THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case No:   674/08

PHILANI-MA-AFRIKA

First Appellant
RESIDENTS OF ANGUS
MANSIONS

Second to Sixty Eighth Appellants

and

W M MAILULA                                                       First Respondent
TRUST FOR URBAN HOUSING FINANCE
Second Respondent
J N BHANA & ASSOCIATES

Third Respondent
REGISTRAR OF DEEDS

Fourth Respondent
THE CITY OF JOHANNESBURG

Fifth Respondent

Neutral citation:
Philani-Ma-Afrika & Others v W M Mailula & Others
(674/08) [2009] ZASCA 115 (25 September 2009)

Coram:
FARLAM, NAVSA, MLAMBO, SNYDERS JJA et

TSHIQI AJA

Heard:
26 MAY 2009
Delivered:
25 SEPTEMBER 2009

Summary:
Sale of property – Failure to establish sale and transfer of
property duly authorised – order putting eviction order
into operation – whether appealable.

______________________________________________________________

ORDER

On appeal from:
Johannesburg High Court (Willis J sitting as court of first
instance)

The following order is made:
1.
The appeal is allowed with costs including those occasioned by the
employment of two counsel.

2.
The order made by the court a quo in case 2008/14341 (the Philani
application) is set aside and replaced by the following order:
'1.
The sale of erf No 4562 Johannesburg, situated at 268 Jeppe
Street, Johannesburg, is set aside.

2.
The Fourth Respondent is ordered to cancel Deed of Transfer
no T033425/07.

3.
It is declared that the property referred to in paragraph 1 is
owned by the Applicant.

4.
The First and Second Respondents are ordered to pay the
Applicant's costs.'

3.
The order made by the court a quo in case 2008/4453 is set aside and
replaced by the following order:
'The application is dismissed with costs'.

JUDGMENT

FARLAM JA (Navsa, Mlambo, Snyders JJA et Tshiqi AJA concurring)
[1] This is an appeal against a judgment delivered by Willis J on 5
November 2008 in the Johannesburg High Court. In his judgment the learned
judge dealt with two applications which were argued together before him. One
was an application brought by the present first appellant, a company
registered in terms of s 21 of the Companies Act 61 of 1973, Philani-Ma-
Afrika, which I shall call in what follows 'Philani', in which it sought orders (a)
setting aside the purported sale of a property known as Angus Mansions,
situated at Erf no 4562, Johannesburg, the street address of which is 268
Jeppe Street, Johannesburg, to the first respondent, Mr William Marofane
Mailula, (b) ordering the Registrar of Deeds, Johannesburg, the fourth
respondent, to cancel Deed of Transfer no T033425/07(in terms of which the
property was transferred from Philani to Mr Mailula) and (c) declaring the
property to be owned by Philani. As additional respondents were cited the
Trust for Urban Housing Finance, the second respondent, which is the
mortgagee of the property under a mortgage bond registered over the
property to secure a debt owed by Mr Mailula, and as third respondent J N
Bhana and Associates, the firm of conveyancers responsible for bringing
about the transfer of the property to Mr Mailula. The City of Johannesburg
was cited as fifth respondent.

[2] The other application was one brought by Mr Mailula, as owner of the
property, for an order evicting 67 named occupiers of the property. They
feature in this case as the second to 68th appellants. The 68th respondent in
the eviction application was described as 'the remaining unlawful occupiers of
Angus Mansions'. They are not represented before this court.

[3] Willis J dismissed the application brought by Philani and granted the
eviction application brought by Mr Mailula against the first to 68th respondents
before him. He granted them and Philani leave to appeal to this court against
his judgment and the orders he made. Subsequently he granted Mr Mailula
leave to execute against the respondents whose eviction he had ordered
(except for the 9th, 16th, 18th, 32nd and 65th respondents, who are respectively
the 10th, 17th, 19th, 33rd and 66th appellants before us and who are all

members of Philani): in what follows I shall call this order ‘the execution
order’. The respondents whose eviction had been ordered, including those
against whom leave to execute was not given, applied to the Constitutional
Court for an order replacing Willis J's execution order with an order dismissing
the execution application.

[4] On 4 December 2008 the Constitutional Court granted an order in the
following terms:
'1.
The order of Willis J in the Johannesburg High Court on 13 November 2008, granting
the First Respondent leave to execute an eviction order against 62 of the applicants on 15
December 2008, is suspended pending the final determination of the appeal in the Supreme
Court of Appeal, pursuant to leave granted to the applicants by the High Court on 5
November 2008.

2.
The application for leave to appeal against the High Court's order of 13 November
2008 is referred to the Supreme Court of Appeal to be adjudicated, to the extent it may be so
adjudicated given the provisions of section 20 of the Supreme Court Act 59 of 1959,
simultaneously with the appeal referred to in sub-paragraph 1 hereof.
3.
Costs are to be costs in the appeal.'

[5] It was common cause at the hearing of the appeal that if the Philani
appeal succeeded the appeal against the order in the eviction case would
also have to succeed.

[6] Philani was incorporated in 1996 to serve as a corporate vehicle
through which the National Housing Board, through the Gauteng Provincial
Housing Board, subsidised and assisted underprivileged people collectively to
acquire Angus Mansions for their own occupation.

[7] Its Memorandum of Association states that its main business is 'to
acquire, hold, develop or improve [Angus Mansions] with a view to enabling
the community of residents, of which at least 75% . . . of the adult members
are persons who earn less than R1500 per month . . . to acquire such land,
and/or right thereto so as to occupy the land and buildings wholly or mainly for
residential purposes . . ..' Its powers include the power to sell or deal with its
property, ie, Angus Mansions, 'but always in accordance with the main object'

(which was identical with its main business). Its income had to be applied
solely towards the promotion of its main and ancillary objects (which were
limited to those 'necessary to achieve its main object') and no part of it might
be paid or transferred directly or indirectly to its members. On winding up its
assets have to be given or transferred to some other association or institution
'having objects similar to its main object'.

[8] In terms of its articles only residents of Angus Mansions are eligible for
membership and membership is a pre-condition of occupation of a flat in the
building. Only members are eligible for election as directors. At all times there
have to be at least seven directors and if the number falls to below seven the
remaining directors 'may only act to call a general meeting for the election of
additional directors'.

[9] Philani acquired Angus Mansions and it was registered in its name on
18 February 1997. The administration and record-keeping of the company
were neglected and as the appellants' counsel put it, 'fell into disarray'. The
register of members was never updated with the result that its only registered
members are the eight original subscribers to the memorandum of
association. Of these two have died and one has moved away so that Philani
has only five registered members left, the appellants in respect of whom the
execution order was not made. The appointment of the directors and the
functioning of the board have also been neglected. CM 29 returns have been
furnished to the Registrar of Companies reflecting resignations and the
appointment of new directors but the new appointments are clearly invalid
because the persons allegedly appointed were not members and were
accordingly ineligible for election as directors  (even if elections were held).
Indeed it is clear that it is not possible for Philani to have a board of directors
whose members can do nothing other than call a general meeting.

[10] On 7 August 2006 a deed of sale was signed by Mr Mailula, as buyer,
and a Mr Mkhumbuzi, purportedly on behalf of the seller. The deed reflected
the sale of Angus Mansions to Mr Mailula for R3.5m. Mr Mkhumbuzi signed
the deed 'by virtue of a Power of Attorney - copy attached'. No copy was

attached. Neither Mr Mailula nor Mr Mkhumbuzi (from whom an unsigned
document purporting to be an affidavit was filed) state whether a power of
attorney in fact existed. If it did, it could not have been valid because the
remaining directors could not validly have passed a resolution authorising the
sale. The estate agent who handled the sale did not make an affidavit nor did
the conveyancing attorney, who, as I have said, was a party.

[11] As counsel for the appellants contended the only document disclosed
in the evidence upon which Mr Mkhumbuzi could have relied was a document
described during argument as 'the Madisha document'. The copy of the
document annexed to the papers reads as follows:
'PHILANI MA AFRICA
PHILANI MA AFRICA

ANGUS MENSSION NO 268 JEEPE STREET [sic]

PO BOX 85
JOHANNESBURG

WITS
2001

2000

__________________________________________________________________________

RESOLUTION BY DIRECTORS OF PHILANI MA AFRICA

BUILDING SITUATED AT CORNER JEPPE AND END STREET

A meeting was on the 12th April 2006 held between the Directors and disposal of property with
immediate effect at an agreed price.

Shares and equity between the members for their own interest and an amount of
R100.000.00 to be paid.
Directly to Solly Madisha.

Disolution of partnership and appointments of interim directors.

Dated on Johannesburg on this 12th day April 2006.

___________________
Directors: Solly Madisha'
(The document bore a signature.)

[12] This is the only document from which Mr Mkhumbuzi claimed to have
derived his authority to sell Angus Mansions on behalf of Philani. Counsel for
the appellants submitted (a) that it was inadmissible because the copy was
not proved to be authentic; (b) that there was every reason to suspect that it
might be a forgery; (c) that it was incoherent on its face; (d) that, if admissible
and genuine, it did not prove a valid resolution because none of the persons
alleged to have adopted the resolution could have validly been elected as
director of Philani (because none was registered as a member) and (e) in any
event, even if they were validly appointed directors, they had no power to do
anything other than call a general meeting, for the reason given earlier. But
there is an even more telling criticism. It did not authorise anyone to
implement it on behalf of Philani.

[13] Apart from the Madisha document, Mr Mailula relied on a further
document, which, although it was only in manuscript, purported to be a copy
of a minute of a meeting of residents of Angus Mansions held on 9 October
2006 (two months after the deed of sale relied on by Mr Mailula was signed).
It reads as follows:
‘Meeting held at Philani Ma Afrika with Housing Dept
Agenda.
1.

Housing Dept introducing Vusani

1.
We told housing that we don't need Vusani to manage us, or to do renovations for us.

2.
We told housing that we don't trust them anymore because during the past years they
introduce Cope housing to manage Philani and they put us into problems. So now we
the declaratory order need any agent brought by housing.

3.
Housing Dept told us that if we don't want Vusani its fine because everything is up to
us as tenants.

4.
We tenants we give Philani the authority to appoint or sell the property to a company
that will run the property in a standard form of good management.'

[14] No evidence was led as to the authenticity of this document. Counsel

for the appellants contended that it was, in any event, a forgery and referred
in this regard to the evidence of Philani's witnesses, who say that there was a
meeting of residents on 9 October 2006 for another purpose and the disposal
of the building was not discussed.

[15] It is unnecessary to make any finding on these issues because, even if
the document is authentic and evidences a resolution in the terms set out, this
still will not assist Mr Mailula in establishing that Mr Mkhumbuzi was
authorised to sell the building or to sign the conveyancing documents for the
property to be transferred to Mr Mailula.

[16] Counsel for the appellants attacked the validity of the sale and transfer
on other grounds also but it is clear from what I have said that Philani has
clearly established that the sale and transfer of its property were invalid and
that it is entitled to the relief it seeks in its notice of motion.

[17] Counsel for Mr Mailula conceded that the documentation purporting to
authorise the sale was, as he put it, ‘a sham’ but submitted that the case
should be sent back to the court a quo so that there could be either a
reference to evidence under rule 6(5)(g) of the Uniform Rules or a reference
to trial. The purpose, he submitted, was so that a full enquiry into the history
of the management of Angus Mansions could be conducted and the
circumstances leading up to the sale could be explored. He submitted further
that inner city housing as a whole should be investigated. All of this is far
beyond the legal issues we are required to address. But this request was in
any event made far too late. In the court below Mr Mailula was content for the
case to be dealt with on the papers and the evidence adduced in that court
was not sufficient to raise a valid defence to Philani's claims, even if believed.

[18] Counsel for the second respondent submitted that Philani was
precluded from obtaining the relief it sought by virtue of the application of the
par delictum rule. He submitted that, if there was a fraud perpetrated on
Philani (as counsel for the appellant submitted), it was as much part of the
fraud as anyone. In this regard he contended that at all material times Philani

had a board of directors and there was accordingly what he called 'corporate
intelligence' and the directors ‘must have known’ what was happening. While I
do not think that it is correct to say that Philani (in any recognisable form) can
be regarded as complicit in the fraud that was perpetrated, it is unnecessary
to give further consideration to the point raised because I am satisfied that, as
counsel for the appellants contended, the par delictum rule does not apply in
the circumstances of this case.

[19] It follows from what I have said that the appeal must succeed and the
orders made by the court a quo must be set aside and replaced with orders in
the Philani application granting Philani the relief it sought and in the eviction
application refusing the relief sought.
[20] It remains for me to deal with the issue referred to this court by the
Constitutional Court. The application was brought in the Constitutional Court
because it was believed that the execution order was not susceptible to
appeal to the Full Bench of the High Court or to this Court. That belief was
erroneous. It is clear from such cases as S v Western Areas 2005 (5) SA 214
(SCA) at paras 25 and 26 at 226A-E that what is of paramount importance in
deciding whether a judgment is appealable is the interests of justice. See also
Khumalo v Holomisa 2002 (5) SA 401 (CC) para [8] at 411A-B. The facts of
this case provide a striking illustration of the need for orders of the nature of
the execution order to be regarded as appealable in the interests of justice.
Counsel were agreed that if the appeal on the merits of the eviction order
were to succeed no further attention need be paid to the application for leave
to appeal against the execution order – the latter being premised on the
former. In any event, in view of the suspension of the execution order by the
Constitutional Court the point, as counsel agreed, became moot. In the
circumstances no order is required in respect thereof.
[21] The following order is made:
1.
The appeal is allowed with costs including those occasioned by the
employment of two counsel.
2.
The order made by the court a quo in case 2008/14341 (the Philani
application) is set aside and replaced by the following order:

'1.
The sale of erf No 4562 Johannesburg, situated at 268 Jeppe Street,
Johannesburg, is set aside.

2.
The Fourth Respondent is ordered to cancel Deed of Transfer no
T033425/07.

3.
It is declared that the property referred to in paragraph 1 is owned by
the Applicant.

4.
The First and Second Respondents are ordered to pay the applicant's
costs.'

3.
The order made by the court a quo in case 2008/4453 is set aside and
replaced by the following order:
'The application is dismissed with costs'.

……………..
IG FARLAM
JUDGE OF APPEAL

APPEARANCES:

FOR APPELLANT:
W H TRENGOVE SC

Ms C STEINBERG

Instructed by

Jerry Nkeli & Associates Inc Johannesburg

Matsepes Inc Bloemfontein

FOR FIRST RESPONDENT:
D A KUNY SC

R G COHEN

Instructed by

Mervyn Joel Smith Attorneys Johannesburg

Lovius Block Bloemfontein

FOR SECOND RESPONDENT: J G SMIT

Instructed by

Cliffe Dekker Hofmeyr Inc Johannesburg

Du Toit Louw Botha Inc Bloemfontein

FOR FIFTH RESPONDENT:
B L MAKOLA

THIRD, FOURTH AND FIFTH RESPONDENTS REFERRED TO ONLY FOR
RECORD PURPOSES.