Case Name:

Croxford Trading 7 v The Body Corporate of the Inyoni Rocks Cabanas Scheme no ss1/11978 (174/2010) [2011] ZASCA 27.

Area of Law:

Property Law re: Sectional Titles

Brief Facts/ Summary:

The Court a quo: KwaZulu-Natal High Court, Pietermaritzburg.
The Appellant: Croxford Trading 7 (Pty) Ltd
The Respondent: The Body Corporate of the Inyoni Rocks

This appeal concerns a developer’s ‘right of extension’ in terms of a sectional titles scheme.

Developer’s right of extension explained:

The Sectional Titles Act 95 of 1986, like its predecessor, the Sectional Titles Act 66 of 1971, sanctions the construction of a sectional title scheme in stages. A developer intending to add a further phase or phases to a sectional title development must, when applying to the local authority for the sectional plan to be registered, reserve a right to extend the scheme. This right is known as the developer’s ‘right of extension’. Where the developer does not reserve the right, or the reservation has lapsed, the right to extend the scheme vests in the body corporate.[1]

In 1978 a sectional title scheme, known as Inyoni Rock Cabanas was registered. The Sectional Titles Act 66 of 1971 was applicable at the time of registration. The developer owned a unit in the scheme and reserved the right, which it had recorded in a conveyer’s certificate, to extend the development. The conveyer’s certificate was only registered in October 2003, which meant that the Sectional Titles Amendment Act 15 of 1993 was the applicable legislation in this regard.

In 2007 the developer transferred its unit to the Appellant, as well as having a Deed of Cession registered in the Appellant’s favour thereafter, purporting to cede the developer’s “right of extension” to the Appellant. The consequence of this was that at the time of registration of the conveyer’s certificate, the developer no longer owned the unit and thus had no interest in the common property of the scheme.

In the court a quo, the Respondent argued that because the developer’s right had been acquired under the previous legislation, it had lost that right when it disposed of the unit. At the time of the Deed of Cession to Appellant, the developer had no right to transfer its “right of extension”. The Respondent thus sought a declaratory order in the Court a quo, directing the Registrar of Deeds to cancel the Deed of Cession.

The Appellant argued in the court a quo that section 25(5) of the 1986 Act allows that the “right of extension” may be exercised even though the developer or its successor-in-title has no other interest in the common property.

The court a quo granted the declaratory order in the favour of the Respondent, forcing the Registrar of Deeds to cancel the registered Deed of Cession in favour of the Appellant.

The SCA held on appeal: “The developer disposed of its unit in the scheme after the 1993 Amendment took effect and thus ceased to have an interest in the common property. Thereafter, it purported to transfer its right of extension to the Appellant by notarial Deed of Cession. But it could not do so because the existence or exercise of a right of extension was dependent upon its continued ownership of the relevant unit. It follows that the High Court was correct to grant the declaratory order to the respondent……”[2]

The appeal was dismissed.

Importance/ Signifigance:

A developer who owned an interest in the common property of a sectional title scheme under the Sectional Titles Act 66 of 1971, and subsequently disposes of the interest, has no ‘right of extension’ that is transferable.

[1] Paragraph 2; Judgement of Cachalia JA: Croxford Trading 7 v The Body Corporate of the Inyoni Rocks Cabanas Scheme no ss1/11978 (174/2010) [2011] ZASCA 27.
[2] Paragraph 19; Judgment of Cachalia JA: Croxford Trading 7 v The Body Corporate of the Inyoni Rocks Cabanas Scheme no ss1/11978 (174/2010) [2011] ZASCA 27.

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