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[2015] ZAKZDHC 55
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EM And EM Engineering (Pty) Limited v KwaDukuza Municipality and Others (9349/2014) [2015] ZAKZDHC 55 (26 June 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL LOCAL
DIVISION, DURBAN
Case No.: 9349/2014
DATE: 26 JUNE 2015
In the matter between:
EM AND EM ENGINEERING (PTY)
LIMITED
.................................................................
Applicant
And
THE KWADUKUZA
MUNICIPALITY
.....................................................................
First
Respondent
THE REGISTRAR OF
DEEDS
..............................................................................
Second
Respondent
ASK Y DEVELOPMENT PROFESSIONALS
CC
.................................................
Third
Respondent
J U D G M E N T
VAN ZŸL, J:
1. This application concerns the vexed
issue of the extent of the applicant’s liability to effect
payment to the first respondent,
in order to obtain a clearance
certificate as contemplated by
section 118(1)
of the
Local
Government: Municipal Systems Act 32 of 2000
and which would then
permit the second respondent (the registrar of deeds) to register the
transfer of ownership of certain immovable
property from the name of
the applicant into the name of a prospective purchaser.
2. The applicant is a property
developer and at all material times was and remains the registered
owner of an immovable property
described as Portion 2 of Erf 923 Salt
Rock, Registration Division FU, Province of KwaZulu-Natal, in extent
40,7195 Hectares and
held by it in terms of a certificate of
registered title number T24568/2010 dated 29 July 2010. In the
affidavits the parties refer
thereto as “the mother property”.
As a matter of convenience this reference is likewise adopted for
purposes of this
judgment.
3. It is not in dispute that the mother
property has been divided into 91 subdivisions, respectively numbered
1002 to 1092, in terms
of a general plan and a copy of which is
annexed marked H to the application papers. Although the founding
papers do not set out
the background to the mother property in
detail, it is nevertheless apparent that it forms the basis for a
residential township
development called The Mount Richmore Village
Estate and to which the applicant refers as “the estate”
in its application
papers.
4. It is also apparent that the
subdivision of the mother property was registered in the office of
the Registrar of Deeds, KwaZulu-Natal
in terms of the provisions of
section 46
of the
Deeds Registries Act 47 of 1937
and that the
establishment of the estate had been approved in terms of the
provisions of the
Development Facilitation Act 67 of 1995
. The
applicant’s certificate of registered title relevant to the
mother property was also endorsed in terms of
section 34(4)
of the
said Act.
5. The essential dispute between the
parties arose from the sale by the applicant of two subdivisions,
namely Erven 1037 and 1038,
both forming part of the mother property,
to the third respondent. In order to effect registration of transfer
of these subdivisions
into the name of the third respondent the
applicant applied to the first respondent for clearance certificates
in terms of section
118(1) of the Local Government: Municipal Systems
Act 32 of 2000 (the Municipal Systems Act).
6. Section 118(1) of the Municipal
Systems Act reads, as follows:-
“(1) A registrar of deeds may not
register the transfer of property except on production to that
registrar of deeds of a prescribed
certificate-
(a) issued by the municipality or
municipalities in which that property is situated; and
(b) which certifies that all amounts
that became due in connection with that property for municipal
service fees, surcharges on
fees, property rates and other municipal
taxes, levies and duties during the two years preceding the date of
application for the
certificate have been fully paid.”
7. The applicant and the first
respondent hold differing views as to how the provisions of section
118(1) should be interpreted
and applied to the sale of subdivisions
forming part of the mother property. Although these two subdivisions
gave rise to the dispute,
the dispute is of general application. It
is common cause that since the litigation commenced, the sales to the
third respondent
have been cancelled, but the dispute remains alive
because it would affect future sales of subdivisions in the estate.
8. The applicant contends that the
references in section 118(1) to “the transfer of property”
and “that property”
should be construed as a reference to
the particular property which is to be the subject of the intended
registration of transfer,
in this instance a subdivision of the
mother property and the applicant stated that it has no objection to
the payment of rates
and charges relevant to any particular
subdivision or erf.
9. The applicant complains, however,
that the respondent has taken the view that the references in section
118(1) to the property,
which is the subject of the intended
transfer, is in law to the entire mother property. This is as opposed
to the individual erf
or subdivision which is the object of the
intended transfer. It subscribes to this view on the basis that the
subdivision to be
transferred still forms part of the mother property
and that the rates and charges therefore payable before a clearance
certificate
can be issued, are those relevant to the mother property
as a whole.
10. In paragraph 18 of the applicant’s
founding affidavits deposed to by one Van As, its estate manager, it
is alleged that:-
“What the First Respondent has
done in the account is to insist that if individual erven, such as
Erf 1037 and 1038 are transferred,
all rates due in respect of the
so-called “mother property” must be paid on each occasion
before any transfer of any
individual subdivision thereof is
allowed.”
11. The first respondent, in its
answering affidavit through one Chetty, in his capacity as its
Director: Revenue, admits the averments
contained in paragraph 18 of
the applicant’s founding affidavit, but asserts that the
applicant’s references to Erven
1037 and 1038 as “individual
erven” are misleading because;
“.. those erven are presently
(and) remain part of the mother property. Registration of their
ownership will amount to the
creation and first registration of
separately owned property.”
12. With reference to the applicant’s
certificate of registered title of the mother property (annexure H),
reflecting it as
comprising 91 smaller properties as per the plan
approved by the Surveyor General, Mr Chetty on behalf of the first
respondent
averred that;
“What this means is that the
Surveyor General has approved various sub-divisions, but that the
land which is owned is the
mother property. It does not mean that
ownership of the sub-divisions has been registered”
13. This approach raises the question
of what then the legal status of a subdivision in respect of land so
subdivided may be.
Section 46
of the
Deeds Registries Act reads
as
follows:-
“46 Requirements in the case of
subdivision of land into lots or erven
(1) If land has been sub-divided into
lots or erven shown on a general plan, the owner of the land
sub-divided shall furnish a copy
of the general plan to the
registrar, who shall, subject to compliance with the requirements of
this section and of any other law,
register the plan and open a
register in which all registrable transactions affecting the
respective lots or erven shown on the
plan shall be registered.
(2) For the purposes of registration of
such a general plan the title deed of the land which has been
sub-divided shall be produced
to the registrar together with the
diagram thereof and any mortgage bond endorsed on the title deed and
the mortgagee's consent
to the endorsement of such bond to the effect
that it attaches to the land described in the plan.
[Sub-s. (2) amended by
s. 22
(a) of Act
43 of 1957.]
(3) If the land sub-divided as shown on
the general plan forms the whole of any registered piece of land held
by the title deed,
the registrar shall make upon the title deed and
the registry duplicate thereof an endorsement indicating that the
land has been
laid out as a township or settlement, as the case may
be, in accordance with the plan, and that the lots or erven shown on
the
plan are to be registered in the relative register.
[Sub-s. (3) substituted by s. 6 of Act
92 of 1978.]
(4) If the land sub-divided as shown on
the general plan forms a portion only of any registered piece of land
held by the title
deed the registrar shall, on written application by
the owner of the land, issue a certificate of township or settlement
title
in his favour in respect of the said portion as nearly as
practicable in the prescribed form and in accordance with a diagram
thereof.
(5) If the land sub-divided as shown on
the general plan comprises the whole or portions of two or more
registered pieces of land,
the registrar may require the owner to
obtain a certificate of consolidated title of the land so
sub-divided. The registrar shall
make on such certificate the
endorsement mentioned in subsection (3).
[Sub-s. (5) amended by s. 22 (b) of Act
43 of 1957.]
(6) The provisions of section
forty-three and of subsections (3) to (6) inclusive of section forty
shall respectively and mutatis
mutandis apply in respect of the
certificates of township or settlement title mentioned in subsection
(4), and the certificates
of consolidated title mentioned in
subsection (5).
[Sub-s. (6) amended by s. 22 (b) of Act
43 of 1957.]
(7) Where a general plan has been
registered in terms of subsection (1), it shall not be necessary,
where a whole erf is transferred,
to produce a diagram thereof:
Provided that where a diagram has not been produced, a reference
shall be made to the general plan
in the relevant deed of transfer:
Provided further that the provisions of this subsection shall apply
only with reference to general
plans lodged for registration on or
after the date of commencement of the Deeds Registries Amendment Act,
1965.
[Sub-s. (7) added by s. 17 of Act 87 of
1965.]”
14. It is apparent from annexure H that
the general plan pertaining to the mother property has been
registered by the registrar
of deeds and that it was endorsed in
compliance with the provisions of
section 46(3)
of the
Deeds
Registries Act. I
did not understand any of the parties to dispute
this state of affairs. Instead the disputes related to the
consequences of such
registration.
15. Counsel for the first respondent
submitted that registration under
section 46(1)
of the
Deeds
Registries Act does
not confer ownership, or put differently, “title”
upon the owner of the mother property of the subdivisions thus
envisaged,
but merely registers a sub-divisional plan on which future
transactions would be registered. By future transactions presumably
was meant future transfers of the sub-divisions to new owners.
Counsel further submitted that ownership (“title”) of
a
sub-division may, inter alia, be acquired by registration of a
certificate of registered title (“CRT”) in terms of
section 43
of the
Deeds Registries Act and
that the applicant
attempted to cure the difficulty that it did not own erven 1037 and
1038 at the time of bringing the application,
by subsequently
applying for and obtaining CRT’s in respect of these two
sub-divisions.
16.
Section 43
of the
Deeds Registries
Act provides
, as follows:-
“43 Certificate of registered
title of portion of a piece of land
(1) If a defined portion of a piece of
land has been surveyed and a diagram thereof has been approved by the
surveyor-general concerned,
the registrar may on written application
by the owner of the land accompanied by the diagram of such portion,
the title deed of
the land, any bond thereon and the written consent
of the holder of any such bond, issue a certificate of registered
title in respect
of such portion, as nearly as practicable in the
prescribed form.
[Sub-s. (1) amended by
s. 19
(a) of Act
43 of 1957.]
(2) In registering the certificate the
registrar shall endorse on the title deed that it has been superseded
by the certificate
in respect of the land described in the
certificate, and on the certificate that the land described therein
is mortgaged by the
bond, and shall make such endorsements on the
bond and such entries in the registers as shall clearly indicate that
the land is
now owned by virtue of the certificate and is subject to
such bond.
[Sub-s. (2) amended by s. 19 (b) of Act
43 of 1957.]
(3) The provisions of this section
shall also apply where two or more defined portions of a piece of
land have been surveyed and
the diagrams thereof approved: Provided
that each of such portions shall be described in a separate paragraph
in the certificate.
(4) No defined portion of a piece of
land shall be mortgaged until the owner thereof has obtained a
certificate of registered title
in respect of such portion in
accordance with the provisions of this section.
(5) (a) Save in the case of a transfer
of a whole erf, no owner of a township or settlement in whose title
deed the individual erven
are not separately described, shall deal
separately in any way with an individual erf in such township or
settlement or any portion
thereof or share therein until he has
obtained a certificate of registered title of such erf in the
prescribed form.
(b) ......[Para. (b) deleted by s. 4 of
Act 11 of 1996.] [Sub-s. (5) added by s. 19 (c) of Act 43 of 1957.]”
17. It is apparent from the provisions
of
section 46(1)
of the
Deeds Registries Act that
upon registration
of the general plan of duly subdivided land, ownership thereof
remains unaffected. Unlike in the case of
section 16
of the
Deeds
Registries Act, there
is no conveyance of ownership from one person
to another involved because the existing registered owner of the
sub-divided land
retains her or his position as such (See: Ex parte
Menzies et Uxor,
1993 (3) SA 799
(C), King J at page 819E, where the
distinction is drawn between
s16
which applies to the transfer of
ownership from one person to another and the situation where an owner
seeks to have a title deed
endorsed to correctly reflect his rights
of ownership).
18. What is, however, envisaged by
section 46(1)
is that future registerable transactions relevant to
and affecting the various sub-divisions thus recognised, would be
recorded
and registered in a dedicated register as opened by the
registrar of deeds.
19. It is also relevant to have regard
to the definitions contained in
section 102
of the
Deeds Registries
Act. These
include, in alphabetical order, the following:-
“'erf' means every piece of land
registered as an erf, lot, plot or stand in a deeds registry, and
includes every defined
portion, not intended to be a public place, of
a piece of land laid out as a township, whether or not it has been
formally recognized,
approved or proclaimed as such;”
“'general plan' means a plan
which represents the relative positions and dimensions of two or more
pieces of land and has
been signed by a person recognized by law as a
land surveyor, and which has been approved, provisionally approved or
certified
as a general plan by a surveyor-general or other officer
empowered under any law so to approve, provisionally approve or
certify
a general plan, and includes a general plan or copy thereof
prepared in a surveyor-general's office and approved, provisionally
approved or certified as aforesaid, or a general plan which has at
any time, prior to the commencement of this Act, been accepted
for
registration in a deeds registry or surveyor-general's office;
[Definition of 'general plan'
substituted by s. 32 of Act 113 of 1991.]”
“'land' includes a share in
land;
[Definition of 'land' substituted by s.
22 (a) of Act 27 of 1982.]”
“'owner' means, in relation to-
(a) immovable property, subject to
paragraph (b), the person registered as the owner or holder thereof
and includes the trustee
in an insolvent estate, a liquidator or
trustee elected or appointed under the Agricultural Credit Act, 1966
(Act 28 of 1966),
the liquidator of a company or a close corporation
which is an owner and the executor of any owner who has died or the
representative
recognized by law of any owner who is a minor or of
unsound mind or is otherwise under disability, provided such
trustee, liquidator,
executor or legal representative is acting
within the authority conferred on him or her by law;
[Para. (a) substituted by s. 22 (d) of
Act 14 of 1993 and by s. 9 (b) of Act 11 of 1996.]
(b) …….”
“'registered' means registered in
a deeds registry;”
20. It must follow that the owner (as
defined) of land in respect of which a general plan has been
registered in terms of
section 46(1)
of the
Deeds Registries Act,
must
also at the time of such registration continue to be the owner
of each sub-division, or erf, thus registered. After all, there is
no
suggestion that erven which come about by the registration of a
general plan would be ownerless.
21. On the contrary, in terms of
section 43(1)
provision is made that the owner of a defined portion
of land may request the issue of a certificate of registered title in
respect
of any such portion and
section 43(2)
provides for the
certificate, once issued, to supersede the title deed, so that such
portion is thereafter owned by virtue of the
certificate of
registered title.
22. By contrast, when
section 46(1)
is
read with the provisions of
section 46(7)
and
43
(5)(a) of the
Deeds
Registries Act it
becomes clear that any sub-division, if alienated
as a whole, may be registered into the name of its new owner without
the need
first to obtain a certificate of registered title in respect
of such sub-division (Pesic and Another v Wetdan W38 CC and Others
2006 (5) SA 445
(W)).
23. In my view the submission made on
behalf of the first respondent to the effect that registration under
section 46(1)
of the
Deeds Registries Act does
not confer ownership
is correct to the extent that no transfer of ownership is involved.
But it is incorrect insofar as the suggestion
is made that ownership
can only come about when a certificate of registered title is issued
to the applicant. Such a certificate
is not a prerequisite to enable
the applicant to pass registered title to the third respondent or any
other purchasers of sub-divisions
in the estate.
24. It follows that in my judgment the
applicant has been the registered owner of the mother property prior
to the registration
of the general plan and the owner of the
sub-divisions making up the mother property following registration on
the general plan.
Thereafter it was entitled to have transferred
ownership in any of the sub-divisions to third parties without the
need first to
have applied for and obtained certificates of
registered title in respect of such sub-divisions.
25. In the light of the conclusion to
which I have come regarding the ownership of the sub-divisions making
up the mother property,
it now becomes necessary to consider the
provisions of section 118(1) of the Municipal Systems Act, already
set out above.
26. The purpose and effect of section
118(1) was considered by the Supreme Court of Appeal in City of
Tshwane Metropolitan Municipality
v Mathabathe
2013 (4) SA 319
(SCA),
where Ponnan JA remarked at page 324 C-E in para 9 that:-
“[9] Municipalities are obliged
to collect moneys that become payable to them for property rates and
taxes and for the provision
of municipal services (s 96). They are
assisted to fulfil that obligation in two ways: first, they are given
security for repayment
of the debt in that it is a charge upon the
property concerned (s 118(3)); and, second, they are given the
capacity to block the
transfer of ownership of the property until
debts have been paid in certain circumstances (s 118(1)) (per Nugent
JA, City of Cape
Town v Real People Housing (Pty) Ltd
2010 (5) SA
196
(SCA) para 2). The principal elements of s 118 are accordingly a
veto or embargo provision with a time limit (s 118(1)) and a security
provision without a time limit (s 118(3)) (City of Johannesburg v
Kaplan NO and Another
2006 (5) SA 10
(SCA) para 13). The two
subsections thus provide a municipality with two different remedies.
Although the purpose of both is
to ensure payment of the municipal
claims that fall within the stipulated categories, the mechanisms
employed to achieve that purpose
are different (BOE Bank Ltd v
Tshwane Metropolitan Municipality
2005 (4) SA 336
(SCA) para 7).”
27. It is relevant to note that Ponnan
JA referred to municipalities being given the capacity in terms of
section 118(1) to block
the transfer of ownership of “the
property” until debts due to it have been paid. That suggests
that such power is
limited to the property intended to be the subject
of the transfer of ownership and in respect of which a clearance
certificate
is sought.
28. Counsel for the first respondent
submitted that rates are payable by the owner of the property
concerned and premised his argument
upon the approach that
registration of the general plan in terms of
section 46(1)
of the
Deeds Registries Act does
not confer upon the resulting sub-divisions
ownership separate from that of the mother property. Consequently, so
the argument
ran, separate ownership in a sub-division only came
about when a sub-division is transferred to a new owner.
29. I remain unpersuaded by the
argument. The fact that the first respondent has not taken steps to
include the sub-divisions as
separate entities in its valuation roll
or to individually rate them cannot affect the legal ownership of the
sub-divisions making
up the mother property. It may be that the first
respondent compromised its position by virtue of the conclusion of
the service
agreement, but the whole agreement does not form part of
the court papers before me and that is not an issue which I need to
decide
in these proceedings.
30. Counsel for the first respondent
submitted that by reason of the transfer of a sub-division being the
first transfer thereof,
separating it from the mother property, the
first respondent was entitled to apply the provisions of
section
118(1)
to the entire mother property, as it exists before separation
and thus to “..veto the transfer to secure rates.” In
Cape Town v Real People Housing (Pty) Ltd
2010 (5) SA 196
(SCA),
Nugent JA at page 201E in para 14 remarked that “I do not think
it is necessary to cite authority for the trite proposition
that a
term cannot be implied in a statute if it would contradict its
express terms.”. Those words were spoken with regard
to the
provisions of
section 118(3)
, but they apply with equal force also to
section 118(1) of the Municipal Systems Act.
31. Counsel for the applicant urged me
to interpret the provisions of section 118(1) as applying only to the
sub-division sought
to be transferred and in respect of which the
clearance certificate is applied for. In so doing counsel relied upon
the approach
to interpretation as set out by the court of appeal in
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012 (4)
SA 593
(SCA) at para graph 18. There Wallis JA in conclusion stated
that:-
“The 'inevitable point of
departure is the language of the provision itself', read in context
and having regard to the purpose
of the provision and the background
to the preparation and production of the document.”
32. What section 118(1) prohibits is
the registration of transfer of property without the production of a
certificate of clearance
with regard to “that property”.
The only property in respect of which the registration of the
transfer of ownership
is in contemplation when the issue of a
clearance certificate is requested, is the sub-division concerned and
not the mother property
which has, by virtue of the registration of
the general plan, been sub-divided into multiple erven.
33. In my judgment the provisions of
section 118(1) of the Municipal Systems Act could, in the present
matter, only have been applied
to the erven in respect of which the
clearance certificates were sought at the time, namely erven 1037 and
1038. Since their sales
have fallen through the relief in this regard
must be limited to declaratory relief.
34. There was some mention in passing
during the course of counsels’ addresses of other issues
between the parties, but the
main thrust of the argument from both
sides related to the interpretation and application of section 118(1)
and whether to the
mother property or to the sub-divisions intended
for transfer. It seems to me that the main issue is encapsulated by
the relief
sought in prayer 2(b) of the notice of motion.
35. The only other live issue remaining
is that of costs. Both counsel sought costs orders adverse to the
opposing party. In the
view I take of the matter the applicant has
been substantially successful with regard to the main issue and I can
see no reason
why costs should not follow the result. However, in my
view the costs occasioned by the applicant’s supplementary
replying
affidavits and the interlocutory application seeking leave
to deliver these are on a different footing. I am unpersuaded that
these
costs should be for the account of the first respondent.
36. In the result I make the following
order:
a. It is declared that the calculation
of the amounts payable to the first respondent in order to secure the
issue of a clearance
certificate in terms of the provisions of
section 118(1)
of the
Local Government: Municipal Systems Act 32 of
2000
in respect of the intended registration of transfer of property
ownership of any of the sub-divisions forming part of the Mount
Richmore Village Estate at Salt Rock, KwaZulu-Natal, shall be based
upon the particular erf or sub-division in respect of which
the
application for such a clearance certificate is made.
b. The first respondent shall pay the
costs of the application, save that there shall be no order as to the
costs occasioned by
the delivery by the applicant of its
supplementary replying affidavits and the application in terms of
rule 6(5)(e)
for authority to do so.
VAN ZÿL, J.
APPEARANCES:
FOR THE APPLICANT: G D HARPUR SC
Instructed by Halstead Paola
La Lucia, KZN
(Ref: L. Paola/pr/04H000913)
Tel: (031) 566 5810
FOR THE FIRST RESPONDENT: G D
GODDARD
Instructed by Sepstone & Whylie
Umhlanga Rocks
(Ref: V Nkosi/kwad7135.771)
Tel: (031) 575 7000
No appearance for Second and Third
Respondents
DATE ARGUED: 12 December 2014
DATE DELIVERED: 26 June 2015