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[2015] ZASCA 103
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Fedgroup Participation Bond Managers (Pty) Ltd v Trustee of the Capital Property Trust (20165/2014) [2015] ZASCA 103; 2015 (5) SA 290 (SCA); [2015] 3 All SA 523 (SCA) (30 June 2015)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 20165/2014
In
the matter between:
FEDGROUP
PARTICIPATION BOND MANAGERS
APPELLANT
(PTY)
LTD
and
TRUSTEE
OF THE CAPITAL PROPERTY
TRUST
RESPONDENT
COLLECTIVE
INVESTMENT SCHEME IN PROPERTY
Neutral
citation:
Fedgroup
Participation Bond Managers v Trustee of the Capital Property Trust
[2015] ZASCA 103
(30 June 2015)
Coram:
Navsa ADP and Mhlantla, Pillay, Willis and
Saldulker JJA
Heard:
19 May 2015
Delivered:
30
June 2015
Summary:
Ownership of Land: whether an encroacher can bring an
independent cause of action claiming transfer of the encroached –
upon
land in the absence of a removal order by the owner of the land
– Building – Illegal structure – No approval of
building plans by local authority.
ORDER
On
appeal from:
Gauteng Local Division,
Johannesburg (Victor J sitting as court of first instance):
The following order is
made:
1. The application to
amend the notice of motion is dismissed with costs including the
costs of two counsel.
2. The appeal is
dismissed with costs including the costs of two counsel.
3. The cross-appeal is
dismissed and no order is made as to costs.
JUDGMENT
Navsa
ADP
et
Saldulker
JA (Mhlantla, Pillay and Willis JJA concurring):
[1]
In this case the question is whether someone encroaching on another’s
land is entitled, in the absence of an action or
an application being
brought by the owner of the land for a removal order, to approach a
court for an order compelling the owner
to transfer, not only that
part of the land on which there is encroachment, but also to seek
transfer of additional vacant land
against a tender of compensation.
The short answer is no. The background and the reasons for that
conclusion follow.
[2]
This appeal is directed
against the judgment and order of Victor J in the Gauteng Local
Division, Johannesburg in terms of which
she refused an application
by the appellant, Fedgroup Participation Bond Managers (Pty) Ltd
(Fedgroup), for an order along the
lines described in the preceding
paragraph. For clarity it is necessary to record specific parts of
the order sought by Fedgroup,
namely:
‘
1.
. . .[D]irecting the respondent, in its capacity as registered owner
of Erf 990 Sunninghill Extension 85 Township, Registration
Division
IR, Provence of Gauteng, in extent 1,1821 hectares (“the
Property”), forthwith upon demand:
1.1 to do all things necessary and to
sign all documents necessary to facilitate and to allow the
subdivision of the Property in
accordance with the Subdivision Plan
annexed to the founding affidavit in these proceedings as Annexure
“FA4”; and
1.2
to do all things necessary and to sign all documents necessary to
facilitate and to allow the transfer of the newly-created
portion of
the Property, in extent 2 396 m
2
and as indicated on the
aforementioned Subdivision Plan, to the Applicant, . . .’
[3]
The respondent is the trustee of The Capital Property Trust
Collective Investment Scheme in Property. The trust was established
in terms of the
Collective Investment Schemes Control Act 45 of 2002
.
We shall refer to it as CPT. As quid pro quo for the order referred
to in paragraph 2, Fedgroup was willing to accede to an order
in
respect of which it would (i) bear all the costs pertaining to the
subdivision of the property and the transfer of the newly-created
portion thereof (ii) against registration of the transfer, pay to the
respondent the sum of R1 950 000 plus value added
tax.
Furthermore, Fedgroup agreed to pay CPT a pro rata amount of the
rates and taxes which the former had paid to the local authority
since the commencement of the encroachment, in the ratio that the
property to be transferred bore to the whole of the property.
[4]
There is also a cross-appeal by CPT against the dismissal by Victor J
of its plea of prescription, in terms of which it had
contended that
any claim which Fedgroup may have had for the transfer of the
triangular piece of land it sought by way of the order
referred to in
the preceding paragraph had prescribed. The matter is before us with
the leave of the court below.
[5]
The background to the litigation culminating in the present appeal is
set out hereafter. Fedgroup and CPT are each the registered
owner of
one of two contiguous prime commercial erven situated in Sunninghill
Extension 85 Township, namely, Erf 989 measuring
5960 m
2
in extent (Erf
989), and Erf 990 measuring 1,1821 hectares
in
extent (Erf 990), respectively. Both erven are zoned in terms of the
relevant Town Planning Scheme to permit the erection of
offices.
[6]
The improvements on CPT’s property consist of two office
buildings which have a gross lettable area of 6 652 m
2
which were let to
the United Nations World Food Programme and Acer Computers.
[7]
The improvements on Fedgroup’s property included a substantial,
but incomplete structure, which consists of a basement
and concrete
formwork. There is a dispute about what the gross built area of the
incomplete structure would be. As will become
apparent later, this is
not an insignificant dispute.
[8]
What follows is a description of how Fedgroup and CPT became
adjoining land owners and how the encroachment at the centre of
the
present dispute occurred. On 31 July 2006 Fedgroup and CPT entered
into a written agreement in terms of which the latter acquired
from
the former a total of twenty-seven income producing properties and
associated businesses, as letting enterprises, for an aggregate
amount of R308 035 000. One of the properties acquired by
CPT is the erf referred to in paragraph 5 above (Erf 990),
including
the improvements referred to in paragraph 6. Registration of the
property into CPT’s name took place on 15 December
2006. The
incomplete structure on Fedgroup’s property referred to above
partially encroaches on CPT’s property. The
encroachment was
discovered by Fedgroup during April or May 2008, almost two years
after the conclusion of the written agreement
of sale. It is common
cause that the incomplete structure which encroaches on CPT’s
property had already been erected when
Fedgroup acquired it from a
predecessor in title. It is unchallenged that the structure was
erected unlawfully, more particularly
because building plans had not
been submitted for approval. We return to this aspect later.
[9]
A fence erected on the property lulled Fedgroup into a false sense of
security about the cadastral boundaries of the property
it disposed
of to CPT. Upon discovering the real state of affairs, Fedgroup
approached CPT concerning the encroachment and to discuss
a possible
resolution. Communications between the parties ensued but ultimately
negotiations broke down. This is unsurprising since
the land
concerned is prime commercial property with each party probably
seeking to extract maximum benefit for itself.
[10]
An admitted stumbling block to a non-litigious resolution of the
problem was that CPT insisted that a proposed settlement agreement
include a forfeiture clause in terms whereof all approvals required
for subdivision and consolidation had to be obtained within
a
specified time, failing which any amount paid to CPT by Fedgroup as
compensation would not be repaid. Fedgroup found this unacceptable.
[11]
In June 2009 Fedgroup contended by way of a letter to CPT that it was
entitled to seek rectification of the written agreement
of sale so as
to reflect the cadastral boundaries as understood by it at the time
of the conclusion of the agreement. This was
contested by CPT’s
attorneys and was not persisted in by Fedgroup, perhaps because of a
clause in the written agreement of
purchase which included a seller’s
warranty against encroachment.
[12]
Because of the breakdown in negotiations and the resultant impasse
Fedgroup decided to go on the offensive and launched an
application
for the orders referred to earlier. In resisting the application, CPT
raised three points
in
limine
. First, that
Fedgroup had no cause of action in that there was no justiciable
dispute. It contended that it was the owner of the
property concerned
and unwilling to dispose of it by way of sale. It developed its
contention as follows. A land owner could not
be compelled to sell
property it was unwilling to part with. In effect, so CPT contended,
Fedgroup sought to compel an expropriation
which, in our law, was
incompetent. Second, CPT raised prescription as a defence. It
submitted that Fedgroup admittedly first became
aware of the
encroachment during April or May 2008 and that even if it had a cause
of action, more than three years had elapsed
before it launched
proceedings in the court below. Lastly, CPT contended that there were
material disputes of fact that could not
be resolved on the papers.
In this regard, CPT contended that this was important in relation to
the question of prejudice, more
particularly in relation to
compensation and the proposed subdivision and the necessary rezoning
which is concomitant to transfer
of the land sought by Fedgroup.
[13]
We interpose to record that the order sought, set out in paragraph 2
above, included land additional to that on which the partially
erected structure was situated and which Fedgroup sought to have
excised from CPT’s property, and transferred to it, based
on
the assertion that it needed the additional vacant land for optimal
development of its own property and its further allegation,
that CPT
would have no use of the undeveloped additional piece of land it
sought to have transferred into its name and that without
which the
transfer it sought would be worthless. It is uncontested that the
land sought by Fedgroup constitutes 20 per cent of
the total extent
of the property owned by CPT.
[14]
We return to list the material disputes asserted by CPT. First, there
is a dispute about the valuation of the land sought to
be excised.
The parties are poles apart in their respective valuations.
[15]
The parties’ respective experts were divided about the extent
of the financial loss and prejudice to each in the event
of an order
in favour of the other. Disputes arose in relation to demolition and
the viability of redesign and redevelopment of
the partially
completed structure so as to avoid encroachment. The cost of redesign
and demolition and removal was estimated by
CPT’s expert to be
an amount of R4 223 138, which was admitted by Fedgroup’s
expert. However, Fedgroup was
adamant that this amount did not
constitute the total prejudice it would suffer in the event of the
order not being granted, contending
that the loss of development
potential in financial terms far exceeded that amount. CPT on the
other hand, contended that if it
were to lose the additional land
sought by Fedgroup it would be unable to develop the remaining land
optimally and that its loss
in financial terms would run into many
millions of rands. There is a related dispute about the effect that
the subdivision resulting
from the order sought would have on the
land-use rights of the remaining portions of CPT’s property and
its valuation. It
would mean that the present improvement coverage
would exceed the permitted land coverage and that it would require a
rezoning
application by CPT. Furthermore, the parties are divided on
the probabilities of success of an application for subdivision and
rezoning. In this regard, Fedgroup contended that CPT’s
expert’s present position on the difficulties to be encountered
in securing approval for the subdivision and rezoning, flies in the
face of an earlier indication by the same expert that there
was a
likelihood of success. According to CPT’s expert, in the event
of an order being granted as sought by Fedgroup, its
property’s
value would be diminished by an amount of R4 410 721. This
is an amount that exceeds the amount of R4 223 138
referred
to above. CPT contended that it would thus be severely prejudiced in
the event of the order being granted.
[16]
The court below dealt with the first point raised by CPT, namely
whether Fedgroup had a cause of action. Victor J categorised
the
order which Fedgroup sought as being one for ‘specific
performance’. Before us the parties were agreed that that
conclusion could not be supported. Following on the aforesaid
erroneous categorisation, Victor J took the view that an order such
as the one sought by Fedgroup was entirely within the court’s
discretion.
[17]
The court below went on to consider
Christie
v Haarhoff
,
[1]
in which the court granted transfer of the encroached upon area,
against compensation to be paid to the landowner. Victor J also
referred to
Trustees,
Brian Lackey Trust v Annandale
,
[2]
in which Griesel J held that the encroacher there could retain the
structure against payment of compensation. Victor J considered
it
significant that in that case the encroaching structure encompassed
80 per cent of the owner’s land. In support of her
view that
the court has a discretion, based on consideration of reasonableness
and fairness, to order that an encroachment could
continue against
‘the payment of damages’, Victor J cited
Rand
Waterraad v Bothma
.
[3]
Her
conclusion on whether Fedgroup had a cause of action is set out in
paragraph 12 of the judgment of the court below:
‘
Based on the
case law set out above I find that this court has a discretion to
order transfer and compensation but obviously each
case must depend
on its facts. I find that the applicant’s cause of action is
good in law and can be raised in the absence
of a demolition order.
The question still to be determined is whether on these facts such an
order is appropriate.’
[18]
In relation to prescription, Victor J ruled against CPT. She
concluded that Fedgroup’s cause of action did not arise
out of
a ‘debt’ as envisaged in
s 11
(d)
of the
Prescription Act 68 of 1969
, stating the following (para 14):
‘
The
applicant has unwittingly been in possession of the respondent’s
immovable property. This cannot be interpreted to be
a debt.’
She
went on to state the following (para 15):
‘
This
encroachment cannot be frozen in a point in time. The encroachment in
my view is a wrong which continues. As long as the respondent
has a
right to require demolition there is no prospect of prescription.’
For
this conclusion she found support in
Barnett
v Minister of Land Affairs
[4]
paras
20 and 21.
[19]
Turning to the disputes of fact, Victor J took the view that there
were indeed disputes concerning the town planning aspects
insofar as
the extended excision of land was concerned, and that there was ‘a
mass of speculation’ as to whether the
application for
subdivision and rezoning would succeed. The reasons for inclining
against Fedgroup are set out in paras 38 and
39 of the judgment of
the court below:
‘
In
this case a factor which introduces a degree of complexity and
affects the exercise of my discretion is that the applicant is
bent
on seeking the entire triangular encroachment and not for example the
solid unfinished building. In exercising my discretion
I would have
had no difficulty in directing the transfer of that portion of the
encroachment against payment of compensation. It
was the applicant's
case, after the court specifically asked whether the transfer of the
unfinished building would suffice. The
applicant submitted that it
would be of no value to the applicant unless the adjoining sliver of
land and the guard house is incorporated.
One area of the triangular
piece of land has access to a public road and this was of importance
to the applicant. There is an already
built guard house. To sum up if
the court were to order the transfer of only the incomplete building
encroachment of 703 square
metres this would not assist the applicant
in any way as the entire encroachment was required for development.
In
my view upon the proper exercise of my discretion based on all the
facts set out above it is only the incomplete building which
can be
transferred to the applicant. That has been rejected and in those
circumstances applicant's application must fail.’
It
is against the conclusions set out in the preceding paragraphs that
the present appeal and cross-appeal are directed.
[20]
Before dealing with the correctness of the court below’s
reasoning and conclusions we pause to state that in anticipation
of
this court perhaps reaching the same conclusion as did Victor J,
namely, that it was not competent to order transfer of land
beyond
that on which the offending structure was erected, Fedgroup filed a
notice of application to further amend its notice of
motion to
include an alternative prayer, to restrict the relief it sought to
the land on which the offending structure was erected.
This amendment
was only sought on appeal. It is, at this stage, apposite to recall
that Fedgroup was emphatic in its founding affidavit
that its
acquisition of the limited land would be worthless. This is an aspect
to which we shall revert in due course. We record
further that, in
response to the application to amend the notice of motion on appeal,
CPT filed a notice of an application to strike
out, conditional upon
the amendment being granted. We now return to deal with the judgment
in the court below and the applicable
law.
[21]
Regrettably, there are major misconceptions in the reasoning and
conclusions of the court below. First, as acknowledged by
counsel on
behalf of both parties, this is not a case in which Fedgroup sought
specific performance. Second, the consideration
of the cases
involving compensation in relation to encroachment was not
sufficiently analytical.
Christie
was a case in which the
court considered an action for trespass. A landowner had come to
court complaining that the defendants had
erected a large building on
his property and had erected a wall and portion of the building
thereon. The defendants had continued
and ‘refused to abate
such trespass’. The extent of the ground trespassed upon was
141 square feet. The defendants
admitted the trespass and alleged
that they had acted in the bona fide belief that the whole of the
ground upon which they had
built belonged to themselves and that, on
discovering the error, they informed the plaintiff. They contended
that it was impossible,
without great loss and damage, to remove the
building and tendered the amount of £20 as compensation,
further offering to
bear the expenses of surveying the land and of
transferring it into their own names. The following part of the
judgment is instructive
(at 353 – 354):
‘
In
this case, however, the plaintiff very properly does not press his
strict
rights
to
the extreme point; and it is practically agreed that the proper
course will be for the plaintiff to transfer to the defendants
the
ground built upon, upon their paying all expenses of and incidental
to the transfer, together with reasonable compensation
for depriving
him of the ground. The question for the Court to decide is what sum
in all the circumstances of the case should be
awarded as reasonable
compensation. . .’ (Our emphasis.)
It
can justifiably be said that
Christie
was a case in which the parties had
agreed to adjudication by the court of a reasonable amount to be paid
for land in circumstances
where the landowner had already agreed to
the transfer, subject to the court deciding on adequate compensation.
It can hardly be
categorised as authority for there being a ‘right’
vested in an encroacher, to approach a court for an order to compel
transfer of property belonging to another. It is also not
insignificant that the action was instituted by the landowner.
[22]
In
Lackey
, also relied upon by the court below, Griesel J
referred to a discretion vested in a court to award compensation
instead of ordering
removal of an encroaching structure. It was
stated that a substantial encroachment is not necessarily a bar to an
order of compensation.
It is true that in
Lackey
the
encroacher instituted the action. That, however, was met by a plea
and a counterclaim by the landowner for removal of the encroachment.
The
lis
then, was not about whether an independent action at
the instance of an encroacher was competent in the absence of a claim
for
removal. The counterclaim sought precisely that. What is
important, though, is that the court in
Lackey
said the
following (para 41):
‘
.
. . On the evidence of this case, the inference is irresistible that
the defendant was prepared to accept monetary compensation
for his
erf . . . .’
The
court refused the aggrieved landowner’s claim for a demolition
order and issued inter alia the following declaratory order:
‘
It
is declared that the defendant is not entitled to the removal from
erf 878 of the encroachment erected thereon by the plaintiffs,
subject to payment by the plaintiffs to the defendant of such damages
as the parties may agree or the Court may determine to be
payable.’
[23]
Rand Waterraad
, another decision on which the court below
relied, dealt with an application by an aggrieved landowner for a
declaratory order
that the respondents in that case had no right in
structures encroaching on his property and that the respondents had
to remove
them at their own cost. In that case the court reaffirmed
the principle that where a demolition order was sought, a court had a
discretion to refuse such an order and to confine the plaintiff to a
claim for damages. Furthermore, in that case, in refusing
the
application, the court took into account the considerable time that
had lapsed during which the landowner had raised no objections
against the erection and presence of the offending structures. At 139
I - J the following appears:
‘
Geregverdigde
billikheid dikteer dat vanweë die traak-my-nieagtige gelatenheid
waarmee applikant hierdie aangeleentheid bejëen
het hy nie
geregtig is op ‘n verwyderingsbevel soos vervat in die
kennisgewing van mosie nie.’
This
case is no authority for the proposition that an encroacher can
approach a court as of right to compel transfer of another’s
immovable property.
[24]
In
Meyer
v Keiser
,
[5]
relied on by Fedgroup, the facts were as follows. A landowner
instituted action against an encroacher for the removal of an
encroachment.
He alleged that unbeknown to him the defendant had
built a house on the adjoining property which, to a substantial
extent, encroached
upon his property. In resisting the claim the
defendant averred that the encroachment had occurred as a result of a
bona
fide
mistake
about the beacons demarcating the boundary. Moreover, the defendant
indicated that in monetary terms greater prejudice would
attach to
him in the event of a demolition order. The defendant prayed that the
court, in the exercise of its discretion, should
order the plaintiff
to transfer to him that part of the property upon which there was
encroachment against payment of compensation.
The plaintiff excepted
to the plea on the ground that the defendant was not entitled to
claim transfer of part of his property.
The following part of the
judgment in
Meyer
is
important:
‘
When
an award of damages is acknowledged as the permissible and
appropriate form of relief in the case of an encroachment, an order
for the transfer of that portion of the property encroached upon is
incidental to, and consequent upon, such an award. The virtue
of such
an ancillary order is obvious but it need not necessarily be made (cf
De
Villiers v Kalson
1928 EDL 217
at 233), and in certain circumstances to do so may be impracticable
or not permissible in law. The important point is that, whatever
form
the order takes in such a case, it is the award of damages which is
the true basis for the relief granted. In my view, perhaps
as a
result of the form of the orders in the two decisions relied upon,
this was overlooked by the pleader in the instant case
which resulted
in a misconception of the nature and extent of the Court’s
discretionary authority.’
The
exception was upheld with costs and the plea was set aside with the
defendant being granted leave to file a new plea if so minded.
[25]
In
Phillips
v South African National Parks Board,
[6]
the
South African National Parks Board had erected an encroaching fence
on the applicant landowner’s property. The court had
regard to
environmental legislation, and the prejudice that the parties might
suffer in the event of the fence remaining in place
compared to
removal being ordered. Significantly, the court recognised that a
loss of property would result in the event of it
being ordered that
the fence remain in place against the award of compensation. It
reasoned that it might amount to deprivation
of property and that
section 25(1)
of the Constitution might come into play (para 24). It
nonetheless considered that such a deprivation might in appropriate
circumstances
be ordered in the exercise of a court’s
discretion. In that case, however, the landowner prevailed and
removal was ordered.
[26]
Professor Z T Boggenpoel, in an article in the
South
African Law Journal
,
[7]
dealing with the rights of a landowner in respect of encroachments,
states with reference to a number of authorities, that removal
of the
offending structure is ‘ordinarily explained as being the
default remedy in the case of encroachments’. She
goes on to
analyse cases that have reaffirmed the discretion to award
compensation instead of ordering the removal of encroaching
structures.
[27]
Professor Boggenpoel was rightly critical of Victor J’s
judgment in this case for not being sufficiently analytical.
She
reasons with justification that the cases relied upon did not provide
the necessary authority to conclude that an encroacher
can claim as
of right that his neighbour’s land should be transferred to
him.
[28]
Professor Boggenpoel, in a separate article,
[8]
very usefully traces the history of our law in relation to an
aggrieved landowner’s right to seek removal of an encroachment.
The remedy has its roots in Roman law.
[9]
The point of departure in Roman Law was that an encroachment should
be removed.
[10]
This could be
done by self-help or by way of the
actio
negatoria
where
the encroachment protruded into airspace. The learned author, while
acknowledging that the remedy had undergone significant
development
and modification when it was received into South African case law
states that there appears to be no mention of a power
of a court to
order transfer of the encroached upon land to the encroacher.
[29]
Similarly there is no mention of such a power in Roman-Dutch law.
Boggenpoel explains that in Roman-Dutch law, the point of
departure
was the same as in Roman law, namely, that if anybody suffered as a
result of something belonging to his neighbour overhanging
or
encroaching on his property, he could force the neighbour to remove
it.
[11]
In the context of
acquisition of ownership, Grotius stated that ownership is
transferred to the affected landowner where someone
built on his
land.
[12]
According to Voet,
‘whatever someone lets unto or constructs on another’s
tenement, becomes the property of him to
whom the ground belongs.
[13]
Boggenpoel explains that no mention is made in the commentaries
regarding an order for the transfer of the encroached upon land
to
the encroacher.
[14]
She states
that her examination of early South African case law confirms the
view that such an order was not competent at common
law.
[15]
With reference to
Christie
,
Boggenpoel concludes that in that case the court merely facilitated a
bilateral agreement and that the transfer that was ordered
was not
against the affected landowner’s will.
[16]
Similarly, in
Van
Boom
v Visser,
[17]
the
plaintiff did not press his rights of ownership and was willing to
accept £100 to tolerate the encroachment. The court
gave
judgment in favour of the aggrieved landowner, reiterating that
removal was the default remedy. The court stated, as an alternative,
that the defendant could pay £25 for the transfer of the
property and £10 damages. The following statement by the author
is worth repeating:
‘
Although the
end result in this case was that transfer was ordered, a very
important qualification should be emphasised. The transfer
of the
encroached-upon land was dependant on the willingness of the affected
landowner to give up his property and it was not an
involuntary
judicial transfer of the affected land.’
[30]
Boggenpoel considered
Meyer
as
well as the decision in
De
Villiers v Kalson
[18]
as
illustrations that an order for transfer does not necessarily have to
be made when a court exercises its discretion to grant
compensation
rather than order removal. The learned author submits that the power
to transfer the encroached upon land, which she
says has typically
formed part of the court’s discretion in the context of
building encroachments, is a separate power that
should be entirely
dependent on the willingness of the affected landowner to give up his
property. She submits that the judgments
that endorse the view that
the power exists for a court to effect an involuntary transfer of
property do not provide adequate authority
for that position. The
following part of the article bears repeating:
‘
As the
matter stands there is no authority in either common law or
legislation in terms of which a court can sanction a forced sale
of
land in the context of building encroachment, against the will of the
affected landowner. It should be kept in mind that South
African
courts only have the powers granted to them by common law or
legislation. In this regard, there is no common law principle
or
legislation that grants them the authority to order compulsory
transfer of land.
Furthermore,
if the affected landowner does not want to give up his property, the
involuntary transfer of property that the court
authorises with a
transfer order may be problematic in light of section 25 of the
Constitution. The order will result in a deprivation
of property,
which will have to comply with section 25(1). Additionally, if the
loss of property in the case where the decision
is made to leave the
encroachment in place and transfer the encroached-upon land to the
encroacher amounts to expropriation of
property, the requirements of
section 25(2) and (3) of the Constitution would also be applicable.’
[31]
The learned author submits that the deprivation of property rights
that occurs as a result of leaving encroachment in place
and ordering
transfer of the encroached upon land, must comply with s 25 of the
Constitution which, she suggests, might be problematic.
She reaches
the following conclusion:
‘
It is argued
here that although it should be possible in terms of the court’s
discretion to leave (even significant) building
encroachments in
place against compensation, the power to order transfer of the
affected property is an entirely different matter.
The discretion of
a court in the context of building encroachments to decide on an
appropriate remedy does not include the authority
to effect a forced
transfer of the land affected by the encroachment. Therefore, a
compulsory transfer order will no doubt conflict
with section 25(1)
in as far as the common law does not authorise such an order and the
transfer order will be unjustified and
therefore arbitrary.’
[32]
Other academics have expressed similar concerns about the
constitutionality of court orders refusing the removal of
encroachments,
particularly where the encroachments are extensive or
where a transfer of ownership of the encroached upon land is also
ordered,
on the grounds that this may constitute arbitrary
deprivation of property.
[19]
[33]
Our law has always been careful to protect the right of ownership,
particularly of immovable property. It is a most important
and
extensive right.
[20]
It is
thus protected by registration in the Deeds Office. Limited real
rights in land may also be required to be registered.
Silberberg
and
Schoeman’s
The Law of Property
,
[21]
in dealing with the exclusion of personal rights from the
registration process, states the following at 65:
‘
This
exclusionary approach indicates support for the notion that ownership
is the pinnacle of – or the most important right
within –
a hierarchy of rights, with limited real rights following close at
heel. Other rights are understood as being in
stages of inferiority
to ownership as far as their protection in property law and
publicising thereof are concerned.’
The
learned authors provide a qualification, namely, that this
hierarchical approach has come under scrutiny for failing to provide
acceptable solutions to the increased pressure brought about by a
proliferation of land reform legislation. However, it does not
follow
from this that the right of ownership should not be afforded its
appropriate weight.
[34]
Before us, counsel on behalf of Fedgroup, when engaged by this court
on how they would circumscribe the right the encroacher
was seeking
to enforce in the court below, experienced difficulty in doing so.
The response ultimately was that no right could
be circumscribed but
that it would be a sad day if this court did not come to Fedgroup’s
assistance especially in the face
of the present impasse. Counsel on
behalf of CPT responded as follows; it was the owner of the land; it
had not sought the removal
of the offending structure; and as far as
it was concerned there was no justiciable dispute. There was thus no
impasse.
[35]
With few exceptions, the decisions discussed earlier in this judgment
flowed from an owner seeking to enforce his full rights
of ownership.
Acquisitive prescription aside, we have difficulty in conceiving a
basis on which an encroacher might offensively,
as of right, claim
the transfer of ownership into his or her name of another’s
land. An encroacher might be able to defend
an action or application
for removal on the basis that it is unjust and unfair to order
demolition and removal. This is a defensive
position that might
rightly be adopted. Courts, in exercising what has now been accepted
as a ‘discretion’ to award
compensation instead of
ordering removal, do so on the basis of policy considerations such as
unreasonable delay on the part of
the landowner, or on the basis of
what might be viewed as acquiescence.
[22]
Prejudice and the principles of neighbour law are taken into account.
However, an encroacher does not have an independent cause
of action.
He or she cannot offensively compel another to part with rights of
ownership. Estoppel is an apt analogy. It is thus
unsurprising that
counsel on behalf of Fedgroup experienced difficulty in formulating
the legal basis for approaching the court
below as did Victor J in
dealing with prescription. She had difficulty in determining what, in
effect, had been said to prescribe.
[23]
In concluding in sweeping terms that a court has a wide discretion to
consider granting the relief sought by Fedgroup, the court
below
erred. In our view, the response of counsel on behalf of CPT set out
at the end of the preceding paragraph is correct.
[36]
It is clear from what is set out above that adjudication in relation
to encroachment is fraught with complexities. For example,
is
compensation to be calculated in relation only to the value of use
and occupation of the land, or should the negative impact
of the
deprivation of the full use of the land be taken into account? If the
determination occurs in relation only to use and occupation
it might
obviate the need to consider transfer of ownership. Does the right to
use and occupy endure only for the lifetime of the
encroacher? In
determining whether an encroachment should remain in place, town
planning and zoning considerations might come into
play. Ought
compensation to be calculated in relation to the full market value of
the land? If the answer is in the affirmative,
does it mean that
registration and transfer has to follow? If it does, does it amount
to deprivation of property within the meaning
of s 25(1) of the
Constitution. Of course these difficulties arise only in the event of
a landowner being unwilling to part with
his or her property.
Carefully crafted legislation, preferably upon the advice of the
South African Law Reform Commission, may
address at least some of
these complexities.
[37]
In the present appeal, Fedgroup has an insuperable difficulty. No
court has ever gone as far as ordering the transfer of land
greater
than the area of encroachment. Such an order is just not competent.
[38]
And even if a court had an inclination to come to Fedgroup’s
assistance, there is yet a further difficulty that Fedgroup
cannot
overcome, namely, several material disputes in relation to values and
ultimately in respect of computation of compensation.
On CPT’s
valuations and tendered evidence the compensation would be inadequate
and it would suffer the greater and irreparable
prejudice.
[39]
As suggested by Boggenpoel in her 2015
SALJ
article,
an intractable problem for Fedgroup is that the encroaching structure
it sought to have remain in place and of which it
required transfer
was erected unlawfully, more particularly, no building plans were
submitted.
[24]
A court will
not countenance or be party to perpetuating unlawful conduct.
[25]
For all the aforesaid reasons, the appeal cannot succeed. The
difficulties referred to in paragraph 36 do not fall for
consideration.
[40]
It is necessary to deal briefly with the application to amend the
notice of motion on appeal. As noted earlier, Fedgroup sought
to
amend its notice of motion on appeal to include an alternative prayer
for transfer of only the encroached-upon land (and excluding
the
additional vacant land sought in the initial prayer). Fedgroup was
emphatic in its founding affidavit that transfer of only
this lesser
area was worthless. It is difficult to comprehend why it is now
pursuing that worthless endeavour. Furthermore, the
case that CPT was
called upon to meet was the transfer of the extensive area initially
sought and it marshalled evidence in relation
to valuation and
prejudice relative to that case. The ground has now shifted radically
to CPT’s prejudice. This cannot be
countenanced. The
application to amend the notice of motion thus falls to be dismissed
with costs.
[41]
Insofar as the cross-appeal is concerned, it was in reality
conditional. Considering the conclusions reached, the question
of
prescription has been rendered moot. The cross-appeal falls to be
dismissed without an order for costs.
[42]
For all these reasons the following order is made:
1. The application to
amend the notice of motion is dismissed with costs including the
costs of two counsel.
2. The appeal is
dismissed with costs including the costs of two counsel.
3. The cross-appeal is
dismissed and no order is made as to costs.
__________________
M S NAVSA
Acting Deputy President
_____________________
H SALDULKER
Judge of Appeal
APPEARANCES:
Appellant
J G Wasserman SC with G
F Porteous
Instructed by:
Gideon Pretorius
Incorporated, Cape Town
Van Der Merwe & Sour,
Bloemfontein
Respondent
J Both SC and J Moorcraft
Instructed by:
Kokinis Incorporated,
Randburg
McIntyre & Van Der
Post, Bloemfontein
[1]
Christie v
Haarhoff and others
(1886-1887)
4 HCG 349.
[2]
Trustees, Brian
Lackey Trust v Annandale
2004
(3) SA 281 (C).
[3]
Rand Waterraad
v Bothma en ‘n ander
1997
(3) SA 120 (O).
[4]
Barnett &
others v Minister of Land Affairs & others
2007 (6) SA 313
(SCA).
[5]
Meyer v Keiser
1980 (3) SA 504
(D).
[6]
Phillips v
South African National Parks Board
[2010]
ZAECGHC 27.
[7]
Z T Boggenpoel
‘
The
Ambit of the discretion of courts in the case of encroachment:
Fedgroup Participation Bond Manager (Pty) Ltd v Trustee of
the
Capital Property Trust Collective Scheme in Property’ (2015)
132
SALJ
5.
[8]
Boggenpoel
‘Compulsory transfer of encroached-upon land: A constitutional
analysis’
(2013) 76
THRHR
313
at 317.
[9]
Boggenpoel (2013)
at 317. See also
Corpus
juris civilis
(D
9.2.29.1) S P Scott
The
Civil Law: Including the Twelve Tables; The Institutes of Gaius; The
Rules of Ulpian; The Opinions of Paulus; The Enactments
of
Justinian; and the Constitutions of Leo
(1973));
J R L Milton ‘The law of neighbours in South Africa’1969
Acta
Juridica
123 at
234; Van den Heever
Aquilian
damages in South African law
(1944)
at 84.
[10]
See
D
9.2.29.1
.
[11]
Van Leeuwen
Het
Roomsche-Hollandsche Recht
2.20.6.
[12]
Grotius
Inleidinge
tot de Hollandsche Rechtsgeleerdheid
2.10.6.
[13]
Voet
Commentarius
ad Pandectas
8.2.4.
[14]
Boggenpoel (2013)
at 318.
[15]
And in this she
relies on C G
Van
der Merwe
Sakereg
2 ed (1989) at
203.
[16]
Boggenpoel (2013)
at 318.
[17]
Van
Boom v Visser
(1904) 21 SC 360.
[18]
De Villiers v
Kalson
(1928)
EDL 217.
[19]
See, for example,
A Pope ‘Encroachment or accession? The importance of the
extent of encroachment in light of South African
constitutional
principles’
(2007) 124(3)
SALJ
537
; AJ van der
Walt ‘Replacing property rules with liability rules:
Encroachment by building’
(2008) 125(3)
SALJ
592
at 622; H
Mostert (ed) and A Pope (ed)
The
Principles of the Law of Property in South Africa
(2010) at 140.
[20]
Chetty v Naidoo
1974 (3) SA 13
(A)
at 20 A - D.
[21]
P J Badenhorst, JM
Pienaar and H Mostert
Silberberg
& Schoeman’s The Law of Property
5
ed (2006).
[22]
In this regard,
see Z T Boggenpoel ‘The Discretion of courts in encroachment
disputes’(2012) 23(2)
Stell
LR
253
at 256-257.
[23]
In this regard,
Victor J’s reliance on
Barnett
was misplaced.
That case dealt with the prescription of an owner’s
vindicatory claim. Brand JA , himself, in a later judgment,
namely,
Bester
NO & others v Schmidt Bou Ontwikkelings CC
2013 (1) SA 125
;
[2012] ZASCA 125
(SCA) recognised that he had erred in accepting
that a vindicatory claim was a debt that prescribed after three
years. In
Absa
Bank v Keet
[2015]
ZASCA 81
(SCA), this court reiterated the significance of the
distinction between real and personal rights and held that the
vindicatory
action is not a ‘debt’ that prescribes after
three years in terms of the
Prescription Act 68 of 1969
. The point
is that in the present case prescription was raised by the owner as
against the encroacher. The court below, as is
apparent from para 15
of the judgment, approached the matter from a flawed perspective.
[24]
Section 4 of the
National Building Regulations and Building Standards Act 103 of 1977
provides:
‘
4
Approval by local authorities of applications in respect of erection
of buildings
(1)
No person shall without the prior approval in writing of the local
authority in question, erect any building in respect of
which plans
and specifications are to be drawn and submitted in terms of this
Act.
.
. .
(4)
Any person erecting any building in contravention of the provisions
of subsection (1) shall be guilty of an offence . . .
.’
[25]
See
Lester
v Ndlambe Municipality
[2014]
1 All SA 402
(SCA).