About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2021
>>
[2021] ZAWCHC 180
|
|
Diaz Hotel and Resort (Proprietary) Limited v Body Corporate of the Vista Bonita Sectional Titles Scheme No SS 357/2008 and Another (15175/2019) [2021] ZAWCHC 180; [2021] 4 All SA 786 (WCC); 2022 (1) SA 175 (WCC) (31 August 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
NDITA
J et DOLAMO J et SHER J
CASE
NO: 15175/2019
In
the matter between:
DIAZ
HOTEL AND RESORT (PROPRIETARY) LIMITED
REGISTRATION
NUMBER: 2014/231014/07
Applicant
And
BODY
CORPORATE OF THE VISTA BONITA
SECTIONAL
TITLES SCHEME NO SS 357/2008
First Respondent
REGISTRAR
OF DEEDS, CAPE
TOWN
Second Respondent
JUDGMENT
DELIVERED (VIA EMAIL) – 31 AUGUST 2021
DOLAMO
et SHER JJ (NDITA J concurring)
INTRODUCTION
[1]
The applicant brought this application for certain declaratory relief
and to compel
the first respondent to co-operate with it to achieve
the transfer of three exclusive use areas in a sectional title scheme
known
as Vista Bonita (the Scheme) in Mossel Bay. The relief sought
in the notice of motion is in the following terms:
“
1.
Declaring that the three exclusive use
areas in the Vista Bonita sectional titles scheme number
SS 357/2008
("the scheme") owned by S D Commercial Holdings
(Proprietary) Limited (in liquidation), namely parking bays
number
P64, P73 and P74 depicted on sheets 4 and 5 respectively of
registered sectional plan S G D No 1065/2007 as amended have
not been
cancelled by resolutions of the first respondent and are extant.
2.
Directing the first respondent to co-operate with the applicant and
the second
respondent to effect transfer of the above -mentioned
exclusive use areas known as parking bays number P64, P73 and P74 in
the
scheme to the applicant, which co-operation must include, but is
not limited to, providing to the applicant all relevant information
such as clearance figures and completing and signing all relevant
documents and affidavits necessary to register such transfers
to the
applicant.
3.
In the event that the first respondent refuses or fails to comply
with the orders
in paragraph 2 above, the sheriff appointed for the
area of jurisdiction within which the scheme is situated is hereby
authorised
to complete and sign all relevant documents and affidavits
on behalf of the first respondent to effect transfer of the exclusive
use areas known as parking bays number P64, P73 and P74 in the scheme
to the applicant.
4.
Directing and authorizing the second respondent, against payment of
the prescribed
fees and costs by the applicant, to transfer the
exclusive use areas known as parking bays number P64, P73 and P74
from S D Commercial
Holdings (Proprietary) Limited (in liquidation)
to the applicant.
5
Directing the first respondent, as well as the second respondent only
if
it opposes the application to pay the applicant's costs of suit
which costs are to include the costs occasioned by the employment
of
counsel.”
[2]
The second respondent in the matter did not indicate whether it was
opposing or supporting
the application nor did it file the customary
report in matters of this nature. It is fair therefore to assume that
it abides the
decision of this court. For the sake of convenience I
shall henceforth refer to the first respondent merely as the
respondent and
where necessary to the second respondent simply as the
Deeds Office or Registrar of Deeds.
THE FACTS
[3]
The facts giving rise to the application are briefly the following:
On or about 2
February 2015 applicant entered into a sale agreement
(“the agreement”) on behalf of The Tower Trust in terms
of which
it purchased all the rights and assets of a business known
as the Convenience Centre, Diaz Beach, Mossel Bay. This business was
owned by a company called S D Commercial Holdings (Proprietary)
Limited (in liquidation) (“the seller” or “S
D
Commercial”). The purchaser was represented by one Conradie
[1]
and the seller by its co-liquidator, one Engelbrecht, the latter
acting in terms of a Certificate of Appointment issued by the
Master
of this court. Included in the
merx
purchased
was unit 73 in the scheme. There were two exclusive use areas which
were associated with unit 73, namely, parking bays
P73 and P74 and
the applicant submitted that it was entitled to obtain transfer of
parking bay P64 as well as the two exclusive
use areas.
[4]
After the conclusion of the sale transaction, the agreement and other
related transfer
documents were lodged in the Deeds Office to
transfer the immovable property into the name of the applicant. After
lodgement the
conveyancers appointed by the parties to handle the
transfer informed the parties that the Deeds Office had rejected the
transfer
of the three exclusive use areas as these were not expressly
cited in the sale agreement. In response to the rejection note, and
in order to correct the error, Engelbrecht and Conradie concluded an
addendum to amend the agreement so that it expressly included
the
three exclusive use areas, namely parking bays P64
[2]
,
P73 and P74 in the scheme, as part of the assets sold under the
agreement.
[5]
Conradie also granted a special power of attorney to Coetzee, the
conveyancing secretary,
authorising her to sign and execute a
notarial deed of cession to enable the transfer of the exclusive use
areas to the applicant.
In addition, Ms Coetzee submitted to the
Deeds Office a duplicate of the original certificate of title to the
exclusive use areas
number SK2348/2008S, and an application for a
replacement copy to enable the transfer of these exclusive use areas
allegedly by
endorsement into the name of the applicant.
[6]
All these documents were re-lodged in the Deeds Office and on 11
December 2015 the
Deeds office registered the transfer of unit 73
into the applicant’s name under Deed of Transfer number
ST21604/2015. Paragraph
9 of the deed of transfer reflects that Unit
73 in the scheme was transferred to the applicant together with an
undivided share
in the common property and other real rights and
conditions as contained in the schedule of conditions referred to in
section 11(3)(b)
of the Sectional Titles Act
[3]
(“the STA”). Applicant submitted that the Deeds Office,
however, failed to register the transfer of the exclusive use
areas
as was intended. According to the applicant this omission in the
records of the Deeds Office ought to be rectified. For this
reason,
the applicant submitted that it requires the co-operation of the
respondent to rectify the error in the Deeds Office but
the latter
has failed and/or refused to provide the necessary information (such
as clearance figures) to effect transfer of the
aforesaid exclusive
use areas to the applicant as the owner of Unit 73.
[7]
In terms of the sectional plan there are 74 exclusive use areas
registered in respect
of the scheme, which areas are designated on
the sectional plan as parking bays P1 to P74, respectively. Unit
73, which is
on the ground floor, is used for a shop known as the
Convenience Centre. The applicant submitted that parking bay P73, the
larger
of the two parking bays associated with unit 73, was intended
for use by the customers of this business. The smaller parking bays
in the scheme are associated with similarly numbered units and are
intended to provide parking for the owners of the respective
units.
Parking bay P64 is in the latter category, being associated with the
ownership of unit 64. The business use is authorised
by the local
authority in terms of the Zoning Scheme of the erf on which the
scheme has been developed. It is stipulated in the
Zoning Scheme
that:
“
Parking
according to minimum off-street parking requirements stipulated in
the Mossel Bay Municipality Integrated Zoning Scheme
By-Law, 2018”
[8]
The applicant submitted that the Zoning Scheme requires that at least
22 parking bays
be provided on the exclusive use areas allocated to
unit 73. Any reduction in the number of parking bays provided for
unit 73 in
the scheme would result in the applicant, as owner of the
unit, contravening the provision of the town planning scheme and the
Zoning By-law. Every exclusive use area associated with a unit is to
be used as a parking bay by the owner of the related section
in
compliance with the relevant town planning scheme. These exclusive
use areas are registered real rights in terms of section
12(1)(f) of
the STA. In terms of the certificate of real rights issued pursuant
to this provision S D Commercial was registered
as the holder of the
exclusive use areas numbers P73 and P74 in the scheme on 16 May 2008.
The applicant submitted that when the
alleged ‘omission’
was discovered applicant engaged respondent with the view to
obtaining transfer of these exclusive
use areas into its name, but
the respondent refused to assist .
[9]
In earlier correspondence between the applicant and the respondent
the latter alleged
that P73 and P74 were cancelled in terms of a
resolution. The alleged cancellation through a resolution occurred in
the following
circumstances: On 3 January 2011, at an Annual General
Meeting (AGM) attended by owners or their proxies of nineteen of the
units
in the scheme, the respondent purported to pass a special
resolution, by 100% vote in favour thereof, to cancel all the
exclusive
use areas. This purported resolution was recorded in
paragraph 14.1 of the minutes of that meeting. Paragraph 14.2
recorded that
a resolution to allocate and cede to certain owners new
exclusive use areas (parking bays) in the sectional plan was not
passed
because 80% of the owners were not present and therefore no
voting could be held. Applicant submitted that while the purported
resolution provided for the cancellation of parking bays P73 and P74
it did not provide for new or existing parking bays to be allocated
to S D Commercial, who was the holder of these registered exclusive
use rights at the time.
[10]
Secondly, the respondent alleged that on 1 September 2015 Conradie
signed on behalf of the applicant
a unanimous resolution taken by the
members of the body corporate to the effect that the members of the
respondent, in terms of
section 27(2) and (3) of STA, unanimously
authorised the delineation on the sectional plan of certain new
exclusive use areas and
the cession thereof to new owners.
Conradie’s explanation regarding the document is that, though
he had signed it together
with other transfer documents in relation
to the sale agreement at the offices of the conveyancers who were
attending to the transfer
of the property, he did not read it before
signing. The so-called “
unanimous resolution
” was
also not read to him nor did the conveyancer point out to him that
this document was not related to the transfer of
the exclusive use
areas and other properties but was about a resolution in terms of
which S D Commercial lost its rights to P73
and P74. Conradie
submitted that he did not intend, by his signature, to give effect to
any of the provisions set out in the resolution.
[11]
The applicant stated that the purported cancellation of the exclusive
use areas by the passing
of the so-called “
first resolution
1
” or any subsequent resolution does not comply with the
requirements of section 27 (5) of the STA and is accordingly
unlawful.
It submitted that on 1 September 2015 the applicant was not
yet the registered owner of unit 73, which was only registered in the
applicant’s name on 11 December 2015. Conradie further alleged
that in any event he had no authority to either bind S D Commercial
or the applicant to the cancellation of the exclusive use areas
associated with unit 73, or to authorise the delineation on the
sectional plan of new exclusive use areas (parking bays) and/or the
cession of the rights of exclusive use of parking bays from
the
respondent to the owners of certain sections, as purportedly provided
for in the resolution.
[12]
Before the conclusion of the agreement, and on 3 November 2011, the
managing agent of the scheme
circulated a letter to the unit owners
in which it requested the owners of certain units listed in the
letter to sign a resolution
to cancel and reallocate parking bays to
various owners. Neither the applicant, nor the seller acceded to the
cancellation and/or
reassignment of its exclusive use areas. Thus,
applicant submitted that these exclusive use areas were still extant
as set out
in the sectional plan and that it was entitled to obtain
transfer thereof into its name.
[13]
The STA has been amended by the Sectional Titles Schemes Management
Act
[4]
(“the Management
Act”) which came into effect on 7 October 2016. In terms of
section 10(7) and (8) of the Management
Act a Body Corporate, such as
the respondent, may make management or conduct rules which confer
rights of exclusive use and enjoyment
of parts of the common property
upon members of the body corporate.
[14]
On 14 June 2019 the applicant’s attorneys addressed a letter of
enquiry to the managing
agent of the respondent regarding the
allocation, if any, of the exclusive use areas P73 and P74 by the
respondent under the provisions
of the Management Act. The managing
agent provided the applicant’s attorneys with a copy of the
conduct rules of the scheme.
These conduct rules only provided, in
terms of clause 33 read with schedule B thereof, for the allocation
of certain foyers to
the owners of specific sections. The conduct
rules do not provide for the allocation of any other exclusive use
areas, let alone
parking bays. In the premises, it submitted that
none of the other owners of units in the scheme had acquired any use
rights rights
to parking bay numbers P73 and P74.
[15]
In opposing the application the respondent raised several points
in
limine
. The respondent submitted that S D Commercial has a direct
and material interest in the relief sought by the applicant but has
not been joined to these proceedings; that S D Commercial was in
final liquidation and if it had been deregistered, any property
which
it owned at the time of its final deregistration has as a matter of
law, become
bona vacantia
in the hands of the State; that the
latter, as such, has a direct and material interest in the relief
sought and ought to have
been joined to these proceedings. The
applicant was similarly obliged to, but did not, join the relevant
representatives of the
Government in these proceedings, so submitted
the respondent.
[16]
The respondent further argued that, to the extent that it was
suggested that by effecting the
transfer of unit 73 into the name of
the applicant the exclusive use area were
ipso facto
also
transferred to the applicant’s name, it was important to note
that neither Conradie nor Engelbrecht had suggested that
a notarial
deed of cession was ever signed or executed, this being the method of
transferring exclusive use areas in the sectional
title scheme.
Respondent further submitted that, when applicant was called upon, by
means of respondent’s notice in terms
of Rule 35(11), (12) and
(14) to produce the duly executed power of attorney authorising a
public notary, to cede the exclusive
use areas together with the
draft Deed of Notarial Cession of Exclusive Use Rights and a copy of
the duly executed Deed of Notarial
Cession, together with a copy of
the relevant page from the notary public’s protocol register,
applicant was unable to do
so.
[17]
Respondent further submitted that S D Commercial, which was the
developer of the scheme, ceased
to be the owner of any unit in the
scheme on 11 December 2015 when all the sections which it previously
owned were transferred
to and registered in the name of the
applicant, as provided for in section 2(2), alternatively 2(3), of
the Management Act. Respondent
submitted that on this date, and by
operation of law pursuant to section 27(1)(c), alternatively 27(4)(b)
of the STA, any rights
to any exclusive use area still registered in
the name of S D Commercial, including those forming the subject
matter of these proceedings,
vested in the respondent free from any
mortgage bond or registered real right. Accordingly, it was
submitted, S D Commercial was
no longer the holder of any rights in
and to the exclusive use areas and therefore could not give transfer
thereof to the applicant.
[18]
The respondent conceded that it was correct that from 16 May 2008 S D
Commercial was the holder
of the exclusive use areas P73 and P74. As
regards the sale agreement respondent argued that it was not a party
to that agreement
and to the extent that applicant sought to enforce
contractual rights, which it holds pursuant to the agreement and the
addendum
thereto, such rights fall to be enforced against S D
Commercial.
[19]
Respondent also denied that parking bay P74 was intended for use by
customers of the business
which is carried out in unit 74 and that
the smaller parking bays were associated with similarly numbered
units. In this respect
respondent argued that it was always possible
for exclusive use areas to change hands between its members, subject
to compliance
with the relevant legislation and/or conduct rules. It
is, however, instructive that the respondent did not assert that this
exchange
had indeed taken place. As regards parking bay P64
respondent denied that the seller was the registered owner of unit 64
and averred
that it could therefore not give transfer thereof to the
applicant.
[20]
Respondent submitted that in signing the relevant documentation
including the resolution at the
conveyancer’s office in
Pretoria, Conradie, on behalf of the applicant represented that it
would be bound by the contents
of that document. As a result of this
representation, the other members of the first respondent altered
their legal positions as
a consequence of such representation. The
respondent accordingly argued that applicant was estopped from
asserting that Conradie
was not duly authorised to act on its behalf,
alternatively, that he had actual or ostensible authority so to act.
It was however,
not explained how the other members of the respondent
had altered their respective legal positions or had been prejudiced
by the
alleged misrepresentation.
[21]
The legal question for determination is whether any right to
exclusive use areas which were registered
in the name of S D
Commercial vested in the respondent, in terms of 27(1)(c) of the STA,
when S D Commercial ceased to be a member
of the respondent, and if
not whether they can still be transferred to the applicant, and
assuming that they can still be transferred
to the applicant, whether
section 33(1) of the Deeds Registries Act
[5]
can be utilised for this purpose.
[22]
I pause here to mention that applicant gave notice, in terms of Rule
16A, of its intention to
have section 27(1)(c) of STA declared
constitutionally invalid insofar as it arbitrarily and without
compensation vests any right
to an exclusive use area, still
registered in the name of a developer, in the body corporate free
from any mortgage bond, if a
developer ceases to be a member of the
body corporate as contemplated in section 2(2) of the Sectional
Titles Management Act. The
applicant also gave notice, in terms of
Rule 28, to substantially amend the relief sought in the notice of
motion.
[23]
The proposed amendments and the constitutional
challenge to section 27(1)(c) provoked vehement opposition
from the
respondent. At the hearing of the matter counsel for the applicant
gave notice that applicant was abandoning the proposed
amendment and
constitutional challenge. This, however, was not to be the last word
on this topic. The respondent, post the hearing
of the matter and
notwithstanding a protest from the applicant that it was not proper
for the respondent to file further “
heads
of argument
”,
drew our attention to the judgment of the Constitutional Court in
EFF
and Another v Minister of Justice and Correctional Services and
Another
[6]
.
This was to counter the applicant’s attempts to argue the
constitutional point despite its formal withdrawal. I agree with
the
respondent that the applicant cannot obtain an order pronouncing on
the constitutionality of section 27(1)(c) of STA after
the express
withdrawal of the challenge. To be afforded any relief of
unconstitutionality the applicant ought to launch a full,
frontal
challenge to the constitutionality of section 27(1)(c)
[7]
.
The intractable approach adopted by the applicant, of withdrawing the
formal notice yet proceeding to argue the very same issue,
is
unprocedural and cannot be countenanced. This leaves this Court to
deal with the merits of the matter as formulated in the papers
filed
of record, without the proposed amendment.
APPLICANT’S
SUBMISSIONS
[24]
Applicant complained that the respondent was changing tack, from its
refusal to provide the necessary
information and sign documents to
effect transfer of the three exclusive use areas sold to the
applicant, to allege ownership of
these rights. This prompted the
applicant to seek a declaratory order to the effect that these
exclusive use rights were not cancelled
in terms of section 27(5) of
STA. This, the applicant alleged was because of the respondent’s
ambivalent stance when, for
the first time in its answering
affidavit, it contended that these rights vested in it in terms of
section 27(1)(c) and/or 27(4)(b)
of the STA. Applicant argued that
this change of tack “
substituted the nature of the
application
” and compelled it to meet an entirely different
case in its replying affidavits.
RESPONDENT’S
SUBMISSIONS
[25]
Respondent argued that the effect of sections 27(1)(c), 27(4)(b) and
34(2) taken together is
that once a developer has given transfer of
the last section held by it, it no longer has a share or interest in
the common property
and is no longer a member of the body corporate;
any exclusive use areas then registered in the name of the developer
vest in the
body corporate free from any mortgage bond or registered
real right which, in
casu
, occurred on 11 December 2015 when S
D Commercial sold the last section it owned and gave transfer to the
applicant.
[26]
On its alleged
volte-face
the respondent submitted that it had
always asserted that it was the owner of the exclusive use areas
which previously belonged
to S D Commercial. Furthermore, it
submitted that applicant was well aware that cession of these
exclusive use areas had not taken
place upon the transfer of unit 73
into its name. The contention that the failure to cede the exclusive
use areas was a conveyancing
oversight and that steps were taken to
rectify the situation was not supported by the evidence, argued the
respondent. In this
respect it was submitted that no such allegation
was made in the founding papers since there was no affidavit by the
conveyancer
that was placed before court to confirm this alleged
oversight and applicant was unable to produce the necessary document
when
called upon to do so in terms of Rule 35(12), despite being
granted a postponement for this purpose. Furthermore, Coetzee did not
confirm that, upon being granted a power of attorney by Conradie, she
appeared before a notary public where notarial deeds of cession
were
duly executed and thereafter lodged at the Deeds Office. According to
the respondent it was only if the necessary documents
were lodged at
the Deeds Office that any question of error on the part of the
Registrar of Deeds could arise.
[27]
Respondent argued further that the submission by the applicant that
the certificate of exclusive
use right could be endorsed to reflect
the applicant as the holder of such rights was incorrect, because
respondent has become
the holder of such rights and real rights are
transferred from one person to the other only by means of a deed of
transfer executed
or attested to by the registrar. It submitted that
other real rights in law may only be conveyed by means of a deed of
cession
attested by a notary public and registered by the Registrar,
as provided for in section 16 of the Deeds Registries Act, nor could
section 100 thereof be utilised since the applicant never sought such
relief in its founding papers.
[28]
Relying on the authority
of
Mckersie v SDD Development (Western Cape) (Pty) Ltd and Others
[8]
(
Mckersie
)
respondent submitted that section 33(1) of the Deeds Registration Act
was of no assistance to the applicant nor was the argument
by the
applicant that the vesting under section 27(1)(c) of STA, was for
“
custodial
purposes
”
supported by any authority. It argued that such an interpretation was
inconsistent with the clear language of the section
and section
27(1)(d). Reliance on the judgment in
Le
Roux v Dunrobin Body Corporate
[9]
,
(
Le
Roux
)
regarding the possible retrospective effect of section 27(4)(b) of
STA, was also said to be misplaced since this section was irrelevant
for present purposes, the relevant provision being section 27(1)(c)
of STA.
[29]
It is common cause that respondent has not yet applied for a
certificate of real right of exclusive
use in terms of section
27(1)(d) of STA. On the assertion that the Deeds Office’s
records were not up to date as they still
reflected S D Commercial as
the holder of the exclusive use areas respondent argued that this was
for the simple reason that these
were never transferred from S D
Commercial to the respondent after the latter became the holder in
terms section 27(1)(c) of STA.
[30]
While the respondent did not persist with the points
in limine
,
for completeness sake, I briefly deal and dispose of them. The
non-joinder argument is a non-starter. Engelbrect clearly
stated that S D Commercial, having sold the properties, no longer had
any interest in the matter and had waived any rights in this
respect.
Nor was its property
bona vacantia
as the respondent, wisely
in my view, conceded. There was therefore no need to join S D
Commercial or any government department
to these proceedings.
[31]
Similarly the argument that the respondent has become the owner of
the exclusive use rights by
virtue of a special resolution of its
members, not expressly disavowed in argument, is nevertheless
misplaced. There was no compliance
with the requirements of section
27(5) of STA. Nothing further need be said in this respect. This
leaves the vexed question of
whether the respondent became the owner
of the exclusive use areas previously registered in the name of S D
Commercial by operation
of law as provided for in section
27(1)(c), when, notwithstanding the fact that these were part of the
merx
sold to the applicant, they were not transferred by means
of a notarially executed deed of cession.
DISCUSSION
[32]
Section 27(1)(c) must be read in conjunction with section 27(1)(d)
and (e). These provide as
follows:
“
27
Rights of exclusive use of parts of common property
(c)
If a developer ceases to be a member of the body corporate as
contemplated in
section 2
(2) of the
Sectional Titles Schemes
Management Act, any
right to an exclusive use area still registered
in his or her name vests in the body corporate free from any mortgage
bond.
(d)
If a right to the exclusive use of a part or parts of the common
property vests in a body
corporate in terms of paragraph (c), the
body corporate shall, in the prescribed form-
(i)
apply to the registrar for the issuing of a certificate or
certificates of real right of exclusive use in its favour;
and
(ii)
submit a certificate of compliance with any law dealing with vesting.
(e)
The registrar shall, after consideration of the application in
paragraph (d), issue such
certificate or certificates in the
prescribed form.”
[33]
A body corporate would acquire rights in terms of
section 27(1)(c)
if
the developer ceases to be a member of the body corporate as
contemplated in section 2(2) of the Sectional Title Schemes
Management
Act. Section 2(2) of the latter Act states that the
developer ceases to be a member of the body corporate when he or she
ceases
to have a share in the common property as contemplated in
section 34(2) of STA. Section 34(2), in turn states that when the
ownership
in every section is held by any person or persons other
than the developer, the developer, shall, subject to the provisions
of
section 25(1) cease to have a share or interest in the common
property.
[34]
Section 25(1) of the STA then provides that:
“
25
Extension of schemes by addition of
sections and exclusive use areas or by addition of exclusive
use
areas only
(1)
A developer may, subject to the provisions of section 4 (2), in his
or her application
for the registration of a sectional plan, reserve,
in a condition imposed in terms of section 11 (2), the right to
erect, complete
or include from time to time, but within a period
stipulated in such condition or such extended period as may be agreed
upon (by
unanimous resolution of the body corporate and with the
consent of the bondholders existing on the date of the taking of the
unanimous
resolution, which resolution and consent must be obtained
by the notary and filed in his or her protocol) prior to the expiry
of
the stipulated period, by way of a bilateral notarial deed, for
his or her personal account-
(a)
a building or buildings;
(b)
a horizontal extension of an existing building;
(c)
a vertical extension of an existing building,
on a specified
part of the common property, and to divide such building or buildings
into a section or sections and common property
and to confer the
right of exclusive use over parts of such common property upon the
owner or owners of one or more sections, or
to delineate exclusive
use areas on or in specified parts of the land and buildings in terms
of section 5 (3) (f) and to confer
the right of exclusive use over
such areas upon the owner or owners of one or more sections.”
[35]
It is apposite to look briefly on the circumstances that led to the
enactment of section 27(1)(c)
of the STA. The background is set out
succinctly by Prof C G van der Merwe in Sectional Titles
[10]
thus:
“
In terms
of the Act, sectional owners are entitled to make reasonable use of
the common property comprised in the scheme. They are
not, however,
entitled to appropriate any part of the common property for their own
exclusive use since this would amount to unreasonable
use.
Developers, however, soon recognised the need for certain portions of
the common property to be allocated to individual sectional
owners to
be utilised as parking bays, courtyards, patios, garden areas,
storerooms, servants' quarters, balconies, attics, basements
and even
outer shells of buildings for advertising purposes. Since the
Sectional Titles Act of 1971 did not provide for the creation
of
exclusive use areas on the common property, developers employed
mechanisms such as notarial leases, servitudes and the amendment
of
the rules of the scheme to establish exclusive use areas for
themselves. The most common practice was for developers to reserve
exclusive use areas for themselves in the rules of the scheme by
inserting a new rule supplementing the model rules to create the
areas. In the new rule, reference was made to a sketch plan which
indicated the precise location of the various exclusive use areas.
This rule was usually inserted into the old Schedule 1 rules so as to
render it capable of amendment by unanimous resolution only.
In this
manner the developer acquired the right to sell or lease exclusive
use areas to sectional owners or outsiders. The fact
that the
creation and exploitation of exclusive use areas were not regulated
by the Act led to several malpractices on the part
of developers.
These were, inter alia, that exclusive use areas were sold to
outsiders who had no personal interest in the scheme;
that
exclusive use areas were let rather than sold and that rents
escalated according to demand; that developers collected
the
cost of maintaining these areas from levies paid by sectional owners
for the upkeep of the property; and that developers
retained
these areas as a lucrative nest egg after they have left the scheme.
On account of these malpractices, the new Sectional
Titles Act
recognised the need for placing all matters pertaining to exclusive
use areas on a secure footing by abolishing the
mechanism of
establishing exclusive use areas by amendment of the rules of a
scheme. All exclusive use areas had to be properly
registered on the
appropriate sheets of a sectional plan”.
[36]
It was with the intention of eradicating these malpractices by
developers that section 27(1)(c)
was promulgated. Through the
following measures the malpractices perpetuated by the developers
were brought to an end
[11]
:
“
First,
exclusive use areas must be transferred to sectional owners
and can no longer be
sold to outsiders. Second, the developer is obliged to allocate an
exclusive use area to an owner (or more
correctly to a section) and
can no longer lease exclusive use areas to owners or outsiders.
Third, the holder of the
right of exclusive use is obliged to contribute to rates, taxes,
insurance premiums and maintenance costs
with regard to the exclusive
use area:
such
costs can no longer be reimbursed from the general administrative
fund. Fourth, the developer is no longer allowed to retain
exclusive
use areas as a lucrative nest egg after leaving the scheme. If a
developer ceases to be a member of the body corporate,
any right to
an exclusive use area still registered in his or her name vests in
the body corporate free from any mortgage bond.”
[37]
It is evident that it is only when the developer has ceased to be a
member of the body corporate
that any rights to exclusive use areas
registered in his/her name would vest in the body corporate in terms
of section 27(1)(c)
of STA. The body corporate must thereafter apply
to the Registrar in terms of section 27(1)(d), in the prescribed form
for the
issuing of a certificate(s) of real rights in its favour. In
such an application it must submit a certificate of compliance with
any law dealing with vesting
[12]
.
The certificate in the prescribed form would be issued by the
registration after “
consideration
of the application
”.
[38]
Reference to “
shall after consideration of the application
”
in section 27(1)(e) of STA implies, in our view, that obtaining a
certificate to a real right in respect of a right of exclusive
use
area which has vested in a body corporate by operation of section
27(1)(c) is not a matter of mere formality. The Registrar
may after
consideration of the application grant or refuse to issue such a
certificate. To be able to come to a conclusion on whether
to grant
or refuse the issue of a certificate the Registrar would have to
enquire into the circumstances under which the body corporate
alleged
the rights vested in it in terms of section 27(1)(c) of STA.
[39]
The above exposition of the provisions of the relevant sections of
STA also demonstrate, in our
view, the process which needs to unfold
before the exclusive use areas, which were registered in the name of
the developer, vest
in the body corporate when such developer ceases
to be a member of the body corporate. In
casu
it would have
been when ownership of unit 73 was registered in the name of the
applicant that S D Commercial ceased to have a share
in the common
property and its rights to the exclusive use area vested in the
respondent. But before the occurrence of this and
whilst still a
member of the body corporate, S D Commercial sold its rights to these
exclusive use areas to the applicant; to this
effect the necessary
documents were purportedly executed and lodged with the Deeds
Registries in order to effect transfer of these
immovable property
rights to the applicant.
[40]
It is significant that when the Deeds Office initially rejected the
transaction, particularly
because the exclusive use areas which were
part of the
merx
were not expressly cited, S D Commercial took
the necessary steps to rectify the situation by concluding the
addendum to ensure
that transfer of these rights was effected;
Conradie granted Coetzee a power of attorney to appear before a
notary public to execute
a notarial deed of cession and to apply for
duplicate certificates of the exclusive use areas, all of which were
filed with
the other transfer documents in the Deeds Office. In this
respect the facts of this case are distinguishable from those of
Mckersie
,
and Le Roux
supra
. In
Mckersie
where the applicant alleged that Humphrey, the seller of the property
in question was untraceable, and in
Le Roux
the seller was
deceased. I shall return to these judgments below.
[41]
The steps taken by S D Commercial resulted in the applicant acquiring
personal rights which preceded
the entitlement of the respondent to
have the rights to the exclusive use areas vest in it in terms of
section 27(1)(c) of STA.
These steps evinced an
animus
transferendi domini
on the part of S D Commercial, the subjective element required for
the passing of ownership to the applicant
[13]
.
That transfer of these exclusive use areas rights did not happen is
an error which ought to be rectified to reflect the correct
legal
position. We are fortified in this respect by the judgment of Shongwe
JA in
Meintjes
NO v Coetzer and Others
[14]
,
a case in which rectification of a title deed to reflect the correct
owner where transfer was fraudulently obtained, who held
that:
“
[9]
As we know, real rights may be acquired by various modes that are not
reflected in the deeds office, for example, by prescription,
expropriation, etc. In such circumstances the owner can trump a bona
fide possessor who had acquired the property from the person
registered as owner in the deeds registry. Under the negative system
of registration, which was adopted in South Africa from Roman-Dutch
law, the registrar of deeds plays a rather passive role. Although he
examines every deed carefully before registering it,
mistakes
do happen
.
For example, where the signature of the transferor is forged, as is
the case in the matter before us,
the
court will order rectification of the deeds registry in favour of the
original owner
.
This will be
so, even against the bona fide acquirer
.
In the present case, a fortiori, the first and second defendants are
not bona fide acquirers, as they admittedly forged the deceased's
signature. (See also Preller and Others v Jordaan
1956 (1) SA 483
(A)
at 496.) Mr Bergenthuin SC, for the plaintiff, referred to Kristal v
Rowell
1904 TH 66
at 71, where the power of attorney under which the
mortgage was executed was forged and it was held that the mortgage
therefore
conferred no right or title of any sort upon the acquirer,
and that the original owner was entitled to have it cancelled.”
(own emphasis)
[42]
Acquisition by a body corporate of the exclusive use rights in terms
of section 27(1)(c), in
our view, does not cover instances where a
developer expressly, and in a binding agreement intended its rights
to be transferred
to a purchaser but where through a mistake,
negligent or otherwise, these were not so transferred at the time
when the last unit
owned by the developer in the scheme was
transferred.
[43]
The respondent made heavy weather of the fact that the applicant did
not seek rectification in
its notice of motion. This does not
preclude the applicant from arguing this point of law. In
Maphongo
and Others v Aengus Lifestyle Properties
[15]
the
Constitutional Court held that:
“
[109]
The rule in terms of which a court permits a party to raise a point
of law is subject to well-known conditions.
These conditions ensure
fairness to all parties. First, the point sought to be raised must be
a point of law in the true sense
of the word. Second, if not
foreshadowed in the pleadings, it must be supported by the
established facts in the record. Third,
the entertainment of the
point must not prejudice the other parties. Consistent with these
requirements, in Barkhuizen this court
made it clear that a party
will not be permitted to raise a point not covered in the pleadings
if its consideration will result
in unfairness to the other party.
The purpose of this rule is to give a fair hearing to all parties.
Therefore, the rule promotes
the right to a fair hearing which is
entrenched in s 34 of the Constitution.”
[44]
Rectification is truly a point of law and it has been foreshadowed in
the papers. The respondent
cannot claim any prejudice as this is in
essence the relief sought by the applicant, though not co-uched in
such specific terms.
Rectification, however, cannot be effected in
this matter by endorsement in terms of section 100 of the Deeds
Registries Act since
the omission to transfer the rights to the
exclusive use areas was not a formal defect.
[45]
The applicability or otherwise of section 33(1) of the Deeds
Registries Act in circumstances
where a belated transfer of rights to
exclusive use areas was sought resulted in two conflicting judgments
in this Division. In
Mckersie supra,
Humphrey, from whom the
applicant purchased a unit in the scheme, but had not been cited in
the application, was not the registered
owner of the exclusive use
areas rights. The developer from whom he purchased the unit, was
deregistered in 2007. The deregistration
of the developer would have
made its properly
bona vacantia
, but for the fact that it had
transferred its last units in 2003. The applicant had purchased his
unit from Humphrey in 2005 and
transfer took place in that year. A
copy of the deed of sale which allegedly was concluded between the
developer and Humphrey was
not available.
[46]
The question was whether the applicant has a right to ownership of
the kind contemplated in section
33(1) of the DRA. Rogers AJ held
that
[16]
:
“
[31]
Where a person is not yet the owner of
property but is one on whom the 'right to the ownership' of
the
property has allegedly devolved by way of a transaction, the person
must consider establish
(sic)
that he has an extant right to claim transfer of the property but
that it is not possible to obtain registration of transfer in
the
usual way. This would typically be because the registered owner and
(where applicable) intermediate purchasers and sellers
of the
property are no longer available to give transfer. The Durr case,
from which I quoted earlier, affords an example.
[32]
The present case is quite different. Ownership of the parking bay
vests in the body corporate,
a juristic entity which exists, is
active and has been cited as a respondent. Although SDD has been
deregistered and Humphrey cannot
be traced, those circumstances are
not the real explanation for the difficulty confronting the
applicant. The true obstacle in
the applicant's way is that ownership
of the parking bay vests in the body corporate, with whom neither the
applicant nor Humphrey
contracted. Even if SDD were still in
existence, this would not alter the fact that in 2003 (about four
years prior to its deregistration)
SDD lost ownership of the parking
bay pursuant to s 27(1)(c) of the STA. The result is that Humphrey,
even if he were still on
the scene and even if SDD were still in
existence, could not obtain transfer of the parking bay from SDD in
order to give transfer
in turn to the applicant.
…
[34]
The above reasoning justifies the further conclusion, also fatal to
the application, that the
applicant has not demonstrated that he is
'unable' to obtain registration in the usual way.”
[47]
In the
Le Roux
matter the applicant purchased an apartment in
a scheme in 2001 with the title deed referring to an exclusive use
area forming
part of the transaction. The sellers had obtained a
notarial cession of parking bay P12 from the first respondent during
1994.
P12 was not ceded to the applicant when he took transfer
of his apartment as was required by the provisions of section
27(4)(a)
of the STA. The seller ceased to be a member of the body
corporate when transfer was registered resulting in these rights
vesting
in the body corporate in terms of section 27(4)(b). The error
was only discovered after several years and the seller had by then
died. The central issue to be determined in that case, as formulated
by the court, was whether the applicant was entitled to receive
a
cession from the first respondent (alternatively the second or third
respondents) for the exclusive use rights in relation to
parking bay
P12.
[48]
It was contended on behalf of Le Roux that the vesting in section
27(4)(b) of STA did not alter
the nature of the exclusive use right
that existed in connection with P12 and that it vested in the body
corporate only for custodial
purposes and accordingly fell to be
relinquished when ownership of the exclusive use right was
established. Wille J found that:
“
[40]
In my view, taking into account the provisions of section 33 of the
DRA, read together with the
belated concessions by the respondents,
that the applicant has demonstrated a clear right to the unhindered
access to P12, which
he has exercised, to the exclusion of all
others, without interference, over many years. Further, this right is
being infringed
upon by the second respondent's conduct, and
regrettably by the first respondent's acquiescence and tolerance of
such conduct.
[41]
I say this, inter alia, because in my view, upon the ordinary
meaning of the language
used and on a proper logical interpretation
of section 33, in these particular circumstances, it must include the
obligation to
effect a cession of rights from the first respondent,
with the right of the applicant to receive a cession of such rights.
Section
33(1) of the DRA provides as follows:
"Any person
who acquired in any manner, other than by expropriation, the right to
ownership of immovable property registered
in the name of any other
person and who is unable to procure registration thereof in the usual
manner and according to the sequence
of the successive transaction in
pursuance of which the right to ownership of such property has
devolved upon him, may apply to
the court by petition for an order
authorizing the registration in his name of such property"
[42]
Further, I find that it will not be a new allocation of rights to
grant to the applicant the
exclusive use rights over P12. Put in
another way, I do not find favour with the argument that the
applicant has no right to compel
the first respondent to transfer
ownership to him, of the exclusive use rights over P12, because he
has no contract with the first
respondent. The facts of this case are
very different because; the applicant purchased an exclusive use
area; this exclusive
use area is noted in his Title Deed;
he has a clear right to unhindered access to P12, which he has
exercised, to the exclusion
of all others, without interference, over
many years and the first respondent must have issued a levy clearance
certificate being
well aware of these facts, prior to transfer been
effected to the applicant.
[43]
In my view, the provisions of section 33(1) are clear in that they
provide that any person
who acquired in any manner, other than by
expropriation, the right to ownership of immovable property may
proceed to obtain the
appropriate relief under this section. Further,
in view of my findings above it is not necessary to deal in any
detail with the
merits of the amendments sought by the applicant. It
accordingly follows that the interdictory relief sought in relation
to P13
falls to be granted with a dismissal of the second
respondent's counterapplication.”
[49]
Can section 33(1) of the Deeds Registries Act be used to transfer the
rights to the applicant?
This section provides as follows:
“
33
Registration of title by other than
the ordinary procedure
(1) Any person
who has acquired in any manner, other than by expropriation, the
right to the ownership of immovable property registered
in the name
of any other person and who is unable to procure registration thereof
in his name in the usual manner and according
to the sequence of the
successive transactions in pursuance of which the right to the
ownership of such property has devolved upon
him, may apply to the
court by petition for an order authorizing the registration in his
name of such property.”
[50]
For
the purposes of what follows it is imperative to distinguish between
ownership rights and exclusive use rights in a sectional
title
scheme, for this distinction is crucial to a determination of the
matter and the relief which is sought, and the basis on
which it is
resisted. In regard to the former, in
Mobile
Telephone Networks (Pty) Ltd and another v Spilhaus Property Holdings
(Pty) Ltd
[17]
the
Supreme Court of Appeal explained the nature of sectional title
ownership, as follows:
“
[1]
Sectional title
ownership consists of three elements, namely individual ownership of
a section, joint ownership of the common parts
of the sectional title
scheme and membership of a body corporate. The registered
title-holder of a unit is the owner of the section,
joint owner of
the common parts of the scheme and a member of the body corporate.
Thus, a person, buying into a sectional title
scheme, enters into a
series of interlocking relationships. The STA [Sectional Titles Act]
introduced several new concepts into
our law. By providing for the
division of land and buildings comprising a development scheme into
sections and common property,
it created an entirely new
composite res, called a unit, which consists of a section and an
undivided share in the common
property. The section is considered the
principal component, with the undivided share in the land and other
common property inextricably
linked thereto as an accessory. The Act
also created an entirely new form of composite ownership, namely
separate ownership of
a section coupled with joint ownership of the
common property. Sectional owners own the common property
collectively in undivided
shares in accordance with the provisions of
the Act.’
[51]
In terms of the STA, ownership rights in sectional title schemes are
transferred in the same
way as ownership rights in land are
transferred i.e by way of a deed of transfer which is endorsed as
against the title deed of
the property (the sectional unit)
concerned, by the Registrar of Deeds.
[18]
An exclusive use right, on the other hand, is a right which is given
to an owner of a section in a scheme, to use (a) part(s) of
the
common property i.e property of the scheme which is owned jointly by
all the registered owners of sections in the scheme. In
this regard
in terms of the STA
[19]
common property includes the land on which the scheme is situated and
those parts of its buildings which are not included in a
section i.e
which are not individually owned. As in this matter exclusive use
rights are commonly conferred over areas such as
parking bays, or
garages.
[20]
[52]
Exclusive use rights are established and provided for in terms of
section 27 of the STA. The
transfer of such rights can only occur
once they have been established, either initially, by the developer
of the scheme
[21]
or subsequently, at the instance of the body corporate on behalf of
all the owners
[22]
.
A developer establishes such rights at the inception of the scheme by
causing them to be registered as conditions of title which
will apply
in favour of specified owners in respect of designated areas or parts
of the common property, as delineated on the sectional
plan, when
making application for the opening of a sectional title register for
the scheme
[23]
.
The STA provides
[24]
that once the requirements in this regard have been duly complied
with, the Registrar of Deeds shall issue to the developer
‘certificates
of real right’ in respect of such
designated exclusive use rights. The developer must (‘shall’)
then transfer
such rights to the owners to whom they have been
allocated in terms of the sectional plan, by the registration of a
unilateral
notarial deed of cession in their favour
[25]
.
[53]
Owners of sections to whom such use rights have been transferred may
in turn similarly transfer
them to their successors in title, by
notarial deeds of cession
[26]
.
This accords with section 16 of the Deeds Registries Act
[27]
which provides that real rights in land other than rights of
ownership may be conveyed from one person to another only by means
of
a deed of cession which has been attested by a notary public and
registered by the Registrar of Deeds.
[54]
In terms of section 27(1)(c)
[28]
of the STA, if a developer ceases to be a member of the body
corporate by no longer owning any sectional units in the scheme, any
right to an exclusive use area which is still registered in its name
‘vests’ in the body corporate, ‘free’
of any
mortgage bond which may have pertained to such rights. A similar
stipulation
[29]
exists in respect of the owner of a section. Thus, where he/she no
longer is a member of the scheme any exclusive use rights which
are
still registered in their name, will ‘vest’ in the body
corporate ‘free from any mortgage bond or registered
real
right’ (sic).
[55]
The respondent seeks to rely on the decision in
McKersie
supra,
in
which this Court held
[30]
that the effect of section 27(1)(c) was that once a developer company
no longer owned any units in a scheme,
ownership
of the parking bay in respect of which exclusive use rights had been
registered by the developer (but which had not been transferred
to
the owner of the section to whom the parking bay had been allocated
in terms of the sectional plan before the developer had
been
deregistered), had vested in the body corporate. On the strength of
this dictum the respondent contends that
ownership
of the parking bays, now vests in it, and this Court consequently
cannot make orders in the terms set out in paragraphs 2, 3, 4
and 5
of the notice of motion. In this regard the applicant seeks orders
which are aimed at effecting the transfer to it of the
‘exclusive
use
areas’
being the parking bays number P64, P73 and P74. Thus, the applicant
also understood the rights over which it sought to lay claim,
as
constituting rights of ownership in terms of the
McKersie
judgment, pursuant to their vesting in the body corporate in terms of
section 27(1)(c). In our view, and as the Court did in
McKersie,
the parties in this matter misconstrue the nature of the rights to
which claim is laid and which are in issue.
[56]
The parking bays have been allocated in terms of the sectional plan,
for use by the owner of
the section which operates a supermarket, and
they never ‘belonged’ to the developer in the sense that
they were never
owned
by it. They belonged to and have always been collectively owned by
all the owners in the sectional title scheme in undivided shares
(
pro
rata
their participation quota in the scheme), as part of the scheme’s
common property. The developer only held the exclusive
use
rights
to the parking bays and was entitled, and indeed compelled
[31]
to transfer these rights to the owner of the section in respect of
which such rights attached as per the delineation on the sectional
title plan i.e the owner of the supermarket for which the use of such
parking bays was designated.
[57]
As stated
supra
Van Der Merwe points out
[32]
that sections 27(1)(c) and 27(4)(a) were introduced into the Act in
2003
[33]
in order to prevent developers and former owners of units in a
sectional title scheme who had divested themselves of ownership
of
units in the scheme, from thereafter hanging onto exclusive use
rights over parts of the common property in order to exploit
these
commercially for their own benefit, or for the benefit of other
parties who had no interest in the scheme. In this regard
it appears
that developers would commonly create a scheme and sell-off all units
therein whilst retaining exclusive use rights
over the parking bays
or garages which attached to the units in terms of the sectional
plan, thereby compelling the owners to have
to rent the bays or
garages from them.
[58]
Thus, the only rights which vested in the respondent once the last
unit which the developer owned
was transferred i.e the unit in
respect of which the supermarket is being operated from which was
bought by the applicant, were
rights of
exclusive use
, and not
rights of
ownership
. In the circumstances the body corporate
could not and did not obtain better rights over the parking bays than
those which the
developer had, as these bays collectively belong to
all the owners of units in the scheme, as part of its common
property. To hold
that sections 27(1)(c) and 27(4)(a) have the effect
of vesting
ownership
rights in respect of the parking bays in
the body corporate, would amount to an unlawful and arbitrary
expropriation of the property
rights of all the owners in the scheme
in respect of such bays, contrary to the provisions of section 25 of
the Constitution. Consequently,
in our view, the court in
McKersie
erred in this regard and what has vested in the respondent were only
the exclusive use rights in respect of the parking bays, and
not
ownership rights.
[59]
Flowing from the above the question which then arises is what is the
effect of section 27(1)(c),
and whether the respondent can now hang
onto these rights and do with them as it pleases, as if they ‘belong’
to, or
are owned by it? When affording a contextual, purposive and
sensible interpretation
[34]
to the section one must bear in mind the mischief which it seeks to
address viz. to prevent the abuse of parts of the common property
of
a sectional title scheme, by allowing them to be used exclusively by
persons or entities who are not supposed to be using them
in terms of
the sectional title plan. In terms of the STSMA the body corporate of
a sectional title scheme is a juristic person
which is responsible
for the control, administration and management of the common property
of the scheme, for the benefit of all
owners, and not for itself.
[35]
As such the body corporate stands in a fiduciary, or at least a
quasi-fiduciary position towards its members i.e the owners of
units
in the scheme, in regard to the common property which belongs to the
scheme.
[60]
Thus, in terms of the STSMA the body corporate may only alienate
common property or any part
thereof on the direction of the owners
given by way of unanimous resolution i.e by a unanimous vote passed
by at least 80% of the
value and number of the votes of all members
of the body corporate present (or represented) at a meeting.
[36]
As
far as exclusive use rights over common property is concerned, in
terms of section 27(2) of the Act the body corporate may similarly
only request a delineation and cession of such rights to particular
owners, upon a unanimous resolution by the owners, and may
only do so
provided that such a delineation and cession will not encroach upon
any prior delineation which is recorded in the sectional
plan. And it
may similarly only cancel an exclusive use right which has been
delineated on the sectional plan, upon a special resolution
by the
owners i.e in terms of a resolution passed by at least 75% of the
value and number of the vote of members of the body corporate
at a
meeting, or as agreed to by them in writing.
[37]
[61]
In the circumstances, in our view, when exclusive use rights in
respect of common property vest
in a body corporate in terms of
sections 27(1)(c) or 27(4)(a) it does not have the right to do with
them as it pleases, and it
holds them and must administer and deal
with them, in the interests of and for the benefit of all owners in
the scheme and not
to serve its own interests. To allow the body
corporate to deal with such rights otherwise would be to allow
exactly the kind of
mischief which the introduction of these
provisions sought to do away with, in that it would allow the body
corporate to exploit
or deal with exclusive use rights when it is not
entitled to do so in terms of the delineation and allocation of such
rights as
provided for in the sectional plan.
[62]
It is common cause that in this matter the applicant is the
registered owner of unit 73, the
section to which the exclusive use
rights in respect of the parking bays attach.
It
is common cause that certificates of real right in respect of such
use rights over the parking bays were issued by the Registrar
of
Deeds to S D Commercial and the title deed(s) were endorsed
accordingly. S D Commercial has not been deregistered and the
liquidator
has indicated that it is still desirous of honouring and
giving effect to its contractual obligations in terms of the deed of
sale,
in which the exclusive use rights were listed as part of the
merx
sold
and that were required to be transferred to the applicant. As
long as such rights remain registered in the name of the
company its
affairs cannot be finally wound up.
[38]
In effect, until the matter is resolved the winding up of the
developer will therefore remain in limbo. The fact that these rights
are currently vested in the respondent does not mean that they are
owned by it. It has merely been vested with these rights in
order to
prevent the developer from holding onto and exploiting them, and it
merely holds them in a custodial capacity and is required
to deal
with them in the interests of the scheme and the members of the body
corporate i.e the owners of units in the scheme, in
accordance with
the intended allocation of these rights as per their designation and
delineation in terms of the sectional plan,
and not to advance its
own interests.
[63]
Notwithstanding that in terms of the language of the provision,
section 33(1) of the Deeds Registries
Act is directed at the transfer
of ownership rights Rogers AJ held
[39]
that the provision was applicable to the transfer of exclusive use
rights by virtue of the provisions of section 27(6) of the STA
and
section 90 of the Deeds Registries Act. Section 27(6) of the STA
provides that an exclusive use right over a part of a scheme’s
common property must for all purposes be deemed to be a right to
urban immovable property which can be mortgaged. As such, it merely
confirms that an exclusive use right constitutes a real right over
immovable property which may be bonded as security for a loan.
Section 90 of the Deeds Registries Act in turn provides for the
cancellation by the Registrar of Deeds of registered leases or
servitudes, in certain circumstances. To this end section 90(2)(a)
provides that for the purposes of the section, a lessor or grantor
in
the case of a registered lease or servitude means the person who,
according to the records in the deeds registry, appears to
be the
owner of the land concerned. In the circumstances, in our view,
neither of these provisions can serve to justify an expansive
interpretation of section 33 of the Deeds Registries Act such as to
equate the holder of an exclusive use right in a sectional
title
scheme with the holder of ownership rights in immovable property.
[64]
Furthermore, there are provisions in the STA which expressly militate
against the applicability
of section 33(1) of the Deeds Registries
Act, in regard to the transfer and registration of exclusive use
rights. In this regard
section 3(1) of the STA states that the
provisions of the Deeds Registries Act shall only apply in regard to
the registration and
filing of documents required in terms of the
Deeds Registries Act, insofar as they can be applied, and only
insofar as the provisions
of the STA do not otherwise apply. The STA
contains specific provisions
[40]
which deal with the establishment, registration, cancellation and
transfer of exclusive use rights, and section 2(e) of the STA
expressly empowers and authorizes the Registrar of Deeds to register
in the deeds registry a title deed whereby ownership and/or
any lease
of, or any other real right in or over a section or an undivided
share or common property of the scheme is acquired.
In our view, this
section is therefore the operative one which allows for the transfer
of exclusive use rights in sectional title
schemes generally and in
circumstances such as those which prevail in this matter, and not
section 33(1) of the Deeds Registries
Act.
CONCLUSION
[65]
Consequently, and subject to what follows, the applicant is in our
view, entitled to an Order
which will allow for the transfer to it of
the exclusive use rights to the parking bays which are still
registered in the name
of S D Commercial, and which are currently
vested in the first respondent i.e which are being held by it in a
custodial and fiduciary
or quasi-fiduciary capacity on behalf of the
members of the scheme. The applicant is not entitled to an Order
transferring the
parking bays themselves (which it describes in paras
2, 3, 4 and 5 of its notice of motion as exclusive use areas), to it.
In this
regard, and in the exercise of the Court’s ancillary
power to grant such further and/or alternative relief as may be
required,
the necessary amendments must be made to the relief which
is prayed for in terms of the notice of motion, in order to reflect
this,
in the light of the legal position which has been outlined
above.
[66]
As far as the mechanism by which the transfer of such rights is to be
effected, both the Sectional
Titles Act and the Deeds Registries Act
require the first respondent to execute a notarial deed of cession in
favour of the applicant,
pursuant to which, on the submission of such
further documents as may be necessary (such as a power of attorney)
and the payment
of such fees as may be prescribed, the Registrar of
Deeds can affect the necessary endorsement in the deeds registry.
COSTS
[67]
This is a matter where costs, including the costs occasioned by the
postponement of the hearing
on 20 August 2020 at the instance of the
applicant, should follow the result. The respondent, in our view,
unreasonably opposed
the application for a postponement which was
brought when the attorney who was dealing with the matter was gravely
ill and in an
Intensive Care Unit in hospital. As a result of this
illness the attorney was in no position to give instructions to
counsel or
his professional assistant who was still too junior at the
time to handle a matter of this magnitude. We are of the view that it
matters not that the applicant was unable to file the documents from
the Deeds Office, which was the main reason why the application
was
sought.
[68]
In the result the following Order is hereby granted:
68.1
It is declared that the exclusive use rights in respect of parking
bays numbered P
64, P 73
and P 74, as depicted on sheets 4 and 5 of
registered sectional plan SGD number 1065/2007, as amended, in the
Vista Bonita sectional
title scheme number SS 357/2008, which are
currently registered in the name of SSD Commercial Holdings (Pty) Ltd
(in liquidation),
and which are vested in and held by the first
respondent, are extant and have not been cancelled by resolutions of
the first respondent.
68.2
First respondent is directed to co-operate with the applicant and the
second respondent and do all things
necessary to effect transfer of
the aforesaid exclusive use rights to the applicant, which
co-operation must include, but is not
limited to, providing such
information to the applicant and completing and signing and
submitting all such documentation as may
be necessary in order to
effect and register such transfer in the name of the applicant.
68.3
In the event that the first respondent refuses and or fails to comply
with the preceding paragraph the Sheriff
appointed for the area of
jurisdiction within which the scheme is situated is authorized and
directed to complete and sign all
relevant documentation on behalf of
the first respondent as may be necessary or required, in order to
effect transfer of the aforesaid
exclusive use rights to the
applicant and to register such rights in its name.
68.4
In terms of
section 2(e)
of the
Sectional Titles Act 95 of 1986
,
second respondent is authorized and directed (as against payment of
the prescribed fees and costs by the applicant and the submission
of
all documents required), to transfer the exclusive use rights in
respect of parking bays numbered P
64, P 73
and P 74, as
depicted on sheets 4 and 5 of registered sectional plan SGD number
1065/2007 in the Vista Bonita sectional title scheme
SS 357/2008
,
which are registered in the name of SSD Commercial Holdings (Pty) Ltd
(in liquidation) and which are currently vested in and held
by the
first respondent, to the applicant.
68.5
First respondent shall be liable for the applicant’s costs of
suit.
NDITA J
.
DOLAMO J
.
SHER J
ATTENDANCES/APPEARANCES
Attendances:
Heard on: 9 November
2020, 26 February 2021.
Supplementary
written submissions received : 23 March 2021
Appearances
:
Applicant’s
counsel: CF Van Der Merwe SC
Applicant’s
attorneys: HJ Van Rensburg Inc (Vanderbijlpark, Gauteng)
First Respondent’s
counsel: P White
First Respondent’s
attorneys: Mostert & Bosman (Bellville)
[1]
Conradie further concluded a nomination agreement on behalf of the
Trust in terms of which the applicant was nominated as the
buyer
under the agreement and to take over all the trust rights and
obligation under the sale agreement.
[2]
The
seller was the owner of
section 64
of the scheme in terms of
sectional title deed number ST12380/2008. The section was
transferred to CShell 172 (Proprietary) Limited
in term of deed of
transfer number ST19534/2014. On 18 May 2018
section 64
was
transferred to Norman Stefan Janse van Rensburg, who is an owner and
member of applicant. As
section 64
was transferred during 2014 when
the seller was still a member of the first respondent, it must be
accepted that the exclusive
use rights to parking P64 did not vest
in the first respondent by virtue of either
section 27(1)(c)
or
section 27(4)(b)
of the
Sectional Titles Act at
that time.
[3]
Act 95
of 1986.
[4]
Act 8
of 2011 (the Management Act) or STSMA.
[5]
Act 47 of 1937.
[6]
2021 (2) SA 1 (CC).
[7]
See
EFF v Minister of
Justice, supra
, at
para [75].
[8]
2013
(5) SA 471 (WCC).
[9]
Le
Roux v Dunrobin Body Corporate and Others
[2020] JOL 47441 (WCC).
[10]
Sectional
Titles, Shareblocks and Time-sharing
Vol 1 (2010, service 12 para 11.5.1).
.
[11]
Id.
[12]
Section 27 (1)(d)(ii).
[13]
See
Du
Plessis v ProphitIus and Another
2010 (1) SA 49
(SCA) at para [11].
[14]
2010
(5) SA 186
(SCA) at para [9].
[15]
2012 (3) SA 531
(CC) at para [109].
[16]
Mckersie supra
at paras [31], [32] and [34].
[17]
2018
(3) SA 396
(SCA) para [1].
[18]
Section 15(1(a).
[19]
Section 1.
[20]
Other
examples of areas over which such rights are commonly conferred are
pathways, corridors, pergolas over or entrances to individual
sections.
[21]
In terms of section 27(1)(a).
[22]
In terms of section 27(2) a body corporate may apply to the
Surveyor-General, if duly authorised by unanimous resolution of its
members, for the delineation of exclusive use rights on a sectional
plan, provided that no such delineation may be effected if
it will
encroach upon a prior delineation on the sectional plan of a part of
the common property for the exclusive use of one
or more owners. If
such a delineation is approved, the body corporate must (‘shall’)
transfer the use rights to those
to whom they have been conferred,
by way of the registration of a notarial deed which is entered into
by the parties, in which
the body corporate represents the owners of
all sections as transferor (section 27(3)).
[23]
Sections 27(1)(a) read together with sections 11(2) and 11(3)(b).
[24]
Section 12(1)f).
[25]
Section
27 (1)(b).
[26]
Vide
sections 27(1)(b), 27(3) and 27(4), provided that where the use
rights are held by more than one owner they must give their written
consent to such transfer and where the use rights attach to a
section which is mortgaged, the mortgagee must similarly provide
its
consent.
[27]
Act 47 of 1937.
[28]
Read together with section 36(2).
[29]
Section 27(4)(a).
[30]
Per Rogers AJ (as he then was) at paras [23], [32] and [35].
[31]
Section
27(1)(b).
[32]
CG Van
Der Merwe
Sectional
Titles, Shareblocks and Time-sharing
Vol 1 (2010, service 12 para 11.5.3).
[33]
By way
of the Sectional Title Amendment Act 29 of 2003.
[34]
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para [18].
[35]
Sections
2(5) and 3(1)(t) of the STSMA.
[36]
Section
5(1)(a).
[37]
Sections
5(1)(f) of the STSMA read together with section 27(5) of the Act.
[38]
Para
[12], replying affidavit.
[39]
At para [21]. On this strength of this dictum Wille J also
held in
Le Roux v
Dunrobin Body Corporate & Ors
[2020] JOL 47441
(WCC) at paras [41] and [46], that the provisions
of section 33 of the Deeds Registries Act were applicable in
relation to the
transfer of exclusive use rights in sectional title
schemes.
[40]
As set
out in section 27(1) – (7).