Property Law 2007 – Outline Course content Part 1 (Notes included here.) Introduction to the concept of ownership Traditional ideas of ownership Neighbour/nuisance law Introduction to environmental laws Environmental Impact Assessment Laws relating to the environment Acquisition of ownership Sectional title ownership (incl share block, timeshare) The transition to ownership: passing of risk Part 2 Ownership Introduction to the protection of ownership Protection of ownership Protection and loss of ownership Possession/protection of possession Protection and loss of possession Servitudes Revision and exam preparation [Note: Details of specific dates and lectures will be handed out at the beginning of this section of the course.] Ed Couzens Rm E518 Shepstone Building, Faculty of Law, University of KwaZulu-Natal, Durban, Email: [email protected] Property Law 2007 – Case List/reading list General readings There is no prescribed textbook. Recommended readings: Badenhorst, Pienaar, Mostert Silberberg & Schoeman’s The Law of Property (4/e LexisNexis Butterworths, 2003) Chapters: 6: Ownership: general principles/neighbour relations 11: Protection and loss of ownership 12: Possession 13: Protection and loss of possession 14: Servitudes Olivier, Pienaar, Van der Walt Law of Property: Student’s Handbook (Juta: 1989) Van der Walt, Pienaar Introduction to the Law of Property (4/e Juta: 2002) Van der Merwe The Law of Things (Butterworths: 1987) Carey-Miller The Acquisition and Protection of Ownership (Juta: 1986) Van der Walt Law of Property: Casebook for Students (Juta: 1992) Introduction to the concept of ownership Regal v African Superslate Gien v Gien Dadoo Ltd v Krugersdorp Mun Cncl 1963(1) SA 102 (A) 1979 (2) SA 1113 (T) 1920 AD 530 Nuisance/neighbour law Holland v Scott Mayor of Bradford v Pickles Regal v African Superslate (Pty) Ltd Gien v Gien Bingham v City Council of Jhb Malherbe v Ceres Municipality 1882 EDC 307 at 332  AC 587 (HL) 1963(1)SA102(A) 1979(2)SA1113(T) 1934 WLD 180 1951(4)SA510(A) Vogel v Crewe 2003(4)SA509(T) Rademeyer v Western Districts Council 1998(3)SA1011(SE) Harris v Williams 1998(2)SA263(W) Garden Cities Incorp Assoc Not For Gain v Northpine Islamic Society 1999(2)SA257(C) Nelson Mandela Metropolitan Municipality v Greyvenouw cc 2004(2)SA81(SE) Hichange Investments (Pty) Ltd v Cape Produce Co (Pty) Ltd 2004 (2) SA 393 (E) Minister of Health & Welfare v Woodcarb (Pty) Ltd 1999 (3) SA 155 (N) Paola v Jeeva NO and others  JOL 11633 (SCA) The Trustees of the Brian Lackey Trust v Annandale Unrep., case nr 3848/02 (C) Environmental Law Natal Fresh Produce Growers’ Association v Agroserve 1990 (4) SA 749 (N) Minister of Health and Welfare v Woodcarb (Pty) Ltd 1996 (3) SA 155 (N) Director: Mineral Development, Gauteng v Save the Vaal Environment 1999 (2) SA 709 (SCA) Fuel Retailers Association of Southern Africa v Director-General Environmental Management, Mpumalanga Case CCT 67/06 The South African Journal of Environmental Law & Policy (SAJELP) Vol 6 No 1, 1999 – six articles on NEMA, by: E Bray, E Couzens, M Kidd, F Soltau, J Milton, R Lawrence E Couzens & M Dent ‘Finding Nema: The National Environmental Management Act, the De Hoop Dam, Conflict Resolution and Alternative Dispute Resolution in Environmental Disputes’ Potchefstroom Electronic Law Journal 2006 Vol: 3 (see http://www.puk.ac.za/fakulteite/regte/per/issue06v3.html) J Glazewski Environmental Law in South Africa 2/ed LexisNexis, 2005 – esp. Chapter 5: NEMA. P Henderson ‘Some Thoughts on Distinctive Principles of South African Environmental Law’ SAJELP Vol 8 No 2, 2001 M Kidd ‘General Intro – NEMA – ECA’ in LAWSA 2nd Ed Vol: 9; 245-324 M Kidd ‘Greening the Judiciary’ Potchefstroom Electronic Law Journal 2006 Vol: 3 (see http://www.puk.ac.za/fakulteite/regte/per/issue06v3.html) The Constitution of the Republic of South Africa Act 108/1996: The Constitution is the supreme law of the land, and has a number of sections that are relevant to the environment. s24 states that: Everyone has the right (a) to an environment that is not harmful to their health or (b) well-being; and to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that (i) (ii) (iii) prevent pollution and ecological degradation; promote conservation; and secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development. s24 has two important consequences: ~ It protects our health and well-being. ~ It places a duty on the state, on business, and on all South Africans to prevent pollution and other damage to the environment, and to promote conservation and sustainable development. Every government authority (national, provincial or local) has a duty to take reasonable steps, in its current functions as well as future plans, to prevent pollution, promote conservation and ensure sustainable development. What do the words ‘health and well-being’ mean? The meaning of these words is not self-evident, and so it will be up to the courts (and ultimately the Constitutional Court) to decide on their exact meaning. Until this happens, this is the most likely interpretation: Protection of our health includes protection from pollution, whether in the air, water, food or soil. It includes protection from dangers in the workplace, and from less obvious dangers to health (such as noise). Protection of our wellbeing is wider than the protection of health. It includes protection from nuisances and invasions of privacy and dignity. We might say that something affects our well-being if it affects our ability to enjoy our life. Against whom can you enforce your environmental rights? Against the state, clearly. s8 of the Constitution says that the Bill of Rights applies to non-state bodies and individuals, if applicable. The Constitutional Court has still to decide on the full meaning of ‘if applicable’. In theory, s 8 offers us protection against individuals and companies who cause pollution or other damage to the environment. In other words, it is not only the state that must respect our environmental rights. The National Environmental Management Act 107/1998 (“NEMA”): NEMA can be regarded as the most important piece of general environmental legislation. It provides a framework for environmental law reform and covers three of the areas mentioned above, namely: ~ Land, planning and development. ~ Natural and cultural resources, use and conservation. ~ Pollution control and waste management. The law is based on the concept of ‘sustainable development’. The object of NEMA is to provide for cooperative environmental governance through a series of principles relating to: ~ The procedures for state decision-making on the environment. ~ The institutions of state which make those decisions. The NEMA principles serve as: ~ A general framework for environmental planning. ~ Guidelines according to which the state must exercise its environmental functions. ~ A guide to the interpretation of NEMA itself, and of any other law relating to the environment. What are the NEMA principles? Some of the most important are: ~ Environmental management must put people and their needs first. ~ Development must be socially, environmentally and economically sustainable. ~ There should be equal access to environmental resources, benefits and services to meet basic human needs. ~ Government should promote public participation when making decisions about the environment. ~ Communities must be given environmental education. ~ Workers have the right to refuse to do work that is harmful to their health or to the environment. ~ Decisions must be taken in an open and transparent manner and there must be access to information. ~ The role of youth and women in environmental management must be recognised. ~ The person or company who pollutes the environment must pay to clean it up. ~ The environment must be held in trust for the benefit of all South Africans. ~ The utmost caution should be sued when permission for new developments is granted. These principles apply to all government officials. NEMA covers the actions of national, provincial and local government as well as state corporations, like ESKOM. What is covered by NEMA? NEMA can only be used for problems that are about to happen, or that occurred after 29 January 1999. It cannot be applied to environmental problems that arose before this date unless the problem still continues. When can you use NEMA to make a complaint? NEMA says you can take legal action to enforce an environmental law or a principle of NEMA: ~ To protect your own interest. ~ To protect someone else’s interest, who cannot him/herself do so. ~ On behalf of a group of people whose interests are affected. ~ If the legal action is in the public’s interest. ~ If the legal action is in the interest of protecting the environment. What does NEMA allow you to complain about? A person can make a complaint or take legal action under NEMA if: ~ Someone, including the government, has broken an environmental law, including a principle contained in NEMA. ~ The government has not obeyed a principle of NEMA. ~ The government has given permission for an activity or development that affects the environment, without properly checking how it could affect the environment and people. ~ Someone, including the government, has caused pollution or damage to the environment. ~ A person has been punished for refusing to do work that might harm the environment, or for reporting on someone who is harming the environment. ~ A major accident (emergency incident) that threatens the public has happened and there has not been a proper report about it, nor has there been a clean-up operation. ~ The state has not prosecuted a person for breaking an environmental law and you believe that person to be guilty. The National Environmental Management Act 107/1998 Summary of the principles contained in Chapter 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ NEMA S 1 Definitions ‘environment’ means the surroundings within which humans exist and that are made up of – (i) the land, water and atmosphere of the earth; (ii) micro-organisms, plant and animal life; (iii) any part or combination of (i) and (ii) and the relationships among and between them; and (iv) the physical, chemical, aesthetic and cultural properties and conditions of the foregoing that influence human health and well-being. ‘ecosystem’ means a dynamic system of plant, animal and micro-organism communities and their non-living environment interacting as a functional unit. NEMA Ch 1 S 2 Principles (2) (a) (b) (c) (d) (e) These principles apply in RSA to actions of all organs of state that may significantly affect the environment and – apply alongside other appropriate and relevant considerations, incl the State’s BoR responsibilities; serve as a general framework for formulation of environmental management and implementation plans; serve as guidelines for any organ of state exercising any function (either ito NEMA or any other statutory provision concerning environmental protection); serve as principles to guide a conciliator appointed ito NEMA; guide the interpretation, administration, implementation of NEMA; and any other law concerned with protection or management of the environment. (3) Environmental management must place people and their needs at the forefront of its concern, and serve their physical, psychological, developmental, cultural and social interests equitably. (4) Development must be socially, environmentally and economically sustainable. (5) (a) Sustainable development requires consideration of all relevant factors, incl: (i) Disturbance of ecosystems and loss of biodiversity be avoided (or minimised and remedied where impossible to avoid); pollution and environmental degradation be avoided (or minimised and remedied where impossible to avoid); disturbance of cultural landscapes and sites be avoided (or minimized and remedied where impossible to avoid); waste be avoided or (where impossible to avoid) minimized and reused/recycled where possible, and disposed of in a responsible manner; use and exploitation of non-renewable natural resources be responsible and equitable, and take consequences of depletion into account; development, use and exploitation of renewable resources (and their ecosystems) not exceed the level beyond which their integrity is jeopardized; a risk-averse and cautious approach be applied, which takes into account the limits of current knowledge about consequences; negative impacts on environment and on people be anticipated and prevented (or minimised and remedied where unavoidable). (ii) (iii) (iv) (v) (vi) (vii) (viii) (b) Environmental management must be integrated (acknowledging that all environmental elements are linked and interrelated) and must take into account effects of decisions on all aspects of the environment and on all people (by pursuing the selection of the best practicable environmental option). (c) Environmental justice must be pursued – adverse impacts shall not be distributed so as to discriminate against any person (especially vulnerable or disadvantaged persons). (d) Equitable access to environmental resources, benefits and services (to meet basic human needs and ensure human well-being) must be pursued. Special measures may be taken to ensure access for persons disadvantaged by unfair discrimination. (e) Responsibility for environmental health and safety consequences exists throughout the life cycle (of a policy, programme, project, product, process, service, or activity). (f) There must be promotion of participation by all interested and affected parties in environmental governance. All people must have the opportunity to develop understanding, skills and capacity (necessary to achieve equitable and effective participation). Participation by vulnerable and disadvantaged persons must be ensured. (g) Decisions must take into account the interests, needs and values of all (interested and affected) parties. This includes recognising all forms of knowledge, including traditional and ordinary knowledge. (h) There must be promotion of community wellbeing and empowerment (through environmental education, the raising of environmental awareness, the sharing of knowledge and experience, and other appropriate means). (i) Social, economic and environmental impacts of activities (including disadvantages and benefits) must be considered, assessed and evaluated. Decisions must be appropriate in the light of such consideration and assessment. (j) The right must be respected (and protected) of workers to refuse to perform work (that is harmful to human health or to the environment) – and their right to be informed of dangers (must also be respected/protected). (k) Decisions must be taken in an open and transparent manner – and access to information must be provided (in accordance with the law). (l) There must be intergovernmental coordination and harmonisation (of policies, legislation, actions iro the environment). (m) Actual or potential conflicts of interest between organs of state should be resolved through conflict resolution procedures. (n) Global and international responsibilities iro the environment must be discharged in the national interest. (o) The environment is held in public trust for the people. The beneficial use of environmental resources must serve the public interest. The environment must be protected as the people’s common heritage. (p) Those responsible for harming the environment must pay for the costs of: remedying pollution, remedying environmental degradation, remedying consequent adverse health effects, and of: preventing/controlling/minimising further pollution, or environmental damage, or adverse health effects. (q) The vital role of women and youth in environmental management and development must be recognised (and their full participation therein must be promoted). (r) Sensitive, vulnerable, highly dynamic, or stressed ecosystems (such as coastal shores, estuaries, wetlands, and similar systems) require specific attention in management and planning procedures (especially where they are subject to significant human resource usage and development pressure). NEMA S28 Duty of care and remediation of environmental damage (Summary) (1) Every person who causes, has caused, may cause, significant pollution or environmental degradation, must take reasonable measures to prevent such pollution occurring/continuing/recurring; or, where such damage is authorised or cannot reasonably be avoided/stopped, to minimise and rectify such pollution/damage. (2) Persons who have a duty, in (1), to take reasonable measures, include an owner of land/premises, a person in control of land/premises, or a person with the right to use the land/premises. (4) The DG or a provincial Head of Dept may direct any person who fails to take proper measures under (1) to take specific reasonable measures. (6) If a person required to undertake remedial measures on the land of another is unable to gain access, the Minister may expropriate the land and vest the expropriated rights in the person undertaking the work – and may recover the costs of the expropriation from the person for whose benefit the expropriation was effected. (7) If a person fails to comply, or to comply adequately, with a directive under (4), the DG pr pHoD may take reasonable measures to remedy the situation. (8) All costs incurred under (7) may be recovered from any person responsible for the pollution/degradation; the owner of the land at the time the pollution/degradation (or the potential therefore) occurred, or that owner’s successor in title; the person in control of the land or any person who had a right to use the land at the time; or any person who negligently failed to prevent the situation. (9) Recovery may be proportional from any person who benefited from the measures taken under (7). (11) If more than one person is liable under s8, liability must be apportioned according to the degree to which each was responsible for the harm resulting from their respective failures to take measures required under (1) and (4). _____________________ S32 Legal standing to enforce environmental laws (Summary) (1) Any person/group of persons may seek appropriate relief iro any breach/threatened breach of any provision of NEMA (incl a principle in Ch 1) or any other statute (concerned with the protection of the environment or use of natural resources) (a) (b) (c) (d) (e) in that person/group of persons’ own interest; in the interest of, or on behalf of, a person who is (for practical reasons) unable to act for him/herself; in the interest of, or on behalf of, a group/class of persons whose interests are affected; in the public interest; and in the interest of protecting the environment. (2) A court may decide not to award costs against a person/group of persons who fails to secure the relief sought (iro any breach/threatened breach of any provision/principle of NEMA, or any other statute concerned with protection of the environment or use of natural resources) … if the court is of the opinion that the person/group of persons acted reasonably out of a concern for the public interest or in the interest of protecting the environment and had made due efforts to use other means reasonably available for obtaining the relief sought. (3) Where a person/group of persons secures the relief sought (iro any breach/threatened breach of any provision/principle of NEMA, or any other statute concerned with protection of the environment) the court may on application (a) award costs (on an appropriate scale) to any person/s (entitled to practice as an advocate/attorney in RSA) who provided free legal assistance/representation to such person/group in the preparation for/conduct of the proceedings; (b) order that the party against whom the relief is granted pay to the person/group concerned any reasonable costs incurred by such person/group in the investigation of the matter and its preparation for the proceedings. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The Environment Conservation Act: The Environment Conservation Act is the other law that relates specifically to the environment. Although most of this Act has been replaced by NEMA, there are still some important sections that remain in operation. These sections relate to: ~ Protected natural environments. ~ Littering. ~ Special nature reserves. ~ Waste management. ~ Limited development areas. ~ Regulations on noise, vibration and shock. ~ Environmental impact assessment (EIA). Perhaps the most important sections are the ones that deal with EIA. The government has made certain Regulations under the EIA sections so that anyone who wants to undertake a development (eg: erect a hotel, or build a factory) must first put together a report about how the development will affect the environment. This report is then used by government to decide whether permission for the development will be granted or not, and whether there will be any limits placed on the development. Having dealt with the framework Acts, it is important to look at the specific Acts which are coordinated under the ‘umbrella’ of the Constitution, NEMA and the ECA. The laws listed here are only the most important national laws that deal specifically with environmental issues. We do not cover laws passed by provincial governments. Some parts of the laws will apply to more than on of the listed categories. ***NOTE: property. Your concentration should be on those statutes which affect rights of NOTE: You may focus on the statutes which have been highlighted in red/bold. Land, planning and development: Land reform and agricultural resources: Fertilizers, Farm Feeds, Agricultural Remedies and Stock Remedies Act 36/1947 Agricultural Pests Act 36/1983 Conservation of Agricultural Resources Act 43/1983 Foodstuffs, Cosmetics and Disinfectants Act 54/1972 Upgrading of Land Tenure Rights Act 112/1991 Restitution of Land Rights Act 22/1994 Communal Property Associations Act 28/1996 Extension of Security of Tenure Act 62/1997 Prevention of Illegal Eviction and Unlawful Occupation of Land Act 19/1998 Communal Land Rights Act 11/2004 (Note: when considering land reform legislation, it is the environmental and property aspects that are relevant – not the political and contractual considerations.) Planning laws: Subdivision of Agricultural Land Act 70/1970 (repealed, but not replaced) National Building Regulations and Building Standards Act 103/1977 Local Government Transition Act 209/1993 Development Facilitation Act 67/1995 Local Government: Municipal Structures Act 117/1998 Environmental assessment: Environment Conservation Act 73/1989 + Regulations R1182 to R1184, in Government Gazette No. 18261 of 5 September 1997 Steps of an environmental impact assessment: ~ Application for authorisation ~ Plan of study for scoping ~ Scoping study ~ Scoping report ~ Review of scoping report by authorities and the public ~ Possible authorisation, if no problems foreseen ~ If problems foreseen, then: ~ Plan of study for EIA ~ Specialist studies and assessment ~ EIA report ~ Review by officials and public ~ Authorisation or refusal ~ Appeal, if refusal (New) Regulations promulgated under NEMA, effective from 1 July 2006 Guidelines: Notice 657 of 2006 Regulations No. R 385 21 April 2006 (See: http://www.capegateway.gov.za/eng/yourgovernment/gsc/406/serv ices/11537/10199) Also: Listing Notice 1 R 386; and Listing Notice 2 R 387 [Note: the above reference is to the position in the Cape – the position elsewhere in the country will be similar, with a few minor differences in procedure.) National Environmental Management Act 107/1998 Mineral and Petroleum Resources Development Act 28/2002 National Environmental Management: Protected Areas Act 57/2003 Biodiversity and genetic modification: Plant Breeders Rights Act 15/1976 Plant Improvement Act 53/1976 Genetically Modified Organisms Act 15/1997 Animal Improvement Act 62/1998 National Environmental Management: Biodiversity Act 10/2004 The coast: Seashore Act 21/1935 Maritime Zones Act 15/1994 (Note: there is an Integrated Coastal Management Bill of 2006.) Protected areas and community-based conservation: National Parks Act 57/1976 (Repealed) Environmental Conservation Act 73/1989 (ss 16 and 18) National Forests Act 84/1998 World Heritage Convention Act 49/1999 National Environmental Management: Protected Areas Act 57/2003 Natural and cultural resource use; conservation: Animals Protection Act 71/1962 Game Theft Act 105/1991 National Forests Act 84/1998 National Veld and Forest Fire Act 101/1998 National Environmental Management: Biodiversity Act 10/2004 Living marine resources: Sea Birds and Seals Protection Act 46/1973 Marine Living Resources Act 18/1998 Water resources: Mountain Catchment Areas Act 63/1970 Water Services Act 108/1997 National Water Act 36/1998 Mining and energy: Petroleum Products Act 120/1977 Electricity Act 41/1987 Minerals Act 50/1991 (Repealed) Mine Health and Safety Act 29/1996 Nuclear Energy Act 46/1999 National Nuclear Regulator Act 47/1999 Mineral and Petroleum Resources Development Act 28/2002 Heritage resources: National Heritage Council Act 11/1999 National Heritage Resources Act 25/1999 World Heritage Convention Act 49/1999 Pollution control and waste management: Air quality: Road Traffic Act 29/1989 National Environmental Management: Air Quality Act 39/2004 Noise control: Aviation Act 74/1962 Road Traffic Act 29/1989 Noise Control Regulations GN R154 in Government Gazette No. 13717 of 10 January 1992 (made in terms of s25 of the Environment Conservation Act 73/1989) Fresh water quality: Health Act 63/1977 Environmental Conservation Act 73/1989 Water Services Act 108/1997 National Water Act 36/1998 National Environmental Management Act 107/1998 Marine water quality: Merchant Shipping Act 57/1951 Dumping at Sea Control Act 73/1980 Marine Pollution (Control and Civil Liability) Act 6/1981 Marine Pollution (Prevention of Pollution from Ships) Act 2/1986 Marine Pollution (Intervention) Act 64/1987 Maritime Zones Act 15/1994 Wreck and Salvage Act 94/1996 Regulations 86 and 87, R 111 in Government Gazette No. 19205 of 2 September 1998 (promulgated in terms of the Marine Living Resources Act 18/1998) Workers’ environmental rights: Occupational Health and Safety Act 85/1993 Mine Health and Safety Act 29/1996 Acquisition of ownership See notes provided; and references. Sectional title (incl share block and timeshare) See notes provided; and references. Passing of risk and profit in the res vendita Van Deventer v Erasmus Poppe, Schunhoof & Guttery v Mosenthal & Co Taylor & Company v Mackie, Dunn & Co De Wet v Zeeman 1960 (4) SA 100 (T) 1879 Buch 91 1879 Buch 166 1989 (2) SA 433 (NC) Property - ‘Protection of ownership’ Marcus v Stamper and Zoutendijk 1910 AD 58 Commissioner of Customs and Excise v Randles, Brothers and Hudson 1941 AD 369 411 Edward L Bateman Ltd v Liquidator, Eric Reed Ltd 1960(4)151(SR) Rei vindicatio Chetty v Naidoo ABSA Bank v Amod Bekker v Jika 1974(3)13(A)20B  2 All SA 423 (W)  4 All SA 563 (LCC) Nelson Mandela Metropolitan Municipality v Various Occupiers of Stands in Mnyanda Street, Qaqawuli Phase 2, New Brighton  4 All SA 485 (LCC) Ndlovu v Ngcobo; Bekker v Jika  4 All SA 384 (SCA) Shoprite Checkers (Pty) Ltd v Jardim 2004(1)502(O) Ross v South Peninsula Municipality 2000 (2) SA 589 (C) Betta Eiendomme v Ekple-Epoh 2000 (4) SA 468 (W) Ellis v Viljoen 2001 (5) BCLR 487 (C) Brisley v Drotsky 2002 (4) SA 1 (SCA) Baartman and Others v Port Elizabeth Municipality 2004(1)560(SCA) City of Cape Town v Yawa and Others  2 ALL SA 281 (C) [Note: Not all of the above cases will be covered in class – you will be advised in class which to concentrate on.] J Smith ‘Impact of recent case law on property law in South Africa’ LexisNexis Butterworths Property Law Digest June 2003 p3 A Costa ‘Landlord and les miserables – Rights of ownership of dwellings’ LexisNexis Butterworths Property Law Digest June 2003 p5 K Hopkins & K Hofmeyr ‘The Constitutional Anomaly created by extending PIE’ LexisNexis Butterworths Property Law Digest June 2003 p11 J Tarica ‘PIE and its application to defaulting tenants and mortgagors’ LexisNexis Butterworths Property Law Digest June 2003 p16 Restrictions on application of rei vindicatio ~ Estoppel Morum Bros Ltd v Nepgen United Cape Fisheries (Pty) Ltd v Silverman Grosvenor Motors (Potchefstroom) Ltd v Douglas Johaadien v Stanley Porter (Paarl) (Pty) Ltd Kajee v HM Gough (Edms) Bpk Electrolux (Pty) Ltd v Khota Johaadien v Stanley Porter (Paarl) (Pty) Ltd 1916 CPD 393 1951 (2) SA 612 (T) 1956 (3) SA 420 (A) 1970 (1) SA 394 (A) 1971 (3) SA 99 (N) 1961 (4) SA 244 (W) 1970 (1) SA 394 (A) ~ Other restrictions Woodhead Plant & Co v Gunn Jubb v Sheriff, Magistrate’s Court, Inanda District Kotze v Prins Cohn v Rand Rietfontein Estates Limited ~ Actio ad exhibendum (1894) 11 SC 4 1999 (4) SA 596 (D) (1903) 20 SC 1939 TPD 319 Unimark Distributors (Pty) Ltd v Erf 94 Silvertondale (Pty) Ltd RMS Transport v Psicon Holdings (Pty) Ltd Alderson & Flitton (Tzaneen(Pty)Ltd v EG Duffey Spares(Pty)Ltd Gore v Saficon Industrial (Pty) Ltd Frankel Pollak Vinderine Inc v Stanton 1999 (2) SA 986 (T) 1996 (2) SA 176 (T) 1975 (3)S A 41 (T) 1994 (4) SA 536 (W) 2000 (1) SA 425(W) ~ Condictio furtiva Minister van Verdediging v Van Wyk First National Bank of SA Ltd v East Coast Design CC Clifford v Farinha 1976 (1) SA 397 (T) 2000 (4) SA137 (D) 1988(1)SA315(W) ~ Actio legis Aquiliae Hefer v Van Greuning Clifford v Farinha Philip Robinson Motors (Pty) Ltd v NM Dada (Pty) Ltd 1979(4)SA952(A) 1988 (1) SA 315 (W) 1975 (2) SA 420 (A) ~ Actio negatoria Moller v SAR&H 1969 (3) SA 374 (N) Loss of ownership Abandonment Salvage Association of London v SA Salvage Syndicate Ltd Underwater Construction & Salvage Co (Pty) Ltd v Bell Achterberg v Glenister (1906) 23 SC 169 1968 (4) SA 190 (C) 1903 TS 330 Possession Underwater Construction and Salvage Co (Pty) Ltd v Bell Reck v Mills Cape Tex Engineering Works (Pty) Ltd v SAB Lines Cameron v S Nienaber v Stuckey Scholtz v Faifer Rosenbuch v Rosenbuch and Another Manga v Manga Ex parte Van der Horst: In re Estate Herold Marais v Engler Earthworks (Pty) Ltd Ross v Ross Nino Bonino v De Lange Meyer v Glendinning Magadi v West Rand Administration Board 1968 (4) SA 190 (C) 1990 (1) SA 751 (A) 1968 (2) SA 528 (C) Case 199/2004 (SCA) 1946 AD 1049 1919 TS 243 1975 (1) SA 181 (W) 1992 (4) SA 502 (ZS) 1978 (1) SA 299 (T) 1998 (2) SA 450 (E) 1994 (1) SA 865 (SE) 1906 TS 120 1939 CPD 84 1981 (2) SA 352 (T) Du Randt v Du Randt 1995 (1) SA 401 (O) Wild Animals Langley v Miller Richter v Du Plooy Lamont v Heyns R v Mafohla Dunn v Bowyer and another S v Frost and S v Noah (CPD) Mbhele v Natal Parks, Game and Fish Preservation Board 1848 3 Menzies 584 1921 OPD 117 1938 TPD 22 1958 (2)(SA 373 (R) 1926 NPD 516 1974 (3) SA 466 1980 (4) SA 303 (D) Game Theft Act 105/1991 Protection and loss of possession Mandament van spolie (spoliation order) Mopeli v Botha Elastocrete (Pty) Ltd v Dickens Rosenbuch v Rosenbuch Parker v Mobil Oil of Southern Africa (Pty) Ltd Mbangi v Dobsonville City Council Kgosana v Otto Shoprite Checkers Ltd v Pangbourne Properties Ltd Bon Quelle (Edms) Bpk v Mun. van Otavi Zulu v Min. of Works, KwaZulu Plaatjie v Olivier Tigon v Bestyet Investments (Pty) Ltd Xsinet (Pty) Ltd v Telkom SA Ltd Fredericks v Stellenbosch Divisional Council Rikhotso v Northcliff Ceramics (Pty) Ltd 1931 WLD 63 1953 (2) SA 644 (SR) 1975 (1) SA 181 (W) 1979 (2) SA 250 (NC) 1991 (2) SA 330 (W) 1991 (2) SA 113 (W) 1994 (1) SA 616 (W) 1989 (1) SA 508 (A) 1992 (1) SA 181 (N) 1993 (2) SA 156 (O) 2001 (4) SA 634 (N) 2002 (3) SA 629 (C) 1977 (3) SA 113 (C) 1997 (1) SA 526 (W) Defences to the mandament van spolie Jivan v National Housing Commission Mans v Loxton Municipality De Beer v Firs Investments Ltd Bosman NO v Tworeck Smit v Saipem Servitudes 1977 (3) SA 890 (W) 1948 (1) SA 966 (C) 1980 (3) SA 1087(W) 2000 (3) SA 590 (C) 1974 (4) SA 918 (A) Bisschop v Stafford 1974 (3) SA 1 (A) Stephens v De Wet 1920 OPD 78 Engelbrecht v Brits 1920 TS 274 Eichelgruen v 298 South Ridge Road (Pty) Ltd 1976 (2) SA 678 (D) Kakamas Bestuursraad v Louw 1960 (2) SA 202 (A) Pieterse v Du Plessis 1972 (2) SA 597 (A) Van der Berg v Van Tonder 1963 (3) SA 558 (T) Ridler v Gartner 1920 TPD 249 Grant v Stonestreet 1968 (4) SA 1 (A) De Beer v Van der Merwe 1923 AD 378 Van Niekerk v Du Toit 1957 (2) SA 226 (N) Nesbitt v Clayton 1957 (1) SA 382 (SR) Trautman NO v Poole 1951 (3) SA 200 (C) Van Rensburg v Coetzee 1979 (4) SA 655 (A) Wynne v Pope 1960 (3) SA 37 (C) Bekker v Van Wyk 1956 (3) SA 13 (T Alexander v Johns 1912 AD 431 Ex parte Evenwell 1937 WLD 1 Ex parte Millsite 1965 (2) SA 582 (T) Swiss Hotels v Pedersen 1966 (1) SA 197 (C) Wahloo Sand BK and others v (the) Trustees, Hambly Park Trust and others 2002 (2) SA 776 (SCA) Property Law 2007 – Tutorials Property Law TUTORIAL 1 Shady Glen Residential Village is a very large residential complex, retirement village and golf estate situated on the North Coast of KwaZulu-Natal. It has its own shopping complex, post office, banks and so forth - in some ways it is much like a small town. The people who live there have generally chosen to do so for its air of tranquillity, and its sense of being ‘close to nature’. The affairs and legal matters are handled by a Committee made up of residents elected for that purpose. The duties of this Committee include the approval of new applications for residence and purchase of property. A year ago, however, an application was made to purchase a unit in the complex by the Shady Glen Islamic Society, for use as a mosque (there are a large number of people adhering to the Islamic faith in the complex). The Committee was very concerned and asked whether there would not be a loud ‘call to prayer’ every evening? The Islamic Society assured the Committee that the call to prayer would be made by way of a light on top of the building. The Committee then approved the application and allowed the purchase to go ahead. However, six months after the purchase, the mosque began to run - and the Society installed on its roof several large loudspeakers through which the call to prayer was made. This immediately led to complaints from neighbouring residents, and the Committee asked the Society to remove the loudspeakers. The Society refused on the basis that they had a constitutional right to practice their religion. The Committee pointed out that the Society had agreed at the time of contracting not to use a loudspeaker, but the Society countered that they had never intended to abide by that clause as it infringed their freedom of religion. The Committee then offered a compromise, that the call to prayer could be made by way of the human voice - as long as the loudspeakers were removed. The Society refused, however, on the basis that the call to prayer needed to be made as loudly as possible. The Committee has now sought a court interdict against the Society, requiring that the Society remove the loudspeakers. You are a single judge sitting in the Durban and Coast Local Division of the High Court. Give judgment in the matter. _______________________________________________________________________ Property Law TUTORIAL 2 The Harddoneby Community lives in a village on the banks of the Muddy River in rural KwaZulu-Natal. According to archaeological evidence, the village has been situated in the same place for at least 250 years. The Community has always led a simple existence, surviving on crops which it grows for itself and irrigates with water from the Muddy River. In recent years, however, the Community has struggled with several new problems and it now consults you for advice. Two years ago, a company (Industrial Effluents (Pty) Ltd) began building a paint manufacturing factory upriver from the Community (just below Old McDonald’s farm). The Community did not become aware of this until six months ago, when the first section of the factory began to operate. The remaining three sections of the factory are due to begin operating in the course of the next two years. Due to discharges from the factory, the Muddy River has now taken on a yellowish colour and become unpleasant to taste. Industrial Effluents (Pty) Ltd has advised the Community that it undertook a proper environmental impact assessment and that the scientific consultants which it employed have advised that the water is not unsafe to drink. ________________________________________________________________________ Property Law TUTORIAL 3 Buyer and Seller enter into an agreement in terms of which Buyer agrees to buy from Seller two racehorses, named “Fortunate Prospect” and “Lucky Chance”. However, the parties are unable to agree on a price for Fortunate Prospect. They think that Fortunate Prospect is probably worth in the region of R100 000, but decide that they will choose a third party to decide on the price for them. They agree therefore that Expert, who is a well-known dealer in racehorses, will determine the price for them. Before this happens, however, and before Buyer has taken delivery, Fortunate Prospect is struck by lightning and killed. The parties did not come to any agreement on variance of the risk, choosing to leave this to be governed by the common law. Explain whether Buyer is obliged to pay the R100 000 to Seller or not, in respect of Fortunate Prospect. They decide that Buyer will buy Lucky Chance for a sum of R100 000. Buyer agrees that he will return the next day to fetch Lucky Chance, but demands that Seller bear the risk if anything should happen to the horse. Two days later, Buyer has still not returned to fetch the horse. The horse is running free in a field in a light rain, when it is struck by a bolt of lightning and killed. Explain whether Buyer is required to pay R100 000 to Seller or not, in respect of Lucky Chance. ________________________________________________________________________ Property Law TUTORIAL 4 Themba recently went on a fishing and diving expedition. While he was fishing he hooked a huge fish, which was eventually weighed in at 100 kilograms. He was unable to land the fish himself and a neighbouring boat had to assist. They were able to land the fish together. The neighbouring boat then demanded a share of the fish. Themba wants to know what the legal position is in regard to the acquisition of ownership and whether he is obliged to give a share to the others. Themba also found an old shipwreck on the sea bed. The ship still has four brass propellers attached to it. Themba cleaned these propellers and engraved his name on them in large letters with a portable power drill. He then carefully noted the position of the wreck on his map, intending to return for the propellers. When he returned he found that the propellers had been cut off by another person, who refused to hand them over. Advise Themba as to the ownership of the propellers. (Taken from Chris Schembri Law of Property 2002.) _______________________________________________________________________ Property Law TUTORIAL 5 Student is in the market for a good second-hand vehicle. After asking around, he is told by many people that he should visit Sleazy Transport Dealers (“STD”) in Durban, as they have a good reputation in dealing with second-hand vehicles. Student duly approaches STD, and soon finds what he is looking for, a 2001 Toyota Whatsit 1600GX, in very good condition, for R65 000. Student insists on seeing the logbook for the vehicle, and STD duly shows this to him. The logbook reveals that the vehicle is currently owned by a finance house, Dodgy Loans (Pty) Ltd (“DL”), who had financed the purchase of the vehicle for a client of theirs, Trickster. STD advise Student that they are selling the vehicle on behalf of Trickster, who has made his last payment to DL. Student is a law student at the University of KwaZulu-Natal and he has just done a course in the law of property and he is thus aware of the problems that could potentially crop up in such situations. Student contacts DL telephonically and asks them to confirm that nothing is owing on the vehicle. They do this in a fax to Student. Student then purchases the vehicle and pays cash for it. A few months later, Student is approached by DL. They inform him that they had made an error and that the vehicle has still not been paid off by Trickster. They want Student to return the vehicle to them. Student refuses and they threaten him with legal action unless he complies with their request. Student approaches STD, only to find that they have been placed in liquidation. Student approaches you for advice. Advise him as fully as possible. (Adapted from Chris Schembri Law of Property 2002.) _______________________________________________________________________ Property Law TUTORIAL 6 Landowner recently bought a plot of land. Upon taking possession, he discovered that a neighbour (adjacent to the plot) was regularly crossing the land to draw water from a river crossing Landowner’s property. This neighbour informed Landowner that he had a servitude which entitled him to do this. Landowner does not want the neighbour on the property, as the neighbour’s incessant footprints have worn a track across the land (which track Landowner considers to be unsightly). (a) (b) Explain to Landowner how you would verify the neighbour’s claim, and what the various consequences of this could be. What would the position be if the neighbour’s property was not directly adjacent to Landowner’s property, but separated from it by another plot of land? (c) What would the position be if the neighbour’s property did not itself have any water source? _______________________________________________________________________ Landownership The basic idea from Roman Law is of land as a unit. Space above, space below - all space. The ius abutendi. Absolute ownership. Grotius: Ownership is ‘full’ where title and actual use are combined; or ‘incomplete’ where separate. ‘Dominum plenum.’ The English ‘quitrent’ system - like dominum plenum but with rent to be paid. A type of system sui generis. The concept of a natural right to landownership came from English law and was influenced by the Industrial Revolution. The demands of industry led to the idea that the owner owned all above and all below. The right to use space upward was regulated only by the law of ‘nuisance.’ The right to use space below? The new principles of mining laws deprived much of this content. Pandectists: idea of ownership as a defence against government. Complete autonomy of owner became a feature of SA law. SA Bill of Rights: s25(1): No one may be deprived of property ... Water? ‘Owned’ by the government as res publica. The English then introduced the idea of the landowner ‘owning’ the water - Courts then interpreted this as the owner of land having a riparian right to perennial running water and absolute ownership of private water The English concept of ‘nuisance’ ... but the right to personal welfare and comfort an incident of landownership. Regal v African Superslate 1963(1) SA 102 (A) Held: The English law of nuisance has not been substituted for our law and we must investigate our own common law sources. Gien v Gien 1979 (2) SA 1113 (T) Held: An owner’s right extends only so far as there rests an obligation on his neighbour to endure the exercise of that right. In the first half of the 20th C, many rights of ownership were diminished by laws. Mining laws; town planning legislation; apartheid zoning; bans on subdivision. Mining Rights Act 20 of 1967 Diamonds Act 56 of 1986 Minerals Act 50 of 1991 Minerals & Petroleum Res Dvpt Act 28 of 2002 Dadoo Ltd v Krugersdorp Mun Cncl 1920 AD 530 Subdivision of Agric Lands Act 70 of 1970 Has legislation so eroded the common law that landownership is no longer consistent with traditional Roman-Dutch ideas? ‘Nuisance’ is not a very effective remedy. s25 (1): No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property. (2): Property may be expropriated only in terms of law of general application (a) for a public purpose or in the public interest; and (b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided and approved by a court. (3): The amount of the compensation ... must be just and equitable ... (4): For the purposes of this section (a) the public interest includes the nation’s commitment to land reform ...; and (b) property is not limited to land. (7): A person or community dispossessed ... as a result of past racially discriminatory laws ... entitled ... restitution ... or equitable redress. (8): No provision ... may impede the state from taking ... measures to achieve land, water ... reform, in order to redress the results of past racial discrimination ... In the United States: The Constitution of the United States: the 5th Amendment: “Nor shall private property be taken for public use, compensation.” without just The eminent domain power of the states is the power to take private property, pay just compensation to the owner, and transfer the property to public welfare use. Thinking? Supreme Court has ‘noted’ that the government cd not function if it cd not take property from individuals. One theory is that sovereign states had original ownership of property, individual possession derives from grant by the state and is held subject to an implied reservation. Q1 - Was there a taking of private property? Q2 - Was the taking for a public use or purpose? Q3 - Was the compensation just? Real problems and litigation have arisen not, as one might have expected, over ‘just compensation’ ... but over ‘regulatory taking’ ... A permanent physical invasion is clearly a taking ... but what about state actions intended to regulate, which in fact interfere with property rights? When state actions intended to regulate private conduct to promote the public welfare have disproportionate effects on property holders, the ‘taking’ may be a ‘regulatory taking’. Mining Rights Act 20 of 1967 s143(1): ... no person shall buy, sell, deal in ... any unwrought precious metal, unless ... Diamonds Act 56 of 1986 s18: ... no person shall have any unpolished diamond in his possession unless - ... Minerals Act 50 of 1991 s5: ... the holder of the right to any mineral ... shall have the right to enter upon such land ... and to prospect and mine for such mineral ... and to dispose thereof. Minerals & Petroleum Res Dvpt Act 28 of 2002 s2: The objects of this Act are to (a) recognise the internationally accepted right of the State to exercise sovereignty over all the mineral and petroleum resources within the Republic; ... (c) promote equitable access to the nation’s mineral and petroleum resources to all the people of South Africa; ... s3(1): Mineral and petroleum resources are the common heritage of all the people of South Africa and the State is the custodian thereof for the benefit of all South Africans. ACQUISITION OF OWNERSHIP ORIGINAL MEANS OF ACQUIRING OWNERSHIP [NOTES on ACQUISITION OF OWNERSHIP based on notes by Mrs J Parker.] Original v derivative acquisition Acquisition of ownership is original if not derived from the ownership of a predecessor. Sometimes a predecessor, as in expropriation; but no transfer of rights by predecessor to successor. Ownership acquired by new unilateral act, free of obligations and benefits pertaining to predecessor’s rights. Totally new right created. Acquisition is derivative if ownership derived from/dependent on ownership of a previous owner. Bilateral transaction. Acquirer gets benefits but also succeeds to liabilities. Original modes The most important are occupation; discovery of treasure; accession; specification; mixing of liquids and mingling of solids; acquisition of fruits; prescription; expropriation; forfeiture to the state; and appropriation of minerals. Occupatio Unilateral of res nullius. (a) object must be unowned thing (res nullius) capable of being privately owned (res in commercio); (b) acquirer must have animus domini; (c) acquirer must exercise the necessary physical control over the thing. Physical control sufficient to make use of the thing –not merely marking property as owned. The physical control need not be lawful. Control might be a crime, but ownership acquired – eg: some pornography; but some legislation does prevent ownership – eg: uncut diamonds. Things res nullius susceptible to occupatio are: wild animals, products of the sea, things belonging to enemies (res hostiles), and abandoned things. ACCESSIO/ACCESSION Ownership acquired when thing/portion of thing is incorporated (by natural/artificial means) into another thing. Thing incorporated is the accessory; thing into which it’s incorporated is the principal thing. Ownership of the accessory is lost; owner of principal thing becomes owner of new entity. Various tests to determine which is the principal thing, namely: ~ thing of highest value; ~ thing of greatest bulk; ~ thing without which the accessory cannot exist; ~ thing which belongs to person on whose account the things are joined; ~ thing adorned by the accessory; or ~ thing which gives the final entity its identity, form, name or function. (Probably the best; where one thing loses identity.) Depending on the process, there are 3 types of accession: ~ natural alluvion, avulsion, acquisition of fruits, offspring ~ artificial human effort – inaedificatio (building on the land of another), specificatio (creating a new species out of the material of another - welding, weaving in, painting). ~ mixed both nature and human labour, acquisition of fruits Immovables - immovables; movables - movables; movables - immovables. Movables to immovables (superficies solo cedit) Anything planted, sown, artificially attached to land becomes part of land and property of the landowner. Land always the principal thing; movable the accessory. Two forms: planting and sowing (anything sown/planted in soil accedes as soon as it has taken root); or attachment of buildings and other structures to land – inaedificatio – (anything built on/attached to soil forms part of the soil). Movables belonging to third parties where attached to soil? If accession, things become immovable and fall into ownership of landowner; if no accession, movables remain property of original owner. To determine, look at: (a) nature/purpose of movable (attached thing) (movable must in nature be capable of acceding to/being assimilated into an immovable) (b) degree/manner of annexation to soil (if movable completely incorporated into soil or building, becomes part of soil or building – must be ‘aard en nagelvast’ Sumatie (Edms) Bpk v Venter1990(1)SA173(T) Courts seem to require physical integration – not mere functional or economic integration. (c) intention of owner of movable. Based mainly on American case law. Intention at time of attachment. The intention of owner of movable is what counts. Rationale seems that owner of movable should not lose ownership for mere fact an outsider wants to attach movable permanently to an immovable. Intention required is intention that accessory shd remain permanently attached to soil/building. Standard-Vacuum Refining Co of SA (Pty) Ltd v Durban City Council 1961 (2) SA 669 (A) Sumatie (Edms) Bpk v Venter 1990 (1) SA 173 T() PRESCRIPTION Original mode of acquisition of ownership. Ownership of a thing acquired by uninterrupted possession for requisite period of prescription. Two views advocated re: rationale (justification) for acquisition by prescription. (1) the institution of prescription is based on omission on part of original owner of thing, who didn’t guard property properly. As penalty for negligent supervision, property taken from owner and awarded to possessor. Not convincing, as owner can (in principle) do with his property as he likes, so entitled to neglect it. Also, negligence has never been required and AD has said that proof of absence of negligence can never constitute a defence to a claim based on acquisitive prescription. (2) is a better justification: that legal rules applicable to prescription aim to continue factual impression of ownership created by long/uninterrupted period of possession; which cd otherwise deceive 3rd p’s and create uncertainty. To promote certainty, prescription has consequence that original owner loses ownership if doesn’t claim restitution of thing during period of prescription. Emphasis not on negligence of owner; but on incorrect impression created by his negligence. Traceable to Roman/Roman-Dutch Law; but only the Prescription Act/1943 supplied a comprehensive statutory basis. Act defined ‘acquisitive prescription’ as ‘acquisition of ownership by the possession of another person’s movable or immovable property continuously for 30 years nec vi nec clam nec precario’. Stated clearly that possessor automatically became owner of thing after this period had expired. 1943 Act superseded by Prescription Act/1969, in effect from 1 Dec 1970. Requirements for acquisitive prescription virtually same as in 1943 Act, summarised: ‘a person shall by prescription become the owner of a thing which he has possessed openly and as if he were the owner thereof for an uninterrupted period of thirty years or for a period which, together with any periods for which such a thing was so possessed by his predecessors in title, constitutes an uninterrupted period of thirty years.’ So 1969 Act drops the nec vi element and replaced the nec precario element with the requirement of possession “as if he were the owner thereof”. 1969 Prescription Act has no retrospective effect, so the Act doesn’t apply where prescriptive period was completed before the date it came into effect, 1 Dec 1970. But where prescriptive period began to run before the new Act came into force (but was only completed afterwards) the 1943 Act applies to former period; and 1969 Act to latter period. So 1943 Act relevant until 30 November 2000. (eg: if prescription began to run in 1950 the first period, 1950 - 1 December 1970, is governed by Prescription Act of 1943; later period, from 1 December 1970 onwards, regulated by Prescription Act/1969.) So requirements of both Acts must be kept in mind to determine whether prescription has occurred in a particular case. Finally, it should be noted that land reform legislation and the new constitutional dispensation do not affect acquisition by prescription. Requirements: To acquire ownership by prescription, only two requirements must be fulfilled - in terms of both Prescription Acts, (a) (b) acquirer must have had civil possession of the thing; and possession must have been for uninterrupted 30 years. Neither ‘just title’ nor bona fides required for acquisition of ownership by prescription. Requirement of possession: 1943 Prescription Act: possession must be nec vi nec clam nec precario; supplemented in case law by additional requirement of “adverse user” or “adverse possession”. 1969 Prescription Act requires only that a person must possess “openly and as if he were the owner”. Different concepts, but it seems the two Acts never intended to require greater possession than the possessio civilis of Roman law – namely, physical control (corpus) of a thing coupled with the intention to be owner (animus domini). Qualification nec vi implies retention of possession without force, or peaceably. Now beyond doubt that a thief or a robber can obtain ownership by prescription, so initial acquisition of possession may have been by force as long as possession isn’t maintained only by force. The nec vi qualification of possession makes sense in forms of prescription which requires a short period of possession; but is not meaningful where a 30 year period is required, since it is improbable a thief/robber cd forcibly prevent owner reclaiming property for 30 years. Owner free to bring a mandament van spolie or to vindicate his property during the period in which prescription runs. Deletion of the nec vi requirement in 1969 Act therefore has no real practical importance, as unlikely anyone wd be able to possess by force for a long period. Moreover, nothing prevents an owner who is restricted by force from arguing his right in court. Nec clam requirement means possessor must not possess secretively; possession must be patent, visible and manifest. Requirement confirmed by 1969 Act; which expressly requires that the possessor must possess openly. 1943 Act required possession to be non-precarious (nec precario). Initially used in the wide sense of “adverse user” and at other times to mean “without permission” or “without consent” – ie: not with the permission of the owner. If possesses with original consent of owner, prescription won’t run; but if initial possession was with consent, and that consent fell away, then the possession is nec precario and prescription begins to run. High Court decisions then led to introduction (not in Act) of “adverse possession” or “adverse user” as requirement for acquisitive prescription – meaning ‘use and enjoyment of a thing without molestation by, and in conflict with the rights of, the owner thereof’. (A possessor can’t claim acquisition of ownership by prescription if has even once recognised the superior rights of the owner.) Pratt v Lourens So a lessee or usufructuary can never acquire ownership of the object of the lease/usufruct by prescription. Malan v Nabygelegen Estates AD “In order to create a prescriptive title, such occupation must be a use adverse to the true owner and not occupation by virtue of some contract or legal relationship…..which recognises the ownership of another.” Clear a person who possesses on ground of revocable permission cannot have intention of an owner (animus domini) and so doesn’t fulfil requirements of possessio civilis; so elimination of requirement by 1969 Act did not change the legal position after 1970. “Adverse user” is not an independent requirement but a component of the possessio civilis that is required for prescription. Du Toit v Furstenberg 1957 (1) SA 501 (O) Bisschop v Stafford AD 1974 So no difference in principle between possession required for prescription before 1970; and possession required thereafter. The requirement of nec precario and the “additional” requirement of “adverse user” accommodated within possessio civilis, namely physical control of an object with the intention of an owner (animus domini). Animus domini implies an intention to be and not an intention to become owner. Addition of previous terms of possession Second requirement for acquisition of ownership by prescription is that possessor must have possessed the object for an uninterrupted period of 30 years. A person may add to his period of possession the period of his predecessor/s in title; as long as that possession also complied with the requirements of possessio civilis. Continuity of possession Possession must be uninterrupted for full 30 years. Course of prescription can be interfered with by interruption or suspension. With interruption, course of prescription is, subject to certain qualifications, completely halted. Running of prescription must start again. Suspension of prescription is a temporary suspension of the course of prescription. Once circumstances that caused suspension disappear, course of prescription is resumed. Interruption Either natural or civil. Natural interruption: possessor loses possession of thing either voluntarily/involuntarily. Possession lost voluntarily when possessor voluntarily surrenders thing to true owner or a third party; or if possessor no longer fulfils the requirements of possessio civilis. Immaterial whether the possessor dispossessed by stealth or by force; nor does it matter whether the possessor has been dispossessed by the owner or an outsider or whether he has been prevented by vis maior from exercising control over thing. Actual dispossession must occur; a mere protest by true owner is insufficient. If actual dispossession had taken place the position under both common law and Prescription Act/1943 was that prescription was interrupted, and had to start de novo. Prescription Act/1969 introduced a new provision that possession not interrupted if dispossessed only temporarily by a thief, a robber or even by the owner (who has taken the law into his own hands). Involuntary loss of possession does not interrupt running of prescription if possessor regains possession by legal proceedings (within 6 months) or by any other lawful means (within a year). Only if possessor voluntarily acquiesces in the dispossession, fails to institute legal proceedings (within 6 months) or is prevented by vis maior from regaining his possession (within a year), is running of prescription interrupted. Running of prescription also terminated by judicial interruption. The Prescription Act/1969 confirms common law rule that prescription interrupted by service of any process on possessor ito which ownership is claimed. Institution of process has no interrupting effect if person claiming ownership does not successfully prosecute claim to final judgment, or if judgment is abandoned by successful plaintiff, or is subsequently set aside. If running of prescription is interrupted, it has to start de novo, and only as from the day when final judgment given. Suspension Under common law prescription did not run against certain categories of persons (who on account of incapacity or any other reason were prevented from enforcing their rights). Act/1943 did not consider, but generally accepted common law wrt acquisitive prescription remained applicable. Under common law prescription did not run against (inter alia) minors, insane persons, persons under curatorship, persons absent in the service of the state or by reason of war, married women were subject to husbands’ marital power, and certain fideicommissaries. Suspension only led to temporary interruption. Consequence of suspension was that period of suspension was added on to the period of prescription. 1969/Act does not allow traditional approach. Instead, suspension only relevant if ground of suspension exists within 3 years of completion of period of prescription. Completion of prescription postponed until 3 years have elapsed from time when ground of suspension ceased to exist. Owner thus allowed 3 years after ground of suspension has elapsed to enforce his rights. (To apply rules of suspension only if impediment occurs at completion of period of prescription makes sense since only at that stage that owner shd have the necessary capacity or have the opportunity to enforce rights.) Unlike position under common law, Act/1969 recognises a numerus clausus of grounds of suspension. First group of circs relates to the person against whom prescription runs; namely a minor, an insane person, a woman whose separate property is controlled by her husband by virtue of his marital power, a person under curatorship or a person who is prevented by superior force from interrupting the running of prescription. Second group of circs relates to persons in favour of whom prescription runs; namely a person outside RSA, a person married to the person against whom prescription is running, and a person who is a member of the governing body of a juristic person against whom prescription is running. Effect: Once requirements for prescription are complied with, the former owner (though still registered as owner) loses ownership and possessor becomes new owner. If land acquired by prescription, he’s entitled to demand registration in his name. (Registration not necessary for acquisition of ownership, but is advisable.) Registrar of Deeds not entitled to make the necessary entries without an order of court, and since a court cannot on its own volition take cognisance of prescription, person who has acquired ownership by prescription must apply for an order of court compelling Registrar to register the land in new name. Applicant must prove obop that req’s of prescription complied with. Various Provincial Ordinances contain provisions which more or less correspond with the State Land Disposal Act. The effect of these is that land owned by, vested in, held in trust or under the control of a local authority cannot be acquired by prescription. DERIVATIVE MODES OF ACQUIRING OWNERSHIP Most important derivative modes are: ~ delivery in the case of movables; and ~ registration in the case of immovables. There are three instances where ownership in an estate passes automatically (ie without delivery or registration), namely on marriage ICOP, on insolvency, and on death. NOTE: Another way (perhaps simpler to understand) to see this is to see ‘delivery’ as being required for any transfer of ownership – and to see physical delivery (of movable property), registration (of immovable property) and cession (of incorporeal property) as being different forms of delivery. In these notes, however, delivery of incorporeal property is not dealt with; and ‘delivery’ is generally used to mean ‘physical delivery’. Ownership does not, as in English/French law, pass on mere agreement between the parties - but only on delivery or registration. In Roman-Dutch/South African law the agreement giving rise to transfer is strictly separated from the delivery or registration itself. Agreement creates only personal rights and obligations - an additional transaction is required for transfer of ownership. So there are two separate legal acts, each with its own requirements. Also the case when the two transactions take place simultaneously (as is normal). Always possible to distinguish between the agreement which gives rise to the personal obligation to transfer, and the actual transfer of the movable/immovable. Note in delivery of a movable, factual control as well as ownership are transferred on delivery; but in case of registration of an immovable (in name of acquirer), ownership is transferred by registration whereas factual control only passes when the acquirer enters into possession of the land. Requirements For passing of ownership by either delivery/registration: ~ The thing must be a res in commercio. ~ The transferor must be capable of transferring ownership. Nemo plus iuris ad alium transferre potest, quam ipse haberet. ~ The transferee must be capable of acquiring ownership. ~ At moment of passing of ownership, transferor must have intention of transferring ownership (animus transferendi dominii) and transferee must have intention of accepting ownership (animus accipiendi dominii). ~ Iusta causa sometimes required for passing of ownership. Implies transfer must be based on a cause. ~ In case of sales of movables there’s a special rule according to which ownership, notwithstanding delivery, does not pass … unless either purchase price is paid or security or credit is given. ~ Passing of ownership must take a specific form. Ownership of movables is passed by delivery; whereas ownership of immovables is passed by registration in the deeds office. Causal or abstract system Much debated. Causal system: passing of ownership dependent on existence/ validity of cause giving rise to the transfer (iusta causa). Abstract system: the passing of ownership wholly abstracted from agreement giving rise to transfer; and is not made dependent on such an agreement. Emphasis placed on the real agreement which exists independently of the agreement giving rise to the transfer. The invalidity of the latter agreement has no influence on the validity of the real agreement. If there is a serious intention to transfer ownership, ownership passes to the transferee, who can in turn validly pass transfer to a third party. Abstract system favoured. Commissioner of Customs and Excise v Randles Bros and Hudson Ltd Majority seemed to support abstract system of transfer unequivocally. 1941 AD 369 Watermeyer JA: “If the parties desire to transfer ownership and contemplate that ownership will pass as a result of the delivery, then they in fact have the necessary intention and the ownership passes by delivery. It was contended, however, on behalf of the appellant that delivery accompanied by the necessary intention on the part of the parties to the delivery is not enough to pass ownership; that some recognised form of contract (a causa habilis . . .) is required in addition . . . I do not agree with that contention. The habilis causa referred to by Voet means merely . . . an appropriate reason for the transfer or a serious and deliberate agreement showing an intention to transfer.” Trust Bank van Afrika Bpk v Western Bank Bpk 1978(4)SA281(A) In an abstract system ownership passes to the transferee despite the absence of a valid causa. Consequently, third parties relying in good faith on the data in the deeds office will not be prejudiced. The main reason for applying an abstract system of transfer is the legal certainty it brings about in commercial dealings. Real agreement: under the abstract system a real agreement, namely an agreement to transfer and accept ownership, is required for the transfer of ownership. In every instance it must consequently be determined factually whether a real agreement has indeed been reached. Summary: So normally three juristic acts involved in the passing of ownership: The obligationary (contractual) agreement; the real agreement to transfer/receive ownership; and the actual transfer of the property (by delivery for movables; registration for land). Delivery General Ownership in a movable corporeal thing is transferred by delivery (transfer of possession). Originally, delivery required literal handover to transferee (traditio vera). Later accepted it was sufficient if transferee placed in position to exercise physical control over the thing whenever he liked (traditio ficta); now called ‘constructive delivery’. Forms of constructive delivery: ~ clavium traditio Contents of a box, cupboard, room, warehouse are transferred by handing over the keys thereof. This form of delivery is often referred to as ‘symbolic delivery’ (traditio symbolica). Handing over of a mere symbol is not sufficient to effect transfer. The parties must have the intention to resort to this form of delivery; keys must be delivered with intention that contents of the warehouse be thereby transferred; and keys must supply transferee with exclusive control over the contents of the warehouse. Closely analogous to clavium traditio and also called ‘symbolic delivery’ is the case where goods are transferred by delivery of documents of title, bills of lading, warehouse receipts. ~ traditio longa manu Delivery occurs by thing being pointed out (‘with the long hand’) by transferor. Usually employed when the size, inconvenient. No change of possession, so strict requirements: ~ ~ ~ ~ parties must have intention to use this form of delivery; thing must be clearly pointed out by transferor to transferee; after thing pointed out, transferee must be capable of exercising physical control and transferee must have intention to be owner of the thing; and thing must be clearly identified. Because of the opportunity for fraud, the courts have been reluctant to extend the scope of this form of delivery to things which can be easily handled. ~ traditio brevi manu ‘With the short hand’ occurs where person to whom thing is transferred is already in possession of the thing but on a basis other than ownership. Ownership passes as soon as the parties have the requisite intention to transfer and acquire ownership. No further overt act is required. Meintjes v Wilson ~ constitutum possessorium In a sense the reverse of traditio brevi manu. Transferor retains physical control of thing to be transferred, but acknowledges the transferee henceforth owns the thing and that he retains it on behalf of the latter. Transfer effected primarily on basis of intention and occurs despite fact that external circumstances under which thing is held do not support the change of ownership. Since no publicity, obviously open for fraud. Constitutum possessorium is never presumed. Party alleging it must prove that following requirements: ~ transferor must be owner and possessor of thing at moment of transfer; ~ transferor must cease to possess the thing for himself and begin to hold the thing for transferee; ~ transferee must consent that detention be retained by transferor; and ~ must be a clearly proved causa detentionis in form of a clear contractual relationship ito which transferor becomes detentor for transferee. Causa detentionis can either be an express agreement or a tacit agreement deduced from the surrounding circumstances. Finally, bona fides of parties must be beyond doubt. It must be proved that the parties had the genuine intention to transfer and accept ownership. ~ attornment Method of delivery developed in English law and taken into South African law. Thing to be transferred is in physical control of a third party who holds it on behalf of the owner. Transferor, transferee and holder enter into a tripartite agreement to the effect that holder (party attorning) henceforth holds thing on behalf of the transferee. Requirements for valid attornment: ~ must be a tripartite agreement or mental concurrence on part of all 3 parties that holder will henceforth hold thing on behalf of transferee, not on behalf of transferor; and ~ holder must exercise factual control over thing or at least have right of control at moment when he consents to hold it in future on behalf of transferee. ~ cession of the right of vindication REGISTRATION General registration in Deeds Registry is the mode ito which immovable property is transferred. Deeds Registries Act 47/1937 establishes a uniform system of land registration for whole of South Africa. Main aim of a registration system is ‘to compile a complete register of all land public as well as private, showing the ownership of every parcel and any limitation or restriction to which that ownership may be subject’. Publicity with regard to ownership and lesser real rights in land shd help to avoid double sales and protect creditors and proposed holders of security rights in land. Procedure: Registration of transfer occurs in the nine Deeds Offices throughout the country. Each registration office has a Registrar of Deeds and several officials. Each plot clearly identified with maps and diagrams drawn by Surveyor-General. Effect: Being registered owner is, with a few exceptions, considered proof of ownership not only as far as the registered owner is concerned, but also wrt a 3rd party relying on the deeds registry. Though Deeds Registry is public, it doesn’t necessarily follow that every member of the public has constructive knowledge of every real right registered in respect of a particular plot of land. Positive or negative system: South Africa adopted a modified negative system of registration. Registration is based on the real agreement or actual intention of the transferor and transferee to transfer and acquire ownership. Because of this the accuracy of the information in the deeds office is nowhere expressly guaranteed. In support of this, the Deeds Registries Act expressly excludes the liability of the state and registration officials for incorrect entries in the deeds registry. Property Law 2007: LLB Lecturer: Mr Dave Holness SECTIONAL TITLES Recommended reading 1. : Sectional Titles Share blocks and Time-sharing Van der Merwe and Butler South African Property Practice and The Law Chapter 8 Delport. Silberberg and Schoeman’s The Law of Property Kleyn and Boraine 3rd Ed Chapter 15. Butterworths Introduction to the Law of Property AJ van der Walt and G J Pienaar 2nd Ed Chapter 6. Juta Ownership of immovable property and the maxim superficies solo cedit Silberberg and Schoeman1 define the law of property as “the sum total of the various legal norms which regulate the legal relationships between persons and things, and in this regard also the legal relationships between legal subjects inter se.” In this part of our commercial law course we are concerned only with certain statutes which regulate that branch of the law of property which deals with legal relationships between legal subjects in regard to a particular classification of “thing”, that is, immovable property 1 The Law of Property 3rd Ed. Kleyn and Boraine at page 2 Immovable property consists of land and anything which becomes a part of the land and certain rights which by virtue of their attachment to land are also regarded as immovable. The maxim superficies solo cedit, roughly translated means “buildings become a part of the land”. This maxim conveys the traditional approach of Roman law, adopted by our common law, that where structures are attached to the land by their owner with the intention that they be permanently annexed to the land these structures lose their separate identity as “things” capable of separate ownership and become part of the land and thus the property of the owner of that land. For these reasons it is not possible under the common law to won such structures separately from the land on which they are erected. It is therefore not possible to own a flat in a building owned by another. Nor is it possible under the common law to own a house on the land of another. Where there is more than one house on a piece of land registered as an erf, for example, it is not possible for the owner to sell one of the houses as a separate unit. If he wished to transfer ownership to another in respect of that house he would have to allow that other to become a co-owner of all the land and both of its houses. Each would have what is described as an undivided share in the land with all its annexations. This is not a satisfactory form of ownership for either of the two parties concerned. For this and other reasons set out under paragraph 3 below it became necessary to find a way whereby individual ownership of buildings and parts of buildings could be separated from the ownership of the land on which they were erected. The change came in the form of the Sectional Titles Act 1971. 2. The Sectional Titles Act The Act has been amended from time to time. The latest consolidated Act which repeals the earlier Acts is Act 95 of 1986 which came into operation in June 1988. There have been small amendments since then the latest being Act 44 of 1997 which amended the Act fairly extensively. The broad effect of the Act is set out under paragraph 4 below. 3. The reason for sectional title legislation One of the greatest problems faced by many South African cities and towns has been the migration into these cities and tows from outlying rural areas, which, coupled with the annual increase in population and general economic development, has led to very serious housing shortages. Dwellings first occupied before the 21st October 1949 and in certain cases dwellings first occupied prior to 1st June 1966 were generally subject to rent control prior to the gradual phasing out of the scope of the Rent Control Act. There is little doubt that owners of properties subject to rent control are disadvantaged and, if their tenants take advantage of the Act, will not realize a fair return on their investment. It is not surprising therefore that these older buildings which usually occupy prime positions in the centre of the cities were becoming neglected and run down with little incentive for their owners to improve them. It is also not surprising that at the time the possibility of legislation in respect of sectional title ownership was first mooted when most properties were subject to rent control there was as a result little incentive for developers to build blocks of flats. These factors all contributed to the housing shortage. From the point of view of the city planners one of the best ways of alleviating the housing shortage would be to make the best possible use of the land available and this meant more apartment type buildings. There were also pressing sociological reasons why the old traditions should be changed and sectional ownership permitted. It was recognized that from a psychological point of view it is far more rewarding for a person to be the owner of his home than merely the tenant. Those people who were tenants were generally in that category because they could not afford to buy their own house. Sectional ownership would permit more people in lower income brackets to become owners. It would also offer to these people an opportunity of investing their capital as a hedge against inflation instead of spending it on rentals. Furthermore community housing offers the advantages of security, shared and thus cheaper amenities and a closer social involvement than does separate housing. Society in South Africa like its counterparts in other parts of the world had outgrown the maxim superficies solo cedit and the legislature had to overcome its limitations. 4. The broad effect of the Act (a) “To provide for the division of buildings into sections and common property and for the acquisition of separate ownership in sections coupled with joint ownership in common property.” These words are taken from the preamble to the 1986 Act. What they mean is perhaps best illustrated by an example: Prior to the Act if a piece of land had twenty flats on it together with a communal garden, drive, and perhaps a swimming pool, the only way the 20 flat dwellers could own their flats would be by becoming joint owners of the land on which the complex was situated. That would have presented tremendous problems. Under the Act if the complex is converted by its owner to a sectional title scheme each can become the owner of his separate flat which is called a “section” and a co-owner of the common property, the lawn, roof, etc. (b) To provide the necessary legislative machinery for such change; for example: i) provision for the approval of development schemes by local authorities; ii) the requirement for plans setting out the sections and the common property iii) the opening of a Sectional Titles Register and the regulation of the transfer of ownership and other real rights in units transferred (a unit comprising the individual ownership of a section coupled with the ownership in undivided shares of the common property2) iv) provisions dealing with the common subdivision and extensions of sections, v) provisions setting out rights of exclusive use of certain parts of the common property vi) and provisions for quotas and levies property and (c) To protect purchasers and tenants from developers. (d) To provide a framework for management of the jointly owned property and rules regulating the rights of the owners of units in relation to the use of their own sections. 5. How a sectional title scheme works in outline (a) The property 2 The component parts of a unit are not divisible. If a section is sold the joint ownership of the common property goes with it. A scheme may begin with a piece of land on which buildings are then erected or it may involve the conversion of existing buildings currently owned by the developer under the maxim superficies solo cedit. If the building is to be a new building then obviously it must confirm to any regulations which would normally apply and be approved by the local authority concerned. (b) An architect or land surveyor acting on behalf of the developer must inspect the property and certify it complies with any operative Town Planning Scheme, Statutory Plan or conditions subject to which a development was approved in terms of any law. If there is noncompliance condonation must be obtained from the local authority. (c) Draft Plans (Section 4) A Sectional Plan and a block plan must now be prepared. A land surveyor must prepare the block plans which concern the land and its measurement. He may also do the plans of the section but an Architect would normally be employed for this. (A developer who intends to establish a scheme shall cause a draft Sectional Plan to be submitted to the Surveyor General in terms of Section 7). (d) Notification to tenants If the building is an existing building then in terms of Section 4(3)(a) the developer is required to notify every lessee who is leasing a portion of the premises. The developer must give 14 days notice calling a meeting at which:i) ii) details of the scheme are given, and information regarding tenants rights in terms of Section 10 are given Provided that the developer need not comply if the lessee in writing says that he is aware of his rights and he has not intention of purchasing his unit. (e) Surveyor General and Registrar of Deeds The draft Sectional Plans completed in terms of Section 4 are then submitted to the Surveyor General for approval of the Plan and then to the Registrar of Deeds for the registration of the sectional plan and for the opening of the Sectional Title Register in terms of Section 11 3. The Registrar will then, when the requirements of the Act and any other Only a “developer” may apply for the approval of a scheme and a developer must by definition be the registered owner of the land 3 relevant law have been complied with, register the Sectional Plan and open the register in terms of Section 12 of the Act. (f) Tenant Protection Where a developer is converting a building which has tenants in occupation the Act offers these tenants a measure of protection from sudden ejectment by virtue of the provisions of Section 10 which also gives the tenants a right of first refusal in respect of the purchase of those sections which they are leasing. (The developer must offer the unit to a tenant and sit the guaranteed period of 90 days and not evict the tenant for a further 180 days (unless the tenant refuses to pay his rent or causes a nuisance)). (g) Sale of units Once registration has been effected the way is now open for the developer to transfer his ownership in the various sections to purchasers. Assuming that the developer has no difficulties in relation to tenants he will sell his units to purchasers who will acquire ownership of the units by endorsement on the sectional title deed signed by the Registrar. Coupled with the ownership of the separate section the purchaser also becomes a co-owner of the common property in undivided shares. Transfer is effected by a conveyancer. (h) Creation of the body corporate Now there are several owners who each have separate ownership of their sections and ownership of the common property in undivided shares. Who makes the decisions regarding upkeep of the common property; for example, roofs, plumbing, exterior walls, gardens etc.? Are there any controls in relation to exercise by the various owners of their rights in relation to their own sections and in relation to the common property? Obviously someone has to be in control and there must be some control over the power which he exercises on behalf of all of them. The Act deals with these problems by the creation of a body corporate of which each owner automatically becomes a member upon acquisition of ownership of his section. (i) Direction of the body corporate The body corporate functions according to the provisions of the Act and Regulations and certain rules in much the same way as a company. The value of the vote attached to membership depends upon the participation quota allotted to each section according to a formula for calculation set out in the Act which is based on size of the section. The participation quota must be set out in the schedule to the sectional plan which is registered. The participation quota is also used to determine the proportional share of the individual owner in the common property, the amount of the contribution he must make towards the expenses of the body corporate and his proportional liability for its debts. There is a procedure whereby the members can make rules to alter the value of the vote accorded to a quota but time does not permit us to examine this now. The board of trustees exercise the management function of the body corporate subject to restrictions set out in the act or the rules or in a resolution of the members in general meeting. The rules are divided into two groups, management rules and conduct rules. They are set out in GN R664 GG11245 dated 8th April 1988 and have been amended by several further Government Notices. The former apply automatically but there is provision for the developer to “substitute” management rules when he applies for the opening of a sectional title register to the extent prescribed in the regulations. These rules can be amended by the body corporate, also “as prescribed by regulation”. The latter also apply automatically but the developer seems to have a freer hand to alter these when he applies for the opening of the sectional title register provided that as altered they are not in conflict with any management rules. The body corporate has the same power by special resolution. The management rules deal with such matters as trustees, improvements, finances, managing agents and meetings of members. The conduct rules are more related to the use and care of the sections and common property. The body corporate consists of two organs, the board of trustees who, like the board of directors of a company, are elected in terms of the rules by the members in general meeting and they constitute the other organ. 6. Rights and duties of section owners Ownership has been described as a “bundle of rights”. Silberberg and Schoeman describe ownership as “the real right that potentially confers the most complete or comprehensive control over a thing, which means that the right of ownership empowers the owner to do with his thing as he deems fit, subject to the limitations imposed by public and private law.4 It includes, inter alia the right to possess property, to use and enjoy it, to take any fruits which it may produce both natural or civil, to destroy it or change it, to exclude others from any of these rights in relation to it and the right to alienate it or grant to others limited real rights in it.5 4 5 At Page 161 For example, lease, mortgage and servitude The owner of a section has all these rights. The subject matter of his ownership, a unit, is deemed by the Act to be land so he is in much the same position as any other land owner. But he is an owner of a section which is part of a group of sections and which involves a common ownership of the remainder of the property. This sort of sectional ownership could not operate to the satisfaction of all without a body of rules which to some extent have to make inroads upon the owners usual rights as a landowner. These inroads are created by: a) The concurrent rights of all owners. They cannot exercise their rights in such a way as to deny to others their rights. Some adjustment has to be made in the exercise by an owner of his right of use and enjoyment; for example; Undue noise, unhygienic behaviour, and undue use or misuse of shared facilities could all amount to an infringement of the rights of others and therefore would not be within the rights of the owner. b) The title deeds. There by be restrictions registered on the title deeds such as servitudes over the common property in favour of particular sections; for example, exclusive personal use reserved to individual owners of separate garages forming part of the common property. c) The Act restricts the freedom of the owner to use his thing as he pleases. Have a look at the duties imposed on an owner in terms of section 44 of the Act. Duties of owners in terms of section 44 include a duty to allow reasonable access to duly authorized persons for the purposes of inspection and maintenance, to carry out certain work if required to by a competent authority, to pay all charges etc. in relation to his section, to keep his section in good order and repair, not to interfere with or cause a nuisance to other occupants, to keep the body corporate informed of any change of real rights in his section and, if a purpose is specially registered on the plan to use his section for that purpose only. d) The rules, particularly the conduct rules, also restrict the owner. There are provisions relating to the keeping of animals and birds, refuse disposal, the parking of vehicles upon the common property, damage to the common property, the external appearance of the section, signs and notices, littering, laundry and washing lines, letting of units and pest control. e) In addition to these restrictions the members themselves can make new rules or resolutions which, provided they are not inconsistent with the Act or unreasonable, may restrict the owners freedom in respect of his property. f) There is a further restriction on the right of the owner in respect of the alienation of this section. Section 15B(3)(a) prevents an owner from selling his unit unless ad until he has paid all his dues to the corporate body or made satisfactory arrangements to have these paid because before the transfer can be registered in the name of the purchaser the conveyancer has to certify to that this has been done. In summary therefore an owner has the usual rights flowing from individual ownership of immovable property but subject to certain restrictions necessarily imposed for the common good or as a prerequisite for the granting of approval of a plan by the municipal body concerned. SHARE BLOCKS Recommended reading sharing : Law Property 16. der 1.) Sectional Titles Share Blocks and TimeVan der Merwe and Butler South African Property Practice and The Chapter 9 Delport Silerberg and Schoeman’s The Law of Kleyn and Boraine 3rd Ed Chapter Butterworths. Introduction to the Law of Property AJ van Walt and G J Pienaar 2nd Ed Chapter 6. Juta The essence of a share block scheme A share block scheme is one in which a company which has real rights to a property allocates it to its shareholders a right to use and enjoy a portion or the whole of that property for a particular period. The share does not pay a dividend. The use and enjoyment of the property is the holder’s only economic benefit while the company is in operation. It differs from sectional title in that the shareholder in terms of a share block scheme is not an owner of that portion of the property allocated for his use. The Company is the owner or holder of the real rights in the property. 2.) The necessary ingredients The components of such a scheme are : a) The promoter (developer) He is the person who initiates the scheme. His motive is usually to make a profit either from the property if he owns it or from the shares which he offers. His position is regulated by the Act which defines him as a “share block developer” which in turn is defined as: “any person by whom, on whose behalf or for whose behalf more than 50 percent of the share block company are held or controlled and, where two or more persons by whom, on whose behalf or for whose benefit more than 50 percent of the shares of such a company are jointly held or controlled, act in concert in relation to or are jointly connected with the business of the company, each of such persons;” In effect this means that the promoter will initially be a developer but later will drop out as he sheds his shares and a shareholder may become a developer if he ends up holding more than 50% of the shares of the company. b) The share block company The promoter forms a new company or adapts an existing one. He would go about this in the normal way. It is a normal company in many respects and is registered under the Companies Act 1973. It may be a public or a private company. The distinguishing features of the share block company are attributed to it by the Share blocks Control Act 59 of 1980. If the company already exists then its memorandum and articles will have to be adapted. Note that no extra fees are required for this or for the change of name required by section 9(1)6. The more important distinctions are as follows: 6 i) There is no danger of the company being wound up just because the number of members is below the minimums of the Companies Act7. ii) The name share block company must feature in the name.8 iii) A share block company may provide it its articles for compulsory loans by members to the company9 iv) Every share must carry an equal vote and must confer a right in the shareholder to the use of immovable property10 v) The share capital clause of the memorandum would set out the number and value of the shares which are allocated to a share block. The shares of the company are blocked in proportion to the number value and size of the accommodation units; for example, a single bedroom unit might have 50 shares allocated to it. This is the share block. Each of these shares may have a value of R2000. Such a share block will cost R100,000. A two-bedroom sea facing Sections 2(2) and 9(2) Section 3(1)(a)(ii) 8 Section 9(1) 9 Section 3(1)(c) 10 Section 3(1)(b) and 10. Although paragraphs (a) and (b) of section 10 are separated by the word “or” it seems that the intention of the section is that both should apply. 7 unit might have 75 shares allocated to it also priced at R2000 each. This will cost the shareholder 150,000. The price of the shares will be determined by the promoter who will build in all his costs and his profit. vi) The main object of a share block company “shall be to operate a share block scheme in respect of immovable property owned or leased by it.”11 The Act restricts the company to the pursuit of only its main and ancillary objects and restricts its powers to only those powers necessary for it to achieve these objects. Any act ultra vires these objects or powers will be void. Furthermore the company is prohibited from alienating or ceding its rights to the immovable property of the scheme without a special resolution of the members.12 c) vii) The articles of the company must set out the entitlement of a member to the use of a portion of the immovable property on the terms set out in the use agreement between the member and the company.13 viii) Before this use agreement is entered into a copy of it must be lodged with the Registrar.14 The property to be used The promoter has a number of options. He may buy the land himself, erect the buildings and then sell or lease them to the company or buy existing buildings and sell or lease them to the company or arrange for the sale or lease of existing buildings directly to the company. As the company has no money at first it will be loaned to the company either by the promoter or a third party. The company’s loan obligation will then be transferred to the shareholders when they purchase their shares from the promoter. The shareholder will be purchasing two separate items, the share at its market price and the loan account which will represent the total loan obligation of the company divided between all the shareholders. This is credited to the member as he contributes. 11 Section 7(1) Section 8 13 Section 7(2) 14 Section 7(5) 12 d) The share block owners At first all the shares will be registered in the name of the promoter. Gradually he will sell these off and a body of independent members will be formed. These people are shareholders but shareholders whose interest is in the use of a portion of the immovable property as opposed to financial rewards in the form of dividends. At the time of purchase of their shares they will enter into a use agreement with the company which, as we saw above is enshrined in the articles. This will set out the terms and conditions of their use of the unit and of the complex as a whole. This use can be very specific, for example, the exclusive use of apartment 294 for 25 years or for so long as the company remains in operation, or it can be flexible as to the nature of the accommodation and the period of use.15 The shareholders finance the scheme by purchasing the shares and by contributing to the company’s loan obligation, usually in instalments, and by paying into a maintenance levy. The members gradually take control of the company and manage its business through the directors whom they appoint who are usually required to abide by the set of management rules. 3.) The broad effect of the Act Share block schemes were in operation long before the Act came into being. It was introduced for the purpose of controlling these schemes with a view to consumer protection, protection of existing tenants and for the purpose of providing an option of conversion to a sectional title scheme. A company is presumed to operate a share block scheme and is therefore subject to the provisions of the Act if any share of the company accords to the shareholder a right or interest in the use of immovable property.16 The Act attempts to achieve these aims in the following way: a) The sale of share blocks i) 15 16 Tenant protection For example a time-share may be based upon a share block scheme. See next lecture Section 4 We saw that a developer in a sectional title scheme has to inform tenants of the scheme and that they have a right of first refusal and a period in which to make up their minds. Much the same applies in a share block scheme. ii) Written contract required A written contract must be entered into between the seller and the share block purchaser.17 Failure to comply with this renders the contract void with much the same provisions as are to be found in the Alienation of Land Act. A copy of this contract and the documents required to accompany it must be handed to the purchaser within 14 days of the conclusion of the contract.18 iii) The contract must contain specified information and must be accompanied by certain documents.19 17 Section 16 See next paragraph 19 Section 17 as read with the second schedule to the Act. 18 The information which the contract must contain includes the following: The name and address of the share block company The name, addresses and occupations of the directors, their terms of office, their remuneration and particulars of those who have a right to appoint them. Whether and by whom the scheme is managed and whether or not funds are entrusted to such manager. Information as to the borrowing powers of the company. The names and addresses of the auditor and secretary of the company and the professional qualifications of the secretary A description of the scheme property and its extent and the portion to be used by the purchaser, and if the property is not owned by the company, particulars as to the terms of its lease. Particulars as to the terms of any of any mortgage of the scheme property. When the purchaser can take occupation. If it is known that a sectional title cannot be registered that fact must be set out. The names and addresses of the parties. A description of the share, the name of the current registered shareholder if such person is not the seller and if the seller is a developer how many shares he has and how many are The aim of these two requirements is to inform the purchaser of all that he needs to know concerning the shares he is purchasing. iv) Much the same restrictions as to the receipt of consideration as apply under the Alienation of the Land Act apply similarly to a share block scheme except that the condition precedent is the incorporation of the share block company instead of the registrability of the Land20 b) A purchaser cannot waive his rights21 and in terms of section 17 (2) any forfeiture clause will be subject to the Conventional Penalties Act 1962 and its effect therefore subject to amelioration by the court. c) The ultra vires doctrine has full effect.22 d) The company cannot increase its loan obligation or encumber it’s assets held by others. The purchase price and how and where it is payable, a breakdown of any amounts payable in excess of the purchase price and the interest payable. The amount of the levy payable. The amount of the company’s total loan obligation, the terms of redemption, the interest payable on the loan and the rights ceded by the seller regarding his loan contributions and the amount still payable by the purchaser on the loan obligation. Details of any know special resolution to increase the company’s loan obligation. Particulars of the insurance of the property or that it has not been insured The documents which must accompany the contract are as follows: A copy of the use agreement and a statement if it differs as to how it differs from other shares in the same category if this is known by the seller. A statement showing the share allocation per share block and the amount payable towards the company’s loan obligation in respect of the share block. A copy of the latest audited annual financial statements of the company and a statement as to any material changes since they were issued if this is known by the seller or, if the A.F.S. are not available, a statement to that effect. If application has been or is to be made for the approval of a sectional plan, a statement as to when and where such plan may be inspected. 20 Section 5A Section 22 22 See 2 (b)(vi)above 21 unless it secures the vote of at least 75% of the members excluding the developer’s votes.23 As we saw above24 the company is also prohibited from alienating or ceding its rights to the immovable property of the scheme without a special resolution of the members. 4.) e) The members have the right to appoint one director once there are less than …. Members and two once they have 10 or more members. These directors cannot be removed by the developers votes.25 f) The company must insure that immovable property subject to the scheme and the directors who knew of or could have prevented the failure will be jointly and severally liable for damage suffered by the company or member26. g) There are certain financial controls imposed by the Act with regard to the employment of the company’s levy fund and member’s loan contributions. These must also be banked and accounted for separately.27 h) If a share block company wishes to convert to sectional title, special provisions are set out in sections 8 and 8A and in the first schedule to the Act.28 The rights of a share block owner Most of the rights will be set out in the use agreement which are enshrined in the articles. The contents of the use agreement, save that it must grant a right of user of the company’s immovable property to the holder of the share block, are not prescribed. They would usually include the following rights and restrictions on rights: a) 23 The right to exclusive use of the accommodation unit. But this may be modified if the scheme is intended to allow flexible use as for example in a time-share scheme. Section 14(1) See 2(b)(vi) above 25 Section 12 26 Section 19 27 Section 13 and 15. 28 Section 8(2) and (3), section 8A and schedule 1. 24 5.) b) A right to use the common property. c) The right to alienate, lease or cede rights in the member’s accommodation unit and loan account or delegate his loan obligations. d) Restrictions on the right of a holder to alter his unit. e) Voting rights if not set out elsewhere and the holder’s rights to assets upon a winding-up. The obligations of a share block owner The main obligations will be payment of the member’s levy and loan allocation and to attend to the interior maintenance of the unit. But in a flexible system, for example a time-share scheme, this latter obligation will usually be undertaken by the company. 6.) The advantages and disadvantages of share block compared with sectional title schemes a) A sectional title scheme offers the purchaser exclusive ownership of the section and co-ownership of the common property. The share block offers only a personal right against the company to the use and enjoyment of the property. b) In a sectional title scheme the developer must initially own the land. In a share block scheme he merely has to arrange for the company to acquire a lease or ownership of the land c) A share block scheme is much quicker and simpler to launch. There is no need for sectional and block plans to be prepared or for local authority approval (other than that normally required for a development of property) or for the approval of the Surveyor General or for registration of the sectional plan. The developer can begin selling units as soon as the share block company is incorporated. d) A share block scheme has the added advantage of being converted fairly simply into a sectional title scheme. The reverse would be more complex e) You will see from the next lecture (on time-sharing) that both a sectional title and a share block scheme can be utilized as the basic legal structure for the operation of a time-share scheme. TIME SHARE Recommended reading sharing 1. : Sectional Titles Share Blocks and TimeVan der Merwe and Butler South African Property Practice and The Law Chapter 10 Delport Silerberg and Schoeman’s The Law of Property Kleyn and Boraine 3rd Ed Chapter 16. Butterworths. Introduction to the Law of Property AJ van der Walt and G J Pienaar 2nd Ed Chapter 6. Juta The essence of a time-share scheme Time-sharing has been around for some time now and considerably longer than the Property Time-Sharing Control Act of 1983. It is just another means devised by the business world of providing a commodity which can be shared by many users at affordable rates for short periods of time. The whole of the property may be shared on a consecutive time basis, for example, X has the exclusive use of a house for the first quarter of the year; or the exclusive use right may relate to only a portion of the property for a certain period together with a shared right to the non-exclusive portions for the same period. Time-sharing schemes are not necessarily recurrent or annual or restricted to immovable property. The idea could, for example, be used to share such facilities as computers and yachts for once only periods or for periods recurring at intervals of two years or more. The point is that the idea is a creature of commerce and not the law. The most common form of time-sharing is the scheme in which the holder of the time-sharing right is granted the use and enjoyment of a certain piece of immovable property, normally a flat or apartment in a holiday complex, for a certain period each year. Some of these schemes are far more flexible and will allow a time-sharing owner to holiday once a year at destinations all over the world. 2. The elements of a time-sharing scheme The components are: a) The promoter of the scheme He is the person who initiates the scheme. His motive is usually to make a profit by selling the rights to the use of the property concerned to members of the public. b) The property to be used The promoter has a number of options. He may initially own a complex himself which is ready to use or he may buy land and erect the building and then, depending upon the legal basis of the scheme29, sell units to the public or sell or lease the complex to a company or club. The property may already be the property of the members of a sectional title scheme or of a company in a share block scheme and the scheme is adapted from that base. c) The legal structure or base upon which the scheme is founded Such structures fall into two categories which are further categorized. The two main categories are schemes wherein the right of use and enjoyment flows from ownership of the property and those where this right is a personal right against the owner of the property or a real right less than ownership30 i) Ownership based schemes aa) Common law co-ownership of the property If four people buy a house at the coast and agree that each shall have the exclusive use of the house for a quarter of the year this is a time-sharing scheme based upon their co-ownership of the house. This is different from the situation where several co-owners each have a concurrent exclusive right to the use of separate portions of the property and a shared right to the use of the common property. Here there is no separation of common and exclusive ownership. The whole property is used exclusively but consecutively. As the parties are not sharing the accommodation at the same time there is less need for rules and regulations concerning their conduct. 29 See next section You will remember that a lessee in occupation has a real right. See below – Schemes based upon lease 30 The owners would have to waive their rights to a partition31 for the duration of the scheme and they would also have to agree that noco-owner could dispose of his undivided share without binding his successor to the waiver and the time-sharing agreement and a similar restriction on alienation. A variation of this scheme might entail a small number of persons sharing accommodation concurrently where this can be done conveniently for example in a small block of flats or a large house. The bigger the group however, the more difficult it is to control the scheme for the benefit of all. What is often categorized as a club scheme could also be operated on the basis of co-ownership. All the members of the club or association would be o-owners of the whole property and they would all agree inter se to pool their use rights and to allocate the exclusive use of portions of the property to individual members on a periodic basis with the right to use the common property tied to the same period. The scheme would also have to provide by agreement for the termination and or transfer of membership. Shared obligations in relation to the maintenance of the property and the administration of the scheme would be a necessary feature of any of the above schemes. The members as owners of the property would also share any liability arising from the operation of the scheme. bb) Co-ownership of a sectional title unit. A sectional title unit would be co-owned by all the users of that unit for the year. This might involve something like 50 timesharing units of a week each or 25 of 2 weeks each. Each holder of a unit would be a co-owner of the apartment. There would have to be exclusive use agreements entered into by all of the co-owners of the section giving them exclusive use for 31 Where property is co-owned the owners have a right to demand a partition or division of the property between them. Some property is not, however, physically divisible; for example, a house. Some property is also not divisible according to the laws of the land; for example, agricultural land in terms of section 3 of the Subdivision of Agricultural Land Act 70 of 1970. In these circumstances the demand can be for a sale of the property and a sharing of the proceeds. their time period only and the agreements would also have to limit their rights to use the common property to these periods. The same requirements as above with regard to waiver of rights to a partition of the unit and binding successors to the scheme and the waiver would have to be met. This would probably be easier to control through the medium of the corporate body and its rules. There is already a restriction on sectional title owners in relation to alienation of their units and this could be adapted to meet these additional requirements. ii) Schemes where the time-sharers are not co-owners of the property. aa) The share block scheme This is merely an adaptation of a share block scheme. Instead of the share holder having an exclusive right to an accommodation unit and shared ownership of the common property for the duration of the scheme he will have these rights intermittently usually for a week or two once a year. These rights will be built into the use agreement incorporated in the articles. bb) The club scheme This will differ from the club scheme mentioned in (i)(aa) above in that the club or trustees32 will be the owner of the property33. The members would all contribute subscriptions or entrance fees to the club which would pay for its acquisition of the property. Their rights would be determined by agreement between themselves and the club. 32 See next paragraph. The word ‘company’ is not defined in the Share-Blocks Control Act. But assuming it means a company registered in terms of the Companies Act then any such company which operates a timeshare scheme will necessarily be a share-block company in terms of the definitions of ‘share’, ‘share block company’ and ‘share block scheme’ in that Act. The club we are looking at, therefore, if it is not a registered company, could only have corporate personality under the common law. This would mean that it could not be a club which carried on business for the gain of itself or its members in terms of Section 31 of the Companies Act. Is the operation of a share-block scheme for members carrying on business for gain? If the answer is “yes” there can be no such club based scheme. 33 The club scheme might be further varied by the creation of a trust. The club would transfer the ownership of the property to trustees who would administer it on behalf of the club. The use agreements would then be between the members and the trustees. The club might remain as the ultimate beneficiary of the trust property with the members having rights against the assets upon termination. A trust might also precede a club or association. The promoter could transfer the property he owns to a trust or transfer capital to a trust for the purchase of property. Independent trustees would be appointed to administer the scheme on behalf of unnamed beneficiaries who would have an intermittent right to the use and enjoyment of the property once they had paid for their share and an ultimate right to a share of the trust assets upon termination of the trust. It could be argued that a club or association would be formed automatically by virtue of the fact that the beneficiaries would be associated through their common rights and obligations with regard to the use and ultimate ownership of the property. cc) The lease scheme The idea here is for the initiator of the scheme to either own the property or have a long lease of it. He would in turn lease portions of the property, for example, apartments, to individual lessees on a long term but intermittent basis, for example, H hires for the first week in June every year for twenty years. The agreement would be a lease in the true sense of the word. The lessor would be responsible for providing the undisturbed use and enjoyment and all maintenance and the lessee for rental and proper care during his user and prompt restoration of the property in fit condition upon termination of each lease period. There would also have to be special terms relative to conduct and use of the common property as there would with any lease of apartments in a complex. d) The time-sharing owners. The time-sharing holders finance the scheme by purchasing the shares and by contributing to the company’s loan obligation, it is a share block scheme, and by paying into a maintenance levy. The interests of the members are protected by the legislation applicable to the scheme. If it is a share block or sectional title scheme the respective controls are built into the two Acts. If it is any other type of scheme and the Property Time-Sharing Control Act34 applies to it then special controls are provided by the Act. NB. If it could be argued that the time-sharing holders associated in a non-corporate scheme constituted an “association” for the purposes of section 30 of the Companies Act 1973, they would nonetheless not be hit by the section as they would not be associated for the purpose of carrying on business. 3.) Act The purpose behind the introduction of the Property Time-Sharing Control 75 of 1983 The main purpose of the Act is to control time-sharing schemes for the protection of the consumer. The Act attempts to achieve this aim directly and through Regulations published under the Act in Government Notice R327 of 24th February 1984. There are also sanctions for non-compliance. This aim is achieved by the following provisions: a) Time-sharing schemes are broadly targeted by the Act. Certain definitions are relevant: “1 Definitions ‘property time-sharing scheme’ means :- 34 35 aa) Any scheme, arrangement or undertaking in terms of which time-sharing interests are offered for alienation or are alienated35 and the utilization of such interests is regulated and controlled, whether such scheme arrangement or undertaking is operated pursuant to a share block scheme, any scheme under which time-sharing interests connected with rights to membership of or participation in any club are granted, any time-sharing development scheme based on the alienation of undivided shares in a unit as defined in section 1 of the Sectional titles Act, 1971 (Act 66 of 1971), or otherwise; or bb) Any scheme, arrangement or undertaking declared a See below The italics are my own property time-sharing scheme by the Minister by notice in the Gazette for the purposes of this act, in terms of which interests in the use or occupation of immovable property, or any portion or part thereof, defined in the notice, are sold or leased; [It is submitted that the words after ‘controlled’ are merely examples of the wide definition which precedes them.] ‘alienate’, in relation to a time-sharing interest, means sell or let for utilization over a prescribed period of at least three years, whether such sale or lease is subject to a suspensive or resolutive condition; and ‘alienation’ has a corresponding meaning. ‘time-sharing interest’, in relation to a property time-sharing scheme, means any right to or interest in the exclusive use or occupation, during determined or determinable periods during any year, of accommodation. It seems arguable that a small group of people who buy a house for the purpose of sharing its use on a periodic basis are not ‘alienating’ any interests and therefore would not be hit by the Act. Similarly if club members buy property as a club and agree between them as to how it is to be shared there does not seem to be an alienation as between the members. On the other hand where the club as a corporate body alienates it’s sharing interests to its members the Act will clearly apply.36 So will the Act apply when the club members acquire their interests from trustees who are the owners of the property. Where a lease underpins the scheme the Act will apply because “alienate” includes to let for three years or longer. b) Written contract containing prescribed information A written contract signed by the parties or their agents authorised in writing is again required and the choice of language is with the purchaser.37 Failure to comply results in the contract being void with similar consequences to those set out in the Alienation of Land Act. 38 The 36 But see footnote 48 above Section 2(1) and 3 38 Section 9(2) 37 contract must contain a long list of specified information39 designed to place the purchaser in possession of all the information he needs in order to assess the true value of what he is buying and any risks involved. Failure to include this information will afford the purchaser certain relief40 if he can prove prejudice and if proceedings are instituted in a court having jurisdiction41 within two years from the date of the contract. The relief a court may grant includes : i) A reduction in the interest rate payable ii) Rectification of the contract iii) A declaration that the contract is void iv) Any alternative relief the court may deem fit An omission pointed out by Van der Merwe and Butler42 is that the seller is not required to give the purchaser a copy of the contract. c) Invalidity of certain clauses and amelioration of forfeiture clause. The Act43 invalidates certain clauses which a seller may include in the contract. These are : i) any provision which deems the seller’s agent to be the purchaser’s agent. ii) any provision exempting the seller from liability for his agent’s acts, representations or omissions. iii) Any clause removing or restricting the seller’s liability under his warranty against eviction. iv) Any clause whereby the purchaser binds himself in advance to agree to the seller delegating his duties 39 Section 4(1) Section 8(1) 41 Section 8(2) 42 Sectional Titles, Share Blocks and Time-sharing 507-508 43 Section 5(1) 40 It also provides44 much the same stipulation as appears in section 17(2) of the Share Blocks Control Act with regard to the application of the Conventional Penalties Act to forfeiture clauses. d) Prescribed contents for time-sharing advertisements An advertisement for the sale of a time-sharing unit must include information as to the name and location of the scheme, the nature of the accommodation unit, the legal base for the scheme, the duration of the time-sharing and when it will be ready for occupation.45 The section creates an offence carrying a penalty of a fine of R1000 or imprisonment for a year or both. e) Restrictions on receipt of consideration Section 7 provides much the same restriction as applies in section 26 of the Alienation of Land Act but here the condition precedent is the furnishing of an architect’s certificate to the purchaser. This certifies that the completed accommodation complies substantially with the relevant building plans, town planning scheme and local authority by-laws, and is “sufficiently complete for the purposes of utilization”. A contravention of the section is an offence and carries the same penalty as in paragraph (c) above. f) Documents which must be available at place of sale The developer46 must have certain documents and information available at the place where the time-shares are being sold.47 There is a long list of the information required, much of it will be repeated in the contract. The documents include plans and a copy of any management agreement48. Failure to comply would also open the door to the relief set out in 3(a) above. g) Restrictions on hybrid schemes The sale of time-sharing interests unless all the accommodation units of the property subject to the scheme are in the same scheme is prohibited.49 44 Section 5(2) Section 6 of the Act as read with Regulation 3. 46 This person is not defined in the Act but is defined in Regulation 1 and basically means the promoter selling time-shares in his own scheme or his agent. 47 Regulation 4 48 See 4(b)(ii)(aa) below 49 Regulation 5(a) 45 Thus it would not be possible to have time-sharing holders occupying certain apartments in the complex and tenants occupying the other apartments other than in terms of a lease arising out of a time-sharing interest. Some protection is also afforded to owners in a sectional title scheme and share-holders scheme against their will. 75% of owners or shareholders, as the case may be, would be required to give their written approval of such a change before it could be effected.50 NB. Where a time-sharing scheme is operated under a share block scheme, many of the requirements of the Property Time-Sharing Control Act are already required by the Share Blocks Control Act. Section 10 of the former Act excepts the duplicating provisions of that Act in relation to time-sharing schemes based upon share block schemes. 1.) Management of the scheme a) Share block and sectional title based schemes Where a time-sharing scheme is operated on the structure of a share block or sectional title scheme then there is a management structure already in existence in terms of those Acts. No management rules are therefore prescribed for these schemes. b) Other schemes i) Where the Act applies We have already seen that the Act will apply to leasing schemes and to club schemes when the club or trustees own the assets. ii) How it applies aa) Appointment of managing agent by developer Before selling any time-sharing interest a developer51 is required to appoint a managing agent. This person must be appointed in a written contract in which his fee is specified. He may be removed by majority vote of those having interests 50 51 Regulation 5(b) See footnote 61 above in time ‘modules’52 in the scheme. Until a management association is in place the manageing agent is responsible to the developer. Thereafter he is responsible to the management association who might terminate his services or retain them.53 bb) Establishment of management association Rather like the creation of the corporate body in the sectional title scheme this association is an automatic creation which takes place as soon as a person other than the developer acquires a time-sharing interest in the scheme. While the association does have power to sue for levy contributions it does not appear to be a corporate body in the true sense. It does however have specific powers and duties set out in the regulations which relate generally to the efficient operation of the scheme. Each holder of an interest in the scheme will have a vote. Until he has sold half of the time-sharing modules the developer will in effect be able to control the managing agent through the management association. EXCURSUS For an interesting case where the purchaser was entitled to opt out of the contract on the grounds of reasonable mistake have a look at Goldberg and Another v Carstens 1997 (2) SA 854 (C) (Not examinable) End of this section on selected property law statutes. Notes drafted by Dave Holness BA LLB LLM PGDHE- UKZN Law Lecturer (Attorney). September 2007 52 Van der Merwe and Butler point out at page 525 and the pages which follow that the regulations in relation to the managing agent and management association indicate “hasty draftsmanship”. It is not clear how or if this term differs from a time-share interest. 53 Regulation 11 Juta’s Law Reports NOTE: The point of this extract is that you should consider how the case might have an effect on Tutorial 1 – dealing with the Garden Cities case. October’s issue of the Advance Notification of Juta’s SA Law Reports and SA Criminal Law Reports touches on a case that deals with that enemy of economic freedom (Barkhuizen v Napier), the massproduced commercial contract. In Barkhuizen the Constitutional Court finds, in dealing with a timelimitation clause in an insurance contract, that the hitherto sacrosanct doctrine of pacta sunt servanda must yield to inherently nebulous public policy notions of fairness, justice and reasonableness, as duly underpinned by the Constitution. Barkhuizen will have a marked impact on SA commercial law, which is postulated on at least the supposition of contractual autonomy. Heady stuff indeed. See Barkhuizen v Napier 2007 (5) SA 323 (CC). – Read more From Legalbrief 1 October 2007 NOTE: The point of this extract is to draw a comparison between PIE in South African and English Law. JA Pye (Oxford) Ltd and Another v United Kingdom (Application No 44302/02): Provisions of English law allowing squatters to obtain after 12 years of adverse possession the right to title of the land, without liability to compensation, was not an intrusion into the applicant companies’ rights to the ownership of their property – the Grand Chamber of the European Court of Human Rights held, by 10 votes to 7, overturning a four-three judgment of a Chamber that the squatters had not violated the applicants’ right to peaceful enjoyment of their possessions as guaranteed by article 1 of Protocol No 1 to the European Convention on Human Rights. -- The Times From Legalbrief 1 October 2007 The transition to ownership: Passing of risk and profit in the res vendita ~ Generally, the owner bears the loss if a thing is damaged without the fault of another. ~ But where the property is sold, the rule is that the risk passes on conclusion of the agreement – even if delivery has not yet taken place. ~ The issue risk will not apply where there is supervening impossibility of performance. ~ Benefits or profits in the res vendita follow the risk; unless the benefit is personal to the seller. Van Deventer v Erasmus 1960 TPD Qualifications to the rule on passing of risk: ~ If the seller is late delivering the res, he bears the risk during the delay unless damage wd have occurred anyway. ~ The risk only passes when the sale is perfecta: ~ ~ ~ The price must be fixed (not just ascertainable); The subject matter must be fixed (not just ascertainable) Poppe, Schunhoof & Guttery v Mosenthal 1879 Buch. Taylor & Co v Mackie, Dunn & Co 1879 Buch. Any suspensive condition to which the sale is subject must have been fulfilled. ~ ~ ~ Note that an agreement to take delivery is highly unlikely to be a suspensive condition. Note that once a suspensive condition is fulfilled, the risk becomes the purchaser’s from the sale date. De Wet v Zeeman 1989 NPD Note that parties may vary the incidence of risk by agreement, and this is common practice to protect the purchaser.