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[2017] ZASCA 141
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Bondev Midrand (Pty) Limited v Puling and Another, Bondev Midrand (Pty) Limited v Ramokgopa (802/2016, 803/2016) [2017] ZASCA 141; 2017 (6) SA 373 (SCA) (2 October 2017)
Links to summary
THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
JUDGMENT
Reportable
Case
No:
802/2016
In
the matter between:
BONDEV
MIDRAND (PTY) LIMITED
APPELLANT
and
PULING
PULING
FIRST RESPONDENT
TAPIWANASHE
PULING
SECOND
RESPONDENT
And
in the matter between:
Case No:
803/2016
BONDEV
MIDRAND (PTY) LIMITED
APPELLANT
and
PETRUS
KGOSI
RAMOKGOPA
RESPONDENT
Neutral
citation:
Bondev
Midrand (Pty) Ltd v Puling
(802/2016);
Bondev
Midrand (Pty) Ltd v Ramokgopa
(803/2016)
[2017] ZASCA 141
(2 October 2017)
Coram:
Leach,
Tshiqi and Seriti JJA and Tsoka and Ploos van Amstel AJJA
Heard:
6
September 2017
Delivered:
2
October 2017
Summary:
Immovable
property : title deed : registered condition entitling developer to
have property re-transferred to it in certain circumstances
: this a
personal not real right, capable of prescribing.
ORDER
On
appeal from:
Gauteng
Division, Pretoria (Makhubele AJ sitting as court of first instance):
In
each case, the following order will issue:
The
appeal is dismissed with costs.
JUDGMENT
Leach
JA (Tshiqi and Seriti JJA, Tsoka and Ploos van Amstel AJJA
concurring)
[1]
In both these appeals, the appellant is Bondev Midrand (Pty) Ltd, a
property developer. In both cases the appellant unsuccessfully
sought
an order obliging the respondent to re-transfer to it a piece of
immovable property it had earlier purchased from the appellant
as it
had failed to comply with a condition registered against the
title deed obliging the respondent to erect a building
on the
property within a prescribed period. And in both cases its claim was
dismissed by the Gauteng Division, Pretoria on the
basis that the
appellant was seeking to enforce a debt as envisaged in s 11
(d)
of the
Prescription Act 68 of 1969
which had prescribed and become
unenforceable as more than three years had elapsed after it had
become due. Leave to appeal was
granted by this Court in both
instances and, as the issue of prescription is common to each, the
appeals were argued together.
Consequently for convenience, and
although the appeal involving the respondent Puling (SCA case number
802/2016) involves additional
issues, I intend to give a single
judgment dealing with both matters. For convenience I intend to use
the respondents’ surnames
when referring to them.
[2]
The appellant has developed more than 4000 residential dwellings in
what is known as the Midstream Estate. Both appeals relate
to pieces
of immovable property in this estate sold by the appellant. Transfer
in case nr. 803/2016 was effected to the respondent
in that case, Mr
Ramokgopa, in November 2006 and to the respondents in case nr.
802/2016, Mr and Mrs Puling, in March 2000. The
Deed of Transfer in
Mr Ramokgopa’s case records the following condition imposed and
enforceable by the appellant as developer:
‘
The
Transferee or his Successors in Title will be liable to erect a
dwelling on the property within 18 (eighteen) months from 16
November
2006, failing which the (appellant) will be entitled, but not obliged
to claim that the property is transferred to the
(appellant) at the
cost of the Transferee against payment by the Transferee of the
original purchase price, interest free. The
Transferee shall not
within the said period so transfer the property without the
(appellant’s) written consent. This period
can be extended at
the discretion of the (appellant).
’
The
title deed in the case of Mr and Mrs Puling is in identical terms
save that the date by when the dwelling was to be erected,
in their
instance, was given as 7 March 2007.
[3]
It is accepted that Mr Ramokgopa failed to comply with this
condition. As a result, in January 2014 the appellant instituted
action against him seeking an order that he transfer the property he
had bought back to it and tendering payment of the original
purchase
price. In opposing this relief, Mr Ramokgopa relied solely upon a
point in limine that the claim against him had arisen
18 months after
18 November 2006 (ie on 15 May 2008) and had therefore prescribed
three years later on 16 May 2011, well before
the appellant had
instituted proceedings against him.
[4]
In the case of Mr and Mrs Puling, they had bought the immovable
property known as Erf 2268, Midstream Estate Extension 26 Township.
The 18 month period ending 6 September 2008 by when they ought
to have built a dwelling on that property in terms of the condition
registered on the title deed elapsed without them doing so. This
condition remains unfulfilled to this day. Consequently, when
the
period elapsed, the appellant became entitled, but not obliged, to
claim re-transfer of the property against repayment of the
purchase
price. For some reason it did not do so. However things were brought
to a head more than four and a half years later when,
on 5 April
2013, an attorney acting on behalf of Mr and Mrs Puling wrote to the
appellant’s attorney, stating that his clients
had no intention
of erecting a building on the property but wished instead to
consolidate it with the adjoining erf which they
had also purchased.
The appellant was not prepared to agree to this and, in March 2014,
instituted proceedings on notice of motion
seeking an order obliging
Mr and Mrs Puling to re-transfer the property to it against payment
of the original purchase price of
R510 000.
[5]
Mr and Mrs Puling opposed the grant of this relief. The first defence
they offered was the same as that of Mr Ramokgopa, namely,
that as
more than three years had elapsed since the date upon which the
appellant’s claim for re-transfer of the property
had become
due, it had prescribed. However they also relied on certain
additional defences, namely: that the appellant had consented
to the
proposed consolidation in terms of a tacit term of the sale; and that
the appellant should be estopped from relying on the
fact that the
property had not been developed within the building period of 18
months. They also contended that the condition registered
against the
title deed of their property differed from what had been agreed upon
in the deed of sale, and regard should therefore
be had to the sale
terms. However rectification of the title deed was not fully
ventilated in the papers nor was it claimed in
the proceedings in the
court a quo. For present purposes the matter must therefore be
decided having regard to the title deed.
[6]
As appears from this, common to both appeals is the issue whether the
appellant’s claim for re-transfer of the property
prescribed
three years after its claim became due when the respondents failed to
erect a dwelling on their respective properties
within the 18 month
building period. The respondents allege it did. It is their
contention that the claim for re-transfer constitutes
a ‘debt’
for the purposes of the
Prescription Act 68 of 1969
, but not one
envisaged in
ss 11
(a)
,
(b)
or
(c)
of that Act. They therefore submit that, in terms of
s 11
(d)
of the Act, the prescriptive period is three years. On the contrary,
the appellant argues the registered condition gives rise to
a real
right which does not prescribe within three years and not merely a
personal right in favour of the appellant.
[7]
Before turning to deal with these opposing contentions, it is first
necessary to mention the recently reported decision in
Bondev
Midrand (Pty) Ltd v Madzhie & others
2017 (4) SA 166
(GP) which the parties’ legal representatives
most correctly drew to our attention. In that case the court
concluded that
a similar repurchase clause was grossly unfair to a
purchaser intending to build a residential home, that it infringed
the constitutional
right to adequate housing and that enforcing it
would be against public policy. Relying upon this, the respondents in
the present
case suggested that the appellant’s claims against
them were similarly not enforceable.
[8]
As appears from the judgment in
Madzhie
,
the application to re-transfer the property was unopposed and the
matter came before court for judgment by default. When the matter
was
initially called on 12 August 2016, the learned acting judge informed
counsel for the applicant that he was inclined to dismiss
the
application as he had reservations relating to the question ‘whether
this type of retransfer clause is consistent with
public policy and
with the provisions of s 26(1) of the Constitution’. The
matter was then postponed until 19 August
2016 for counsel to prepare
heads of argument relating to the issue. However, on that date
counsel for the applicant indicated
in chambers that the applicant
had filed a notice of withdrawal, tendering costs. Uniform rule
41(1)
(a)
provides that once a matter had been set down a party may withdraw
proceedings with the leave of the court, and such leave was
granted.
That should have been the end of the matter as it is not ordinarily
the function of a court to force a party to proceed
with an action
against its will or to investigate why the party wishes to abandon
such action – see
Levy
v Levy
[1991] ZASCA 81
;
1991 (3) SA 614
(A) at 620B. But four months later the learned acting
judge gave reasons for consenting to the withdrawal. He dealt with
various
constitutional issues, stating that the clause was grossly
unreasonable towards a purchaser ‘that wishes to pursue the
suburban
dream incrementally’
[1]
and that a repurchase clause is ‘not central to the business of
a developer or the operations of a homeowners association,’
[2]
before concluding that the present type of repurchase clause is an
instance where enforcement should be refused.
[3]
[9]
With due respect, the least said about this judgment is probably the
better. It obviously reflects the learned acting judge’s
personal viewpoint but it was inappropriate, to say the least, to
have pronounced upon the issue in the circumstances. As I have
said,
the applicant wished to abandon an application for default judgment
and all that was required was the court’s consent.
This was not
an instance that required a formal judgment, let alone one in respect
of constitutional issues that had not been raised
or canvassed in the
papers and in respect of which interested parties had neither been
forewarned nor heard
.
A court should
refrain from dealing with legal issues unnecessary to determine in
order to properly deal with a matter before it.
This is all the more
so in Constitutional matters. As the Constitutional Court said in
Albutt
[4]
a passage to which it subsequently referred with approval in
Aurecon
:
[5]
‘
Sound
judicial policy requires us to decide only that which is demanded by
the facts of the case and is necessary for its proper
disposal. This
is particularly so in constitutional matters, where jurisprudence
must be allowed to develop incrementally. At times
it may be
tempting, as in the present case, to go beyond that which is strictly
necessary for a proper disposition of the case.
Judicial wisdom
requires us to resist the temptation and to wait for an occasion when
both the facts and the proper disposition
of the case require an
issue to be confronted. This is not the occasion to do so.’
[10]
In the light of the paucity of the information before it, and not
having heard the various parties who may well be interested
in a
matter such as this, it was inappropriate for the court in
Madzhie
to reach the conclusion that it did in regard to the
constitutionality and lack of enforceability of the repurchase clause
that
was registered against the title deeds of the property.
[11]
We were informed from the bar that the Registrar of Deeds now views
the judgment in
Madzhie
as binding and, consequently, now refuses to register deeds
containing such clauses. This is extremely unfortunate, bearing in
mind that clauses of this nature are relatively common and are
regularly registered at the instance of developers and local
authorities.
In the light of what I have said above, those employed
in the Deeds Office should not regard the judgment in
Madzhie
as
an authoritative judgment, binding upon them.
[12]
I return to the issue at hand, namely, whether the claim for
re-transfer constitutes a debt capable of prescribing or a real
right. The condition in question consists of two clauses. The first
obliges the transferee or its successors in title to erect
a dwelling
on the property within a period of 18 months. The second provides
that in the event of a dwelling not being erected
within that period,
the appellant is entitled but not obliged to have the property
retransferred to it against return of the purchase
price.
[13]
The first clause reflects an intention to bind not only the
transferee but its successors in title. Moreover, the requirement
that a dwelling be erected on the property results in an encumbrance
upon the exercise of the owner’s rights of ownership
of its
land. Accordingly, in the light of authority such as
Willow
Waters
,
[6]
this first clause gives rise to a real right. Indeed, I did not
understand the respondents to contend otherwise.
[14]
On the other hand, the right of the appellant to claim re-transfer of
the property against repayment of the original purchase
price as set
out in the second clause does not amount to such an encumbrance. It
is a right which can only be enforced by a particular
person, the
appellant, against a determined individual, and does not bind third
parties. Not only is this the hallmark of
a personal right,
[7]
but it is a right which the appellant can exercise at its sole
discretion. In these circumstances I understood that both sides
were
agreed that if that clause had been standing alone, it would not have
carved out a portion of the respondents’ dominium
and would
therefore be regarded as creating a personal right.
[8]
[15]
Section 63(1)
of the
Deeds Registries Act 47 of 1937
prescribes that
no condition in a deed ‘purporting to create or embodying any
personal right . . . shall be capable of registration’.
But
although only real rights and not personal rights should be
registered against a title deed, the fact that a personal right
becomes registered does not, in itself, convert that right into a
real right. Almost 100 years ago, Innes CJ observed that ‘(a)
jus
in personam
does not become a
jus
in rem
because it is erroneously placed upon the register’
[9]
and this remains the position to this day.
[10]
The appellant argued, however, that although the second clause
appeared to create a personal right, it is so inextricably wound
up
with the first clause, which clearly created a real right, that the
two clauses were to be read together as creating a real
right which
is capable of registration.
[16]
The appellant relied upon the decision of this court in
Cape
Explosive Works Ltd & another v Denel (Pty) Ltd & others
2001 (3) SA 569
(SCA) to support this argument. In that matter the
first appellant, Capex, had sold and transferred two pieces of land
to Armscor.
The deed of transfer contained two restrictions imposed
upon Armscor and its successors in title in favour of Capex: first,
that
the land was to be used only for the manufacture of armaments
and, second, that if the land was no longer required for that
purpose,
Armscor was to advise Capex of that fact and Capex would
have the ‘first right to repurchase’ the land. If it did
not
avail itself of that right, the restriction on ownership would
fall away. In due course Armscor transferred the properties to Denel
but in circumstances unnecessary to detail, the second condition was
not registered against their title deeds while the first condition
was registered only in respect of a small portion of one property.
Denel sought an order declaring its ownership of both portions
to be
unencumbered by condition 2. Capex, in turn, brought a
counter-application seeking rectification of the title deeds of both
properties to reflect both conditions.
[17]
It was argued on behalf of Denel, that the second condition
constituted a personal right in the nature of an option to repurchase
which could not constitute a valid real right as it imposed an
obligation on the part of the transferee, Denel, to notify Capex
when
the property was no longer required for the use to which it had been
restricted. Denel therefore submitted that the second
condition could
not validly be registered against the title deed, so that it was
entitled to the relief it sought and that the
title deed could not be
rectified in this regard. In rejecting this, Streicher JA, writing
for a unanimous court, stated:
‘
I
n
my view, the stipulation referred to was not intended to burden the
transferee with an obligation. Condition 1 contained a use
restriction and condition 2 provided that in the event of the
property no longer being required for the use to which it was
restricted Armscor or its successors in title would advise Capex
accordingly, whereupon Capex would become entitled to repurchase
the
property, failing which the property would no longer be subject to
the use restriction. Upon the property no longer being required
for
the restricted use it would be useless to the owner thereof unless
Capex repurchased it or the use restriction could be
terminated.
Condition 2 was intended to provide Armscor and its successors
in title with a mechanism for such termination.
Hence, although
framed as an obligation, the giving of notice was as much a right as
an obligation. . . .
The
use restriction according to condition 1 was materially different
from the use restriction according to condition 1 read with
condition
2. The two conditions were not independent of one another and they
could not be separated. They formed a composite whole.
They were
specifically stated to be binding on the transferee, being Armscor,
and its successors in title. Furthermore, they constituted
a burden
upon the land or a subtraction from the
dominium
of the land in that the use of the property by the owner thereof was
restricted. The right embodied in conditions 1 and 2, read
together,
therefore constituted a real right which could be registered in terms
of the
Deeds Registries Act.’
[11]
[18]
As
appears from this, Denel’s right as transferee under condition
2 to give notice to the transferor, Capex, that the property
was no
longer being used for the specified purpose, provided a mechanism to
terminate the restriction upon the rights of ownership.
Either Capex
would repurchase the property or, if it was not inclined to do so,
Denel would retain its ownership, free of the restriction.
The
encumbrance of the land created by condition 1 could only continue
until such time as Denel gave Capex a notice under condition
2. Thus
the restriction on ownership in condition 1 was inseparably bound up
with condition 2.
[19]
But that is a far cry from the circumstances in the present cases.
The burden created by the first clause, namely the obligation
to
build a dwelling on the property, is binding on the transferees (the
respondents) and their successors in title. The latter
have no right
under the second clause to bring that restriction to an end. All
clause two provides is that in the event of a failure
to build a
dwelling in the requisite time the appellant, as the transferor, can
recover the land against the payment of the purchase
price if it so
chooses. This is akin to providing the appellant with an option to
purchase which is essentially a personal right.
[12]
But the appellant is not obliged to demand or claim re-transfer of
the land and the obligation to build will remain extant as long
as
the respondents retain their ownership. Thus the restriction upon
ownership created by clause 1 remains binding and will not
be
terminated should the appellant elect not to seek retransfer. The two
clauses read together therefore do not constitute what
Streicher JA
referred to as ‘a composite whole’ restricting the
respondents’ use of the property.
[13]
[20]
In the circumstances, the first clause of this condition must be
regarded as providing a real right and a restriction upon
the
ownership of the property of the respondents and their successors in
title. On the other hand, the second clause under which
the appellant
has the election to claim re-transfer of the property, creates no
more than a personal right akin to an option to
purchase which is not
inseparably bound up with the first clause. As the appellants sought
to enforce this second clause, the issue
then becomes whether the
debt which is the subject of such a claim has prescribed.
[21]
Until fairly recently, it was accepted that the term ‘debt’
used in the
Prescription Act 68 of 1969
, but not defined in that Act,
should be interpreted as having a wide meaning – see eg
Desai
NO v Desai & others
[1995] ZASCA 113
;
1996 (1) SA 141
(A) at 146I-J. However, in a series of judgments of
the Constitutional Court it has now been held that in the modern
constitutional
era the term must be interpreted more narrowly than
what was previously the case – see
Makate
v Vodacom Ltd
2016 (4) SA 121
(CC) paras 87-93 and
Off-Beat
Holiday Club & another v Sanbonani Holiday Spa Shareblock Ltd &
others
CCT 106/16 (23 May 2017) para 44. However although these decisions
have been somewhat controversial,
[14]
and it may well be that the ‘precise boundaries of the husk
left by the
Makate
axe’
[15]
may not yet have been determined, it appears to be settled that even
on a narrow meaning a ‘debt’ includes the right
to claim
the return of property. Indeed, in the present case I understood the
appellant to accept that if its right to claim re-transfer
of the
immovable property is to be regarded as a personal right, not only
would prescription have begun to run on the date by when
the title
deed reflected a dwelling had to be erected, but that the appellant’s
claim in each case had prescribed before
proceedings were commenced.
[22]
In the light of our conclusion that the second clause of the
condition does indeed create no more than a personal right, the
appellant’s claim in each case was therefore correctly
dismissed by the court a quo on the basis of prescription. This
renders
it unnecessary to deal with the other issues raised by the
respondents, Mr and Mrs Puling, in case 802/2016.
[23]
Accordingly, in each of these cases, the appeal must be dismissed.
There is no reason for costs not to follow the event.
[24]
In each case the following order will issue:
The
appeal is dismissed with costs.
______________
L
E Leach
Judge
of Appeal
Appearances:
(Case No: 802/2016)
For
Appellant:
S J Grobler SC (with him
N J Horn)
Instructed
by:
Tim Du Toit Attorneys,
Johannesburg
Phatshoane
Henney Inc, Bloemfontein
For
Respondent:
G Wagenaar
Instructed
by:
Gerhard Wagenaar
Attorneys, Lynnwood Glen
Symington &
De Kok Inc Attorneys, Bloemfontein
Appearances:
(Case No: 803/2016)
For
Appellant:
S J Grobler SC (with him N J Horn)
Instructed
by:
Tim Du Toit Attorneys, Johannesburg
Phatshoane
Henney Inc, Bloemfontein
For
Respondent:
M E Manala
Instructed
by:
Mothle Jooma Sabdia Inc, Pretoria
Matsepes Inc,
Bloemfontein
[1]
Para 35.
[2]
Para 47.
[3]
Paras 53 and 54.
[4]
Albutt v Centre for the Study
of Violence and Reconciliation & others
2010 (3) SA 293
(CC);
[2010] 5 BCLR 391
;
[2010] ZACC 4
para 82.
[5]
City of
Cape Town v Aurecon
South Africa (Pty) Ltd
2017 (4) SA 223
(CC) para 35.
[6]
Willow Waters Homeowners
Association (Pty) Ltd v Koka NO & others
2015 (5) SA 304
(SCA) para 16 and 22 and the authorities there
cited.
[7]
See eg
Absa
Bank Ltd v Keet
2015
(4) SA 474
(SCA) para 20. H Mostert and A Pope
The
Principles of the Law of Property in South Africa
(2010) at 45.
[8]
Compare:
National
Stadium South Africa (Pty) Ltd & others v Firstrand Bank Ltd
2011 (2) SA 157
(SCA)
para 33.
[9]
British South Africa Company
v Bulawayo Municipality
1919
AD 84
at 93.
[10]
See
eg
Fine
Wool Products of South Africa, Ltd, & another v Director of
Valuations
1950 (4) SA 490
(E) at 499B-C,
Nel,
NO v Commissioner for Inland Revenue
1960 (1) SA 227
(A) at 34H-35A,
Titty’s
Bar and Bottle Store (Pty) Ltd v ABC Garage (Pty) Ltd & others
1974 (4) SA 362
(T) at 367H and
Lorentz
v Melle & others
1978 (3) SA 1044
(T) at 1049.
[11]
Paras 14-15.
[12]
Barnhoorn NO v Duvenhage &
others
1964 (2) SA
486
(A) at 494F-H
[13]
Cape Explosive Works
para
14.
[14]
See eg F Snyckers ‘Prescription
Under Siege’ (2017) 29
Advocate
Vol 30 No 2 at 30.
[15]
The phrase is plagiarised from
Snyckers op cit.