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[2013] ZAGPPHC 52
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Heritage Hill Home Owners Association v Heritage Hill Devco (Pty) Ltd (31022/2010) [2013] ZAGPPHC 52; 2013 (3) SA 447 (GNP) (14 February 2013)
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT. PRETORIA /ES
(REPUBLIC
OF SOUTH AFRICA)
CASE
NO: 31022/2010
DATE:14/02/2013
IN
THE MATTER BETWEEN:
HERITAGE
HILL HOME OWNERS ASSOCIATION
….........................................
PLAINTIFF
AND
HERITAGE
HILL DEVCO (PTY)
LTD
.......................................................................
DEFENDANT
JUDGMENT
KOLLAPEN.
J
[1]
In this action the plaintiff has issued summons against the defendant
in terms of which it seeks payment in the sum of R2,5
million which
it alleges is due by the defendant to it as levies payable by the
defendant in respect of the defendant's ownership
of various erven
situated within the Heritage Hill estate located in the township of
Louwlardia Extension 48.
[2]
The plaintiff is a section 21 company incorporated as such in terms
of the Companies Act 61 of 1973 and its Articles of Association
regulates the relationship and rights and obligations of the members
of the plaintiff company.
[3]
The defendant, it is common cause, is the developer of the township
known as Louwlardia Extension 48 and as developer is also
a member of
the plaintiff.
[4]The
Articles of Association of the plaintiff provides for two categories
of membership:
(a)
during the development period the developer would have seven nominees
as members of the plaintiff who are not registered owners
of portions
of the property; and
(b)
any person, including the developer, who is the registered owner of
property or portion of property would be a member of the
plaintiff.
[5]
The defendant in its plea denied that it was the owner of any
individual properties within the township and pleaded that it
was the
owner of the remainder of the township known as Louwlardia Extension
48. On that basis it contended that it was not liable
for levies as
envisaged and contemplated in the plaintiffs Articles of Association.
[6]The
parties were able to reach agreement on all of the issues in dispute
save for the question of whether it could be said that
the defendant
was the registered owner of erven in the township as contemplated in
the Articles of Association. The plaintiffs
stance was that the
defendant was in fact the registered owner of erven as contemplated
in the Articles of Association while the
defendant's stance was that
it was the registered owner of the remaining extent of the township
and not the owner of individual
erven.
Background
[7]
The property known as Portion 53 of the farm Brakfontein 390,
Registration Division JR, Province of Gauteng was transferred
to the
defendant in terms of deed of transfer T/82544/05 registered as such
on 30 June 2005 by the Registrar of Deeds in Pretoria.
[8]
It is common cause that the land described in the aforementioned
title deed was laid out into a township known as Louwlardia
Extension
48 and a general plan in respect of such a township was registered by
the Registrar of Deeds on 7 February 2006.
[9]
If one has regard to the general plan then it is evident from the
plan that it depicts various erven and in respect of each
such erf
the location thereof, the dimensions thereof are clearly identified
and an erf number is allocated to each such erf.
[10]
The defendant as township developer would then be entitled to sell
and transfer erven as depicted on the general plan to individual
owners without there being any need for the individual erven in
question to be first transferred to the developer for onward transfer
to those who had purchased erven in the township from the developer.
[11]
The plaintiffs Articles of Association provides in Clause 9.2 thereof
that members of the plaintiffs association shall be liable
in respect
of any levy determined from time to time in equal shares in respect
of each property owned by such member.
[12]
If regard is had to the definition of member as the registered owner
of property, the basis accordingly for the payment of
levies by any
member of the plaintiffs association would be in respect of its
registered ownership of property in the township.
[13]
Notwithstanding the description of the plaintiff as the Heritage Hill
Home Owners Association it is evident from the Articles
of
Association that membership was not confined to home owners but
rather to registered owners of property (in addition to the
members
who were nominees of the developer).
[14]
The Articles of Association in turn describes "the property"
as "an erf in the township to be known as Louwlardia
extensions
to be established by the
developer
on portions of the farm Brakfontein 390, Registration Division JR,
Province Gauteng".
[15]
Arising from this, the only question in dispute and for determination
by this court is: -
(i)
Was the defendant, following the establishment of the township and
for the purposes of the Articles of Association of the plaintiff,
the
registered owner of individual property/ies in the township? If it
was, then it was accepted by the parties that it would be
liable to
pay levies; or
(ii)
Was the defendant the registered owner of the property known as the
remaining extent of the township Louwlardia Extension 48
and not as
contended for, the registered owner of the individual erven in the
township of Louwlardia Extension 48? In such event
it would not be
liable for levies.
The
provisions of the Deeds Registries Act and other related provisions
[16]
The Deeds Registries Act 47 of 1937 ("the Deeds Act")
defines "erf as
"Every
piece of land registered as an erf, lot, plot or stand in a deeds
registry, and includes any 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 recognised, approved or proclaimed
as such."
[17]
The Deeds Act further defines "registered" as registered in
a deeds registry. It is clear having regard to the definition
of both
cerf and ‘registered’ as contained in the Deeds Act, that
once the township had been proclaimed and the Registrar
of Deeds had
effected as he did on 7 February 2006, the registration of the
general plan of the township of Louwlardia Extension
48, the erven in
question and as depicted on the general plan were registered as such.
[18]
The effect of the registration of the general plan was to subdivide
the land which was formerly a farm and to provide for the
basis to
now deal with the subdivided land either collectively or as
individual erven.
[19]
Although the defendant remained the owner of essentially the same
land that was previously a farm, the effect of the establishment
of
the township had changed the nature of the land from farm land to
land in a proclaimed township. See Florida Hills Township
Ltd v
Roodepoort-Maraisburg Town Council
1961 2 SA 386
(T) at 388. In this
regard the conclusion in Kosmos Ridge Homeowners Association v Cosmos
Ridge (Ply) Ltd
(2003) JOL 11481(T)
that the balance of the township
still remained farmland is inconsistent with the finding in Florida
Hills that the nature of the
land upon proclamation as a township had
changed from farmland to land in a proclaimed township.
[20]
The effect of the establishment of the township and the subdivision
of the land in accordance with the general plan also meant
that the
defendant while essentially
remaining
the owner of the same content of land was now restricted in the
manner in which it was able to deal with the land in question.
It was
obliged to deal with the land in question in accordance with the land
being proclaimed as a township and in accordance with
the subdivision
of the land which was reflected in the general plan registered by the
Registrar of Deeds.
[21]
Section 46(1) of the Deeds Act provides as follows:
"If
land has been subdivided into lots or erven shown on a general plan,
the owner of the land subdivided shall furnish a copy
of the general
plan to the Registrar, who shall, subject to compliance with
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.”
It
is clear from the above that the registration of the plan by the
Registrar had the effect in law of subdividing the land and
of
providing a basis in terms of which registrable transactions in
respect of the lots or erven shown on the plan could be registered.
This section, read together with the definition of an ‘erf
referred to above, would mean that all the erven in the township
were
registered as such and that the opening of the register of the
township by the Registrar would then provide the basis for
registrable transactions in respect of such erven to be registered .
Section
47 of the Deeds Act in turn provides that the owner of land in
respect of which a register has been opened may by one deed
transfer
the whole or any portion of such land or a share in the whole of such
land provided that if a portion only is sought to
be transferred, the
transfer shall be passed in accordance with a diagram from which
shall be excluded all erven on the land which
have already been
transferred and secondly the boundaries of such portion shall
coincide with one or more of the lines of division
shown on the
general plan and shall not intersect any of the erven shown thereon.
[22]
It is evident therefore from the provisions of section 46 and section
47, that the manner in which the township developer is
able to deal
with land in the township following the subdivision and the
registration of the township must be such that it accords
with the
nature of the subdivision and indeed is such that it recognises the
existence of the individual erven depicted on the
general plan.
[23]
As a matter of fact and as a matter of law it could hardly then be
contended that following the establishment of the township,
the
individual erven depicted on the general plan did not come into
existence as individual erven capable of being dealt with,
sold and
transferred. The fact that the developer had the right to sell the
whole land or a portion thereof does not in my view
detract from the
conclusion that the erven depicted on the general plan came into
existence as such. The two propositions are in
my view not mutually
destructive and indeed are reconcilable.
[15]
If it is to be argued that the ownership of the developer in and to
the land were not moderated by the establishment of the
township and
the subdivision, then the provisions of section 47 would hardly make
sense to the extent that it provides restrictions
in the manner in
which the township developer may transfer and deal with land in~the
township. This suggests compellingly in my_view
that the- consequence
of the subdivision and the establishment of the township was to
forever change the substance of the ownership
of the developer. It
converted the land from farm land into a township and it created
within the township separate and identifiable
erven which could be
the subject of individual ownership.
[16]
It must accordingly follow that even if the defendant contends that
it was no more than the owner of the remainder of the township
known
as Louwlardia Extension 48, the argument that it was not the owner of
the individual erven situated in that township is in
my view not
sustainable on account of the above.
[17]
If one accordingly accepts that the defendant was for the purposes of
this action the owner of land in the township, excluding
of course
erven sold and transferred to individual purchasers, could it be said
that it was the registered owner of such erven
for the purposes of
the Articles of Association?
[18]
If one has regard to the provisions of section 46 of the Deeds Act
then it is clear that the registration of the general plan
had the
effect of creating separate erven, the ownership of which could only
have vested in the township developer and in this
instance that would
have been the defendant.
[28]
In the context of this action there can hardly be any suggestion that
the dispute in question is a dispute around farm land.
Indeed the
membership of the defendant in the plaintiff company is a membership
with a view to the advancement and the development
of the township
known as Louwlardia Extension 48.
[29]
In that context it must accordingly follow that the common interest
of the plaintiff and the defendant which bind them together
in the
plaintiff company is indeed in relation to the township and that the
imposition of levies by the plaintiff is indeed in
respect of
township land and for the benefit of the owners of such land. A
township is defined by its own unique characteristics
distinct from a
farm. It consists of separate erven for residential and other
purposes all of them clearly identified on the general
plan and all
of them take on and assume a separate and distinct identity. This is
as much evident from the general plan and from
the consequences and
effects of section 46 and section 47 of the Deeds Act.
The
law on the matter
[30]
Plaintiff sought to rely on the judgment in Florida Hills Township
Ltd v Roodepoort-Maraisburg Town Council referred to above
as well as
Ryhnfield Townships Ltd v Benoni Town Council & Another
1950 4 SA
717
(T).
[31]
In the Florida Hills matter the court concluded that when township
property is sold as individual erven the remainder of the
property is
reduced from time to time by the sale of individual erven but that
the unit of the remainder retains its own identity
and continues to
appear as the remainder in the deeds registry. It accordingly
concluded that it was that remainder which had to
be entered on the
roll as a unit in the ownership of the township owner. A similar
approach was taken by the court in the Rhynfield
matter and it was
the plaintiffs contention that this court was bound by the decisions
in both Rhynfield and Florida Hills which
decisions it was contended,
were relied upon by HARTZENBERG J in the matter of Kosmos Ridge Home
Owners Association v Kosmos Ridge
(Ptyj Ltd
[2003] JOL 11481
(T).
This matter dealt with the payment of levies by a township developer
and HARTZENBERG J relying on Rhynfield and Florida Hills
concluded
that the individual erven did not exist before there was a specific
transfer in respect of such a specific erf registered
in the Deeds
office.
[32]
The decisions in Florida Hills and Rhynfield dealt with the
relationship between a local authority and a township developer
and
with the valuation of unsold lots in a township. The legal nature of
the relationship between the parties in those matters
was one that
flowed ex lege and the dispute centered around the method used to
value such erven. In my view the relationship the
parties find
themselves in, in the context of the present dispute is certainly
distinguishable. The relationship between the parties
evidenced by
the Articles of Association is a contractual relationship underpinned
by membership based inter alia on the ownership
of
land
in the township and the imposition of levies presumably to advance
the interests of all land owners in the township. The Articles
of
Association to that extent evidences a coming together of property
owners for the purposes of their collective benefit. In this
regard
it could hardly be contended that the defendant’s involvement
in the plaintiff was as owner of farm land and not land
in a
township. On the contrary the membership provisions in the Articles
of Association treat the developer, to the extent that
it owns land,
in the same way as any other person who owns land in the township.
[33]
For the purposes of the Articles of Association the defendant was in
fact the owner and indeed the registered owner of the
various erven
in the township that came into existence upon the registration of the
general plan and the subdivision of the township.
It must follow that
if the various individual erven depicted on the general plan vested
in the defendant the answer to the question
as to who the registered
owner of those erven were for the purposes of the Articles and the
imposition of levies could only be
that it was the defendant.
[34]
In Knysna Hotel v Coetzee N 0 1998(2) SA 743 SCA , the Court after
examining the system of land ownership and in distinguishing
between
a common law and registered owner of property concluded that ‘it
was the co-operation of the registered owner which
was required for
any transfer, irrespective thereof whether he was the true owner or
not’.
In
the context of the individual erven in the township in casu, it would
follow that the transfer of those erven would have to be
effected by
the registered owner and the only entity that would be such a
registered owner would be the defendant.
[35]
In my view the Court in Florida Hills and Rhynfield dealt with this
issue in an entirely different context and to that extent
those
decisions are distinguishable. In those matters the relationship
between the local authority and the landowner was not premised
on the
description and the layout of the land as a township while in casv.
it is the existence of the township that brings and
binds the parties
together. In addition the genesis of the relationship and the
objective it sought to advance were also distinguishable.
When a
local authority values property and imposes taxes thereon, those
taxes contribute to the broad tax base of the local authority
who by
and large may determine how such taxes are to be utilized. While its
use may endure directly for the benefit of the landowner,
there is no
requirement that it does so nor may such a landowner directly
participate in such decisions with regard to how such
revenue is
utilized.
[36]
On the other hand the very idea of the formation of the plaintiff is
to create a structure for the benefit of all owners of
land in the
township, all of whom automatically become members on account of
their ownership of land and all of whom are entitled
on account of
their membership to participate directly in the decision-making
processes of the plaintiff with regard to the imposition
of levies
and the use to which such revenue that is so generated is to be put.
This significantly different context is accordingly
important in
considering the effect, if any, of the dicta in Florida Hills and
Rhynfield in the matter before this Court. In my
view that changed
context creates a different basis upon which the rights and
obligations of the members of the plaintiff are to
be determined.
[37]
In my view the decision in Kosmos Ridge to the extent that the court
found itself bound by the decisions in Florida Hills and
Rhynfield
was wrong. For the reasons I have already given those decisions
relate to a different context and indeed a different
legal
relationship and are clearly distinguishable from the facts in the
present matter. In addition it appear from the Kosmos
Ridge judgment
that ‘registered owners’ was defined in the Articles in
that matter to have reference to owners who
received transfer . There
is no such provision in the Articles of the plaintiff. Under those
circumstances this court is entitled
and indeed justified in
departing from the decision in Kosmos Ridge.
[38]
For the purposes of the Articles of Association it would be
artificial and narrow to suggest that the individual erven which
all
are situated in the township only come into existence when those
individual erven are sold and transferred to the first purchasers.
In
the context of a township those individual erven have an identity
similar and comparable to the identity of erven already sold
and
transferred. For those reasons I am inclined to conclude that the
defendant was for the purposes of the Articles of Association
the
registered owner of the various properties described in annexure "A"
in the township Louwlardia Extension 48.
[39]
I may pause to mention that when one has regard to the Articles of
Association and indeed to the purposes to be achieved by
the
imposition of levies then it is clear that levies are not confined to
home owners but to property owners and that levies are
ultimately
utilised for the benefit of the township. In this regard such
benefits would accrue to the developer as owner of the
individual
erven. The developer's ability to market such erven would in large
measure be linked to the manner in which the township
is administered
and the manner in which different issues such as security,
aesthetics, lighting, etc are dealt with. To the extent
that levies
ultimately impact on the ability of the plaintiff to provide such
services, the defendant could hardly be said to be
prejudiced if it
was required to pay such levies as such levies ultimately redound to
its benefit.
[40]
On the contrary if the defendant could argue that it was exempt from
paying such levies then the consequence of such a stance
would be
inequitable in that it would disproportionately place the burden for
the services in the township that is to be funded,
from levies on
those individual property owners who have taken transfer from the
developer and not the developer. Having regard
to the fact that such
services as are to be provided from the levies payable ultimately
accrue to the benefit of all property owners
in the township, the
defendant would be in an unduly advantageous position if such a
stance was sustainable.
[41]
The above aside I am nevertheless convinced that as a matter of law
the plaintiff has succeeded in proving, for the reasons
already
given, that the defendant for the
purposes
of the Articles of Association and for the purposes of attracting
liability for levies imposed by the plaintiff, is in
fact the
registered owner of the erven in the township as set out in annexure
"A" to the plaintiffs particulars of claim.
[42]
The parties were in agreement that in the event of the court deciding
the question in favour of the plaintiff the quantum of
the plaintiffs
claim was agreed in the sum of R2.5 million.
[43]
The parties were in agreement that having regard to the complexity of
the legal dispute between the parties that the costs
of two counsel
were warranted.
[44]
In all the circumstances I make the following order:
(1)The
defendant is ordered to pay the plaintiff the sum of R2,5 million.
(2)
The defendant is ordered to pay interest on the above amount at the
rate of 15,5 % per annum from date of judgment until date
of final
payment.
(3)
The defendant is ordered to pay the plaintiffs costs of the action
which costs shall include the costs of two counsel.
N
KOLLAPEN
JUDGE
OF THE NORTH GAUTENG HIGH COURT
31022-2010
HEARD
ON: 14 NOVEMBER 2012
FOR
THE PLAINTIFF: A F ARNOLDI SC & J W SCHABORT
INSTRUCTED
BY: JARVIS JACOBS RAUBENHEIMER INC
FOR
THE DEFENDANT: M C ERASMUS SC & J A VENTER
INSTRUCTED
BY: ADRIAAN VENTER ATTORNEYS