THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
No precedential significance

Case no: 116/10
In the matter between:
BONHEUR 76 GENERAL TRADING (PTY) LTD

First Appellant
THE MORNINGSIDE WEDGE OFFICE PARK OWNERS
ASSOCIATION (ASSOCIATION INCORPORATED
UNDER SECTION 21)

Second Appellant
LESLIE WILLIAM LOB

Third Appellant
and
CARIBBEAN ESTATES (PTY) LTD

First Respondent
WEDGEPORT (PTY) LTD

Second Respondent
MARTIN ETTIN

Third  Respondent
DEREK GREENBERG

Fourth Respondent
GREGORY FRANCIS PORTEOUS

Fifth Respondent
DOUGLAS WILLIAM PORTEOUS

Sixth Respondent
REGISTRAR OF DEEDS, PRETORIA

Seventh Respondent
Neutral citation:
Bonheur v Caribbean (116/10) [2011] ZASCA 19 (17 March 2011)
Coram:  HARMS DP, LEWIS, PONNAN, MALAN and THERON JJA

Heard:
8 March 2011
Delivered
17 March 2011
Summary:
Right of pre-emption to share in immovable property not created
through unsigned agreement: party with no right to share cannot prevent its
alienation.

_________________________________________________________________________
ORDER
_________________________________________________________________________
On appeal from: South Gauteng High Court (Johannesburg) (Van Eeden AJ sitting as
court of first instance).
The appeal is dismissed with costs including those of two counsel.
________________________________________________________________________
JUDGMENT
________________________________________________________________________
LEWIS JA (HARMS DP and PONNAN, MALAN and THERON JJA concurring)
[1] This dispute concerns an undivided share in residential property in
Morningside, Johannesburg. The property is adjacent to an office park and a
shopping centre developed by the first appellant, Bonheur 76 General Trading (Pty)
Ltd (Bonheur), and governed by the second appellant, Morningside Wedge Office
Park Owners Association (the Association), of which all the owners of the office park
and the centre are members. The third appellant is Mr Leslie Lob, who is also a
director of Bonheur and who deposed to the founding affidavit.
[2] The appellants sought an order in the South Gauteng High Court setting aside
the sale by the first respondent, Caribbean Estates (Pty) Ltd (Caribbean), to the
second respondent, Wedgeport (Pty) Ltd (Wedgeport), of its 46 per cent undivided
share in the property; setting aside a mortgage bond registered over that share of
the property in favour of the third and fourth respondents,  Mr Martin Ettin and Mr
Derek Greenberg, and interdicting the respondents (the fifth and sixth respondents
being respectively Mr Gregory Porteous and Mr Douglas Porteous, members of
Caribbean and authorized to represent it) from alienating the share other than in
terms of various contracts, and the memorandum and articles of association of the
Association, to all of which the appellants asserted the respondents were party. The
seventh respondent is the Registrar of Deeds, who played no role in the litigation.

Van Eeden AJ dismissed the application with costs on the attorney and client scale1
but granted leave to appeal to this court.
[3] The property was created on 16 November 2005 by virtue of a subdivision. A
46 per cent share was acquired by Riverbend Trade and Investment 4 (Pty) Ltd
(Riverbend) and a 54 per cent share was acquired by Vinella Investments (Pty) Ltd
(Vinella). Shortly thereafter, in January 2006, Riverbend sold its 46 per cent share to
Caribbean and Vinella sold its 54 per cent share to Bonheur. It is the share acquired
by Caribbean that is in dispute.  I shall refer to it for convenience as the Caribbean
share.
[4] On 25 September 2008 Caribbean sold its share to Wedgeport. Transfer was
effected on 1 December 2008 and on the same day a mortgage bond was registered
over the Caribbean share in favour of Ettin and Greenberg as security for a loan
made to Wedgeport.
[5] The grounds on which the appellants initially claimed relief were that Bonheur
had what they termed a ‘de facto’ right of pre-emption in respect of the Caribbean
share, and that Wedgeport was precluded from buying or taking transfer of the share
without first becoming a member of the Association. The second ground was
founded in the supposed principle that co-owners of undivided shares in property
cannot alienate their shares without the approval of other co-owners. This ground
was extended during the hearing of the appeal to encompass an oral agreement of
partnership between Bonheur and Caribbean which precluded the sale or
mortgaging of the Caribbean share without the consent of Bonheur. And in its reply
to Caribbean’s founding affidavit Bonheur had raised a further ground: that the sale
by Caribbean to Wedgeport, a loan to it by Ettin and Greenberg, and a mortgage
securing payment of the loan, were ‘sham transactions’.
The right of pre-emption
[6] The ‘de facto’ right of first refusal was alleged to arise from three sources: the
articles and memorandum of association of the Association; a co-owners’ agreement
and a joint venture development agreement (the JVD agreement). The high court

1 The judgment is reported: 2010 (4) SA 298 (GSJ).

found that there was no such right. Neither Bonheur nor Caribbean was a member of
the Association and had not been required to become such when they acquired their
respective shares from Riverbend and Vinella. They were thus not bound by the
articles and memorandum of association.
[7] The co-owners’ agreement relied on by Bonheur was concluded on 12 August
2005, before the subdivision and before the shares in the property were transferred
to Bonheur and Caribbean. It created pre-emptive rights in respect of some of the
properties, but not the residential property the shares in which were acquired by
Bonheur and Caribbean. In any event, it was common cause that this agreement had
not been signed on behalf of either Bonheur or Caribbean. Thus it too did not confer
on Bonheur any right of pre-emption.
[8] The third agreement relied on was foreshadowed in a letter of intent signed on
12 August on behalf of Bonheur and Caribbean, and also by Ettin and Greenberg. It
referred to the proposed co-ownership agreement, and also, inter alia, to the JVD
agreement. That too was never concluded. Although a draft agreement was attached
to the founding affidavit of Lob it was not actually agreed to or signed. Since a right
to purchase land must be in writing, signed by the parties or their duly authorized
agents (s 2(1) of the Alienation of Land Act 68 of 1981), no valid right of pre-emption
came into existence. The high court thus correctly found that Bonheur had no right to
demand that the Caribbean share be sold or transferred to it.
Oral agreement of partnership
[9] In argument at the hearing of the appeal Bonheur conceded that it had no
right of pre-emption given the requirements of s 2(1) of the Alienation of Land Act.
Counsel thus changed tack, submitting that as a partner of Bonheur, Caribbean was
precluded from alienating partnership property without the consent of Bonheur. He
argued that there was a partnership agreement, concluded orally, the terms of which
were to be found in the draft of the JVD agreement read with the letter of intent. The
latter recorded that the parties (in fact the predecessors of Bonheur and Caribbean)
would not make material decisions about the common property without unanimous
agreement. And the former provided for a ‘buy-out’ procedure and would have
imposed a duty of good faith and an obligation to share information upon the parties.

[10] Bonheur argued that the letter of intent and the unsigned draft of the JVD
agreement proved that there was an agreement, albeit oral or tacit, that there would
be a partnership between it and Caribbean, precluding the alienation of the
Caribbean share. The terms were exactly the same as those of the draft JVD
agreement and the date when the partnership came into existence was the date of
the letter of intent – 12 August 2005.
[11] This was not the case made in the application. Nor was it presaged in the
heads of argument for Bonheur. There is nothing to support the contention. On the
contrary, the founding and subsequent affidavits deposed to on behalf of Bonheur
were firmly based on the alleged de facto right of pre-emption arising inter alia from
the draft JVD agreement. Moreover, the parties to the latter agreement would have
included Lob and Vinella. The rabbit pulled out of counsel’s hat bore no resemblance
to a partnership between the co-owners. This argument too must fail.
Alienation of share without all co-owners’ consent
[12] The appellants argued, thirdly, that Caribbean is precluded by the common
law principles regulating co-ownership from selling the Caribbean share to
Wedgeport; and that Wedgeport was precluded by the same principles from
mortgaging the Caribbean share to Ettin and Greenberg. However, as found by the
high court, s 34(1) of the Deeds Registries Act 47 of 1937 expressly allows for such
alienation. Should a co-owner wish to alienate only a fraction of his share, a
certificate of registered title has to be furnished to the Registrar. But should the full
share be sold or mortgaged no such certificate is required. The conclusion to be
drawn from this provision alone is that such alienation is permitted. The section does
not require the consent of the other co-owners. That is settled common law as well.
[13] Each co-owner of property is entitled to dispose of his share without the
consent of the others.2 The right of disposal is not fettered unless by agreement. Of
course one co-owner may not use or deal with the common property as a whole

2 See C G van der Merwe ‘Things’  Lawsa  vol 27 (First reissue) paras 409 and 412 and P J
Badenhorst, Juanita M Pienaar and Hanri Mostert Silberberg and Schoeman’s The Law of Property  5
ed (2006) p 133 ff.

without the consent of all the co-owners.3 But the sale of a share, or its
hypothecation, does not affect the property as a whole. The sale to Wedgeport, and
the mortgage of the Caribbean share in favour of Ettin and Greenberg, did not in my
view require the consent of Bonheur. The application was correctly refused on this
ground as well.
[14] However, the high court gave leave to appeal to this court when referred to
Mazibuko v DPP4 which held that where co-ownership is ‘tied’ because it arises from
a marriage in community of property, and the husband’s share should be forfeited in
terms of the Prevention of Organized Crime Act, the wife’s share had also to be
forfeited (although she would share in the proceeds of the realization of the
property). But the court there distinguished this type of co-ownership from ordinary
co-ownership.5 Bonheur submitted (and the high court in giving leave must have
thought there was some merit in this contention) that there might be some jeopardy
to Bonheur’s share should Wedgeport’s share be realized in a similar way. Its
‘constitutional’ right to property might (if I understand the argument) be placed in
jeopardy should the sale to Wedgeport not be set aside.
[15] Bonheur, on appeal, argued that this was so because various statutes
regulating municipal affairs imposed taxes on co-owners jointly and severally. If
Wedgeport failed to pay its pro rata share then Bonheur might be deprived of its
share in the property.  The argument is entirely speculative. And it bears no relation
to the case made out in the application. No more need be said of it.
Were the sale, loan and mortgage sham transactions?
[16] In response to Caribbean’s answering affidavit Bonheur alleged that the sale
of its share to Wedgeport, the loans to Wedgeport of the purchase price by Ettin and
Greenberg, and the mortgage bond registered as security, were all simulated

3 See generally, for example, Erasmus v Afrikander Proprietary Mines Ltd 1976 (1) SA 950 (W). The
position is different where the co-ownership is ‘tied’, as it is where the co-owners are married to each
other in community of property: Mazibuko & another v National Director of Public Prosecutions 2009
(6) SA 479 (SCA).
4 Above.
5 Paras 47-48.

transactions. The high court rejected this ground as well, finding that the submission
was ‘far-fetched and speculative’.6 The reason for the sham, Bonheur contended,
was to prevent Lob from enforcing any judgment that it might obtain against
Caribbean in a counterclaim against it. The high court found that there was no
evidence of a sham.
[17] Bonheur nonetheless persists with the contention on appeal. The argument is
that the shareholders and directors of Wedgeport are also directors of Caribbean;
the purchase price was not actually paid by Wedgeport, but would be effected
through ‘cash advances and by way of loan account and book entries’, Ettin and
Greenberg retained control of the Caribbean share through having lent the purchase
price to Wedgeport, and having secured a mortgage bond over the share; the sale
and loan agreements have different provisions  as to the payment of the price; and
Ettin and Greenberg agreed to lend not only the price but also the funds required to
pay rates, taxes and other expenses for a three-year period. Moreover, Wedgeport
undertook not to sell or alienate the Caribbean share without the written consent of
Ettin and Greenberg. A genuine purchaser would not, Bonheur argued, have
accepted such limitations on its rights.
[18] The contention that the transactions are simulated was supported, Bonheur
argued, by the fact that Caribbean, or Ettin and Greenberg, paid the outstanding and
future rates on the Caribbean share to ensure transfer of the property. The payment
included the amount owed by Bonheur yet was made without reference to Bonheur.
[19] As the high court found, Bonheur has not adduced evidence of an intention on
the part of any of the respondents to disguise their transactions. Nor was there
evidence of any apparent reason why they should have done so. And Caribbean
had, shortly before selling its share to Wedgeport, offered it for sale to Bonheur,
which had declined. That there was no intention to avoid paying the fiscus is shown
by the fact that VAT on the transaction had been paid. Nor did Bonheur show any
basis on which it was entitled to require that contracts between other parties be set
aside.

6 Note 1 above, para 17.

[20] As to the interdicts sought as an alternative to the orders setting aside the
contracts and transfers in question, Bonheur did not show any basis for anti-
dissipatory relief. It sought interim interdicts pending the referral of the dispute to oral
evidence. It does not persist in asking for a referral. And it cannot prevent the
disposal of property to which it has no right. Such relief would thus not be competent.
[21] In the circumstances the appeal is dismissed with costs including those of two
counsel.
_______________
C H Lewis
Judge of Appeal

APPEARANCES:
APPELLANTS:

M Nowitz

Instructed by  Errol Goss Attorneys

Matsepes Inc

Bloemfontein

RESPONDENTS:

D Fine SC (with him P M Cirone)

Instructed by Glyn Marais Inc

Lovius Block Attorneys

Bloemfontein
SUPREME COURT OF APPEAL OF SOUTH AFRICA

PRESS RELEASE
17 MARCH 2011
STATUS: Immediate

Bonheur v Caribbean (116/10) [2011] ZASCA 19 (17 March 2011)

Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal today dismissed an appeal against a decision
of the South Gauteng High Court which held that the appellants had no right
of pre-emption in respect of an undivided share of property in Morningside,
Johannesburg, and that a co-owner of the property was not entitled to prevent
the sale or mortgage of its undivided share of the property. It held also that
the appellants could not prohibit the alienation of the share.

The appellants had argued that it had a right of pre-emption in respect of the
share, arising from three agreements, to none of which they were party. The
high court held that, pursuant to s 2(1) of the Alienation of Land Act 68 of
1971, such a right could arise only from a written document signed by the
parties. This requirement had not been met and there was thus no right.

In the SCA the appellants conceded that there was no right flowing from any
agreement, but argued that there was a partnership between the parties
which required the consent of other partners to alienate their share. There
was no evidence that there was any such partnership and this was not a case
made out by the appellants in their application to the high court. The SCA
rejected this ground as well.

The appellants argued also that a co-owner cannot sell or mortgage a share
of the common property without the other co-owners’ consent. That is not our

common law, and the SCA found that the high court had correctly rejected this
argument as well.

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