Nedbank Limited v Mendelow NO

Mrs Emily Valente owned immovable property in Gauteng. In 1994 she executed a will leaving her estate equally to her two sons, Evan and Riccardo Valente. In January 2001, Riccardo forged his mother's signature on a deed of sale transferring the property to U Valente Africa (Pty) Ltd. Mrs Valente died a week later. Riccardo and an attorney were appointed as co-executors, though the attorney later resigned. At the time of death, the estate comprised shares in the company, the property, cash and movables. Riccardo had Evan removed as a director of the company and obtained mortgage bonds over the property - first from BoE Bank Ltd (cancelled) and later from Imperial Bank Ltd (R6 million), which was acquired by Nedbank. The bond was registered shortly before the company was provisionally wound up. Riccardo forged Evan's signature on a 'consent to sale' document to induce the Master to sign a certificate permitting transfer under s 42(2) of the Administration of Estates Act 66 of 1965. New executors (Mendelow and Ledwaba NNO) were appointed in 2009 and sought to set aside the transfer and bond registration on grounds of fraud.

• Whether ownership passes when registration of immovable property is effected pursuant to fraud and forgery
• Whether a forged 'real agreement' (intention to transfer ownership) can effect transfer of ownership despite registration
• Whether a mortgage bond registered over property by a non-owner is valid
• Whether the executors had locus standi to bring the claim
• Whether the conduct of the Master and Registrar of Deeds constituted administrative action reviewable under the Promotion of Administrative Justice Act 3 of 2000 (PAJA)
• Whether the court could apply legal principles mero motu when the parties had not pleaded them correctly

The appeal was dismissed with costs including those of two counsel where so employed. The orders of the high court were upheld: the property was to be reregistered in the name of the deceased estate and the mortgage bond in favour of Nedbank was cancelled.

Where registration of transfer of immovable property is effected pursuant to fraud or forgery, and there is no genuine intention on the part of the owner to transfer ownership (no valid 'real agreement'), ownership does not pass despite registration in the deeds registry. South Africa operates a negative deeds registration system which does not guarantee title. The person in whose name the property is registered is not the owner and cannot grant a valid mortgage bond or other real right over the property. Purely clerical or ministerial acts by state officials (such as the Master signing a certificate under s 42(2) of the Administration of Estates Act or the Registrar of Deeds registering transfer) that involve no discretion, choice or evaluation do not constitute 'administrative action' reviewable under the Promotion of Administrative Justice Act 3 of 2000.

The court noted that while the Master and Registrar of Deeds may sometimes be called upon to make evaluations requiring exercise of judgment or choice (in which case their functions would be quasi-judicial and reviewable under PAJA), this was not such a case. The court also observed that it could not exercise discretion to condone fraud, as doing so would be contrary to constitutional values and public policy. Lewis JA commented that not every act of an official amounts to administrative action reviewable under PAJA or otherwise. The judgment cited Jones: Conveyancing in South Africa regarding the quasi-judicial nature of some registrar functions, but distinguished those from the purely mechanical duties involved in this case. The court noted that s 95 of the Administration of Estates Act provides for review of or appeal against appointments or decisions by the Master, but this does not make such acts 'administrative action' under PAJA.

This case is significant in South African property law as it clarifies and reaffirms fundamental principles of the deeds registration system. It confirms that South Africa operates a negative registration system where registration does not guarantee title. The judgment reinforces that the abstract theory of transfer applies to immovable property - requiring a genuine 'real agreement' (intention to transfer and acquire ownership) separate from the underlying causa. It establishes that where fraud or forgery vitiates the real agreement, ownership does not pass despite registration, and any subsequent real rights (such as mortgage bonds) registered over the property are void. The case also clarifies the limits of administrative law review under PAJA, holding that purely clerical or ministerial acts by state officials (such as the Master or Registrar of Deeds acting without discretion) do not constitute reviewable 'administrative action'. Finally, it confirms the court's power and duty to apply correct legal principles mero motu where the facts support them, to prevent decisions based on incorrect law which would infringe the principle of legality.