Double Sales: The appeal court confirms the general principle of first in time, first in right, unless the later purchaser can show a balance of equities in his or her favour.
In the recent appeal court judgement of Haroon Abdulla Mohamed v KPMG Harley & Morris Joint venture N.O. and Others confirmed the general principle, that the maxim qui prior est tempore, prior est jure – directly translated as ‘first in time, first in right’ applies, unless the later purchaser can show a balance of equities in his or her favour.
The facts were as follows: A Bank in Lesotho was the registered lease holder of a plot of land on which four houses were built. The bank decided to dispose of its rights in the land, and a Land Surveyor was instructed to sub-divide the land into four parts; A, B, C and D respectively.
The Second Respondent made an offer to the Bank for the purchase of plot D as well as the southern portion of plot B. His offer was accepted and he paid the bank accordingly.
The bank gave instructions to a Surveyor to do the survey for the sub-division of plot B. However, before plot B could be re-surveyed, the Bank signed a Deed of Sale with the Sixth Respondent (a junior official in the Bank’s Property Division) for plot B. This sale was, however, “voetstoots” and contained a clause in which the following was stated:
“… and the seller shall not be liable for any defects, patent, latent or otherwise in the property…”.
It was clear that the Sixth Respondent was purchasing rights to the whole of plot B, including the front portion thereof, which the surveyor was instructed to sub-divide. A double sale of the rights to the land was effected by the Bank; initially to the Second Respondent and subsequently to the Sixth Respondent. These rights were never registered in the Deeds Office.
Thereafter, the Sixth Respondent sold plot B to the Appellant. Consequently, both the Second and Sixth Respondents had acquired a personal contractual right to claim such transfer from the Bank. The Appellant, in turn, had a personal contractual right to claim transfer of these rights from the Sixth Respondent.
The Appellant brought an application in the Court a quo in which main relief was sought, directing the First Respondent, being the bank’s Liquidators, to prepare and present the conveyancing documents necessary to effect transfer to the Appellant of all property rights to plot B. In addition, the Appellant sought an interdict restraining the Second Respondent from interfering with the registration process or obstructing the Appellant’s occupation of plot B and further interdicting the Second Respondent from changing the boundaries of plot B, or removing and/or repositioning any fence or boundary lines allocated by the Chief Surveyor in terms of the site diagram held by the Chief Lands Surveyor.
It is trite law that a party cannot transfer to another greater rights than he himself is entitled to. The Sixth Respondent, having purchased the rights to plot B while being fully aware that the southern portion thereof had already been sold to the Second Respondent, after which he abused his position in the Bank to attempt to acquire rights in the whole of plot B, was found to have been mala fide and dishonest. For this reason, the Court held that the Sixth Respondent could not be said to have shown a balance of equities in his favour.
The Court confirmed the general principle, that the maxim qui prior est tempore, prior est jure – directly translated as ‘first in time, first in right’ applies, unless the later purchaser can show a balance of equities in his or her favour.
As the Second Respondent was the first purchaser of the rights (prior in tempore) he was entitled to an order of specific performance against the Bank. The Appellant could not show a balance of equities in his favour and is therefore left to content himself with a claim for damages against the Sixth Respondent.
As a result, the appeal was dismissed, with costs.
Written by Lelanie Botha and edited by Morné Maree.