Brief Summary

Property Law — Declaratory relief — Applicant seeks to declare the sale and transfer of property invalid — Applicant claims co-ownership of the property and seeks registration in his name after being evicted — Respondents contest the validity of the transfer and the applicant's ownership rights — Court finds that the applicant has a legal right as co-owner and that the transfer to subsequent parties was unlawful, ordering the registration of the property in the applicant's name and cancellation of previous deeds.

Comprehensive Summary

Summary of Judgment

1. Introduction

The matter concerned an application in the High Court (Gauteng Division, Pretoria) for declaratory relief and consequential orders relating to the validity of a sequence of property transfers and the rectification of the Deeds Register. The applicant, Mailula Albert Atte Obed, sought an order declaring the sale and subsequent disposals of a residential property in Mamelodi East to be invalid, unlawful, and set aside, together with directions compelling various steps to restore the property’s registration and to facilitate an administrative inquiry under the Conversion of Certain Rights into Leasehold or Ownership Act 81 of 1988.

The principal opposing parties were the National Housing Finance Corporation (Pty) Ltd (first respondent), Nu-Way Housing Developments (Pty) Ltd (second respondent), and the ultimate purchasers, Sipho Noah Mthethwa and Siziwe Sylvia Mthethwa (sixth and seventh respondents). Certain other respondents (including the Registrar of Deeds, the City of Tshwane Metropolitan Municipality, and the Department of Human Settlements) abided the court’s decision.

Procedurally, the dispute arose against the background that the applicant had been evicted from the property on 4 November 2019 pursuant to a court order obtained by the sixth and seventh respondents. The applicant’s attempt to obtain leave to appeal against the eviction was unsuccessful, and a petition to the Supreme Court of Appeal was stated to be pending. The eviction and the applicant’s contention that the property had been unlawfully transferred away from him triggered the present motion proceedings, which were heard on 10 October 2022, with judgment delivered on 10 February 2023.

In general subject-matter terms, the dispute concerned competing claims to ownership and entitlement in respect of low-cost housing originally linked to the conversion of rights regime, and whether later transfers (alleged to be fraudulent or unauthorised) could stand in the face of the applicant’s asserted legal interest and long-standing occupation.

2. Material Facts

It was common cause that the applicant was an elderly person who had resided at the property for approximately 29 years, having acquired and occupied the stand during the early 1990s. The applicant asserted that he purchased the stand in 1991, built a house on it for his family, and occupied it continuously until the eviction in 2019. The acquisition was described as having occurred through the framework of the Conversion of Certain Rights into Leasehold or Ownership Act 81 of 1988.

The evidence before the court included confirmation from the third respondent (Home Loans (Pty) Ltd, formerly Khayalethu Home Loans) that the applicant had applied for and received financing to acquire the undeveloped property and to construct a dwelling. The third respondent’s version, as summarised by the court, was that funding arrangements resulted in disbursements for the purchase of the undeveloped property, construction costs, insurance, and associated charges. It was also placed before the court that the applicant ultimately settled the relevant loan in full, with payment said to have been completed on 2 July 2013.

The applicant’s case was further premised on the proposition that municipal documentation reflected him as a registered co-owner or at least as having a recognised connection to the property through the local authority. The court recorded, as a relevant and effectively undisputed feature for purposes of declaratory relief, that a rates clearance certificate used in the later transfer process listed the applicant as a registered co-owner together with the first respondent’s predecessor.

The material event giving rise to the dispute was that the property was later sold and transferred in a chain of transactions: first, a transfer involving the first and second respondents to the fourth and fifth respondents; thereafter a further transfer from the fourth and fifth respondents to the sixth and seventh respondents. The applicant contended that these disposals occurred without his knowledge and in circumstances amounting to a fraudulent or unauthorised transfer, particularly because he alleged he was not in possession of any power of attorney, was never contacted, and had an established interest reflected in municipal and historical records.

The first respondent disputed that it had records of payments evidencing a purchase price paid by the applicant and denied knowledge of or responsibility for the earlier transactions allegedly concluded between the second respondent and prospective homeowners. The second respondent argued, among other things, that the application was premature, that disputes of fact existed making motion proceedings inappropriate, and that the applicant had failed to comply with document production requests under Rule 35(12). The sixth and seventh respondents emphasised that they held a title deed, had obtained an eviction order, and would be prejudiced by being deprived of ownership long after the events in question.

A further material feature was the delay: the transfers and the applicant’s underlying purchase occurred years before the application was launched (in June 2021). The applicant’s explanation for the delay was not fully contained in his founding papers, but in argument he linked the timing to the eviction litigation and his later understanding that he needed to set aside the allegedly unlawful sale and transfers.

3. Legal Issues

The central legal questions identified by the court were whether the circumstances justified the grant of declaratory relief under section 21(1)(c) of the Superior Courts Act 10 of 2013, and whether the transfers attacked by the applicant could be treated as valid in light of the allegations of fraud and lack of authority.

More specifically, the court framed the issues for determination as whether the fraudulent transfer from the first respondent to the fourth and fifth respondents was valid; whether the transfer from the fourth and fifth respondents to the sixth and seventh respondents could be valid if it presupposed a valid earlier transfer; and whether the cancellation and reversal of the relevant deed of transfer should be ordered so as to permit an inquiry under section 2 of the Conversion of Certain Rights into Leasehold or Ownership Act 81 of 1988 to determine the “true owner”.

In addition, although not treated as the decisive basis for dismissal, the court was required to address objections that the application suffered from unreasonable delay, that it was procedurally inappropriate because disputes of fact allegedly required action proceedings, and that the existence of an eviction order affected the applicant’s ability to obtain the relief sought.

The dispute therefore primarily concerned the application of legal principles governing declaratory relief to the established and largely common-cause background facts, together with evaluative determinations about whether the matter was hypothetical or academic, whether the applicant had the requisite legally cognisable interest, and whether the court should exercise its discretion to grant the remedy.

4. Court’s Reasoning

The court approached the matter through the lens of the statutory power to grant declaratory orders in section 21(1)(c) of the Superior Courts Act 10 of 2013, noting that declaratory relief was not available at common law and that the jurisdiction to grant it was historically conferred by section 102 of the General Law Amendment Act 46 of 1935, now superseded by section 21. The court emphasised that section 21 empowers the High Court, in its discretion and at the instance of an interested person, to determine an existing, future, or contingent right or obligation, even where consequential relief cannot be claimed.

In applying the accepted two-stage approach, the court relied on the principle (as stated in the authorities it cited) that the requirements for a declarator are two-fold. First, the applicant must show a legally recognised interest in an existing, future, or contingent right or obligation. Second, if that threshold is met, the court must decide whether it is appropriate to grant declaratory relief as a matter of discretion. The court also noted the caution that declaratory relief is generally not granted where issues are merely hypothetical, abstract, or academic, or where the legal position is already clearly defined by statute.

The court drew on Shoba v Officer Commanding, Temporary Police Camp, Wagendrift Dam 1995 (4) SA 1 (A) to state that a concrete dispute is not a prerequisite for jurisdiction under the declaratory power, but that the court must avoid acting as an adviser and must ensure there are interested parties upon whom the order will be binding. The court further stated that declaratory relief resolves disputes over the existence of legal rights or entitlements and is ordinarily grounded in a legal basis for determination, with the applicant needing an interest akin to a party seeking to intervene, namely a direct and substantial interest in the subject-matter.

On the facts, the court considered it significant that it was common cause that the applicant had occupied the property for decades, that he had built a house on the stand, and that municipal documentation (including the rates clearance certificate used for transfer) reflected him as a registered co-owner with the predecessor of the first respondent. The court also treated the third respondent’s confirmation of the financing arrangement and the applicant’s settlement of the loan as supporting the applicant’s asserted connection to the property and his claim of a legally recognisable interest.

In evaluating the objections based on delay, the court acknowledged that the applicant’s founding and supplementary affidavits did not provide an adequate explanation for the delay, but recorded that the applicant advanced an explanation in argument linked to the eviction proceedings and the subsequent realisation that he needed to set aside the sale and transfer to challenge the loss of the property. The court held that, on the papers and argument before it, it was not necessary to dismiss the application for unreasonable delay because it considered the application to have merit and prospects of success.

The court then concluded that, on the evidence before it, the applicant had established the necessary conditions for declaratory relief: he had a direct and substantial interest in the subject matter, and the issues raised were not hypothetical or merely academic. Having reached that conclusion, the court held that it was proper to exercise its discretion in favour of granting the declaratory relief sought. The court’s ultimate order recorded that the application for declaratory relief was granted “as per relief sought”.

5. Outcome and Relief

The court granted the application for a declaratory order in the terms sought by the applicant. The judgment recorded the operative result as an order that the application for declaratory relief is granted “as per relief sought”, which, on the face of the notice of motion summarised in the judgment, encompassed the declaration that the relevant sales and transfers were invalid and unlawful and be set aside, together with the ancillary directions aimed at reversing registrations and facilitating an inquiry under the relevant conversion legislation.

No order as to costs was made.

Cases Cited

Geldenhuys and Neethling v Beuthin 1918 AD 426.

Cordiant Trading CC v DaimlerChrysler Financial Services (Pty) Ltd 2005 (6) SA 205 (SCA).

Ex parte Noriskin 1962 (1) SA 856 (D).

Milani and Others v South African Medical and Dental Council and Others 1990 (1) SA 899 (T).

Family Benefit Friendly Society v Commissioner for Inland Revenue and Others 1995 (4) SA 120 (T).

Shoba v Officer Commanding, Temporary Police Camp, Wagendrift Dam 1995 (4) SA 1 (A).

Ex parte Nell 1963 (1) SA 754 (A).

Legislation Cited

Superior Courts Act 10 of 2013, section 21(1)(c).

General Law Amendment Act 46 of 1935, section 102.

Supreme Court Act 59 of 1959, section 19(1)(a)(iii) (repealed).

Conversion of Certain Rights into Leasehold or Ownership Act 81 of 1988, section 2.

Rules of Court Cited

Uniform Rules of Court, Rule 35(12).

Held

The court held that the applicant had demonstrated a legally cognisable interest sufficient to found standing for declaratory relief under section 21(1)(c) of the Superior Courts Act 10 of 2013. The applicant’s long-term occupation, the background of the acquisition and financing of the property, and municipal documentation reflecting his interest were treated as establishing a direct and substantial interest in the subject matter.

The court further held that, despite objections based on delay and procedural objections raised by certain respondents, the matter was not appropriately dismissed on those grounds because the application was considered to have merit and prospects of success. The issues raised were not hypothetical, abstract, or academic, and the declaratory order would bind interested parties.

Exercising its discretion, the court granted the declaratory relief sought and made no order as to costs.

LEGAL PRINCIPLES

Declaratory relief in the High Court is governed by section 21(1)(c) of the Superior Courts Act 10 of 2013, which confers a discretionary power to determine existing, future, or contingent rights or obligations at the instance of an interested person, even where consequential relief cannot be claimed.

The decision to grant a declarator entails a two-stage inquiry. The applicant must first establish a legally recognised interest in an existing, future, or contingent right or obligation. If that threshold is met, the court must then decide whether it is appropriate, as a matter of discretion, to grant the order in the circumstances.

A concrete dispute is not an absolute prerequisite for the court’s jurisdiction to grant a declarator, but declaratory relief is not granted to obtain advisory opinions. There must be interested parties upon whom the order will be binding, and the applicant must demonstrate a direct and substantial interest in the subject matter.

Declaratory relief is generally not granted where the dispute is hypothetical, abstract, or academic. The court retains a discretion and may refuse relief depending on the circumstances, including the nature of the dispute and whether the declarator would serve a practical purpose in resolving a genuine controversy affecting the parties’ rights.

Road Accident Fund and Another v Discovery Health (Pty) Limited (2022/016179) [2023] ZAGPPHC 37 (23 January 2023)