PROPERTY

Facts: Mr Botha owned units 77 and 78 in Willem Court. Mr Botha entered into an agreement with the body corporate for the purchase of the right of exclusive use of parking bays 19 and 20. Mr Botha sold unit 78 to Mr Westbrook, together with the right of exclusive use of parking bay 20. However, according to the deed of transfer, only the unit was sold and transferred. The parking bay was not mentioned nor was there any notarial deed that sought to transfer ownership. At the time the right of exclusive use was sold to Mr Westbrook, the exclusive use areas had not been delineated in Willem Court and the right to the exclusive use had not been registered in Mr Botha’s name. The body corporate ceded the right of exclusive use of the parking bays to Mr Botha. Mr Westbrook sold unit 78 together with the right of exclusive use of the parking bay to the appellant. Mr Westbrook signed a power of attorney for the transfer of unit 78 to the appellant, however, the parking bay was not mentioned in the power of attorney. Subsequently, when the unit was transferred to the appellant, the right of exclusive use of parking bay 20 was not ceded to him.

Appeal: The court a quo found that the appellant had failed to prove that he had acquired the right of exclusive use and that the parking bay was erroneously ceded to the respondent. This appeal is against that judgment. The issues for determination are, firstly, whether the court a quo erred in finding that the appellant had failed to discharge the onus resting upon him, and secondly, whether the court a quo erred in its interpretation of the law relating to the acquisition of the right of exclusive use areas in terms of the Sectional Titles Act 95 of 1986 (STA).

Discussion: To discharge the onus resting upon him, the appellant had to satisfy the court, firstly, that when Mr Westbrook sold parking bay 20 to him, Mr Westbrook had title to the parking bay. Secondly, the appellant had to satisfy the court that he had acquired the right of exclusive use of the parking bay when it was ceded to the respondent, and thirdly, that an error occurred in the conveyancing attorneys’ offices and Registrar of Deeds that resulted in the parking bay not having been registered in his name. At the time when unit 77 was transferred from Mr Botha to Mr Westbrook, the body corporate had not yet ceded the right of exclusive use of parking bay 20 to Mr Botha. At the time when Mr Westbrook sold the parking bay to the appellant, Mr Westbrook did not have title to it. It is open to the appellant, if he has proof that he acquired the right from Mr Westbrook and is prejudiced by the cession of the right to the respondent, to recover the purchase price paid from the seller and levies paid to the body corporate. However, the appellant’s claim against the respondent, a bona fide purchaser, is not sustainable.

Findings: The right of exclusive use of the parking bay was never transferred to Mr Westbrook nor transferred from him to the appellant by registration of a notarial deed of cession. In 1997, the STA was amended by the Sectional Titles Amendment Act 44 of 1997, which inserted section 27A. After the amendment to section 27 and the insertion of section 27A , the right of exclusive use areas could be acquired by an alternative means to the registration of a notarial deed of cession. The problem with this contention is that the appellant does not allege that he acquired the right of exclusive use of the parking bay by means of the rules of the body corporate. Accordingly, the appellant had never acquired ownership of the exclusive use of parking bay 20 within the legal framework of section 27 of STA as amended. Therefore, the appellant’s contention that the court a quo made an error of law in its interpretation of the acquisition of the right of exclusive use areas under section 27 of the STA should fail.

Order: The appeal is dismissed with costs on scale A.

MATHENJWA J (POYO DLWATI JP and BRAMDHEW AJ concurring)

* See also Rauch v Registrar of Deeds, Cape Town [2022] ZAWCHC 61.

Facts: The applicant, Die Orffer Landgoed, sought an order to have a Special Power of Attorney (SPA) declared as an original for the purposes of Regulation 65(1) of the Deeds Registries Act, or alternatively, to compel the respondents (trustees of the Bloubank Boerdery Trust) to sign and furnish a duplicate original of the SPA. The SPA, signed on 14 December 2022, authorized the applicant to sell a property owned by the Trust to settle a debt owed by the Trust to the applicant. The respondents opposed the application, arguing that the SPA was invalid due to the resignation of a trustee, that it had been revoked, and that they had obtained a higher offer for the property. The respondents also sought a declaratory order that the SPA was not binding on the Trust and that the sale agreement concluded by the applicant with O2 Fruit (Pty) Ltd should be set aside.

Issue: The main issue was whether the SPA was valid and binding on the Trust, particularly in light of the resignation of one of the trustees, Mr. Stofberg, and whether the SPA had been revoked. Additionally, the court had to determine whether the sale agreement with O2 Fruit should be set aside and whether the registration of the property should be stayed pending further proceedings.

Discussion: The court examined the validity of the SPA, focusing on whether Mr. Stofberg’s resignation as a trustee was effective at the time the SPA was signed. The respondents argued that Mr. Stofberg’s resignation was not effective until the Master of the High Court issued new letters of authority, while the applicant contended that the resignation was effective upon notification to the Master and the co-trustees. The court considered conflicting case law, including Soekoe NO v Le Roux [2007] ZAFSHC 135 and Meijer NO v FirstRand Bank Ltd [2012] ZAWCHC 23, and concluded that Mr. Stofberg’s resignation became effective when the Master acknowledged it on 29 March 2021, prior to the signing of the SPA. The court also rejected the respondents’ argument that the SPA had been revoked, finding that the Trust had approbated and reprobated the SPA by relying on its validity in other proceedings. The court further held that the sale agreement with O2 Fruit was valid and that there was no conflict of interest or breach of fiduciary duty by the applicant.

Findings: The court found that the SPA was valid and binding on the Trust, as Mr. Stofberg’s resignation was effective before the SPA was signed. The court also found that the SPA had not been revoked and that the Trust was estopped from denying its validity due to its prior reliance on the SPA in other proceedings. The court dismissed the respondents’ counterclaim to set aside the sale agreement, finding no evidence of a conflict of interest or breach of fiduciary duty by the applicant. The court also declined to stay the registration of the property, as there was no factual dispute requiring referral to oral evidence.

Order: The Special Power of Attorney dated 14 December 2022 was declared an original for the purposes of Regulation 65 of the Deeds Registries Act. The first and second respondents were ordered to pay the costs of the application, including the reasonable costs of counsel on Scale B. The respondents’ counterclaim was dismissed with costs.

Facts: The Body Corporate alleged that the respondent, Mr Katisi, had breached his obligations regarding the payment of the levies and utilities due over a period of 25 months from 2021 to 2023. During that period, the respondent’s arrears escalated to R107,940.63, of which R16,610.68 was in respect of unpaid and arrear electricity consumption charges. The respondent conceded his indebtedness to the Body Corporate. The respondent explained that the effects of the Covid-19 pandemic impacted him negatively as the breadwinner in his household and that a lack of income had placed him in an unfavourable position since 2020. The respondent tendered a payment arrangement on the basis that he would pay R8,000 per month to extinguish the outstanding levies and utilities. The respondent has conceded his indebtedness to the Body Corporate.

Application: The Body Corporate (applicant) approached the opposed motion court for a monetary judgment against the respondent. It sought judgment for R107,940.63 in respect of the unpaid and arrear levies and electricity charges together with interest and costs. Coupled with the request for monetary judgment, the Body Corporate sought authorisation to engage the services of an electrician to disconnect the electricity supply to the respondent’s residential property until the judgment amount was paid for in full.

Discussion: The respondent contended that the Body Corporate is not entitled to cut the electricity without a prior agreement between themselves and that such relief would affect his constitutional right against the “arbitrary deprivation of property in terms of section 25(1) of the Constitution” and “the public law right to receive electricity from the municipality”. The Body Corporate has paid the respondent’s electrical charges in respect of February 2021, on a monthly basis, up to an including March 2023. It is contended that the electricity consumption charges are the most prejudicial to the Body Corporate if they are not recovered, as the Body Corporate is obligated to, on a monthly basis, to effect payment of electricity consumption in respect of every unit to Eskom.

Findings: The Body Corporate is a non-profit association and precluded from deriving income from sources outside the scope of the Sectional Titles Schemes Management Act 8 of 2011. It is dependent on the recovery of the levies and municipal charges for its survival. It is obliged to pay Eskom, failing which the remainder of the owners of units of the Body Corporate will be left without electricity. The recovery of the electrical charges is therefore critical. The respondent continues to benefit from electricity without paying his dues, which is detrimental to the financial stability of the Body Corporate and the other owners. The disconnection of the respondent’s supply of electricity can operate as a preventative measure to safeguard other owners by ensuring that the financial responsibility is shared equally and proportionately to avoid financial hardships and the repercussions thereto. In the absence of such a safeguard, the respondent enjoys the benefit of electricity without paying his dues, at the expense of the other owners.

Order: Judgment is granted for R107,940.63 plus interest. The applicant is authorised to engage the services of an electrician to disconnect the electricity supply to the respondent’s unit, in the event of the respondent not effecting payment of the outstanding electricity charges within 10 days of this order. The electricity supply shall remain disconnected until such amount plus interest is paid. The respondent is to pay the costs of the application on Scale B.

WINDELL J

* See also Body Corporate of Balboa Park v Skeyi [2024] ZAGPJHC 361.

Facts: The applicant (RE/MAX Living) concluded a written joint mandate with the Smiths together with third respondent (Kapstadt Properties) to market and find a purchaser for their property. The joint mandate did not specify the selling price. The commission for RE/MAX Living was to be 3,5% plus VAT of the purchase price achieved. Mr Pears was an existing client of RE/MAX Living and an offer to purchase was made by Pears. However, the price fell short of the asking price. The Smiths accepted an offer for a purchase price of R24 million from an American purchaser introduced to the Smiths by Kapstadt. This transaction was abandoned as the American purchaser was unable to fulfil the terms of the transaction due to an unforeseen change in his personal circumstances. The Smiths then accepted an offer from Pears to purchase the property for a purchase consideration of R24 million.

Claim: RE/MAX Living instituted motion proceedings against the Smiths for the estate agent commission in the amount of R966,000 (VAT inclusive) relating to the sale of the Smiths’ immovable property. This determination pivots on who was the effective cause of a sale, and whether it is RE/MAX Living or Kapstadt, both of whom are estate agencies.

Discussion: Kapstadt argues that the property was sold to Pears more than 90 days after the mandate period had expired. It was contended that the property was no longer listed for sale on RE/MAX Living’s website and was no longer being marketed by them at the time Kapstadt was negotiating with Pears. The Smiths, in their dealings with Kapstadt, sought an indemnity by Kapstadt ensuring that in future dealings with Pears, the Smith's will be indemnified against any claim by RE/MAX Living for commission. In hindsight, the Smiths, who safeguarded themselves against this risk associated with the commission, ought to have insisted that Pears engage with RE/MAX Living, rather than accepting the offer via Kapstadt, especially since they were fully aware of the prior involvement of RE/MAX Living. Kapstadt has indemnified the Smiths against any claim RE/MAX Living may have against them.

Findings: The fact that negotiations for the purchase of a property may have been broken off is not sufficient to prevent an agent from being the effective cause of a sale. The argument that the subsequent conduct of the parties could also have influenced the interpretive exercise, is untenable. The inquiry regarding the effective cause of the sale pertains to a legal matter, and the case law favours RE/MAX Living. The Smiths accepted an offer for the property from Pears, through Kapstadt, knowing full well that RE/MAX Living had introduced Pears to the property on multiple occasions. There are no reasons for the court to exercise a discretion to refer this matter to trial or to hear oral evidence. The facts in this matter demonstrate that the dominant cause of the sale was the efforts of RE/MAX Living, and not the efforts of Kapstadt. Kapstadt will have to seek a remedy elsewhere for a claim, though its indemnity poses a problem for itself. The counterclaim against RE/MAX Living cannot be sustained.

* Note the comments at para [29] about alternate dispute resolution mechanisms.

Order: The Smiths are to pay R966,000 plus interest to RE/MAX Living.

PARKER AJ

Facts: The appellant is the body corporate of a sectional title scheme known as San Sydney. The scheme comprises of eight registered units. The appellant wishes to implement an agreement whereby it sells the right to complete buildings 9, 10 and 11 on the common property and to divide such buildings into sections to a third party, HF Property Investments (HFP). The appellant concluded that such a sale would require the written consent, contemplated in section 5(1)(b) of the Sectional Titles Schemes Management Act 8 of 2011 (STSMA) read with section 25(6) of the Sectional Titles Act 95 of 1986 (STA), of each owner and bondholder in respect of the registered units in the scheme, and that such consents may not be withheld “without good cause in law”. When the required consents were not all forthcoming, the appellant approached the High Court.

Appeal: Ms Singh (first respondent) opposed the application successfully. The application was dismissed with costs. The High Court concluded that: to implement the agreement entailed the alienation of common property and a right of extension of the scheme; to conclude the agreement, additional powers had to be conferred upon the appellant by the direction of the registered owners; such additional powers had not been obtained; further, a decision to alienate, exercise or cede such right of extension could only be made by the owners if they had all relevant material information before them; the owners had not been provided with all the information; and, the respondent accordingly was not withholding her approval without good cause in law.

Was there alienation of common property? The respondent viewed the transfer of the three buildings by cession of the appellant’s right to extend the scheme to HFP to amount to an alienation of a portion of the common property. The extension of a scheme, by the erection of further buildings on “common property” will affect the participation quotas, diluting the percentage of the floor areas of owners expressed as a percentage, and hence their undivided share of ownership of the common property, but the extension of the scheme on common property does not involve an alienation of the common property. The respondent and the High Court erred in concluding that the agreement involved a sale of common property which required compliance with the provisions of section 5(1)(a) of the STSMA. The respondent was not entitled to withhold her consent to the agreement based on the sale of the right of extension contained therein not having been authorised by a unanimous resolution.

Withholding of approval: There is a relationship between the appellant as the body corporate, and the respondent as unit owner and the other unit owners inter se, to co-operate in relation to their bound sectional ownership. The affidavits from both parties reflect a measure of distrust. The predicament faced by the parties is one that called for considerably more transparency and co-operation between the appellant and the respondent. With a full and candid disclosure, a mutually acceptable arrangement, with the consent of all the relevant parties, should be possible. In the spirit of communal ownership and the legal obligations it imposes in matters where sectional title ownership is implicated, the parties needed to engage constructively to achieve a mutually acceptable resolution of their dispute. They had not done so. Both the appellant and the respondent are, to a greater or lesser extent to blame for that situation.

Order: The appeal is upheld to the extent set out below but is otherwise dismissed. The order of the High Court is set aside and substituted with an order directing the respondents to sign whatever consent is required for the applicant to obtain a Certificate of Real Right in respect of the extension of the San Sydney Sectional Title scheme, by the addition of the buildings that have been erected on the common property of the scheme , depicted as sections 9, 10 and 11.

KOEN AJA (DAMBUZA JA, SMITH JA, MOLOPA-SETHOSA AJA and MOLITSOANE AJA concurring)

Facts and issue: This case is, at its essence, about a sewerage pipeline, which the City constructed over the property of the applicant (Rosevean), and which has been described by Rosevean as the “unsightly Pipe”, and by the City as the “secluded pipe”. The key questions are whether the City constructed the sewerage pipeline across Rosevean’s property in Hout Bay irregularly or unlawfully; and if so, what should be done about that at this stage, slightly more than four years’ later.

Discussion: The requirement of sufficient notification of and consultation with the landowner is consistent with the fact that the City’s decision to instal a sewerage pipeline over the Rosevean property would appear to constitute administrative action, with the result that the procedural fairness requirements in section 3 (and potentially, too, section 4) of the Promotion of Administrative Justice Act, 3 of 2000 would be applicable. There is nothing to indicate that the City notified Rosevean before installing the contentious sewerage pipeline. That was also doubtless why the City officials and Nejeni entered the Rosevean property via a neighbouring property, rather than via the front entrance. There can consequently also be no suggestion that Rosevean was advised by the City of what it was proposing to do. Whether deliberately or otherwise, the City officials did not contact Rosevean during September and October 2020 and were not even able to be reached by Rosevean’s representatives (who made various outreaches) until after the pipeline had been constructed.

Findings: The high-water mark of the City’s position is that Rosevean should supposedly have been aware that the City’s contractor, Nejeni, had entered its property via a neighbouring erf and was constructing a sewerage pipeline, but did not object. That is insufficient to meet the notification and consultation requirements. Notwithstanding its powers under clause 3.5.1 of the subdivision conditions, the City could not proceed on that basis. Its installation of the sewerage pipeline over the Rosevean property between 8 and 20 October 2020 was therefore unlawful. Rosevean is entitled to declaratory and directory relief against the City in respect of the contentious sewerage pipeline, albeit that this relief is to be suspended to avoid the prejudice that would otherwise ensue to the properties in and around Military Road.

Order: It is declared that the installation of a sewer line across the property of the applicant was unlawful. The order is suspended for a period of fifteen months from the date of this order. The first respondent is directed to remove the current sewer line from the applicant’s property by the end of the period of suspension.

Facts and issue: This application arises out of a disputed ownership of immovable property. The applicants allege that they are co-owners of the property, and this is denied by the respondents. It is on the basis of this alleged co-ownership that the applicants seek an order under the actio communi dividundo for termination of the joint ownership and division of the joint property.

Discussion: Joint ownership is a concept that implies that two or more persons, including juristic persons, may own property at the same time in undivided shares. A co-owner need not be registered in the deeds registry in the deeds registry in order for him to be accepted in law as a co-owner. Each co-owner is entitled to share in the profit generated by the property unless the co-owners have agreed to share the profits differently. Each owner has the right to freely and without reference to the other owner or co-owners, to alienate his share in the property. Where the co-owners are unable to agree regarding the manner in which the property is to be divided, the court will make an appropriate order. If the property cannot be divided because it is not lawful or economical to do so, the court will order that the property be sold.

Findings: The parties are unable to reach consensus regarding the purchase price at which the respondent will buy out the applicant. Further, the property cannot be divided because it is zoned as agricultural land and the Subdivision of Agricultural Land Act 1970 restricts the subdivision of agricultural land except with the permission of the Minister. It would also be expensive to subdivide the property even if permission was given to do so, as the owners would have to hire Town Planners to give effect to the subdivision. Neither of the parties is willing to incur the necessary expenses. The only available option would seem to be an order in terms of the actio communi dividundo. The parties are at loggerheads and there would seem to be no room for co-operation between them. In the circumstances the best option would be to sell the property and thereafter consider claims according to what is due to each party.

Order: It is declared that the first and second applicants are co-owners of the immovable property.        The co-ownership of the applicants and the respondents, in the immovable property (and their partnership) is terminated.

Facts and issue: This case concerns a claim of ownership of land. The controversy finds its genesis in whether the applicant has a legal right and entitlement to the land by virtue of the operation of the law. The application is brought on behalf of the City of Cape Town (the City). The property is currently registered in the registry of deeds under the name of the respondent. As such, the respondent claims title to the property by virtue of what is recorded in the registry of deeds. The City, however, contends that the property in question was erroneously registered under the name of the respondent.

Discussion: The City has been at pains to point out that the application pertains to matters of ownership and unlawful construction.  The City asserts that the property vested in it by operation of law, dating from as far back as 1984. For the proposition that the property vested in the City, the City places reliance on section 24 (1) of the Township Planning Ordinance 33 of 1934. According to the City, in the subdivision approval, the property is designated as a public space. And the land use designation for the property is public park. The City then provides the background as follows: As previously outlined, in 1984, the fourth respondent undertook a township development. The remaining portion of the land from the subdivision for the development was designated as a public place. It is the City’s assertion that the property remained designated as a public place with open space zoning for some 32 years.

Findings: The court is called upon by the City to decide whether the property vests in the City in terms of an ordinance. In other words, whether the ordinance trumps a registered owner in the deeds of registry. The registration of title in the deeds office does not establish incontrovertible evidence of ownership of the immovable property. This is so because the deeds office cannot guarantee the accuracy or truthfulness of the information on their registration system. The applicant’s argument is made with much greater plausibility. Accordingly, the City has succeeded to prove its entitlement to the property and the unlawfulness of the building work on the property.

Order: It is declared that the property vests in the City of Cape Town (the applicant) arising from section 24 of the Township Planning Ordinance 33 of 1934, Western Cape, and/or section 58 of the Municipal Planning Bylaw, and so vested since 1984. The second respondent is directed to register the property in the name of the applicant.

Facts: The appellant is Chapman’s Bay Estate Home Owners’ Association (HOA) and the first respondent is Mr Lotter who owns an erf in the estate. At the time Mr Lotter received the transfer of the erf, the previous owner had not yet built a house thereon. The HOA brought clause 9.10 of the HOA’s constitution to Mr Lötter's attention before he purchased the erf. The HOA also explained to him that a subsequent owner will be liable for penalty levies if, at the time an erf is acquired, the three years stipulated in clause 9.10 has already expired, and the construction of a dwelling has not commenced or been completed on the property. Immediately after receiving transfer of the erf, Mr Lotter started building the house and completed it without delay.

Appeal: Despite this, the HOA continued to impose penalty levies on him in terms of this clause from the date he received the transfer, even though the previous owner had duly paid the levies imposed on him in full. Mr Lotter refused to pay the penalty levies and only paid the regular levies charged. The aggregate sum of the outstanding penalty levies was R58,905. Mr Lotter approached the CSOS and sought an order prohibiting the HOA from imposing penalty levies on him. The adjudicator ruled in favour of Mr Lotter. The High Court ruled in favour of Mr Lotter, albeit for different reasons from those of the adjudicator. The appellant now approaches the Supreme Court of Appeal.

Discussion: The interpretation of the clause by Mr Lotter is at odds with that of the HOA. The HOA maintained that the clause provides for a single three-year moratorium period for each erf, during which the HOA will not impose penalty levies against the owner of an undeveloped erf. The HOA further submitted that clause 9.10 is attached to the property in question and not to persons or owners, which is why subsequent owners are held liable for paying the penalty levies. The purpose, as contended by the HOA, is to motivate owners, irrespective of the fact that they took the transfer of an erf from the developer or a subsequent owner, to construct and complete construction work on the relevant erf as soon as possible. The High Court rejected the HOA’s argument that the penalty levies attach to the property and not to a person.

Findings: Subsequent owners, such as Mr Lotter, do not take transfer from the developer but from the owner. The High Court was correct in finding that there is nothing in the clause that authorises the HOA to continue to impose penalty levies. The first owner who obtained a transfer from the developer paid the levies imposed on him. The continuous imposition of the penalty levies on Mr Lotter results in a double payment being charged from the same erf, as the penalty levies were paid in full. On a proper interpretation of clause 9.10, as it stands, the HOA is entitled to impose penalty levies only upon owners who purchased properties in the estate directly from the developer. The wording of the clause does not bear out the expansive interpretation given to it by the HOA.

Order: The appeal is dismissed.

KGOELE JA (MOKGOHLOA JA, WEINER JA, DOLAMO AJA and DIPPENAAR AJA concurring)

Facts and issue: This appeal arises from an order of the High Court, which set aside an order of the Community Schemes Ombud Service (CSOS) adjudicator. Although the question raised in this appeal was the correctness of the adjudicator’s decision, a preliminary point arose, and this court must first decide whether it has jurisdiction to entertain this appeal. The primary question is whether the High Court (consisting of two judges) sat as a court of appeal in respect of the adjudicator’s decision under the Community Schemes Ombud Service Act 9 of 2011 or as a court of first instance.

Discussion: If the High Court sat as a court of first instance, the appellants should have sought leave to appeal from the High Court in terms of s 16(1)(a) of the Superior Courts Act 10 of 2013 (SC Act) and not special leave to appeal from this court, in terms of ss 16(1)(b) and 17(3) of the SC Act, as they did. As a starting point, this court does not have any original jurisdiction. Its jurisdiction is derived from the Constitution and is principally limited to decide appeals and issues connected with appeals (which includes applications for leave to appeal). The jurisdictional requirements for a civil appeal from the High Court sitting as a court of first instance are twofold: first, there is a ‘decision’ of that court within the meaning of s 16(1)(a) of the SC Act; and second, the required leave to appeal has been granted under s 17(2) of the SC Act. Both requirements must be met. It is only the second that occupies this courts attention. The right to appeal to this court is neither automatic, nor absolute, since leave to appeal is required. Leave is a condition for exercising the right or, put differently, it is a jurisdictional fact for an appeal.

Findings: Where, as here, the High Court, whose judgment is sought to be appealed, sat as a court of first instance, it must first be approached for leave. If that is granted, the condition is met. If it is refused, the party wishing to appeal has a right to petition this court for such leave. It must thus follow that the order granting special leave to the appellant to appeal to this court is a nullity. The consequence, ordinarily at any rate, is that the matter falls to be struck from the roll. This court cannot, under the guise of exercising its inherent power, enter into the merits of an appeal over which it has no jurisdiction. Jurisdiction is a necessary precondition for the exercise of its inherent power. The conclusion that the order granting leave was a nullity and that this court therefore lacks jurisdiction, must be the end of the matter.

Order: The appeal is struck from the roll with costs.

Facts and issue: The applicant brings an application for the eviction of the respondents. In response, the respondents filed a counter application in which they sought to interdict the applicant from alienating or selling the property in question and setting aside the sale and the resultant transfer of the property to the applicant. In the alternative, the respondents seek to retain occupation of the property pending the determination of their claim for unjust enrichment emanating from the reasonable costs of repairs and maintenance of the property and the outstanding balance due in terms of the agreement of purchase and sale of the said property.

Discussion: The respondents' opposition and counter application is premised on their overarching submission that the purported sale transactions between the parties are in fact simulated and were designed to conceal the true nature of the transaction. The respondents contend that the intention was to circumvent certain legal obligations. In support of their argument, the respondents outline some of the factors that point to the said simulation. It was submitted that the applicant never took occupation of the property, nor did she make use of it, the purchase price was not paid in full by the applicant and there was no genuine lease agreement was entered into. The common intention of the parties was that the property was to be repurchased by the respondents. In addition, two agreements were prepared by the conveyancer at the same time. The respondents submitted that all the above are clearly indicates that the initial sale was not intended to be final. Various loans were advanced by the applicant to respondents. One of the loans was recorded in the agreement where parties agreed that it represented a partial payment of the purchase price. This alone raises red flags regarding the real intention of the sale.

Findings: When the above is considered together with the applicant's assertion that the balance outstanding of R95,000 was set off against the loan, a clear picture emerges that the sale of the respondent's property was a disguise for loans advanced by the applicant. Another strange feature of the transaction is the sale and repurchase of the property within a short space of time. This strongly points to lack of a permanent intention to take ownership of the property and support the respondent’s contention that the sale was not genuine. The applicant's inability to provide evidence of rental payments by the respondents, or to specify how payments were made, further indicates that no lease agreement was entered into. This demonstrates that the applicant never took occupation of the property, nor did she conduct any meaningful investment with the property. The sale transaction between the parties was dishonest and intended to disguise the loan arrangement between them.

Order: The applicant is interdicted from alienating and encumbering the immovable property. The sale agreement is set aside. The subsequent transfer of the property from the respondents to the applicant is also set aside.

Facts: The purchasers made an offer to purchase a residential property from the respondent seller. The second respondent is a firm of attorneys who acted on behalf of the seller (DM Inc). The offer to purchase (OTP) was accepted by the seller. The sale was subject to the approval by a financial institution, of a mortgage bond against security of the property. As the purchasers were having problems in obtaining finance, the appellant agreed that she would provide them with the funds necessary to enable them to acquire the property. Despite valiant attempts to get the guarantee provided on time, they were not. The OTP, as amended by the first addendum, accordingly lapsed. The appellant requested a further extension to provide the funds. The seller agreed that a second addendum to the OTP could be concluded. The requisite bond approvals were obtained. The appellant, instead of providing a bank guarantee, made payment of R1,950,000 into DM Inc’s trust account. Problems arose when the purchasers, facing financial problems, found themselves unable to meet their financial obligations and thus sought to cancel the agreement. They requested Standard Bank, which had approved the mortgage loan, to withdraw such approval.

Appeal: The appellant, having taken cession of the purchasers’ claim, demanded repayment of the amount of R1,950,000. The seller did not accept that the OTP had lapsed and elected to uphold the contract and demand specific performance of its terms. The High Court found that the parties had intended to revive the agreement and that the second addendum had that effect. It held that the second addendum amounted to a "fresh agreement" incorporating the terms of the OTP. Leave to appeal was granted to a full court, which dismissed the appeal. The appellant appeals the full court's decision. The issue is whether an agreement for the purchase and sale of an immovable property can be revived subsequent to the lapse of a suspensive condition.

Discussion: The appellant submits that the second addendum makes it clear that the parties were oblivious to the fact that a whole new contract was required. They were under the erroneous impression that they could simply extend the time period within which the suspensive condition had to be fulfilled. This, the appellant says, could not be done. That the parties intended to "revive" the OTP is clear from the evidence. The wording of that document makes it clear that the parties intended to "amend" the OTP. Indeed, the second addendum records that it is an "addendum" to a sale agreement. It purports to amend clause 7 of the OTP by replacing the suspensive condition and extending the period for payment of the purchase price. The appellant is thus correct that the respondents laboured under the erroneous impression that they could simply extend the time fixed for the fulfilment of the suspensive condition, and did not appreciate that a new contract had to be concluded. This is reinforced by the context in which the addendum was concluded and its purpose.

Findings: The purported revival of the OTP and extension of the time fixed for the fulfilment of the suspensive condition, after the expiry date for its fulfilment, is legally incompetent. The OTP lapsed by operation of law, and with it, the suspensive condition. Consequently, there was nothing to revive, and the OTP and all its terms became unenforceable. A contract which has lapsed due to non-fulfilment of a suspensive condition cannot be revived, because there is no right that can be waived. The full court erred in disregarding this principle. Clause 7.2 could not be varied after the expiry date for the fulfilment of the suspensive condition. Neither could the parties to the OTP extend its validity in accordance with the terms of the second addendum. The OTP was invalid and unenforceable. For this reason, the respondents’ argument that the purchasers sought "to provide additional time for fulfilment of the suspensive condition" is unsustainable.

Order: The appeal succeeds with costs. The respondents shall pay the applicant R1,950,000.

SCHIPPERS JA (KGOELE JA and BAARTMAN AJA concurring)

WEINER JA (with TOLMAY AJA) dissenting