THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT
Reportable

Case No:   768/2013

In the matter between:

WILLOW WATERS HOMEOWNERS
ASSOCIATION (PTY) LTD                                                    Appellant

and

JERRY SEKETE KOKA NO                                      First Respondent
CATHERINA ELIZABETH OOSTHUIZEN NO Second Respondent
TANIA OOSTHUIZEN NO                                       Third Respondent
REGISTRAR OF DEEDS, PRETORIA                 Fourth Respondent
FIRSTRAND BANK LIMITED                                  Fifth Respondent

And

ASSOCIATION OF RESIDENTIAL
COMMUNITIES  CC

First Amicus Curiae
NATIONAL ASSOCIATION OF
MANAGING AGENTS

Second Amicus Curiae

Neutral citation: Willow Waters Homeowners Association (Pty) Ltd v
Koka (768/13) [2014] ZASCA 220 (12 December
2014)
Coram:
Maya, Theron, Saldulker JJA and Mocumie and
Gorven AJJA
Heard:
15 September 2014
Delivered:
12 December 2014
Summary:
Land – whether a condition of title in a title deed of immovable
property which prohibits the transfer thereof without a clearance certificate or the
consent of a homeowner’s association constitutes a real or personal right – whether
the embargo remains binding on the Master and trustees of the property owners in

sequestration.
________________________________________________________

ORDER

On appeal from: North Gauteng High Court, Pretoria (Bam AJ sitting
as a court of first instance)

1 The appeal is upheld with costs including the costs of two counsel.
2 The order of the court below is set aside and replaced with the
following:
‘The application is dismissed with costs including the costs of two
counsel.’

JUDGMENT

Maya JA  (Theron, Saldulker JJA, Mocumie and Gorven AJJA
concurring)

[1] The central issue in this appeal is whether embargo provisions in a
title condition registered against the title deed of immovable property
preventing the transfer thereof without a clearance certificate from a
homeowner’s association constitute real or personal rights. The North
Gauteng High Court, Pretoria (Bam AJ) held that the embargo is a mere
personal right which did not bind the trustees of an insolvent estate in
whom ownership of the immovable property sought to be transferred
vested. Consequently, the court allowed the fourth respondent (the
Registrar) to effect transfer of the property without a clearance certificate
from the appellant (the association). The appeal is with the leave of the
high court.

[2] The appellant, the Willow Waters Homeowners Association, (Pty)
Ltd, (the association) is duly incorporated in terms of s 21 of the
Companies Act 61 of 19731 in respect of the Willow Waters Estate (the
estate) in the estate of Van Riebeeckpark Extension 26. Its membership
comprises registered owners of property in the estate. All owners
automatically assume that status and are bound by the association’s
Articles of Association and Rules until such ownership ceases.2 The
estate consists of 13 full title erven and one erf with communal facilities.
The association owns the communal facilities and operates the estate’s
infrastructure
including
its
roads,
water,
electricity,
sanitation,
telecommunications network and security services as well as ingress and
egress to the development for the members’ benefit.

[3] The association recovers its costs from the members by way of
monthly levies3 as well as fines and penalties for breaches of its rules.4
No member is allowed to transfer his (perhaps ‘their’ then it is neutral
gender) property until the board of trustees has certified that the member
has at date of transfer fulfilled all financial obligations to the association.5
Furthermore, rule 2.5 entitles the association to refuse clearance of a
transfer in the event of any outstanding levies and penalties.

1 It is now deemed to be a non-profit company in terms of Item 4(1)(a) of Schedule 5 of the Companies
Act 71 of 2008.
2 In terms of Article 3.3 which provides that ‘[w]hen a member becomes the registered owner of a Unit,
he shall ipso facto become a member of the Association, and when he ceases to be the owner of any
Unit … he shall ipso facto cease to be a member of the Association’. ‘Unit’ is defined in Article 1.1 as
‘a dwelling unit for a single family…with or without outbuildings, and whether held under tenure in
terms of the Sectional Titles Act 66 of 1971, as amended, or situated on its own residential lot or
individual subdivision of a residential lot, tenure of which may be registered in the Land Register of the
Deeds registry’.
3 Article 4 empowers the trustees (directors) of the association to impose levies upon members for the
purpose of meeting all the expenses incurred or reasonably anticipated to be incurred in the attainment
of the association’s objects and to determine the rate of interest chargeable upon arrear levies in
accordance with the Limitation and Disclosure of Finance Charges Act 173 of 1968.
4 Article 5 vests the trustees of the association with the power to impose a system of fines and penalties
for the enforcement of any of the rules made for the running of the estate.
5 Article 46.

[4] In 2006, Mr Christiaan Petrus van der Walt and his wife, Lourette,
jointly purchased one of properties in the estate, Portion 7 of Erf 2461
(the property), which had an incomplete dwelling, for a sum of R900 000.
They took transfer of the property under Deed of Transfer T06/99802
dated 8 August 2006. The Van der Walts simultaneously caused a
mortgage bond to be registered over the property as security for a loan of
R1,6 million and an additional sum of R320 000 in favour of Firstrand
Bank Limited, the fifth respondent, which abides the decision of this
court in the appeal.

[5] In June 2006, the association had caused the Van der Walts to sign
an agreement in terms of which they bound themselves to its rules,
regulations and guidelines. According to this agreement they would, inter
alia, submit building plans for the association’s approval within two
months and finalise the renovation of the property as stipulated in the
approved building plans within nine months from its registration. They
further acknowledged that a breach of these timelines would result in the
imposition of a fine in accordance with the rules of the association.

[6] The Van der Walts failed to complete the renovations within the
prescribed period. They also fell behind with the payment of their levies
and
consequent
penalties
were?
imposed
by
the
association.
Subsequently, Mrs Van der Walt was sequestrated on 13 March 2009 and
her husband shortly thereafter, on 1 April 2009. The first to third
respondents (the trustees) were appointed joint trustees of their insolvent
estates. At that stage, the Van der Walts’ debt stood at R129 789. By the
launch of this? application in April 2012, it had increased to R771 049.
The market value of the property itself is not clear from the papers. On 9

September 2009, auctioneers had valued it at R1,1 million. A year later,
on 23 September 2010, the bank valued it for purposes of a forced sale at
R700 000. But a municipal valuation dated 2 November 2011 placed it at
R1 667 000. Nothing however turns on this uncertainty.

[7] In anticipation of a sale of the property, the association required the
new owner to accept and bind itself to its rules and regulations. It also
required payment of three months’ levies in advance from date of
registration and all outstanding levies and penalties up to the date of
registration prior to transfer of the property. The association’s demand
was made on the basis that the outstanding levies and building penalties
are akin to realisation costs stipulated in s 89(1) of the Insolvency Act 24
of 1936 (the Act)6 which gives a local authority or a body corporate under
the Sectional Titles Act7 the power to veto transfer of immovable
property until all moneys owing to them by the transferor are fully paid.

[8] For this stance, the association relied on one of the conditions
prescribed in the Deed of Transfer, title condition 5(B)(ii) (the embargo).
The embargo, which echoes the provisions of Article 46 and rule 2.5,

6 The section reads:
‘The cost of maintaining, conserving and realizing any property shall be paid out of the proceeds of
that property, if sufficient and if insufficient and that property is subject to a special mortgage,
landlord’s legal hypothec, pledge, or right of retention the deficiency shall be paid by those creditors,
pro rata, who have proved their claims and who have been entitled, in priority to other persons, to
payment of their claims out of those proceeds if they had been sufficient to cover the said cost and
those claims. The trustee’s remuneration in respect of any such property and a proportionate share of
the costs incurred by the trustee in giving security for his proper administration of the estate, calculated
on the proceeds of the sale of the property, a proportionate share of the Master’s fees, and if the
property is immovable, any tax as defined in subsection (5) which is or will become due thereon in
respect of any period not exceeding two years immediately preceding the date of the sequestration of
the estate in question and in respect of the period from that date to the date of the transfer of that
property by the trustee of that estate, with any interest or penalty which may be due on the said tax in
respect of any such period, shall form part of the costs of realization.’
7 Section 15B(3)(a)(i)(aa) of the Sectional Titles Act 95 of 1986 provides for a statutory embargo. This
court has held that the effect of that section is to create an ‘effective preference’ and to render the costs
of settling all arrear monies in respect of a unit as a cost of administration in an insolvent estate. See
Barnard NO v Regspersoon van Aminieen ‘n ander 2001 (3) SA 975 (SCA) para 15; Nel v Body
Corporate of the Seaways Building & another 1996 (1) SA 131 (A) at 140H-141A.

decrees that ‘[t]he owner of the [property] or any subdivision thereof, or
any person who has an interest therein, shall not be entitled to transfer the
[property] or any subdivision thereof or any interest therein without a
clearance certificate from the Home Owners Association that the
provisions of the Articles of Association of the Home Owners
Association have been complied with’. The association took the view that
the trustees had no power to transfer the property to any purchaser
without the clearance certificate envisaged in the embargo because (a) the
embargo vested it with a real right which diminished the rights of
ownership in relation to the property and bound the trustees too, as the
Van der Walts’ successors in title; (b) the trustees as successors to the
Van der Walts’ rights acquired no greater rights of ownership than those
held by the latter; and (c) the Van der Walts’ undisputed breach of their
obligation to keep their levies up to date under the association’s Articles
of Association entitled it to withhold the clearance certificate in terms of
the embargo.

[9] The bank, relying on the security provided by the mortgage bond,
had lodged and proved a claim against both estates of the Van der Walts.
The association’s attitude to that claim was that the bond was registered
pursuant to the Van der Walts’ acquisition of ownership in the property
and was therefore registered over the property subject to the association’s
real right and the concomitant diminution of the Van der Walts’ rights of
ownership in terms of the embargo. But, according to the trustees, the
association had no right to demand payment before transfer as the
embargo merely constituted a personal right which was not binding on
them but was limited to a concurrent claim in the insolvent estate.

[10] The trustees approached the high court seeking orders declaring

that the association’s claim in respect of the outstanding levies and
penalties against the insolvent estate did not constitute a claim in terms of
s 89(1) of the Act and that the Registrar could therefore pass transfer of
the property without the association’s consent. In the high court, and in
addition to the above contentions, the association, supported by the first
and second amici curiae, argued that the trustees’ interpretation of the Act
would result in an arbitrary deprivation of its real right in insolvency and
would be inconsistent with the constitutional provisions which entrench
the right to property. The parties agreed that if the embargo constitutes a
real right, the trustees’ application would fail and that the association
would, in law, be entitled to refuse to give its consent until the
outstanding amounts had been paid.

[11] As stated earlier, the high court found that the embargo is a mere
personal right which does not detract from the dominium of the property
or bind the trustees. The court rejected the amici curiae’s constitutional
argument and granted the declaratory relief sought by the trustees. This
decision, however, contradicted an earlier judgment of the high court8
which held that a similar title condition constituted a real right binding
upon the liquidators of an insolvent close corporation.

[12] The issues remain unchanged on appeal. The thrust of the
association’s argument was that the embargo is a real right intended to
bind the owner of the land and his successors in title in that it results in a
subtraction from dominium of the land against which it is registered. The
embargo thus remained binding on the Master and the trustees, so they
argued, because these parties stepped into the shoes of the insolvent
parties and acquired the same rights of ownership held by the insolvents.

8 Cowin NO v Kyalami Estate Homeowners Association [2013] ZAPGJHC 121 (25 February 2013).

[13] The trustees, on the other hand, submitted that whilst the  embargo
prohibited the transfer of property by its owner, (a) there was no evidence
showing an intention to create a real right in the land; (b) that the true
object of the embargo was not to diminish ownership in the land but to
achieve specific performance of a contract by a member of the
association who also happens to be the owner of the land; (c) that the
right created by the embargo is a personal one attaching not to the land
but only to the current owner of the land, which is subject to the
concursus creditorum of insolvency; (d) that if a real right is created at
all, the envisaged transfer of land is voluntary and not a transfer
consequent upon a forced sale under insolvency law; and (e) that the
matter raises no constitutional issues.

[14] The amici curiae, the Association of Residential Communities CC
(ARC) and the National Association of Managing Agents (NAMA)
which are the only recognised representative bodies in South Africa for
homeowners associations and managing agents,9 participated in the
proceedings both in the high court and on appeal. Their contentions
before us related mainly to the constitutional implications of the matter
regarding the right to property of homeowners associations across the
country under ss 25(1) and 39(2) of the Constitution which respectively
entrench the right to property and require a statutory interpretation that

9 ARC was established to provide support, best practice and consulting services to the governing bodies
of residential estates such as homeowners associations, boards of directors and bodies corporate.
Governing bodies of about 45 per cent of all properties situated in residential estates in South Africa
are associated with it. NAMA was established with the primary objective of promoting and advancing
the interests of managing agents of residential communities in South Africa. It manages the affairs of
approximately 13 550 security estates representing approximately 495 000 individual property owners.

promotes the spirit, purport and objects of the Bill of Rights.10

[15] They argued that the interpretation of the Act for which the trustees
contended was inimical to these constitutional provisions because it
results in arbitrary deprivation of property. This is so, they contended,
because on this construction, upon an owner’s insolvency, the right of the
homeowners association to resist transfer without a clearance certificate
would be extinguished. Some of their further contentions were that
homeowners associations constitute a more recent form of communal
residential development for which no statutory protection, such as that
provided for municipalities and sectional title developments, has yet been
promulgated. Therefore the embargo, the insertion of which is a standard
and well-established practice, provides the associations with critical
protection as the only effective mechanism for ensuring the collection of
levies which are their lifeblood.

[16] To determine whether a right or condition in respect of land is real,
two requirements must be met: (a) the intention of the person who creates
the right must be to bind not only the present owner of the land, but also
successors in title; and (b) the nature of the right or condition must be
such that its registration results in a ‘subtraction from dominium’ of the
land against which it is registered.11 Whether the title condition embodies
a personal right or a real right which restricts the exercise of ownership is
a matter of interpretation.12 the intention of the parties to the title deed

10 In terms of the section 25(1) ‘[n]o one may be deprived of property except in terms of law of general
application, and no law may permit arbitrary deprivation of property.’ And s 39(2) provides: ‘[w]hen
interpreting any legislation, and when developing the common law or customary law, every court,
tribunal or forum must promote the spirit, purport and objects of the Bill of Rights.’
11 Cape Explosive Works Ltd & another v Denel (Pty) Ltd & others 2001 (3) SA 569 (SCA) para 12;
Erlax Properties (Pty) Ltd v Registrar of Deeds and others 1992 (1) SA 879 (A) at 885B.
12 National Stadium South Africa (Pty) Ltd & others v Firstrand Bank Ltd 2011 (2) SA 157 (SCA) para
33.

must be gleaned from the terms of the instrument ie the words in their
ordinary sense, construed in the light of the relevant and admissible
context, including the circumstances in which the instrument came into
being.13 The interest the condition is meant to protect or, in other words,
the object of the restriction, would be of particular relevance.14

[17] Here, one of the pre-conditions which the developer of the
township was required to meet for the local authority to authorise the
subdivision of the erf on which the township was established (in terms of
s 92 of the Town-Planning and Townships Ordinance 15 of 1986) and the
Registrar to register the subdivision, was the insertion of the embargo in
all the title deeds of all the properties in the township. It was thus
common cause that the subdivision and the subsequent development of
the township would not have occurred without the insertion of the
embargo.

[18] According to the trustees, this meant no more than that the
township could not be subdivided without such title conditions being
inserted into the relevant title deeds. They disavowed any intention to
create a real right binding on successors in title, and trustees in the event
of insolvency, arguing that the embargo made no reference to successors
in title but instead required each new owner to bind himself and become a
member in his own right.

[19] In support of this contention, the trustees relied on the case of
Bodasing v Christie NO.15 There, a testator bequeathed a farm to each of
his two sons, subject to testamentary clause 24 which was registered

13 Bothma-Batho Transport v S Bothma & Seun Transport 2014 (2) SA 494 (SCA) paras 10-12.
14 Ibid. See also Willoughby’s Consolidated Co Ltd v Copthall Stores Ltd 1918 AD 1 at 16.
15 Bodasing v Christie NO 1961 (3) SA 553 (A) at 561.

against the respective title deeds. The clause granted each son a right of
pre-emption over the farm of the other to the effect that if either of them
wanted to sell he could do so only to the other at a specified price and on
specified terms and conditions. One son hypothecated his farm whereafter
his estate was sequestrated. The trustee subsequently sold the farm by
public auction to a third party against the other son’s objection that he
had a right to purchase the farm at the price fixed in the will which was
far less than that offered at the sale. The provincial division granted the
latter an interdict restraining transfer to the third party who appealed
successfully to the Full Bench. On further appeal to this court it was held
that the restraint imposed on the alienation of the immovable property,
which was bequeathed to each legatee giving each legatee a right of pre-
emption to the other legatee, bound the legatee only and not the trustee as
it only restrained a voluntary sale and not a sale made compulsory by the
law.

[20] Bodasing is, in my view, distinguished by its own facts and it does
not assist the trustees’ case. As this court pointed out, there was nothing
in clause 24 to indicate that the testator intended any right of pre-emption
to operate on the sequestration of the estate of either of the legatees. The
restraint imposed by clause 24 was intended for an entirely different
reason to that in this case ie to give a right of pre-emption specifically to
each of the legatees. Here, the underlying purpose of the embargo was to
create a general security for the payment of a debt as in the case of a lien
or a mortgage bond. Clearly, to achieve that purpose it had to bind all the
successive owners in the township. This object is also evident from the
plain language of the embargo which must be read with the provisions of
Article 46. It seeks to bind ‘the owner of the erf or any subdivision
thereof or any person who has an interest therein’. In so doing, it employs

generic, unqualified terms such as the ‘owner’ and ‘any person’. These
classes must, of necessity, include every owner or holder of a real right in
the property from time to time. This is further bolstered by the embargo
prohibiting transfer unless the purchaser has undertaken, on transfer, to
become a member of the association and to be bound by its rules. The
first aspect required for a real right is therefore satisfied.

[21] For a condition to be capable of valid registration as a real right,
the second aspect requires that it must carve out a portion of, or take
away something from, the dominium.16 This principle is embodied in
s 63(1) of the Deeds Registries Act 47 of 1937 in terms of which ‘[n]o
deed, or condition in a deed, purporting to create or embodying any
personal right, and no condition which does not restrict the exercise of
any right of ownership in respect of immovable property, shall be capable
of registration’.

[22] It is established that ownership comprises a bundle of rights or
competencies which include the right to use or exclude others from using
the property or to give others rights in respect thereof.17 One of these
rights or competencies is the right to freely dispose of the property, the
ius disponendi. If that ‘right is limited in the sense that the owner is
precluded from obtaining the full fruits of the disposition … [then] one of
his rights of ownership is restricted’.18 In this matter the embargo
registered against the property’s title deed ‘carves out, or takes away’
from the owner’s dominium by restricting its ius disponendi. Thus, it

16 Edelor (Pty) Ltd v Champagne Castle Hotel (Pty) Ltd 1972 (3) SA 684 (N) at 689F-690 B; Venter v
Minister of Railways 1949 (2) SA 178 (E); National Stadium SA fn 9 para 33.
17 Van den Berg v Dart & another 1949 (4) SA 884 (A) at 885; Geyser & another v Msunduzi
Municipality & others 2003 (5) SA 18 (N) at 37A-B; Mobile Telephone Networks (Pty) Ltd v SMI
Trading CC 2012 (6) SA 638 (SCA) para 17; National Stadium SA fn 9 para 31.
18 Pearly Beach Trust v Registrar of Deeds 1990 (4) SA 614 (C).

subtracts from the dominium of the land against which it is registered. It
satisfies the second aspect and is, therefore, a real right.

[23] I agree with the association and the amici curiae that the trustees’
argument that the embargo is meant to achieve specific performance of a
contract, which was accepted by the high court, conflates two distinct
rights – (a) the association’s claim for payment of the amounts due to it
by the Van der Walts, which is a personal contractual right ranking as a
mere concurrent claim in the insolvent estate; and (b) the association’s
right of veto in terms of the embargo which restricts the owner’s ius
disponendi. As pointed out above, the latter is the right in contention here
and it is a real right for the reasons set out above. As stated, the right
diminishes ownership in the property by entitling the association to
withhold a clearance certificate thus preventing the transfer of the
property until the Van der Walts’ outstanding debt has been paid. In that
case, the embargo remains binding on the trustees in whom the insolvent
estate now vests in terms of s 20 of the Act.19

[24] The effect of the embargo is akin to that of the embargos contained
in s 118 of the Local Government: Municipal Systems Act 32 of 2000

19  The section reads in relevant part:
(1)  The effect of the sequestration of the estate of an insolvent shall be–
(a)  To divest the insolvent of his estate and to vest it in the Master until a trustee has been appointed,
and, upon the appointment of a trustee, to vest the estate in him;
…
(1)  For the purposes of subsection (1) the estate of an insolvent shall include–
(a)  all property of the insolvent at the date of the sequestration, including property or the proceeds
thereof which are in the hands of a sheriff or a messenger under writ of attachment.’

(the Municipal Systems Act)20 and s 15B(3)(a)(i)(aa) of the Sectional
Titles Act 95 of 1986.21 These provisions respectively prohibit the
Registrar from registering the transfer of immovable property except on
production of a certificate issued by the municipality or a conveyancer
confirming that all moneys due to the municipality or a body corporate
have been fully paid.
[25] It is accepted that these statutory embargoes serve a vital and
legitimate purpose as effective security for debt recovery in respect of
municipal service fees and contributions to bodies corporate for water,
electricity, rates and taxes etc. Thus, they ensure the continued supply of
such services and the economic viability and sustainability of
municipalities and bodies corporate in the interest of all the inhabitants in
the country.22 And this is particularly so in the circumstances of
insolvency, when an effective legal remedy against an insolvent is most
needed.23

[26] These objects are precisely what the embargo in this case seeks to
achieve. Nothing in the law impedes this type of security. Neither is there
anything ‘insensible or unbusinesslike’ that undermines the apparent

20 The section reads:
(1)  A registrar of deeds or other registration officer of immovable property may not register the
transfer of property except on production to that registration officer of a prescribed certificate–
(a)  issued by the municipality in which that property is situated; and
(b)  which certifies that all amounts due in connection with that property for municipal service fees,
surcharges on fees, property rates and other municipal taxes, levies and duties during the two years
preceding the date of application for the certificate have been fully paid.
(2)  In the case of the transfer of immovable property by a trustee of an insolvent estate, the provisions
of this section are subject to s 89 of the Insolvency Act 24 of 1936.
21 The section provides:
‘(3) The registrar shall not register a transfer of a unit or of an undivided share therein, unless there is
produced to him–
(a)  a conveyancer’s certificate confirming that as at date of registration–
(i)(aa) if a body corporate is deemed to be established in terms of section 36(1), that body corporate
has certified that all moneys due to the body corporate by the transferor in respect of the said unit have
been paid, or that provision has been made to the satisfaction of the body corporate for the payment
thereof’.
22 Geyser fn 14 at 37.
23 Barnard NO v Regspersoon van Aminie en ‘n ander fn 7 para 15.

purpose of the title condition in the interpretation contended for by the
association.24 In one of the cases postulated by trustees, where there may
be insufficient funds to meet the debt, there is no indication in the
association’s Articles of Association and rules that the association cannot
waive its veto right and issue the clearance certificate to ensure the sale of
the property. The Act provides its own safeguards to address possible
prejudice to creditors. For a start, a sequestration may not be ordered
unless it is shown that it will be to the advantage of creditors to do so.
And provision is made in a careful scheme for the disposition of an
insolvent estate including cases where there are insufficient assets to meet
the creditors’ claims.

[27] It must be borne in mind that homeowners associations are obliged
to provide services to all of their members. And so, similarly to
municipalities and bodies corporate which enjoy the statutory protection
afforded by the embargoes, they extend credit to all the homeowners in
their estates without the benefit of requiring security therefor. As was
contended by the amici curiae, there is no material difference between
homeowners associations and bodies corporate in terms of their objects,
activities and status. There is simply no basis to deprive the association of
the protection afforded by the embargo which has an identical purpose
and effect to that provided to bodies corporate (and municipalities) by a
law of general application.

[28] It bears mention that the embargo confers no preference on the
association’s claim which indeed remains a concurrent claim as

24 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 18.

contended by the trustees.25 Its effect is merely to secure payment of the
claim. And, in insolvency, this is done only in so far as it is not
incompatible with the rights of other creditors. It is settled in the context
of statutory embargoes that an amount paid in order to enable property
sold by a trustee or liquidator to be transferred to the buyer is included in
the cost ‘of maintaining, conserving and realising’ property to which
reference is made in s 89(1)  of the Act.26 Likewise, to discharge their
duty to sell the property, the trustees in this case must pay the outstanding
levies and penalties as part of ‘the cost of … realising any property’
within the meaning of s 89(1), out of the proceeds of the property, in the
manner contemplated in s 118(2) of the Municipal Systems Act.

[29] To hold otherwise would deprive the association of an effective
tool for ensuring the collection of levies. This would impose enormous
costs on it (and on other homeowners associations across the country,
whose services infrastructure installed in residential estates is valued at
more than R10 billion, particularly having regard to the evidence that just
35 members of NAMA are owed fees in excess of R28 million in respect
of members whose properties were subjected to forced sales) with dire
consequences on its ability to run the estate. One obvious example of
such consequences is that the credit standing and ability of homeowners
associations to secure finance would be adversely affected because of
their inability to collect debts owed to them.

25 As mentioned above, it confers an ‘effective preference’ in respect of the claim in that amounts due
form part of the costs of administration. See fn 7.
26 Rabie NO v Rand Townships Registrar 1926 TPD 286; Nel NO v Body Corporate of the Seaways
Building & another 1996 (1) SA 131(A) at 139D-140G; Eastern Metropolitan Substructure of Greater
Johannesburg Transitional Council v Venter NO 2001 (1) SA 360 (SCA) paras 32 -34; Barnard NO fn
19 paras 9-18. First Rand Bank Ltd v Body Corporate of Geovy Villa 2004 (3) SA 362 (SCA) paras 21-
27; BOE Bank Ltd v Tshwane Metropolitan Municipality 2005 (4) SA 336 (SCA) para 7; City of
Johannesburg v Even Grand 6 CC 2009 (2) SA 111 (SCA) para 14.

[30] A further consideration is that the Registrar has seen fit to register
this condition against the title deeds of the properties in the township.
Whilst this is, of course, not decisive, it is important to bear in mind the
approach of this court to actions taken by the Registrar. In Registrar of
Deeds (Transvaal) v The Ferreira Deep Ltd,27 De Villiers CJ said:
‘In Hollins v. Registrar of Deeds, supra, INNES, C.J., expressed the opinion that the
Court should be very careful in dealing with the Registry of Deeds. With that view I
entirely agree, and it is for that reason the more that it is satisfactory to be able to
arrive at this conclusion. It would be no light matter for the Court to declare of no
value rights which have been registered against title, which have been looked upon by
the public as valid, and upon the faith of which numerous transactions have been
entered into.’28

[31] As to the constitutional point raised by the amici curiae, which may
well have merit, it was properly conceded on their behalf that a finding
that the embargo constitutes a real right and is therefore enforceable
against the trustees as well would dispense with the need to address it.
Thus, nothing more need be said in that regard.

[32] For all these reasons, the appeal must succeed with costs to follow
the result in the ordinary course. There is, of course, no need to make any
costs award in respect of the amici curiae.29

[33] The following order is made:
1 The appeal is upheld with costs including the costs of two counsel.
2 The order of the court below is set aside and replaced with the
following:

27 Registrar of Deeds (Transvaal) v The Ferreira Deep Ltd 1930 AD 169 at 181.
28 Hollins v. Registrar of Deeds 1904 TS 603.
29 Minister of Justice v Ntuli 1997 (3) SA 772 (CC) para 43; Mohunram and another v National
Director of Public Prosecutions and another (Law Review Project  as Amicus Curiae) 2007 (1) SA 222
(CC) para 105.

‘The application is dismissed with costs including the costs of two
counsel.’

____________________________
MML MAYA
JUDGE OF APPEAL

APPEARANCES:

For 1St Appellant:

W Trengrove SC ( N Ferreira)

Instructed by: N Van der Walt Inc,

Pretoria
Symington & De Kok,
Bloemfontein

For 1St to 3rd Respondents:
MM Oosthuizen SC (L Meintjies)

Instructed by: Rorich, Wolmarans

Luderitz Inc, Pretoria

Kamer Weihman & Joubert Attorneys,

Bloemfontein

For Amicus Curiae:

S Budlender

Instructed by: Adams & Adams

Attorneys, Pretoria

Honey Inc, Bloemfontein
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

12 December 2014

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part of
the judgment.

Willow Waters Homeowners Association (Pty) Ltd v Koka
(768/13) [2014] ZASCA 220 (12 December 2014)

Media Statement

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

Today the Supreme Court of Appeal (SCA) delivered judgment upholding the appeal against an order
of the North Gauteng High Court, Pretoria. The SCA set aside the order of the court below and
replaced it with an order dismissing the application.

The issue in this appeal was whether embargo provisions in a title condition registered against the
title deed of immovable property preventing the transfer thereof without a clearance certificate from a
homeowner’s association constituted a real or a personal right

The appellant’s (the association) membership comprised of registered owners of property in the
township. These owners automatically assumed that status and were bound by the association’s
Articles of Association and Rules until such ownership ceased.

In 2006, Mr Christiaan Petrus van der Walt and his wife, Lourette, jointly purchased one of properties
in the estate, Portion 7 of Erf 2461 (the property), which had an incomplete dwelling, for a sum of
R900 000. They couple caused a mortgage bond to be registered over it as security for a loan of R1,6
million and an additional sum of R320 000 in favour of Firstrand Bank Limited, the fifth respondent. In
June 2006, the association had caused them to sign an agreement in terms of which they bound
themselves to its rules, regulations and guidelines According to this agreement they would, inter alia,
submit building plans for the association’s approval within two months and finalise the renovation of
the immovable property as stipulated in the approved building plans within nine months from its
registration. They further acknowledged that a breach of these timelines would result in the imposition
of a fine in accordance with the rules of the association. The Van der Walts failed to complete the
renovations within the prescribed period and also fell behind with the payment of their levies and
penalty imposed by the association. Subsequently, Mrs Van der Walt was sequestrated on 13 March
2009 and her husband shortly thereafter, on 1 April 2009. The Bank then valued the property for a
forced a sale.

`

In anticipation of a sale of the property, the association required the new owner to accept and bind
itself to its rules and regulations. It also required payment of three months’ levies in advance from
date of registration and all outstanding levies and penalties up to the date of registration prior to
transfer of the property. For this stance, the association relied on one of the conditions prescribed in
the Deed of Transfer, title condition 5(B)(ii) (the embargo).

The Bank, relying on the security provided by the mortgage bond, had lodged and proved a claim
against both estates of the Van der Walts. The association’s attitude to that claim was that the bond
was registered pursuant to the Van der Walts’ acquisition of ownership in the property and was
therefore registered over the property subject to the association’s real right and the concomitant
diminution of the Van der Walts’ rights of ownership in terms of the embargo. But, according to the
trustees, the association had no right to demand payment before transfer as the embargo merely
constituted a personal right which was not binding on them but was limited to a concurrent claim in
the insolvent estate.

The trustees approached the high court seeking orders declaring that the association’s claim in
respect of the outstanding levies and penalties against the insolvent estate did not constitute a claim
in terms of s 89(1) of the Insolvency Act 24 of 1936 and that the Registrar could therefore pass
transfer of the property without the association’s consent.

The SCA held that it was accepted that statutory embargoes served a vital and legitimate purpose as
effective security for debt recovery in respect of municipal service fees and contributions to bodies
corporate for water, electricity, rates and taxes etc and that therefore there was simply no basis to
deprive the association of the protection afforded by the embargo.

The SCA held further that homeowners associations are obliged to provide services to all of their
members. And so, similarly to municipalities and bodies corporate which enjoy the statutory
protection afforded by the embargoes, they extend credit to all the homeowners in their estates
without the benefit of requiring security therefor

The SCA found therefore that the embargo registered against the property’s title deed ‘carves out, or
takes away’ from the owner’s dominium by restricting its ius disponendi. Thus, it subtracted from the
dominium of the land against which it was registered and was consequently a real right.

--- ends ---