Legator McKenna Inc v Shea

The first respondent, Ms Clare Shea, suffered brain injuries in a motor vehicle accident on 5 February 2002. On 8 March 2002, the second appellant, Mr McKenna, was appointed as curator bonis to her estate by the Durban High Court. On 22 April 2002, McKenna purported to sell Shea's house in Berea, Durban to the second respondents (the Erskines) for R540,000, adding the words "subject to approval of Master of High Court" to his signature. At this time, McKenna had not yet received letters of curatorship. The letters of curatorship were only issued by the Master on 3 June 2002. The Master granted consent for the sale on 17 July 2002, and transfer was registered to the Erskines on 27 July 2002. Shea subsequently recovered from her injuries and was declared capable of managing her own affairs on 10 March 2003. She then sued for return of the house, claiming the sale was invalid as it was concluded before McKenna received his letters of curatorship, allegedly contravening section 71(1) of the Administration of Estates Act 66 of 1965.

• Whether the sale agreement concluded by McKenna before receiving letters of curatorship contravened section 71(1) of the Administration of Estates Act 66 of 1965
• Whether a valid agreement of sale was concluded between McKenna and the Erskines
• Whether the abstract theory of transfer applies to immovable property in South African law
• Whether ownership of the property passed to the Erskines despite any invalidity in the underlying sale agreement
• Whether Shea could claim return of the property on the basis of the condictio ob turpem vel iniustam causam
• Whether the 'rule in Wilken v Kohler' applied as a defence

The appeal was upheld with costs, including costs of two counsel. The order of the court a quo was set aside and substituted with an order dismissing the plaintiff's (Shea's) claim 1 with costs.

The binding legal principles established are: (1) The abstract theory of transfer applies to immovable property in South African law. Transfer of ownership requires delivery (registration for immovables) and a valid real agreement, but does not require a valid underlying contract such as a sale agreement. (2) A real agreement will be valid if the transferor intends to transfer ownership and the transferee intends to become owner, even if the underlying causa (such as a sale agreement) is invalid or non-existent. (3) A mistaken belief about the validity of an underlying causa constitutes a mistake in motive which does not vitiate a real agreement, unless the mistake is expressly made part of the real agreement. (4) The 'rule in Wilken v Kohler' is good law in South Africa: where both parties to an invalid or non-existent agreement have performed in full and the lawful purpose of their transaction has been achieved, neither party can recover their performance on enrichment grounds. (5) The Wilken v Kohler rule does not apply where the purpose of the transaction is prohibited by law, and thus provides no defence to the condictio ob turpem vel iniustam causam. (6) The condictio ob turpem vel iniustam causam requires illegality in the underlying transaction as an essential element.

The court made several obiter observations: (1) The court declined to decide whether a conditional agreement of sale (subject to the Master's approval) would constitute a contravention of section 71(1) of the Administration of Estates Act, noting that the appellants' arguments on this point had merit but the issue did not require determination. (2) Brand JA noted that section 80(1) of the Administration of Estates Act did not directly require the Master's consent in this case because the property's value exceeded R100,000, meaning only the High Court could authorize the sale. The requirement for the Master's approval stemmed from the court order appointing McKenna, not from statute. (3) The court commented on the policy justification for the Wilken v Kohler rule, noting that it prevents parties who received what they bargained for from escaping bad bargains through enrichment actions, which are intended as equitable remedies. (4) While finding that no valid written agreement existed due to non-compliance with section 2(1) of the Alienation of Land Act 68 of 1981, the court noted that even if the Erskines had impliedly accepted McKenna's counter-offer, such acceptance would not satisfy the writing requirement as established in Jackson v Weilbach's Executrix 1907 TS 212.

This case is significant in South African property and enrichment law for several reasons: (1) It provides authoritative Supreme Court of Appeal confirmation that the abstract theory of transfer applies to immovable property in South Africa, not just movables. This means ownership can pass despite an invalid underlying causa (such as a void sale agreement), provided there is valid delivery/registration and a valid real agreement. (2) It provides clear judicial endorsement of the 'rule in Wilken v Kohler', holding that where parties have fully performed under an invalid or non-existent agreement and the lawful purpose has been achieved, enrichment claims are not available. This rule is justified on policy grounds that parties who receive what they bargained for should not escape bad bargains through enrichment actions. (3) It clarifies the distinction between the validity of underlying contracts (justa causa) and the validity of real agreements in the context of property transfers. (4) It demonstrates the limited scope of the condictio ob turpem vel iniustam causam, which requires actual illegality in the underlying transaction. (5) It illustrates the application of section 28(2) of the Alienation of Land Act 68 of 1981, which validates certain non-compliant alienations when performance has occurred and transfer has been effected.