 1905 TS 769 at 771; Van Zyl The
Judicial Practice of South Africa Vol 1 4 ed p 266.
10 Herbstein and Van Winsen The Civil Practice of the Supreme Court of South Africa 4 ed (1997) p 774-
775.

estate and the trustee, on the instructions of the creditors, would be entitled
to either enforce the agreement of sale or to cancel it and resell the
property.

[26] It follows that unlike the purchase of a property with knowledge of a
prior sale, the first respondent did what, according to the Uniform Rules, he
was entitled to do. There can be no question of regarding his actions as a
species of fraud. To extend the doctrine of notice to situations such as the
present would open the door to unscrupulous debtors to fabricate personal
rights which would be difficult for a creditor to expose for what they are. It
will discourage prospective purchasers from taking part in sales in
execution where a claim to a prior personal right is made by a third party.
Very few such prospective purchasers would be prepared to investigate the
validity of such a claim by a third party and even less will be prepared to
involve themselves in litigation against such a third party. In the result, to
extend the doctrine of notice to situations such as the present will create, to
the detriment of the creditor as well as the debtor, uncertainty as to the title
obtained at a sale in execution and so reduce the effectiveness of such a
sale, the purpose of which is to obtain satisfaction of a judgment debt.

[27] For these reasons I am of the view that the doctrine of notice should
not be applied to the present situation and thus that knowledge on the part
of the first respondent of the sale of the property to the appellant did not
affect the validity of the subsequent attachment and sale in execution
thereof. The court a quo, therefore, correctly dismissed the appellant’s
application.

[28] The application for leave to appeal is dismissed with costs.

____________________
P E STREICHER
JUDGE OF APPEAL

CONCUR:
MTHIYANE JA)
MLAMBO JA)
MALAN AJA)

FARLAM JA
[29] I have had the advantage of reading the judgment prepared by
Streicher JA in this matter. As I am of the view that the application for
leave to appeal should be allowed and the appeal in so far as it is related to
the first respondent upheld it is necessary for me to state my reasons for
coming to this conclusion.

[30] I do not think that the court below was correct in holding that the
agreement of sale in terms of which the appellant purchased the property
from the third respondent was not a bona fide agreement because it was
entered into in order to ensure that the family would not lose the use of the
property. Nor do I think that it can be said that the appellant acquiesced in
the execution sale because it did not apply to court to stop it before it took
place. It had communicated its attitude to the first respondent’s
representatives before the execution sale took place and there was no basis
for finding that its attitude had changed thereafter. As far as the price at

which the appellant brought the property is concerned, there is no basis for
holding that it was not an appropriate price when the contract upon which
the appellant relies was concluded.

[31] In view of the fact, however, that the execution sale took place
pursuant to two writs of execution, the second of which was issued by the
registrar pursuant to a judgment obtained by Standard Bank Financial
Nominees (Pty) Ltd (which unlike the other judgment creditor, the first
respondent, was not aware of the sale to the appellant when it caused the
property to be attached), I do not think that any legal basis exists for setting
aside the sale in execution or for ordering the third respondent to transfer
the property to the appellant against payment of the purchase price set forth
in the agreement of sale between them and the costs of transfer. As I see
the matter the execution sale was valid because of the fact that it took place
pursuant to the writ issued to the Standard Bank Financial Nominees (Pty)
Ltd and the second respondent is accordingly entitled to have the property
transferred to her, against payment of the price realized at the execution
sale and the transfer costs. This means that the only question to be
considered is whether the appellant was entitled to an order setting aside
the attachment of the property at the instance of the first respondent.

[32] As appears from my colleague’s judgment the question presently
under consideration was answered in the negative by Nestadt J in Reynders
v Rand Bank Bpk 1978 (2) SA 630 (T) and in the affirmative by Friedman
JP (with whom Traverso J concurred) in Hassam v Shaboodien 1996 (2)
SA 720 (C).

[33] The reasoning in the Reynders case, appears from the following
passage of the judgment (at 637 F-H):

‘I do not think that the argument of counsel for the applicant founded on the
double sales analogy is a good one. I think, with respect to the eminent author, that the
statement of Wille [Principles of South African Law, 6 ed, at 169], to which I have
referred, is too widely worded and should not be applied without qualification. In my
view the situation of someone purchasing or taking delivery of an article which he
knows has been sold to a third party cannot be equated with that of a judgment creditor.
In the case of a second sale, the seller and the mala fide second purchaser having
knowledge, whether at the time he purchases or when he takes delivery, voluntarily
enter into a type of fraudulent conspiracy, the necessary and inevitable result whereof is
to deprive the first purchaser of his contractual claim to the property. In the case of an
attachment, whilst the consequences to the first purchaser might be the same, there is no
question of the debtor and judgment creditor in any way acting  fraudulently or
dishonestly.’

[34] It was pointed out in the Hassam case (at 726 J – 727 C) that it is not
necessary, in a double sale case, to prove ‘a type of fraudulent conspiracy’.
All that has to be proved is knowledge of the prior sale. As was said by
Van Heerden JA in the majority judgment in Associated South African
Bakeries (Pty) Ltd v Oryx & Vereinigte Bäckereien (Pty) Ltd 1982 (3) SA
893 (A) at 910 G-H:
‘Dit blyk dus dat om van bedrog of mala fides binne die raamwerk van die
kennisleer te praat – altans vir sover dit ’n verkoop in stryd met ’n voorkoopsreg
aangaan – oorbodig is en moontlik verwarring kan skep. Die juiste siening na my
mening is dat vanweë die kennisleer aan ’n persoonlike reg beperkte saaklike werking
verleen word.’

[35] It follows, in my view, that the main consideration on which the
Reynders judgment was based has been shown to be erroneous.

[36] The judgment in the Reynders case was trenchantly criticised by Van
der Merwe and Olivier. Die Onregmatige Daad in die Suid-Afrikaanse Reg,

6 ed, at 274-276. After the passage quoted by my colleague at para [20] of
his judgment, the learned authors said (at 275-6):
‘Aangesien op die gebied van die privaatreg beweeg word, kan die ratio vir die
kennisleer in ieder geval nooit bestraffing van bedrieglike of oneerlike optrede wees nie,
maar wel die beskerming van vroeër gevestigde vorderingsregte teen skuldige
inbreukmaking daarop. Soos die regter self toegee, is die benadeling van die draer van
die eersgevestigde vorderingsreg steeds dieselfde hetsy lewering ingevolge ’n tweede
verkoping hetsy beslaglegging ter afdwinging van ’n latere vorderingsreg plaasvind.
Daarom gaan ook die volgende stelling van die regter nie op nie:
“I would pause here to stress that different considerations might well apply in a
case where the judgment creditor and judgment debtor fraudulently conspire to defeat
the prior personal right of a third party to claim property of the debtor by, for example,
the fabrication of an indebtedness.”

Of A en C nou “fraudulently conspire” om B se reg te verkort dan wel of C in opsetlike
miskenning van B se reg sy eie regsposisie probeer verstewig, gaan dit telkens om ’n
skuldige inbreukmaking op B se vorderingsreg en is aanwending van die beginsels van
die kennisleer gepas. Dus kan die benadering van ons howe in ’n geval soos die
onderhawige nie onderskryf word nie. Dit verteenwoordig ’n onhoudbare beperking op
die aanwendingsterrein van die kennisleer en is ’n negering van grondbeginsels.’ (The
italics are mine.)
This criticism of the reasoning in the Reynders case was expressly
approved by Friedman JP in the Hassam case at 728 D – E.

[37] In my view it is important to stress that it is not suggested that the
third respondent is insolvent and that if the execution effected at the
instance of the first respondent is set aside it will not be able to recover
what it is owed by the third respondent. If he were to be sequestrated then,
clearly, the appellant would not be able to claim transfer of the property:
see, eg, Harris v Buissine’s Trustee (1840) 2 Menz 105. It follows that the
main consequence of dismissing the appellant’s appeal in so far as it relates
to the first respondent would be to hold that the appellant’s as yet

unregistered ius in personam ad rem acquirendam11 would be able to be
defeated by a party who had prior knowledge of it, with the result that it
would lose the ‘beperkte saaklike werking’ against those with knowledge
of the right (cf the Amalgamated South African Bakeries case at 910 H). I
do not think that such a decision would be legally sound. I do not agree that
such a conclusion is a necessary inference from Rule 45 of the Uniform
Rules: in any event the common law on the point cannot be overridden by a
rule of court.

[38] Furthermore I do not think it is correct to regard this as a case where
the court is called upon to extend the doctrine of notice to cases of
execution where the execution creditor had knowledge of the right. In my
view it is more accurate to say that what the first respondent is asking the
court to do is to create an exception and to exclude its operation in such
cases. I am not sure that this court has the power to uphold such an
exclusion but even if it has I do not think that the case in favour thereof has
been made out. The mere fact that some persons may fraudulently claim
rights which would enjoy ‘beperkte saaklike werking’ where the judgment
creditor had been told about them in advance cannot justify depriving
someone of such rights where there is no fraud and he or she genuinely
possesses such rights.

[39] For these reasons I am of the view that the following order should be
made:

1.
The applicant is granted leave to appeal against the order of the court
a quo in so far as it relates to the first respondent.
2.
The appeal in so far as it relates to the first respondent is allowed.

11 For a recent historic and comparative discussion of the ius ad rem doctrine see R Michaels,
Sachzuordnung durch Kaufvertrag, Berlin, 2002.

3.
The first respondent is ordered to pay one half of the applicant’s
costs on the application for leave to appeal.
4.
The applicant is ordered to pay the costs on the application for leave
to appeal of the second respondent.
5.
The order of the court a quo is altered to read:
‘1.
The attachment of the property described in paragraph 7.1 of
the applicant’s founding affidavit at the instance of the first
respondent is set aside.
2.
The first respondent is ordered to pay one half of the
applicant’s costs.
3.
The relief sought by the applicant in prayers 2 and 3 of its
notice of motion is refused,
4.
The applicant is ordered to pay the costs of the second
respondent.’

___________________
IG FARLAM
JUDGE OF APPEAL