Brief Summary

Property Law — Leasehold — Cancellation of Certificate of Leasehold — Applicants sought cancellation of a Certificate of Registered Grant of Leasehold issued in respect of property, arguing it was issued without compliance with the Conversion of Certain Rights to Leasehold Act 81 of 1988 — Respondent contended that the Conversion Act was not applicable as the property was acquired prior to its enactment — Court held that the issuance of the leasehold certificate was unlawful due to non-compliance with the mandatory provisions of the Conversion Act, thus warranting its cancellation.

Comprehensive Summary

Summary of Judgment

Introduction

This was an application in the Gauteng Local Division, Johannesburg, in which the applicants sought relief aimed at undoing the registration of a Certificate of Registered Grant of Leasehold in respect of a house in Sharpville Township, and compelling the competent housing authority to conduct an inquiry in terms of the Conversion of Certain Rights to Leasehold Act 81 of 1988.

The parties were Setlhatlole Simon Setlhatlole and Setlhatlole Solomon Setlhatlole as first and second applicants, and Moroesi Esther Setlhatlole cited both in her personal capacity and in her capacity as executrix of the estate of her late husband (first and second respondents), together with the Director-General: Department of Housing, Gauteng Province (third respondent) and the Registrar of Deeds, Johannesburg (fourth respondent). The opposition was pursued only by Moroesi Esther Setlhatlole in both capacities, and the judgment treated “the respondent” as referring to her in those capacities.

In relation to procedure, the first applicant launched the proceedings on a date recorded in the judgment as 30 January 2008, with the papers reflecting case number 3436/18 and the background narrative indicating that the first applicant launched the proceedings in 2018. The second applicant was joined on 28 August 2022 pursuant to a court order uploaded on CaseLines. The matter was heard on 16 August 2023 and judgment was delivered on 25 August 2023.

The general subject-matter concerned the validity of tenure upgrading/leasehold registration in a township context where multiple family members had historically occupied the property under a residence permit system, and whether the statutory process under the Conversion Act had to be followed before a leasehold (and ultimately ownership) could lawfully be registered in particular persons’ names. The dispute also had practical consequences because eviction proceedings had been instituted in the magistrates’ court and were stayed pending the outcome of this application.

Material Facts

The property was initially occupied by the late Solomon Setlhatlole and his wife, the late Elizabeth Setlhatlole, who died in 1950 and 1990 respectively. They were survived by two siblings, the late Jacob Modise Setlhatlole and the late Welhemina Setlhatlole. Jacob Modise Setlhatlole was survived by his wife, Moroesi Esther Setlhatlole (the respondent), and Welhemina Setlhatlole was survived by the two applicants.

A Residence Permit was issued in 1985 in the name of the late Jacob Modise Setlhatlole under regulations promulgated under Government Notice R1036 of 14 June 1968. The permit recorded that the property was leased to Jacob Modise Setlhatlole and listed individuals entitled to reside with him. The permit included the names of Simon Setlhatlole and Moroesi Esther Setlhatlole as residents.

In 2000, a Certificate of the Right of Leasehold (described in the judgment as the certificate whose cancellation was sought) was issued under the Upgrading of Land Tenure Act 91 of 1991 in the names of the late Jacob Modise Setlhatlole and the respondent. At the time this certificate was issued, the first applicant and his mother were still resident on the property.

In 2017, the respondent instituted eviction proceedings against the late Welhemina Setlhatlole, who died shortly thereafter. Those eviction proceedings were stayed in the Vereeniging Magistrates’ Court pending the outcome of this application.

A key disputed aspect was whether the Conversion Act applied to the property and therefore required an inquiry under section 2 before rights could be upgraded/registered. The respondent contended that the property had been “purchased” by the late Jacob Modise Setlhatlole through a deed of sale concluded in 1983 with the Oranje-Vaal Administration Board, and that because the acquisition and the permit predated the Conversion Act, the Act could not apply retrospectively. The applicants’ case, accepted by the court, was that the statutory inquiry procedure had not been followed and that this rendered the leasehold registration susceptible to cancellation.

The judgment also dealt with the content of the 1983 sale agreement. The agreement’s preamble described the Board’s willingness to dispose of a right of occupation in terms of section 16(1)(c) of the Black (Urban Areas) Consolidation Act 25 of 1945, subject to Chapter 2 of Government Notice R1036 of 1968, and clause 12 recorded that the purchaser would not by virtue of the agreement acquire ownership of the land or any real right in the land and would remain liable to pay site rental. These contractual terms were treated by the court as materially undermining the respondent’s contention that the property had been acquired in a manner excluding application of the Conversion Act.

Legal Issues

The central legal question was whether the Certificate of Leasehold registered under the Upgrading of Land Tenure Act 91 of 1991 was issued contrary to the peremptory requirements of the Conversion of Certain Rights to Leasehold Act 81 of 1988, specifically the obligation to conduct an inquiry under section 2 to determine who should be declared to have been granted a right of leasehold.

A related issue was whether, on the respondent’s version of an earlier “purchase” and the pre-1988 issuing of a permit, the Conversion Act was inapplicable to the property (including the contention that it could not operate retrospectively in a manner that disturbed accrued rights).

The matter also raised a question of standing (locus standi), in that the respondent argued that the first applicant could not claim rights in the property because he was a minor at the time he allegedly took occupation; the applicants relied on his inclusion as a resident in the permit to justify an enforceable interest requiring protection through the Conversion Act process.

The dispute predominantly concerned the application of law to largely common-cause historical facts, and the legal consequences of non-compliance with statutory procedure, rather than credibility-based factual disputes.

Court’s Reasoning

The court located the dispute within the historical framework of African land tenure in South Africa and the legislative response to insecure tenure. It treated the Conversion Act as remedial legislation intended to address the “precarious security of tenure” produced by earlier statutory regimes that limited and devalued African landholding rights, and referred to prior case law and legislation chronicling this history.

The court stated that the Conversion Act authorised the Commissioner (and, by assignment, provincial authorities) to hold an inquiry and make determinations regarding permits, leaseholds, and ownership rights. It emphasised that section 2 of the Conversion Act prescribes a mechanism intended to determine to whom the relevant rights in affected sites should be allocated, and that this determination may be challenged by interested parties. The court treated the language and purpose of section 2 as peremptory, such that non-compliance would “ordinarily be visited with nullity”.

In applying those principles, the court accepted the applicants’ submission that an inquiry under section 2 had not been held before the rights reflected in the leasehold certificate were registered. It further accepted, on the authority relied upon by the applicants, that the need for a Conversion Act inquiry could arise even where rights had been processed under the Upgrading of Land Tenure Act, referring to Rahube v Rahube 2019(1) BCLR 125 (CC) as supporting that proposition in the applicants’ argument.

The court rejected the respondent’s argument that the Conversion Act did not apply because the late Jacob Modise Setlhatlole had “purchased” the property in 1983. The court relied on the wording of the sale agreement itself, which characterised the transaction as disposing of a right of occupation and expressly excluded the acquisition of ownership of the land or any real right in the land, with continued liability for site rental. The court also treated as legally significant the broader proposition it described as “trite” in the period prior to 1988, namely that Africans could not own immovable property, and concluded that the respondent’s preliminary point that the property was acquired before the Conversion Act came into effect lacked a legal basis and was unsustainable.

Having found that the Conversion Act applied and that there had been non-compliance with its section 2 process, the court reasoned that the ultimate registration of the leasehold certificate could not lawfully have taken place in the absence of lawful justification or exception. It then invoked section 6 of the Deeds Registries Act as conferring power on the court to direct the Registrar of Deeds to cancel title deeds registered pursuant to unlawful or illegal conduct.

On costs, the court applied the general principle that costs follow the result and found no reason to depart from it.

Outcome and Relief

The court granted the application. It ordered the Registrar of Deeds, Johannesburg to cancel the registration of Certificate of Leasehold No. TL13005/2000 held in respect of the house in Sharpville Township.

It declared that the Residence Permit issued in favour of the late Jacob Modise Setlhatlole was reinstated.

It directed the Director-General: Department of Housing, Gauteng Province (or the relevant functionary) to institute an inquiry as contemplated by the Conversion of Certain Rights to Leasehold Act 81 of 1988.

It ordered the first and second respondents to pay the applicants’ legal costs jointly and severally, the one paying the other to be absolved.

Cases Cited

Rahube v Rahube 2019(1) BCLR 125 (CC). Moremi v Moremi and Another 2001 SA 936 (W). Nzimande v Nzimande 2005 (1) SA 83 (W). Phasha v Southern Metropolitan Local Council [2000] 1 ALL SA 451 (W). Kuzwayo v Estate Late Masilela [2010] ZASCA 167 (1 December 2010). Ndaba v Thonga and Others (18674/20199) [2020] (23 November 2020) (Gauteng Local Division) (unreported, as described in the judgment).

Legislation Cited

Conversion of Certain Rights to Leasehold Act 81 of 1988 (section 2). Upgrading of Land Tenure Act 91 of 1991. Deeds Registries Act (section 6). Black (Urban Areas) Consolidation Act 25 of 1945 (section 16(1)(c)). Gauteng Housing Act 6 of 1998. Gauteng Housing Amendment Act of 2000. Proclamation 41 of 1996, Government Gazette 17230 of 26 July 1996. Government Notice No. R1036 of 14 June 1968. Native Land Act 27 of 1913. Native Urban Areas Land Act 21 of 1023 (as referred to in the judgment). Group Areas Act. Black Communities Act 4 of 1984.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the Conversion of Certain Rights to Leasehold Act 81 of 1988 applied to the property and that compliance with the section 2 inquiry process was peremptory. Because the relevant inquiry had not been conducted, the issuance and registration of the Certificate of Leasehold in 2000 was treated as having occurred contrary to the statute and was therefore susceptible to cancellation.

The court further held that the respondent’s reliance on an alleged pre-Conversion Act “purchase” did not exclude the Conversion Act’s application, particularly where the 1983 agreement reflected a transaction for a right of occupation and expressly excluded the acquisition of ownership of the land or real rights in the land.

The court held that it had the power under section 6 of the Deeds Registries Act to direct cancellation of the registered leasehold certificate. It consequently ordered cancellation, reinstated the residence permit, directed that an inquiry be instituted under the Conversion Act, and awarded costs against the first and second respondents jointly and severally.

LEGAL PRINCIPLES

The judgment applied the principle that section 2 of the Conversion of Certain Rights to Leasehold Act 81 of 1988 establishes a mandatory, peremptory inquiry procedure intended to determine the appropriate beneficiary of leasehold (and related tenure rights) in respect of affected sites, and that non-compliance with this peremptory procedure is ordinarily treated as resulting in nullity of subsequent registration steps dependent on that process.

It further applied the principle that, in assessing whether the Conversion Act applies, the court must consider the nature of the rights historically held and transferred. Where the underlying arrangement reflected a right of occupation rather than ownership of land (and expressly excluded ownership or real rights in land), this undermined an argument that the property fell outside the Conversion Act’s remedial scheme by virtue of a pre-1988 transaction.

The judgment also applied the principle that a court may, where registration has occurred pursuant to unlawful or illegal conduct, direct the Registrar of Deeds to cancel the relevant registered right in terms of section 6 of the Deeds Registries Act, thereby restoring the position necessary for the competent authority to undertake the statutory inquiry process contemplated by the Conversion Act.

Sethlatlole and Another v Setlhatlole and Others (3436/18) [2023] ZAGPJHC 962 (25 August 2023)