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[2014] ZASCA 94
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Eskom Holdings Soc Ltd v Norton and Another (464/13) [2014] ZASCA 94 (26 June 2014)
THE SUPREME COURT
OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 464/13
DATE:
26 JUNE 2014
In the matter
between:
ESKOM HOLDINGS
SOC LTD
.....................................................
APPELLANT
And
LINDY
NORTON
...........................................................
FIRST
RESPONDENT
REGISTRAR OF
DEEDS
.........................................
SECOND
RESPONDENT
Neutral citation:
Eskom Holdings Soc Ltd v Norton (464/13)
[2014] ZASCA 94
(26 June
2014)
Coram: Navsa,
Lewis and Shongwe JJA and Hancke and Mocumie AJJA
Heard: 22 May
2014
Delivered: 26
June 2014
Summary:
Interpretation of deed of servitude ─appellant not entitled to
rely on a clause in the deed, inserted for its protection,
to assert
that cancellation of the servitude for failure to pay first
respondent servitude rental, is not valid ─ appeal
dismissed
with costs.
ORDER
On appeal from:
North Gauteng High Court, Pretoria (Makgoba J sitting as court of
first instance):
The appeal is
dismissed with costs including the costs of two counsel.
JUDGMENT
Mocumie AJA (Navsa,
Lewis and Shongwe JJA and Hancke AJA concurring):
[1] This appeal
turns on the interpretation and application of a clause in a Deed of
Servitude (the Deed). In terms of the Deed,
the appellant, Eskom
Holdings Limited (Eskom), a State owned company and the principal
distributor of electricity in South Africa,
has ‘the right in
perpetuity, to convey electricity across [the property owned by the
first respondent, Ms Lindy Norton]
by means of wires and/or cables or
other appliances underground and/or along the route hereinafter
described, together with the
right to. . . erect, use or maintain,
repair, relay, alter, inspect and remove all poles, towers,
standards, wires, cables, pipes,
strays, struts, arrester yards with
the necessary fencing to protect such arrester yards, and all other
appliances necessary or
incidental to the conveyance of electricity.’
The property in question is situated at 83 Blue Hills Extension 9
Township,
Gauteng.
[2] During 2012 Ms
Norton (Norton) applied to the North Gauteng High Court for an order
declaring the servitude (344 of 1958) to
have been duly cancelled by
her. In addition, she sought an order directing the Registrar of
Deeds to record the cancellation of
the servitude and Eskom to remove
all electricity cables and wires traversing the property within 30
days of the order. The high
court (Makgoba J) granted an order in
those terms and ordered Eskom to pay Norton’s costs, including
the costs of two counsel.
The present appeal directed against that
order is with the leave of the court a quo.
[3] The background
is set out hereafter. As indicated by the servitude number, the
property has, since 1958, more than five decades
before Norton took
transfer of the property, been subject to the servitude that entitled
Eskom to install and maintain cables and
wires over the property for
the purposes of conveying electricity. The property constitutes a
sub-divided part of the land described
in the deed of servitude.
1
[4] Clause 2 of the
Deed states that ‘in consideration of the rights granted to it
[Eskom] shall . . . pay to the registered
owner for the time being .
. . annually the sum of £15.00 (fifteen pounds) payable yearly
in advance on 24thOctober, in
each and every year, beginning the
first payment on 24thOctober, 1958.’
[5] Clause 3 of the
deed provides for cancellation of the Notarial agreement in the
following terms: ‘If [Eskom] shall be
in arrear with any such
payment for a period of 1(one) month from the due date . . . the
registered owner . . . will have the right
to cancel this Notarial
agreement, provided however, that 30 (thirty) days’ notice in
writing of intention to do so shall
have been given to and received
by [Eskom] and [Eskom] shall have failed to make payment within the
said 30 (thirty) days.’
[6] Clause 9 of the
Deed is central to this appeal and was clearly intended to protect
Eskom and, indeed, even the public interest.
It reads as follows:
‘Upon the
registration of transfer of the said property or any portion thereof
after the registration of this Agreement, the
transferee shall
produce the title deed to [Eskom] in order that [Eskom] may register
the change of ownership, and until such production
[Eskom] shall be
entitled to treat the transferor as being still the registered owner.
[Eskom] may waive compliance with the provisions
of this clause, but
such waiver must be in writing.’
It is safe to say
that this clause was designed to ensure that Eskom was not prejudiced
by a change of ownership, of which it was
unaware, and where in those
circumstances it made payment to an erstwhile owner, its position was
protected and continuation of
the servitude was not thereby
disrupted.
[7] That brings me
to the change of ownership that did occur and which is material to
the outcome of this appeal. Norton took transfer
of the property from
Mr Ronald King on 23 July 2010. She did not produce her title deed to
Eskom as envisaged in clause 9. Nonetheless,
on 8 October 2010
Eskom’s attorneys, instructed by their client, wrote to Norton
as follows:
‘Dear Mrs
Norton
CAPITALISATIONOFREGISTERED
SERVITUDE: K344/1958S
L NORTON / ESKOM
HOLDINGS LIMITED
ERF37 BLUE HILLS X8
We refer to the
abovementioned transaction and confirm that a servitude for the
purposes of conveying electricity in favour of Eskom
Holdings Limited
was registered over the property on 9th April 1958 by virtue of a
Notarial Deed of Servitude K344/1858S, a copy
of which is enclosed
for information purposes
We have been
instructed By Eskom Holdings Limited to make an offer to you on its
behalf to capitalize the yearly lease amount of
the abovementioned
servitude, by means of a once-off consideration payment of R411.76
(Four Hundred and eleven rand and seventy
six cents).
This amount will be
paid to you on date of registration of the Capitalization Agreement
in the Deeds Office and will be in full
and final settlement of any
moneys payable to you in respect of the abovementioned servitude.
In view of the above
we enclose the following documents . . . .’
[8] I pause to state
that there is parallel litigation between Eskom and a number of
homeowners, including Norton, concerning the
legality of Eskom’s
power lines in the neighbourhood and the challenge appears to be
related to health and safety issues.
Although not directly related to
the legal issues in the present case it does serve to explain
subsequent events, including Norton’s
reaction to the offer of
capitalization.
[9] Norton did not
respond to the offer for more than a year. During that time the
consideration due in terms of the deed of servitude
was in arrears.
On 30 April 2012, purportedly acting in terms of the notice clause
referred to above, Norton gave notice of her
intention to cancel the
notarial agreement. Notwithstanding this demand, Eskom failed to pay
Norton the rental which it did not
dispute was due. On 5 June 2012,
after the expiry of the 30 day period referred to in clause 3 of the
Deed, Norton’s attorneys
of record sent a letter to Eskom’s
attorneys stating: ‘notwithstanding receipt of the registered
letter on 3 May 2012,
Eskom has failed to pay the consideration owing
to our client within the specified 30 days referred to in para 3 of
the deed of
servitude and the notarial agreement is therefore
cancelled with immediate effect from the date hereof.’ This
letter also
called upon Eskom to remove all the cables and wires
traversing Norton’s property.
[10] In response,
Eskom’s attorneys sent a letter to Norton on 7 June 2012
requesting ‘banking details, alternatively
your trust account
details in order for Eskom to effect payment to your client and
tender payment of the arrears’. Later
that day, when the
attorneys did not receive any response to Eskom’s tender, they
sent another letter which now informed
Norton that payment of R5,63
in respect of the arrear rentals due to her had been made. Norton
rejected that payment and sent the
R5,63 back on the basis that the
agreement had already been cancelled. Eskom refused to accept the
cancellation. This prompted
the proceedings in the court a quo.
[11] In opposing
Norton’s application Eskom adopted the view that Norton’s
failure to present to it a copy of her title
deed, as required by
clause 9, was fatal to her case. It was contended on behalf of Eskom
that presentation of a copy of the title
deed was required to enable
the transfer of ownership to be recorded in its register for payment
of the consideration due in terms
of the Deed. Before us and in the
court below, it was submitted that the acknowledgment of Norton’s
ownership of the property
by Eskom’s attorneys in the letter
referred to above was not one that could be construed as an
acknowledgment for the purposes
of clause 9 but rather for
capitalization purposes only.
[12] It is necessary
to record that on 20 July 2011, long after acknowledging Norton’s
ownership in the letter referred to
earlier, Eskom nevertheless paid
the consideration for the right to convey electricity, not to her
predecessor in title, Mr King,
but to the original owners, the Krause
Family Trust. In so doing, it claimed it had discharged its
obligations in terms of the
Deed and contended that Norton was
precluded from relying on its failure to pay the consideration to
her.
[13] In her founding
affidavit Norton relied not just on the letter in which the
capitalization offer was made but also on the fact
that she had
registered with Eskom as a consumer in respect of the property and
also that she had received other correspondence
from Eskom addressed
to her and her husband as homeowners informing them of the upgrading
of power lines.
[14] Significantly,
Eskom stated in the answering affidavit filed on its behalf that
whilst Norton’s title deed ‘came
to the attention of
various officials within the first respondent, they (the officials)
were concerned with other issues and were
not alive to clause 9 of
the Notarial Agreement. The consequence was that the object of the
clause was never achieved.’
[15] The court a quo
found in Norton’s favour on the following basis: ‘Clause
9 allows for a fiction to operate to Eskom’s
advantage namely,
it allows Eskom to act as though the previous owner of the property
continues to own it, despite the fact that
he or she no longer does.
Eskom cannot avail itself of the fiction when it in fact knows the
identity of the new owner of the property
and has that owner’s
details at its disposal.’ Makgoba J went on to state that Eskom
was bound by an election it had
made to treat Norton as the owner.
[16] As stated above
the clear purpose of clause 9 is to protect Eskom from being
prejudiced by a change of ownership of which it
is unaware. It places
the burden of ensuring certainty on the new owner by way of the
production of a title deed. I agree with
the court below that when
Eskom became aware, with certainty, of the identity of the new owner
then the object of clause 9 was
met. What is more, on Eskom’s
own version it had a copy of the title deed in its possession. Beyond
that it addressed Norton
as the property owner when it made an offer
to capitalize the consideration. Eskom cannot be heard to say that
the acknowledgment
of ownership was one that can be simply regarded
as an acknowledgment purely for the sake of the offer of
capitalization. It cannot
regard Norton as owner for one purpose but
not another, especially when both relate to the servitude.
Startlingly, even during
the 30 day notice period Eskom adopted a
supine attitude.
[17] Norton’s
reliance on her registration with Eskom, as a consumer of
electricity, is, however, unhelpful to her cause and
counsel on her
behalf did not contend that it could be said to strengthen her case
nor could any correspondence addressed merely
to the homeowner be of
any assistance. But, as pointed out above, the letter from Eskom’s
attorneys is pivotal as is the
assertion that Eskom was in possession
of a copy of the title deed. Whereas it might be said that Norton was
opportunistic, she
acted well within her legal rights and Eskom, on
the other hand, did little to protect itself. The cancellation was
proper and
Norton was entitled to the relief granted by the court
below.
[18] It is common
cause that the electrical power lines in question have not yet been
electrified. Furthermore, we were informed
by counsel on behalf of
Eskom that the power lines were intended to be back-up lines. There
is thus no question that the local
or national electrical grid is at
risk.
[19] For the reasons
stated above the following order is made:
The appeal is
dismissed with costs including the costs of two counsel.
B C MOCUMIE
ACTING JUDGE OF
APPEAL
Appearances
For the
Appellant: F H Odendaal SC (with him G I Hulley)
Instructed by:
Cliffe Dekker Hofmeyer, Pretoria
Symington & De Kok, Bloemfontein
For the
Respondent: D Unterhalter SC (with him I Goodman)
Instructed by:
Nortons Incorporated, Pretoria
McIntyre & Van der Post, Bloemfontein
1
The
relevant part of clause 8 dealing with subdivision and the
consideration due in relation thereto reads as follows: ‘Should
the said property be subdivided, the consideration stipulated for in
clause 2 . . . and the notices referred to in clauses 3
and 4 . . .
shall be payable to or given to the registered owner of that portion
of the said property . . .’