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[2015] ZAKZDHC 78
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EThekwini Municipality v Mounthaven (Pty) Ltd (1985/2014) [2015] ZAKZDHC 78 (30 September 2015)
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IN
HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 1985/2014
DATE:
30 SEPTEMBER 2015
ETHEKWINI
MUNICIPALITY
.......................................................................................
APPLICANT
And
MOUNTHAVEN
(PTY)
LTD
.........................................................................................
RESPONDENT
JUDGEMENT
Delivered:
30 September 2015
MBATHA
J
[1]
The Applicant is eThekwini Municipality, a category A Municipality,
duly constituted as such and which has its principal place
of
business at [C…… H…., Dr P……. K……
Street], Durban, KwaZulu-Natal.
[2]
The Respondent is Mounthaven (PTY) Ltd, a company duly registered in
terms of the Company Laws of the Republic of South Africa
and whose
registered address is [……. E…… S……,
1……. S…… Road,
L…..],
KwaZulu-Natal.
[3]
The Applicant seeks an order that it be declared that in terms of
Clause C.2 to the conditions of tittle, the property described
as Erf
[2…..] of [V……] Extension [2……],
situated at 6 [M…….] Place, [V……],
KwaZulu-Natal “the property” is to be transferred,
forthwith, to the Applicant and seeks further relief as stated in
the
Notice of Motion.
[4]
The relief sought is sought on the basis that the Respondent did not
comply with its obligation to develop the property by June
1988, nor
did it deny its failure to honour that obligation and the Applicant
was therefore entitled to invoke Clause C.2 at any
time thereafter.
[5]
Clause 5 of the sale makes the sale makes the sale subject to
specified additional conditions in favour of the Applicant and
these
were in due course incorporated in the Deed of transfer as clauses C
(1) and C (2), when the property was transferred to
the Respondent on
the 4
th
of August 1986.
The
conditions of title which the Applicant invokes are as follows:
“
C.
…
1)
The Purchaser shall erect, or cause
to be erected on the property, buildings to the value of not less
than ONE HUNDRED THOUSAND
RAND (R100 000,00) and failing the
erection of buildings to that value within two (2) years from the
date of sale, then, for
the purpose of levying the general rate and
sewer rate payable to the Verulam Town Council by the Purchaser or
his successors in
tittle, there shall be deemed to be buildings to
such required value on the property and all valuation and rating
provisions of
Section 157 of Ordinance 25 of 1974 or any amendment
thereof shall apply to the property and be binding upon the Purchaser
or his
successors in tittle.
2)
If at the expiry of a period of
three (3) years from the date of sale the Purchaser has failed to
complete buildings to the value
of not less than ONE HUNDRED THOUSAND
RAND (R100 000,00) on the property, ownership of the property
shall revert to the Seller
which shall be entitled to demand
re-transfer thereof to it from the Purchaser who shall be obliged to
effect to the Seller against
payment by the Seller to the Purchaser
of all payments made on account of the purchase price less any costs
incurred by the Seller
in obtaining re-transfer of the property into
its name, including costs as between attorney and client, all costs
transfer,
transfer duty, stamp duty and the like.”
The
effect of conditions as submitted by the Applicant may be summarised
as follows:
a)
If the Respondent did not, within two (2)
years of the sale date, erect buildings with a value of not less than
R100 000.00
on the property then the Respondent would be liable
to the Applicant for increased rates on the property as if such
buildings had
in fact been built on it; and
b)
If the Respondent did not, within three (3)
years of the sale date, erect such buildings on the property then the
Applicant was
entitled to compel re-transfer of the property to it at
the Respondent’s expense against re-payment of the price (“the
reversion clause”).
[6]
The Respondent admit that it did not, and still has not, erected any
such buildings on the property and it remains vacant land,
the
present directors of the Respondent citing the continued existence of
a 750mm diameter storm water pipe that runs under the
property, and
is not the subject of any servitude, as preventing the effective
development of the property, which is zoned for
commercial purposes.
The Applicant declined to remove the pipe or relocate it to the
existing servitude on the property.
[7]
On 23 May 2012, the Applicant wrote a letter to the Respondent in
which letter the Applicant invoked the reversion clause and
demanded
re-transfer of the property. Such re-transfer was not effected
by the Respondent and on 19 February 2014, the Applicant
launched the
present application for re-transfer of the property.
[8]
The Respondent has raised prescription as one of its defences and
proceeded with the defence of prescription only in terms of
the
Prescription Act
[1]
, when this
matter was argued before me. In that regard, it raised the
following issues:-
a)
That the right of the Applicant to claim
re-transfer of the property in terms of the reversion clause is a
“debt” as
contemplated in chapter III of the Prescription
Act;
b)
That such debt became due on 25 May 1988
when, because of the Respondent’s failure to build the required
buildings on the
property within the stipulated time, the right to
claim re-transfer in terms of the reversion clause accrued to the
Applicant;
c)
That the debt was immediately claimable and
the Applicant could not delay the onset of prescription by not
demanding re-transfer
of the property until 2012;
d)
That as prescription of the Applicant’s
right to enforce the reversion clause began to run in May 1988, the
debt either prescribed
after three (3) years in May 1991 or after 15
years in May 2003; and
e)
That the Respondent also submitted that the
Applicant was not an organ of State as understood in Section 11 of
the Prescription
Act. Even if it had been an organ of State,
the claim would have prescribed in 2003. The enforcement
proceedings were
only instituted in 2014 by the Applicant.
[9]
The Respondent also contends that when it raised the issue of
prescription in its answering affidavit, the Applicant only raised
a
bare denial. It was only on its heads of argument, that it
contended that ownership automatically reverted to the Applicant
after May 1989, whereafter it was entitled to claim possession and
re-transfer of the property. It submits that its claim
is based
on a
rei vindicatio
as owner, and therefore a claim under the
rei vindicatio
is not for a “debt” subject to
extinctive prescription.
I
accept the Respondent’s contention that this defence is not
pleaded, though the Applicant gave a lengthy replication. In
support
of this, the Respondent referred me to the judgment of Theron JA in
Quartermark
Investments (PTY) Ltd v Mkhwanazi and Anther
[2]
.
Though this was an irregular step on the part of the Applicant, I
find that it just and equitable to deal with the merits
of the
defence raised by the Applicant.
[10]
It is trite that the extinctive prescription of debts is regulated by
Chapter III of the Prescription Act
[3]
.
The periods of prescription are stated in Section 11 of Chapter III
and I will not repeat them here. Prescription
sets in as soon
as the debt is due.
[11]
The question for determination before me is whether the claim for the
retransfer of property to the Applicant is a “debt”
or
not. The
Respondent relies on
Desai
NO. v Desai and Others
[4]
,
where the Court held that the term “debt” in the context
of section 10 (1) of the Prescription Act
[5]
had a wide and general meaning, and included an obligation to do
something or refrain from doing something in clause 13 (d) (of
that
case) to procure registration of transfer was a “debt” as
envisaged in section 10 of the Prescription Act.
In
the Desai case, the Applicants had launched an application, whereby
they sought an order directing the Appellant to take all
steps and
sign all documents necessary to effect transfer to them of certain
immovable properties. Amongst other findings
made by Hugo J, he
dismissed the application to pass transfer on the basis that it was a
“debt” which had been extinguished
by prescription.
The
Appellate Division, as it was then, confirmed Hugo J’s
finding. It went on further to state that the undertaking
in
clause (d) to procure registration of transfer was a “debt”
as envisaged in Section 10(1) of the Act. In terms
of the
Act
[6]
, the debt is
extinguished.
[12]
The Respondent in further support of its defence of extinctive
prescription also relied on
The
Master v I.L. Back and Co. LTD and Others
[7]
by Galgut AJA, where the Court held that a creditor’s right of
action is not “
postponed
until such time as he may, either in his wisdom or when he thinks he
ought to, bestir himself
.”
Basically, this means that you must strike while the iron is still
hot.
[13]
Besides considering whether the Applicant’s claim is a “debt”
for purposes of extinctive prescription within
the meaning of the
Prescription Act, I must also consider if there is an exception when
the claim is vindicatory in nature, as
ownership is a real right and
avails the owner thereof of the
rei vindication
i.e. the right
to recover the property from anyone who is in possession thereof.
[14]
The term “debt” is not defined in the Prescription Act.
In terms of Section 12(1) of the Act, prescription
commences as soon
as the debt is “due”. The term due has been
interpreted to mean, that for prescription to run
there has to be a
debt in respect of which the debtor is under an obligation to perform
immediately. The Courts have held
that a debt includes also any
liability arising under a contract. A debt refers to an
obligation to do something e.g. delivery
of something. It
refers mostly to a claim.
Prescription
begins to run when the debt is due provided that the debtor does not
wilfully prevent the creditor from knowing of
the existence of the
debt, the creditor must have knowledge of the debtor and of the facts
from which the debt arises. The
time for a contractual debt is
determined by the terms of the contract. See
LTA
Construction LTD v Minister of Public Works and Land Affairs
[8]
.
Where
a contractual debt is dependent upon the happening of a certain event
or the lapse of a specified period of time, the debt
becomes due upon
the fulfilment of that condition or lapse of that period.
[15]
Wille’s Principles of South African Law, 8
th
Edition 1991 states that ownership does not pass on account of a mere
agreement between the parties but only on delivery and registration.
The Respondent relies on Desai that it is a debt, the debt has
prescribed and the creditor cannot delay prescription, see
Mostert
v Mostert
[9]
,
where the Court held that the period of prescription began to run
from the date of the dissolution of the partnership and not
from the
date for demand for this account. It is the Respondent’s
case that the prescription period is three (3) years,
as it was also
not an organ of state. There are no averments by the Applicant
that prescription has been interrupted, therefore,
the property did
not automatically revert to Applicant, because it’s an owner
without transfer and registration of transfer.
[16]
The Applicant’s defence to prescription which has not been
stated in replication is that the Respondent acquired only
a limited
real right in and to the property and relied on
Cumming
v Cumming
[10]
:-
“
If
the condition creating the reversionary right is a valid one, then
something less than full and unrestricted ownership vested
in the
appellant by virtue of registration, namely, the right of the
Respondent to re-acquire ownership an possession on
an order of
divorce being granted for whatever reason.”
It
further submits that the property was purchased in 1986 and by June
1989, the Respondent had failed to develop it, therefore,
ownership
automatically reverted to the Applicant after May 1989. It was
therefore entitled to claim possession and transfer
of the property.
It
further stated that the
rei
vindicatio
is not a “debt” as envisaged in the
Prescription Act of
1969
and relies on the judgments in
Staegemann
v Langenhoven and Others
[11]
;
Fedgroup
Participation Band Managers (PTY) LTD v Trustee of the
Capital
Property Trust
[12]
.
[17]
It is common cause that prescription extinguishes a “debt”
being anything that is owed or due. The word “debt”
refers to the claim and not the cause of action. In general,
prescription begins to run as soon as the debt is due, unless
the
debt is the result of a continuing wrong. It must be
immediately claimable by the creditor in legal proceedings.
[18]
This takes me to the submissions made by the Applicant that their
claim is based on a
rei vindicatio
and it does not prescribe
after three (3) years in terms of the
Prescription Act. I
have
considered Staegemann judgment, where Blignaut J says that such a
claim is not a debt and it cannot be defeated by prescription.
The facts in the Staegemann’s case are different as the claim
in that matter related to a credit agreement, a credit agreement
which stated that if the Respondent failed to make payment to the
Appellant, the Respondent would be entitled to the return of
the
motor vehicle and the Appellant would be entitled to demand payment
of arrear instalments.
In
my view, each case should be decided on its facts. In this
case, nothing is owing to the Applicant. It was aware
of the
time frame of the reversionary rights to the property and also aware
of the debtor. It did not exercise its rights
when the three
(3) year period expired, but it tried to assist the Respondent
without reserving its rights to the property.
[19]
I therefore find that this claim is a “debt” as envisaged
in the Desai case, where the Court held that a debt was
said to have
“
a wide and general meaning and includes an obligation to do
something and refrain from doing something.”
20.1
The judgement in
Evins
v Shield Insurance Co. LTD
[13]
held that the word “debt” must be given a wider meaning
denoting not debts sounding in money, which is due, but must
be
extended to debt for a vindication of property. A contrary view
is held in
Absa
Bank v Keet
[14]
,
where the Court held that a vindicatory claim based on ownership of a
thing cannot be described as a debt. There must be
a
distinction between real and personal rights.
20.2
In finding whether the decision in Absa Bank v Keet is applicable to
this case, I have revisited the conditions
of title. Clause C1 binds
the purchaser or his successors in title to the erection of buildings
to the value of not less than R100 000,00.
The intention
here being that no building of less than the value of R100 000.00
shall be built on the property.
Clause
C 2 specifically state that:
“
If
at the expiry of a period of three (3) years from the date of sale,
the purchaser has failed to complete buildings to the value
of not
less than R100 000,00 on the property, ownership of the property
shall revert to the seller, which shall be entitled
to demand
re-transfer thereof to it from the purchaser….”
20.3
The wording of this provision (C2) is peremptory and stipulates that
the period should be three (3) years if no
buildings are erected.
It further states that the seller “
shall
be entitled to demand re-transfer
”.
The wording of the provision, does not say that the property “shall
automatically” revert to the seller.
It is trite that
property can only be transferred by registration thereof and does not
occur automatically.
No
demand was made at the expiration of three (3) years by the
Applicant, therefore its claim lapsed. It has also not made
any
submission that prescription was interrupted, as at all times it was
aware of its cause of action and the debtor was known
to it.
21.1
It is my view that it’s right to claim re-transfer could not
have occurred automatically. The successors
in title are only
bound to the value of the building of the property. A right
that was vested to the Applicant was extinguished
by the effluxion of
time. The Applicant has not established that it had an absolute
real right to the property. They
lost their right of action
when it prescribed after three (3) years.
21.2
In
Legater
McKenna Inc. and Another v Shea and Others
[15]
the Court held that the requirements for passing of ownership are:
1)
Delivery (registration of transfer);
2)
Real agreement, essential elements of which
being;
i.
intention of transferor to transfer
ownership; and
ii.
Intention of transferee to acquire
ownership.
21.3
Similarly, in
Middleton
v Middleton and Another
[16]
,
the Court held that there was no merit in Applicant’s
contention. It was trite, both in terms of the common
law
and in terms of Section 16 of the Deeds Registries Act
[17]
,
that ownership of land could be conveyed by one person to another
only by means of a deed of transfer executed or attested by
the
registrar, save as otherwise provided in the Act or in any
other law. It held further that the settlement agreement
between the Applicant and First Respondent in that matter merely had
the effect of creating a contractual right in favour of the
Applicant
for acquisition of the First Respondent’s one half undivided
share in the property. The derivative acquisition
of ownership
of property, or of any rights therein, required an act of
traditio
(ie. delivery or transfer). In all instances where rights of
ownership of immovable property could only be vested in a person
by
means of an act of
traditio
,
the only legal recognised and effective method of accomplishing that
was by registration of a deed of transfer in the Registry
of Deeds
It
went on further to say that the settlement agreement conferred no
more than a contractual right in
personam
in favour of the
Applicant against the First Respondent for transfer of ownership of
the latter’s rights in and to the property
by registration or
endorsement in terms of the Act.
It
held that there was no act of
traditio
perfecting the Applicant’s ‘
acquisition
’
in the present matter, the Applicant had not become vested with the
First Respondent’s rights in rem in and to the
property.
The First Respondent remained vested with ownership of a one half
undivided share in the property as at the date
on which such was
placed under judicial attachment at the instance of the Second
Respondent.
[22]
I am also of the view that the Applicants claim is a debt that
prescribed by effluxion of time after three (3) years and that
the
property did not automatically revert to it after the expiration of
the three (3) year period.
[23]
I therefore make the following order:
a)
The plea for Prescription is upheld with
costs.
MBATHA
J
Date
of hearing : 27 July 2015
Date
delivered : 30 September 2015
Appearances
:
For
the Applicant : Adv. S. Mahabeer
Instructed
by : Berkowitz Cohen Wartski
Durban
For
the Respondents : Adv. R. Suhr
Instructed
by : Mervyn Gounden & Associates
c/o
Messenger King
Durban
[1]
Act
68 of 1969.
[2]
2014
(3) SA 96
(SCA) 100 at 13.
[3]
Act
68 of 1969.
[4]
1996
(1) SA 141 (A).
[5]
Act
68 of 1969
[6]
Act
68 of 1969.
[7]
1983
(1) SA 986
(A) 1005H.
[8]
1992
(1) SA 837 (C).
[9]
1913
TPD 255.
[10]
1984
(4) SA 585
(T) at 589 D-E.
[11]
2011
(5) SA 648
(WCC) at para 18-12.
[12]
2015
(ZASCA) 103 (30 June 2015).
[13]
1980
(2) SA 814 (A).
[14]
(817/2015)
[2015] ZASCA 81
(28 May 2015).
[15]
2010
(1) SA 35 (SCA)
[16]
2010
(1) SA 179
(D).
[17]
Act
47 of 1937.