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Bondev

5 October 2017

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.


Media Summary

The appellant in both these matters, Bondev Midrand (Pty) Limited, is a property developer. In both cases it had unsuccessfully sought an order in the High Court in Pretoria, obliging the respondents to re-transfer immovable property that it had earlier sold to them. It sought this relief on the basis of a condition registered against the title deed which obliged the respondents to erect a dwelling on their property within a prescribed period and that, in the event of them failing to do so, entitling but not obliging the appellant to claim re-transfer of the property against tender of the original purchase price.

In both cases the respondent failed to erect a dwelling on its property within the prescribed period. And in both cases, more than three years had elapsed from the date upon which they had been obliged to do so, before the appellant claimed re-transfer. The respondents thus both alleged that the appellant’s claim had prescribed. In both cases, this plea was upheld.

In the Supreme Court of Appeal the appellant contended that the condition registered against the title deeds conferred a real right upon it and that its right to claim re-transfer was therefore not capable of prescribing within three years. In support of this conclusion, it relied upon the decision of the Supreme Court of Appeal in Cape Explosive Works Ltd v Denel (Pty) Ltd 2001 (3) SA 569 (SCA). In that case the court had held that two conditions, one of which appeared to be a personal right while the other reflected a real right, were so closely bound up with each other that both should be regarded as constituting, together, a real right. Relying upon this it was argued that the condition that respondents build a dwelling within the prescribed period created an encumbrance upon the property, and therefore a real right, and that this was so intimately bound up with the respondents’ right to claim re-transfer of the property, that the condition that was registered should be interpreted as creating a real right not subject to a three year prescriptive period.

The Supreme Court of Appeal concluded that the second clause of the condition was akin to providing the appellant with an option to purchase, essentially a personal right, and that the restriction created by clause 1 to build a dwelling would not be terminated should the appellant in its discretion decide not to seek re-transfer. It therefore concluded that the two clauses read together do not constitute a composite whole restricting the respondents’ use of property. In these circumstances the second clause created no more than a personal right which was capable of prescribing.

It therefore held that in each case the appellant’s claim had prescribed, and dismissed the appeal.

Additional note
Before dealing with the opposing contentions, Leach JA mentioned 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 the court's attention, and noted the following:

[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 Bondev 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.

Full judgment

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