Brief Summary

Property Law — Ownership — Validity of Deed of Leasehold — Applicants, children of the late Solomon Marule, sought to cancel a 2003 Deed of Leasehold registered in the names of the first and second respondents, claiming it was invalid due to the absence of a required inquiry under the Conversion of Certain Rights into Leasehold or Ownership Act 81 of 1988. The court found that the residential permit held by the first respondent did not qualify as an “affected site” under the Act, and therefore, no inquiry was necessary for the conversion of rights. The court upheld the validity of the 2003 Deed, affirming the ownership of the property by the first and second respondents.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings were an application in the Gauteng Division, Johannesburg, in which the applicants sought relief directed at the cancellation of a registered deed relating to a residential property in Wattville, Benoni, and ancillary relief aimed at preventing alienation of the property and triggering an administrative investigation and hearing under statutory housing conversion legislation.

The parties were members of the Marule family. The first to fourth applicants and the first respondent were the children of the late Solomon and Dinah Marule. The fifth applicant participated in a representative capacity as the executrix of the estate of a deceased sibling. The first and second respondents were the persons in whose names the property was registered (the second respondent being the first respondent’s spouse). The remaining respondents were organs of state and officials connected to municipal land administration and the deeds registry, including the Ekurhuleni Metropolitan Municipality (as local authority) and the Registrar of Deeds.

The application was opposed on the merits by the first and second respondents. The other respondents did not oppose and did not seek costs. The judgment was delivered electronically (by circulation to the parties’ representatives and publication on CaseLines), with the hand-down deemed to have occurred on 18 July 2023.

The subject-matter of the dispute concerned whether the registration of the property in the first and second respondents’ names (via a 2003 registered instrument described as a certificate of registered grant of leasehold and referred to as the “2003 Deed”) was legally vulnerable because, as contended by the applicants, a statutory section 2 inquiry under the Conversion of Certain Rights into Leasehold or Ownership Act 81 of 1988 (as amended) had not preceded the conversion of rights derived from apartheid-era occupation permits.

2. Material Facts

It was common cause that, at least prior to 2003, the owner of the property was the local authority (the Ekurhuleni Metropolitan Municipality and its predecessors). The property fell within land historically designated for Black occupation under the apartheid legislative scheme (specifically, land regulated under the Blacks (Urban Areas) Consolidation Act 25 of 1945), in which occupation depended on permits issued by the relevant local authority.

In 1952, the parties’ father, Solomon Marule, applied for and was allocated a municipal house, and his permit was renewed from time to time. A permit issued on 4 November 1971 recorded permission to occupy the municipal house together with identified members of his family, including Dinah and the children (including the applicants and the first respondent), all of whom lived in and grew up in the house.

A material factual and legal classification accepted by the court was that the relevant permit (including the 1971 permit) could only have been a “residential permit” as contemplated in Regulation 7 of the 1968 Regulations (published under Government Notice R1036 of 14 June 1968), and not a site permit under Regulation 6, nor a certificate of occupation under Regulation 8. The court emphasised features indicating this classification, including that Solomon’s 1952 application was for allocation of a “municipal house” (not a vacant site on which to build), that the word “site” was crossed out on the 1971 permit, and that earlier permits were expressly residential permits.

It was common cause that Solomon moved out of the house in the early 1980s and applied for transfer of the tenancy to the first respondent. The precise reasons Solomon nominated the first respondent (as opposed to another child) were disputed, but the court treated those reasons as irrelevant to the legal issues before it.

Solomon died in August 1984. On 12 December 1984, the local authority issued a new residential permit to the first respondent, entitling him to occupy the house together with the second respondent and various named family members (including his siblings). Members of the family continued to occupy the house for varying periods up to 2018.

On 30 May 2003, in circumstances the applicants alleged they did not know and which the respondents did not explain, a Certificate of Registered Grant of Leasehold (the 2003 Deed) was registered in the Johannesburg Deeds Office in relation to the erf. The deed recorded that a right of leasehold had been granted to the first and second respondents by the municipality.

Although the parties treated the 2003 Deed as a “title deed” conferring ownership, the court observed that the decisive point for present purposes was that the first and second respondents were reflected in the deeds registry as the registered owners. A deeds office search and a report filed by the Registrar of Deeds stated that the erf was registered in the first and second respondents’ names by virtue of the 2003 Deed, and further that the leasehold had been upgraded to full ownership in terms of the Upgrading of Land Rights Act 112 of 1991.

The applicants’ case was founded on the contention that the only lawful process by which the first respondent’s Regulation 7 residential permit could have been converted into ownership required a section 2 inquiry under the Conversion Act, and that no such inquiry occurred. The respondents primarily contended that section 2 did not apply because a Regulation 7 residential permit did not constitute an “affected site” under the Conversion Act, and that the Conversion Act instead made provision (in section 6) for such residential-permit tenure.

3. Legal Issues

The central legal question was whether, on the facts accepted by the court (notably that the historical right was derived from a Regulation 7 residential permit), the applicants were entitled to cancellation of the 2003 Deed on the basis that a section 2 inquiry under the Conversion Act had not been held.

This was primarily a dispute about law, specifically statutory interpretation and the legal consequences flowing from the classification of the prior tenure as a Regulation 7 residential permit, and the correct delineation between the statutory mechanisms in section 2 (inquiries relating to “affected sites”) and section 6 (conversion of residential-permit tenure) of the Conversion Act. It also involved application of those legal principles to the established factual matrix regarding the nature of the permit and the subsequent registration.

A subsidiary issue concerned the appropriate costs order, given that only the first and second respondents opposed the application.

4. Court’s Reasoning

The court approached the matter on the basis that the applicants’ entitlement to the relief sought depended on a single proposition: that the first respondent’s rights (stemming from a Regulation 7 residential permit) could only lawfully have been converted into ownership through a section 2 inquiry, and that the absence of such an inquiry rendered the 2003 Deed susceptible to cancellation.

In addressing that proposition, the court relied substantially on the reasoning of Stegmann J in Toho v Diepmeadow City Council and Another 1993 (3) SA 679 (W). Applying Toho, the court held that there is no scope for a section 2 inquiry in relation to a house occupied by virtue of a Regulation 7 residential permit. The court accepted the conclusion in Toho that the Conversion Act made specific provision for such properties in section 6, and that rights held under a residential permit did not fall within the definition of an “affected site” in section 1 of the Conversion Act. On that reasoning, the repeal of the 1968 Regulations and the coming into force of the Conversion Act had the effect that tenure evidenced by a residential permit was converted into an unregistered statutory lease by virtue of section 6, and that this conversion impliedly excluded residential-permit rights from the category of rights that could be processed through the section 2 inquiry mechanism.

The court then considered the authorities relied upon by the applicants and explained why they did not displace the Toho approach on the present facts. The court distinguished Kuzwayo v Representative of the Executor Estate Late Masilela [2011] 2 All SA 599 (SCA) on the basis that it concerned a Regulation 6 site permit, which is expressly included in the statutory concept of an “affected site” and therefore falls squarely within section 2. Phasha v Southern Metropolitan Local Council 2000 (2) SA 455 (W) was treated as factually and legally distinguishable because it concerned a trading site permit, also expressly included within the “affected site” definition. Disetsane v Moganedi 2014 JDR 1720 (GP) was treated as addressing the court’s power to cancel an erroneously registered deed under section 6 of the Deeds Registries Act 47 of 1937, but not as authority for the applicants’ specific proposition about the necessity of a section 2 inquiry in a Regulation 7 context. Ntshalintshali v Sekano 2015 JDR 1413 (GJ) was treated as turning on an error and improper advantage linked to the absence of endorsement of a “family rights agreement” and the sale of property by a person not entitled to sell it, which was not a feature present in this case. Khwashaba v Ratshitanga 2016 JDR 0776 (GJ) was distinguished because it involved a Regulation 8 certificate of occupation, and it was common cause there that such occupation fell within section 2.

The court also discussed two Gauteng decisions, Maimela v Maimela and Others (13282/16) [2017] ZAGPJHC 366 (24 August 2017) and Molata v Lekaje 2016 JDR 1265 (GJ). Although those matters involved properties originally occupied by virtue of residential permits, the court noted that they were decided without reference to Toho and on the basis that they were indistinguishable from decisions concerning Regulation 6 and Regulation 8 rights. The court referred to Nzimande v Nzimande 2005 (1) SA 83 (W) as observing that section 2 applies only to Regulation 6 and Regulation 8 rights, and not to Regulation 7. On that basis, the court expressed the view that Maimela and Molata were incorrectly decided insofar as they treated the absence of a section 2 inquiry as decisive in the context of Regulation 7 residential-permit tenure.

Having accepted the respondents’ primary legal contention, the court held that, even assuming in the applicants’ favour that no section 2 inquiry had taken place, the applicants were not entitled to cancellation of the 2003 Deed on that basis because section 2 was not applicable to the underlying right at issue.

The court added, without determining the validity of the respondents’ title on any other basis (and expressly indicating that it was not called upon to decide such questions), that it was possible for a residential permit holder to acquire leasehold under other statutory mechanisms, including under Chapter VI of the Black Communities Development Act 4 of 1984, and that section 11(2) of the Conversion Act contemplated acquisition of leasehold or ownership “of his own accord”. The court further noted that section 52 of Act 4 of 1984 provided for the granting and registration of leasehold by a local authority, and that section 2 of the Upgrading of Land Rights Act 112 of 1991 could potentially explain the Registrar of Deeds’ report that the leasehold had been upgraded to ownership. These observations were framed as contextual possibilities rather than determinations.

On costs, the court applied the general rule that costs follow the result. Because the first and second respondents were substantially successful and the court saw no reason to depart from the usual approach, the applicants were ordered to pay their costs. As the remaining respondents did not oppose, no costs were awarded to them.

5. Outcome and Relief

The court dismissed the application in its entirety. The applicants were ordered, jointly and severally, to pay the costs of the first and second respondents. No costs orders were made in favour of the non-opposing respondents.

Cases Cited

Van Heerden v Pienaar 1987 (1) SA 96 (A).

Toho v Diepmeadow City Council and Another 1993 (3) SA 679 (W).

Kuzwayo v Representative of the Executor Estate Late Masilela [2011] 2 All SA 599 (SCA).

Phasha v Southern Metropolitan Local Council 2000 (2) SA 455 (W).

Disetsane v Moganedi 2014 JDR 1720 (GP).

Ntshalintshali v Sekano 2015 JDR 1413 (GJ).

Khwashaba v Ratshitanga 2016 JDR 0776 (GJ).

Maimela v Maimela and Others (13282/16) [2017] ZAGPJHC 366 (24 August 2017).

Molata v Lekaje 2016 JDR 1265 (GJ).

Nzimande v Nzimande 2005 (1) SA 83 (W).

Legislation Cited

Blacks (Urban Areas) Consolidation Act 25 of 1945.

Conversion of Certain Rights into Leasehold or Ownership Act 81 of 1988 (as amended in 1993).

Black Communities Development Act 4 of 1984.

Upgrading of Land Rights Act 112 of 1991.

Deeds Registries Act 47 of 1937.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that where occupation of a municipal house derived from a Regulation 7 residential permit under the 1968 Regulations, the section 2 inquiry procedure under the Conversion of Certain Rights into Leasehold or Ownership Act 81 of 1988 does not apply because such rights do not fall within the statutory definition of an “affected site”. The Conversion Act instead makes specific provision for residential-permit tenure in section 6, which converts such tenure into an unregistered statutory lease upon the repeal of the 1968 Regulations.

Accordingly, even accepting that no section 2 inquiry had been held, the applicants were not entitled to cancellation of the 2003 deed on that basis. The application was dismissed with costs awarded to the opposing first and second respondents.

LEGAL PRINCIPLES

A court considering a challenge to the registration of rights derived from apartheid-era occupation must identify the legal character of the pre-existing right (for example, whether it arose from a Regulation 6 site permit, a Regulation 8 certificate of occupation, a trading site permit, or a Regulation 7 residential permit), because the applicable statutory conversion mechanism depends on that classification.

For Regulation 7 residential permit occupation, the Conversion Act does not require or permit a section 2 inquiry, because such permits are not “affected sites” as defined. The statutory effect of the Conversion Act is that, upon repeal of the relevant regulations, residential-permit tenure is converted into an unregistered statutory lease under section 6, and the administrative inquiry mechanism in section 2 is excluded in that context.

Authorities dealing with the necessity of section 2 inquiries in relation to site permits, certificates of occupation, or trading site permits are not determinative for properties occupied under residential permits, and must be distinguished on that basis when the statutory definition of “affected site” is not satisfied.

Marule and Others v Marule and Others (15082/2020) [2023] ZAGPJHC 928 (17 July 2023)