Neutral citation: eThekwini Municipality v Mounthaven (Pty) Limited  ZACC 43
Coram: Mogoeng CJ, Basson AJ Cameron J, Dlodlo AJ, Froneman J, Goliath AJ, Khampepe J, Mhlantla J, Petse AJ and Theron J
Judgments: Froneman J (unanimous)
Heard on: 28 August 2018
Decided on: 31 October 2018
Summary: Meaning of debt — Prescription Act 68 of 1969 — Real rights — Limited Real Rights — Personal rights — reversionary clauses; Deeds Registries Act 47 of 1937 — Registration of Personal Rights
On Wednesday, 31 October 2018 at 10h00 the Constitutional Court handed down judgment in an application for leave to appeal against a judgment of the High Court of South Africa, KwaZulu-Natal Division, Pietermaritzburg. In a unanimous judgment written by Justice Froneman, the Constitutional Court refused leave to appeal on the basis that the application lacked reasonable prospects of success.
On 24 May 1985, the eThekwini Municipality sold immovable property to Mounthaven at a public auction for an amount of R60 000. In the Deed of Sale a special condition was included to the effect that Mounthaven was to erect buildings on the property to the value of R100 000 within three years of the purchase date. In the event that Mounthaven failed to do so, the Municipality would be entitled to the re-transfer of the property.
Mounthaven failed to develop the property within the specified time period of three years and the property remains undeveloped. Mounthaven explained that this failure was caused by a dispute with the Municipality regarding a storm-water pipe that runs beneath the property. According to Mounthaven it was the Municipality’s responsibility to relocate the storm-water pipe. In 2012 the Municipality approached the High Court, relying on the special condition in the Deed of Sale, claiming the re-transfer of the property. In response, Mounthaven argued that the claim for re-transfer constituted a debt for purposes of the Prescription Act, and that the Municipality cannot rely on such claim as a debt prescribes within three years in terms of the Act and the Municipality waited for 24 years to claim the re-transfer. The High Court found in favour of Mounthaven. The parties’ positions remained unchanged in the Constitutional Court on appeal.
In arriving at the decision to refuse leave to appeal this Court found that the dictionary definition of a debt - an obligation to pay money, deliver goods, or render services - encompassed a claim to transfer immovable property in the name of another. The claim to transfer property is essentially a claim to deliver goods. Meaning that it is a debt that satisfies the definition of a debt in the Prescription Act and owing to an effluxion of time longer than three years, the claim has prescribed.
In arriving at that conclusion this Court rejected the Municipality’s submission that the obligation to claim re-transfer stems from a real right and not a personal right. Consequentially a real right cannot expire. The rejection was based on the fact that the clause in the deed of transfer does not bind successors in title and registration of that clause at the deeds registry does not change the fact that the clause remains a personal right.