Property Law Case Summaries - Compiled by Remy Ngamije PDF

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Khan v Minister of Law and Provincial Plessis August September case exhibits a simple determination of the principal thing in a composite, ultimately applying It suggests that the principal thing in a car is the applicant had his BMW seized a policeman. He now applies for an order to reclaim it. It ...

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Khan v Minister of Law and Order Transvaal Provincial Division Du Plessis J 1990 August 29; September 5

This case exhibits a simple determination of the principal thing in a composite, ultimately applying common sense. It suggests that the principal thing in a car is the chassis. FACTS The applicant had his BMW seized by a policeman. He now applies for an order to reclaim it. It was found that almost the entire body of the car is that of a stolen 1988 BMW. The engine and inner front portion of the car are from a 1985 BMW legitimately bought by the applicant. LEGAL QUESTION How does one determine which is the principal thing after accession to form a composite thing? REASONING Where one movable is joined to another so as to form an entity, the owner of the principal thing becomes the owner also of the thing joined to it. It is therefore imperative in this case to determine what the principal thing is. Various tests have been used over the years: the bulk test; the character, form and function test; and the pure value test. But these things are really a matter of common sense; the tests are of use primarily in cases of doubt. ANSWER TO LEGAL QUESTION The principal thing is the one which gives the composite thing its identity; or its character, form and function. OUTCOME The ultimate car is therefore the stolen 1988 BMW and the applicant accordingly has no right to reclaim it.

Ex parte Geldenhuys Orange Free State Provincial Division De Villiers JP 1926. April 15; May 20

This case provides the locus classicus for the ‘subtraction from dominium’ test: one must look not at the right itself but at the correlative obligation, and determine whether it binds successors in title in such a way that it can be said to subtract from the land’s dominium. The ratio confirms that a personal right can be registrable when it is inextricably linked to one or more real rights. This principle was later enshrined in s 63(1) of the Deeds Registries Act. The judgment is also useful in that it suggests that neither the paying of money nor conditional obligations can easily be considered real rights. FACTS A testatrix died, survived by her husband and five minor children. In terms of the joint will of the married couple, as soon as the eldest child reaches majority the survivor must divide up their farmland in equal portions by the drawing of lots and distribute it among the children. The child who gets the portion comprising the homestead of the farm shall pay £200 to the other children. The applicant (the surviving father) applied for an order inter alia instructing the Registrar of Deeds to register transfer of the undivided shares of the land to the children subject to these conditions. LEGAL QUESTION Can a personal right be registrable by virtue of its close relationship with a real right? REASONING The question here is whether the conditions of the will can be considered real rights, i.e. ones which burden the land, and constitute a deduction from the dominium. This was the explanation given in Hollins v Registrar of Deeds and is still accurate for the purposes of the present case. The key is that the correlative obligation which arises from a real right must survive a transfer of ownership and continue to burden the land; it must be an obligation binding not just on one person or other but on anyone. It seems that the provisions of the will ‘so directly affect and adhere to the ownership of the undivided shares’ that they need to be regarded as real. As for the difficult issue of the paying of the £200 by the owner of the homestead, it must be held that this is a personal right. This is because the paying of money cannot easily be held to be a real right, and the obligation is uncertain and conditional upon the outcome of the drawing of lots. It is therefore not a registrable right per se. However, it is so closely related to a right which is registrable that it must also be regarded as such. If not, it would give a misleading representation of testamentary direction, especially to strangers who wished to purchase one of the undivided shares. Answer to legal question Yes, a personal right can be registrable if it is inextricably linked to one or more real rights. Outcome The applicant’s prayer for the registering of the entire clause in the will is granted.

Schwedhelm v Hauman Eastern Districts Local Division Pittman JP, Lewis J 1946. November 27. 1947. February 3

In addition to its contention that a servitude cannot furnish a positive obligation on the servient owner, this judgment is important because, like Capex v Denel, it argues that errors in the Deeds Registry imply very little about the legal status of the relevant rights (specifically, it states that a right is not made real merely by its registration). Finally, the judgment makes it clear that personal rights can be transferred to successors in title by (express or implied) agreement; in this they can behave in practice somewhat like real rights. FACTS

The excipient (defendant) came to own a portion of farmland across which the respondent (plaintiff) has a right to draw water. The plaintiff claimed that the defendant was under an additional obligation to provide and maintain the windmill and piping necessary for the plaintiff to exercise his right, and was suing on the grounds that the defendant had failed to meet this obligation. The defendant had excepted to this claim because it has no legal basis; it constitutes an unlawful attempt to impose a praedial servitude. LEGAL QUESTION

Can a servitude impose a positive obligation on the servient owner? REASONING

It is common cause that the servitude of aquaehaustus is valid. But the additional maintenance requirement cannot be a praedial servitude because a well-known rule of Roman law makes clear that no servitude can cast upon the owner of the servient tenement a positive duty such as this one. There remains the important fact that the Registrar of Deeds registered the servitude in its entirety. But it is quite possible that the Registrar of Deeds was simply wrong to register this right. Since the maintenance right does not appear to satisfy the exception identified in Ex parte Geldenhuys, and its registration contradicts the fundamental principle of law that no personal rights are registrable, the fact that it was granted by the Registrar of Deeds is ignored. The respondent countered that the intention of the parties created a genuine servitude. But the intention of the parties cannot override the fundamental principles of law any more than can the Registrar of Deeds’ intentions. This is independent of the question of whether a personal obligation could have been imposed upon Els (the owner before the defendant) to compel him to provide maintenance. In fact, such an obligation was imposed upon Els, and a reading of the deed of transfer between Els and the defendant suggests that the defendant did indeed undertake to fulfill the maintenance obligation. While this is quite different to recognition of a real right to maintenance, and could be rebutted in the later court proceedings, it is sufficient to fault the present exception. Answer to legal question No, a servitude cannot impose a positive obligation on the servient owner. Outcome The exception is dismissed with costs.

Nel NO v Commissioner of Inland Revenue Appellate Division Steyn CJ, Beyers JA, Malan JA, Van Blerk JA, Ramsbottom JA 1959. November 12, 18.

In this case, the question of whether an annuity right is a real right is raised. The court does not reach a firm verdict, but suggests in a frequently-referenced dictum that it could be if the payment derives from the land. This suggestion was, it could be argued, later endorsed by Barclays Bank v Comfy Hotels. FACTS

A father donated a piece of property to his minor son, accepting the donation on the son’s behalf as his natural guardian. The donation was subject to certain conditions, namely that the father retain a life usufruct over the property, and that once he dies his wife shall be granted a life usufruct and will be the beneficiary of a notarial deed executed by the son to pay £20 a month to her. The father died and was survived by his wife and son, the former of whom was appointed executrix and is the appellant in this case. She contended inter alia that the annuity of £20 was a usufructuary-like interest and therefore must have its value deducted from the donor’s estate in terms of the Death Duties Act. The Commissioner rejected this. The executrix applied to the Cape Provincial Division, but the court ruled that the obligation imposed by the annuity was personal to the son, and therefore not registrable in terms of the Act. The wife appeals to the present court. LEGAL QUESTION

Is an annuity right a real right? REASONING

Counsel for the appellant argued that the annuity right would ‘run with the land’ and bind successive owners of the property, and should therefore be considered a real right. The question was then raised whether this sort of obligation to pay money, that will bind successors in title, can in South African law be imposed upon land and registered as title. Lower courts had answered this question in the affirmative, as did counsel for both sides. However, the present court has never had to rule on this matter and there is no need to do so here. The important question is actually the more basic one of whether the donor had intended to impose the annuity condition as a personal obligation on his son, or rather as a real right which burdens the land. The relevant section of the transfer deed makes it abundantly clear that the donor intended it to be a personal obligation on his son. Answer to legal question No verdict is reach. It is tentatively suggested, though, that an annuity right could be real if the payment derives from the land itself. Outcome Since the annuity right is not real, it does not entitle the appellant to claim a deduction in terms of the Death Duties Act. The appeal is dismissed with costs.

Cape Explosive Works Ltd and Another v Denel (Pty) Ltd and Others Supreme Court of Appeal Vivier JA, Olivier JA, Zulman JA, Streicher JA, Mthiyane AJA 2001. February 22; March 19.

This case makes clear that the Deeds Registry is not absolutely reliable: an omission of a real right therefrom does not extinguish it. The judgment also provides a clear illustration of the application of the two-fold test. Finally, the Court ruled that a use restriction and repurchase right were inextricable and formed a composite whole. For a criticism of this interpretation see Wille p.437. FACTS

In 1973, Capex (the appellant) sold two pieces of land to Armscor (the second respondent). In the deed of sale it was stipulated that (1) the properties would be used only for the manufacture of arms, and (2) if the properties were no longer used as such Capex would have the first right of repurchase. Armscor agreed to the registration of these rights in the Deeds Office. But through various alienations and consolidations a significant portion of the land in question came under the ownership of Denel (the first respondent) completely unencumbered by condition 2 and mostly unencumbered by condition 1, ostensibly due to a clerical error in transfer. Denel brought an application to the court a quo declaring its ownership of the land to be legitimately unencumbered by condition 2, while Capex brought a counter-application for the reinstatement of the conditions in title. The court found in favour of Denel on the grounds that condition 2 was not registrable. Capex appeals to the present court. LEGAL QUESTION

Does the omission of a real right from the registry affect its legal status? REASONING

As follows a number of cited rulings on the matter, the intention with which transfer was given and received is a key determiner of whether conditions 1 and 2 were transferred in title. Since Capex sold and Armscor bought the property subject to those conditions and without complaint, the transfer was presumptively completed with the intention to transfer those conditions. Other circumstantial evidence confirms this. We must then ask whether the condition results in a ‘subtraction from the dominium’ of the land in question. Counsel for Denel argued that condition 2 could not be a real right because it imposed a positive obligation on the transferee to notify the transferor when the properties were no longer required for arms manufacture. But the giving of notice is as much a right as an obligation, because if Denel does not do so the land is useless to it. Conditions 1 and 2, as a composite whole, patently constitute a subtraction from the dominium. Because of the nature of a real right, being enforceable against anyone and in perpetuity, they do not cease to exist simply by their erroneous omission from subsequent title deeds. As follows case law and the ‘negative system’ which is in place, the registry cannot be absolutely relied upon as an accurate reflection of the true state of affairs. Answer to legal question

No, such omission from the registry does not affect its legal status. Outcome The appeal is upheld with costs; the judgment of the court a quo is dismissed. The title deed must be rectified so as to register conditions 1 and 2, and Denel is interdicted from using the properties contrary to those conditions.

Bowring NO v Vrededorp Properties CC and Another Supreme Court of Appeal Streicher JA, Brand JA, Heher JA, Van Heerden JA, Maya JA 2007. May 21, 31.

The details of this case are unimportant. The only significant matter is the Court’s extension of the application of the doctrine of notice with regard to successive sales of the same property , by allowing the first purchaser to recover the thing sold directly from the second purchaser who acquired the property with knowledge of the first sale. There is no precedent in our case law for such application; ordinarily the second sale would be cancelled and then the first purchaser would be entitled to claim the property from the seller. But the Court ruled that there was no reason to disallow direct transfer from the second purchaser to the first. It should be emphasized that the doctrine of notice only operates in this manner where the second purchaser knew of the first sale.

Wahloo Sand Bk en Andere v Trustees, Hambly Parker Trust, en Andere Supreme Court of Appeal Vivier JP, Howie JA, Olivier JA, Cloete AJA, Brand AJA 2001. September 11; November 29.

The details of this case, like Bowring, the other case on the doctrine of notice, are unimportant. The significance is just that it holds that an as-yet-unregistered servitude is registerable if the purchaser of the servient tenement was ignorant of it at the time of purchase but was made aware of it before transfer. The Court had justified this on the basis of the doctrine of notice and the maxim prior in tempore, potior in jure, since the appellants’ personal rights to have the servitudes registered had arisen before the defendant’s personal right to have ownership of the land transferred unencumbered. Owner concluded agreement over mutual servitudes of right of way. Before registration, property sold, new owner refused to have servitude registered. Bona fide purchaser who had become owner was not bound by an unregistered servitude because he had obtained unencumbered ownership of the servient tenement when it was registered in his name. not the case if not yet registered in his name, and his lack of knowledge of the existence of the servitude agreement was accordingly no defence against a claim by the owner of the dominant tenement for a specific performance thereof. Further - both the purchaser of the servient tenement before registration and the owner of the dominant tenement had personal rights, the former to transfer of the property into his name the latter to registration of the servitude. Although the rights claimed were compatible in that ownership and a servitude could coexist, the claims were not, the first respondent wanted clean title, which was incompatible with a registered servitude over the property. Priority of the competing claim decided in favour of appellant according to the qui prior est tempore potior est iure, unless the respondent had raised special circumstances that would tilt the balance of fairness in his favour. Held that servitude should be registered

Lorentz v Melle Transvaal Provincial Division Viljoen J, Human J, Nestadt J 1978. April 5, 6; June 15.

This ‘watershed judgment’ is most significant for its restriction of the subtraction from dominium test so as to require curtailment of the enjoyment of the land “in the physical sense” (although in Silberberg and Schoeman it is argued that the SCA in Capex does not condone this narrow formulation). This narrower test compels the court to declare that obligations sounding in money are typically personal in nature. This squarely conflicts with the decision in Pearly Beach, as does this court’s rejection of various mining cases as disanalogous. Of minor interest is the confirmation that neither the intention of the parties nor erroneous registration can convert a personal right into a real one, echoing Schwedhelm. FACTS Mr van Boeschoten, the father of the respondent, and Mr Lorentz, the father of the appellant, were about to acquire coownership of a piece of land. They registered a notarial deed against the title deed agreeing to subdivide the land such that if either subdivision had a township laid out upon it the owner of the other portion would be entitled to half the proceeds of this development. Earlier in the deed it was stated that the owners’ “heirs, executors and assigns” acquire the stipulated rights over the subdivisions. The provisions of the deed were registered against the title deeds of all subsequent owners, including now the appellant and respondent. The respondent applied for an order declaring inter alia that the rights created by the township clause were personal rights. A single judge granted the application, and the matter is now brought before a full bench; the appellant contends that the rights are real. LEGAL QUESTION Can an obligation sounding in money be a real right? REASONING To decide whether the township clause is a praedial servitude, as alleged, we must ask whether (1) it is of such a type of right as to be capable of being a praedial servitude, and (2) whether the parties intended it to be such. The second point arises only if the first question is answered in the affirmative, because intention of the parties alone cannot convert a personal right into a real right. Also, the mere fact that the right was registered does not make it real. The dictum in Nel NO tentatively suggests that an annuity right could be real if the money comes from the land. Also, it was submitted that the right of a person to take natural fruits from the land is real in nature, so the right to take the civil fruits may be too. This is particularly so because the township clause would raise the value of the dominant tenement. Regardless, this is a conditional obligation to pay money by one person. His rights are curtailed, but not in relation to ‘the enjoyment of the land in the physical sense’. The cases referred to by counsel involving mineral rights provide a dubious analogy for the present matter, and should therefore be ignored. Ultimately the first leg of the test is not passed, and so this is indeed a mere personal right. ANSWER TO LEGAL QUESTION No, it is typically a personal right. OUTCOME The appeal is dismissed.

Linvestment CC v Hammersley and Another Supreme Court of Appeal Howie P, Mthiyane JA, Heher JA, Combrinck JA, Kgomo AJA 2007. November 21. 2008. February 28.

This case overturns the established case law by holding that the owner of servient tenement can in fact change the route of a defined servitude without the consent of the dominant owner if(a) the status quo is materially inconvenient to

the servient owner; (b) the relocation occurs on the servient tenement; (c) the relocation will not prejudice the dominant owner; and (d) the ...