THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 20165/2014

In the matter between:

FEDGROUP PARTICIPATION BOND MANAGERS

APPELLANT
(PTY)  LTD

and
TRUSTEE OF THE CAPITAL PROPERTY TRUST

RESPONDENT
COLLECTIVE INVESTMENT SCHEME IN PROPERTY

Neutral citation:
Fedgroup Participation Bond Managers v Trustee of the Capital
Property Trust [2015] ZASCA 103 (30 June 2015)
Coram:
Navsa ADP and Mhlantla, Pillay, Willis and Saldulker JJA
Heard:
19 May 2015
Delivered:
30 June 2015
Summary:
Ownership of Land: whether an encroacher can bring an independent
cause of action claiming transfer of the encroached – upon land in the absence of a
removal order by the owner of the land – Building – Illegal structure – No approval of
building plans by local authority.

________________________________________________________________
ORDER
_______________________________________________________________
On appeal from: Gauteng Local Division, Johannesburg (Victor J sitting as court
of first instance):
The following order is made:
1. The application to amend the notice of motion is dismissed with costs including
the costs of two counsel.
2. The appeal is dismissed with costs including the costs of two counsel.
3. The cross-appeal is dismissed and no order is made as to costs.

_________________________________________________________________
JUDGMENT
_________________________________________________________________
Navsa ADP et Saldulker JA (Mhlantla, Pillay and Willis JJA concurring):

[1] In this case the question is whether someone encroaching on another‟s land
is entitled, in the absence of an action or an application being brought by the owner
of the land for a removal order, to approach a court for an order compelling the
owner to transfer, not only that part of the land on which there is encroachment, but
also to seek transfer of additional vacant land against a tender of compensation. The
short answer is no. The background and the reasons for that conclusion follow.

[2] This appeal is directed against the judgment and order of Victor J in the
Gauteng Local Division, Johannesburg in terms of which she refused an application
by the appellant, Fedgroup Participation Bond Managers (Pty) Ltd (Fedgroup), for an

order along the lines described in the preceding paragraph. For clarity it is necessary
to record specific parts of the order sought by Fedgroup, namely:
„1. . . .[D]irecting the respondent, in its capacity as registered owner of Erf 990 Sunninghill
Extension 85 Township, Registration Division IR, Provence of Gauteng, in extent 1,1821
hectares (“the Property”), forthwith upon demand:
1.1 to do all things necessary and to sign all documents necessary to facilitate and to allow
the subdivision of the Property in accordance with the Subdivision Plan annexed to the
founding affidavit in these proceedings as Annexure “FA4”; and
1.2 to do all things necessary and to sign all documents necessary to facilitate and to allow
the transfer of the newly-created portion of the Property, in extent 2 396 m2 and as indicated
on the aforementioned Subdivision Plan, to the Applicant, . . .‟

[3] The respondent is the trustee of The Capital Property Trust Collective
Investment Scheme in Property. The trust was established in terms of the Collective
Investment Schemes Control Act 45 of 2002. We shall refer to it as CPT. As quid pro
quo for the order referred to in paragraph 2, Fedgroup was willing to accede to an
order in respect of which it would (i) bear all the costs pertaining to the subdivision of
the property and the transfer of the newly-created portion thereof (ii) against
registration of the transfer, pay to the respondent the sum of R1 950 000 plus value
added tax. Furthermore, Fedgroup agreed to pay CPT a pro rata amount of the rates
and taxes which the former had paid to the local authority since the commencement
of the encroachment, in the ratio that the property to be transferred bore to the whole
of the property.

[4] There is also a cross-appeal by CPT against the dismissal by Victor J of its
plea of prescription, in terms of which it had contended that any claim which
Fedgroup may have had for the transfer of the triangular piece of land it sought by
way of the order referred to in the preceding paragraph had prescribed. The matter is
before us with the leave of the court below.

[5] The background to the litigation culminating in the present appeal is set out
hereafter. Fedgroup and CPT are each the registered owner of one of two
contiguous prime commercial erven situated in Sunninghill Extension 85 Township,
namely, Erf 989 measuring 5960 m2 in extent (Erf 989), and Erf 990 measuring
1,1821 hectares in extent (Erf 990), respectively. Both erven are zoned in terms of
the relevant Town Planning Scheme to permit the erection of offices.

[6] The improvements on CPT‟s property consist of two office buildings which
have a gross lettable area of 6 652 m2 which were let to the United Nations World
Food Programme and Acer Computers.

[7] The improvements on Fedgroup‟s property included a substantial, but
incomplete structure, which consists of a basement and concrete formwork. There is
a dispute about what the gross built area of the incomplete structure would be. As
will become apparent later, this is not an insignificant dispute.

[8] What follows is a description of how Fedgroup and CPT became adjoining
land owners and how the encroachment at the centre of the present dispute
occurred. On 31 July 2006 Fedgroup and CPT entered into a written agreement in
terms of which the latter acquired from the former a total of twenty-seven income
producing properties and associated businesses, as letting enterprises, for an
aggregate amount of R308 035 000. One of the properties acquired by CPT is the erf
referred to in paragraph 5 above (Erf 990), including the improvements referred to in
paragraph 6. Registration of the property into CPT‟s name took place on 15
December 2006. The incomplete structure on Fedgroup‟s property referred to above
partially encroaches on CPT‟s property. The encroachment was discovered by
Fedgroup during April or May 2008, almost two years after the conclusion of the
written agreement of sale. It is common cause that the incomplete structure which
encroaches on CPT‟s property had already been erected when Fedgroup acquired it
from a predecessor in title. It is unchallenged that the structure was erected
unlawfully, more particularly because building plans had not been submitted for
approval. We return to this aspect later.

[9] A fence erected on the property lulled Fedgroup into a false sense of security
about the cadastral boundaries of the property it disposed of to CPT. Upon
discovering the real state of affairs, Fedgroup approached CPT concerning the
encroachment and to discuss a possible resolution. Communications between the
parties ensued but ultimately negotiations broke down. This is unsurprising since the
land concerned is prime commercial property with each party probably seeking to
extract maximum benefit for itself.

[10] An admitted stumbling block to a non-litigious resolution of the problem was
that CPT insisted that a proposed settlement agreement include a forfeiture clause in
terms whereof all approvals required for subdivision and consolidation had to be
obtained within a specified time, failing which any amount paid to CPT by Fedgroup
as compensation would not be repaid. Fedgroup found this unacceptable.

[11] In June 2009 Fedgroup contended by way of a letter to CPT that it was
entitled to seek rectification of the written agreement of sale so as to reflect the
cadastral boundaries as understood by it at the time of the conclusion of the
agreement. This was contested by CPT‟s attorneys and was not persisted in by
Fedgroup, perhaps because of a clause in the written agreement of purchase which
included a seller‟s warranty against encroachment.

[12] Because of the breakdown in negotiations and the resultant impasse
Fedgroup decided to go on the offensive and launched an application for the orders
referred to earlier. In resisting the application, CPT raised three points in limine. First,
that Fedgroup had no cause of action in that there was no justiciable dispute. It
contended that it was the owner of the property concerned and unwilling to dispose
of it by way of sale. It developed its contention as follows. A land owner could not be
compelled to sell property it was unwilling to part with. In effect, so CPT contended,
Fedgroup sought to compel an expropriation which, in our law, was incompetent.
Second, CPT raised prescription as a defence. It submitted that Fedgroup admittedly
first became aware of the encroachment during April or May 2008 and that even if it
had a cause of action, more than three years had elapsed before it launched
proceedings in the court below. Lastly, CPT contended that there were material
disputes of fact that could not be resolved on the papers. In this regard, CPT

contended that this was important in relation to the question of prejudice, more
particularly in relation to compensation and the proposed subdivision and the
necessary rezoning which is concomitant to transfer of the land sought by Fedgroup.

[13] We interpose to record that the order sought, set out in paragraph 2 above,
included land additional to that on which the partially erected structure was situated
and which Fedgroup sought to have excised from CPT‟s property, and transferred to
it, based on the assertion that it needed the additional vacant land for optimal
development of its own property and its further allegation, that CPT would have no
use of the undeveloped additional piece of land it sought to have transferred into its
name and that without which the transfer it sought would be worthless. It is
uncontested that the land sought by Fedgroup constitutes 20 per cent of the total
extent of the property owned by CPT.

[14] We return to list the material disputes asserted by CPT. First, there is a
dispute about the valuation of the land sought to be excised. The parties are poles
apart in their respective valuations.

[15] The parties‟ respective experts were divided about the extent of the financial
loss and prejudice to each in the event of an order in favour of the other. Disputes
arose in relation to demolition and the viability of redesign and redevelopment of the
partially completed structure so as to avoid encroachment. The cost of redesign and
demolition and removal was estimated by CPT‟s expert to be an amount of
R4 223 138, which was admitted by Fedgroup‟s expert. However, Fedgroup was
adamant that this amount did not constitute the total prejudice it would suffer in the
event of the order not being granted, contending that the loss of development
potential in financial terms far exceeded that amount. CPT on the other hand,
contended that if it were to lose the additional land sought by Fedgroup it would be
unable to develop the remaining land optimally and that its loss in financial terms
would run into many millions of rands. There is a related dispute about the effect that
the subdivision resulting from the order sought would have on the land-use rights of
the remaining portions of CPT‟s property and its valuation. It would mean that the
present improvement coverage would exceed the permitted land coverage and that it
would require a rezoning application by CPT. Furthermore, the parties are divided on

the probabilities of success of an application for subdivision and rezoning. In this
regard, Fedgroup contended that CPT‟s expert‟s present position on the difficulties to
be encountered in securing approval for the subdivision and rezoning, flies in the
face of an earlier indication by the same expert that there was a likelihood of
success. According to CPT‟s expert, in the event of an order being granted as
sought by Fedgroup, its property‟s value would be diminished by an amount of
R4 410 721. This is an amount that exceeds the amount of R4 223 138 referred to
above. CPT contended that it would thus be severely prejudiced in the event of the
order being granted.

[16] The court below dealt with the first point raised by CPT, namely whether
Fedgroup had a cause of action. Victor J categorised the order which Fedgroup
sought as being one for „specific performance‟. Before us the parties were agreed
that that conclusion could not be supported. Following on the aforesaid erroneous
categorisation, Victor J took the view that an order such as the one sought by
Fedgroup was entirely within the court‟s discretion.

[17] The court below went on to consider Christie v Haarhoff,1 in which the court
granted transfer of the encroached upon area, against compensation to be paid to
the landowner. Victor J also referred to Trustees, Brian Lackey Trust v Annandale,2
in which Griesel J held that the encroacher there could retain the structure against
payment of compensation. Victor J considered it significant that in that case the
encroaching structure encompassed 80 per cent of the owner‟s land. In support of
her view that the court has a discretion, based on consideration of reasonableness
and fairness, to order that an encroachment could continue against „the payment of
damages‟, Victor J cited Rand Waterraad v Bothma.3 Her conclusion on whether
Fedgroup had a cause of action is set out in paragraph 12 of the judgment of the
court below:
„Based on the case law set out above I find that this court has a discretion to order
transfer and compensation but obviously each case must depend on its facts. I find that the
applicant‟s cause of action is good in law and can be raised in the absence of a demolition

1 Christie v Haarhoff and others (1886-1887) 4 HCG 349.
2 Trustees, Brian Lackey Trust v Annandale 2004 (3) SA 281 (C).
3 Rand Waterraad v Bothma en ‘n ander 1997 (3) SA 120 (O).

order. The question still to be determined is whether on these facts such an order is
appropriate.‟

[18] In relation to prescription, Victor J ruled against CPT. She concluded that
Fedgroup‟s cause of action did not arise out of a „debt‟ as envisaged in s 11(d) of the
Prescription Act 68 of 1969, stating the following (para 14):
„The applicant has unwittingly been in possession of the respondent‟s immovable property.
This cannot be interpreted to be a debt.‟
She went on to state the following (para 15):
„This encroachment cannot be frozen in a point in time. The encroachment in my
view is a wrong which continues. As long as the respondent has a right to require demolition
there is no prospect of prescription.‟
For this conclusion she found support in Barnett v Minister of Land Affairs4 paras 20
and 21.

[19] Turning to the disputes of fact, Victor J took the view that there were indeed
disputes concerning the town planning aspects insofar as the extended excision of
land was concerned, and that there was „a mass of speculation‟ as to whether the
application for subdivision and rezoning would succeed. The reasons for inclining
against Fedgroup are set out in paras 38 and 39 of the judgment of the court below:
„In this case a factor which introduces a degree of complexity and affects the
exercise of my discretion is that the applicant is bent on seeking the entire triangular
encroachment and not for example the solid unfinished building. In exercising my discretion I
would have had no difficulty in directing the transfer of that portion of the encroachment
against payment of compensation. It was the applicant's case, after the court specifically
asked whether the transfer of the unfinished building would suffice. The applicant submitted
that it would be of no value to the applicant unless the adjoining sliver of land and the guard
house is incorporated. One area of the triangular piece of land has access to a public road
and this was of importance to the applicant. There is an already built guard house. To sum
up if the court were to order the transfer of only the incomplete building encroachment of 703
square metres this would not assist the applicant in any way as the entire encroachment was
required for development.

4 Barnett & others v Minister of Land Affairs & others 2007 (6) SA 313 (SCA).

In my view upon the proper exercise of my discretion based on all the facts set out above it
is only the incomplete building which can be transferred to the applicant. That has been
rejected and in those circumstances applicant's application must fail.‟
It is against the conclusions set out in the preceding paragraphs that the present
appeal and cross-appeal are directed.

[20] Before dealing with the correctness of the court below‟s reasoning and
conclusions we pause to state that in anticipation of this court perhaps reaching the
same conclusion as did Victor J, namely, that it was not competent to order transfer
of land beyond that on which the offending structure was erected, Fedgroup filed a
notice of application to further amend its notice of motion to include an alternative
prayer, to restrict the relief it sought to the land on which the offending structure was
erected. This amendment was only sought on appeal. It is, at this stage, apposite to
recall that Fedgroup was emphatic in its founding affidavit that its acquisition of the
limited land would be worthless. This is an aspect to which we shall revert in due
course. We record further that, in response to the application to amend the notice of
motion on appeal, CPT filed a notice of an application to strike out, conditional upon
the amendment being granted. We now return to deal with the judgment in the court
below and the applicable law.

[21] Regrettably, there are major misconceptions in the reasoning and conclusions
of the court below. First, as acknowledged by counsel on behalf of both parties, this
is not a case in which Fedgroup sought specific performance. Second, the
consideration of the cases involving compensation in relation to encroachment was
not sufficiently analytical. Christie was a case in which the court considered an action
for trespass. A landowner had come to court complaining that the defendants had
erected a large building on his property and had erected a wall and portion of the
building thereon. The defendants had continued and „refused to abate such
trespass‟. The extent of the ground trespassed upon was 141 square feet. The
defendants admitted the trespass and alleged that they had acted in the bona fide
belief that the whole of the ground upon which they had built belonged to themselves
and that, on discovering the error, they informed the plaintiff. They contended that it
was impossible, without great loss and damage, to remove the building and tendered
the amount of £20 as compensation, further offering to bear the expenses of

surveying the land and of transferring it into their own names. The following part of
the judgment is instructive (at 353 – 354):
„In this case, however, the plaintiff very properly does not press his strict rights to the
extreme point; and it is practically agreed that the proper course will be for the plaintiff to
transfer to the defendants the ground built upon, upon their paying all expenses of and
incidental to the transfer, together with reasonable compensation for depriving him of the
ground. The question for the Court to decide is what sum in all the circumstances of the case
should be awarded as reasonable compensation. . .‟ (Our emphasis.)
It can justifiably be said that Christie was a case in which the parties had agreed to
adjudication by the court of a reasonable amount to be paid for land in
circumstances where the landowner had already agreed to the transfer, subject to
the court deciding on adequate compensation. It can hardly be categorised as
authority for there being a „right‟ vested in an encroacher, to approach a court for an
order to compel transfer of property belonging to another. It is also not insignificant
that the action was instituted by the landowner.

[22] In Lackey, also relied upon by the court below, Griesel J referred to a
discretion vested in a court to award compensation instead of ordering removal of an
encroaching structure. It was stated that a substantial encroachment is not
necessarily a bar to an order of compensation. It is true that in Lackey the
encroacher instituted the action. That, however, was met by a plea and a
counterclaim by the landowner for removal of the encroachment. The lis then, was
not about whether an independent action at the instance of an encroacher was
competent in the absence of a claim for removal. The counterclaim sought precisely
that. What is important, though, is that the court in Lackey said the following (para
41):
„. . . On the evidence of this case, the inference is irresistible that the defendant was
prepared to accept monetary compensation for his erf . . . .‟
The court refused the aggrieved landowner‟s claim for a demolition order and issued
inter alia the following declaratory order:
„It is declared that the defendant is not entitled to the removal from erf 878 of the
encroachment erected thereon by the plaintiffs, subject to payment by the plaintiffs to the
defendant of such damages as the parties may agree or the Court may determine to be
payable.‟

[23] Rand Waterraad, another decision on which the court below relied, dealt with
an application by an aggrieved landowner for a declaratory order that the
respondents in that case had no right in structures encroaching on his property and
that the respondents had to remove them at their own cost. In that case the court
reaffirmed the principle that where a demolition order was sought, a court had a
discretion to refuse such an order and to confine the plaintiff to a claim for damages.
Furthermore, in that case, in refusing the application, the court took into account the
considerable time that had lapsed during which the landowner had raised no
objections against the erection and presence of the offending structures. At 139 I - J
the following appears:
„Geregverdigde billikheid dikteer dat vanweë die traak-my-nieagtige gelatenheid waarmee
applikant hierdie aangeleentheid bejëen het hy nie geregtig is op „n verwyderingsbevel soos
vervat in die kennisgewing van mosie nie.‟
This case is no authority for the proposition that an encroacher can approach a court
as of right to compel transfer of another‟s immovable property.

[24] In Meyer v Keiser,5 relied on by Fedgroup, the facts were as follows. A
landowner instituted action against an encroacher for the removal of an
encroachment. He alleged that unbeknown to him the defendant had built a house
on the adjoining property which, to a substantial extent, encroached upon his
property. In resisting the claim the defendant averred that the encroachment had
occurred as a result of a bona fide mistake about the beacons demarcating the
boundary. Moreover, the defendant indicated that in monetary terms greater
prejudice would attach to him in the event of a demolition order. The defendant
prayed that the court, in the exercise of its discretion, should order the plaintiff to
transfer to him that part of the property upon which there was encroachment against
payment of compensation. The plaintiff excepted to the plea on the ground that the
defendant was not entitled to claim transfer of part of his property. The following part
of the judgment in Meyer is important:
„When an award of damages is acknowledged as the permissible and appropriate form of
relief in the case of an encroachment, an order for the transfer of that portion of the property
encroached upon is incidental to, and consequent upon, such an award. The virtue of such
an ancillary order is obvious but it need not necessarily be made (cf De Villiers v Kalson

5 Meyer v Keiser 1980 (3) SA 504 (D).

1928 EDL 217 at 233), and in certain circumstances to do so may be impracticable or not
permissible in law. The important point is that, whatever form the order takes in such a case,
it is the award of damages which is the true basis for the relief granted. In my view, perhaps
as a result of the form of the orders in the two decisions relied upon, this was overlooked by
the pleader in the instant case which resulted in a misconception of the nature and extent of
the Court‟s discretionary authority.‟
The exception was upheld with costs and the plea was set aside with the defendant
being granted leave to file a new plea if so minded.

[25] In Phillips v South African National Parks Board,6 the South African National
Parks Board had erected an encroaching fence on the applicant landowner‟s
property. The court had regard to environmental legislation, and the prejudice that
the parties might suffer in the event of the fence remaining in place compared to
removal being ordered. Significantly, the court recognised that a loss of property
would result in the event of it being ordered that the fence remain in place against
the award of compensation. It reasoned that it might amount to deprivation of
property and that section 25(1) of the Constitution might come into play (para 24). It
nonetheless considered that such a deprivation might in appropriate circumstances
be ordered in the exercise of a court‟s discretion. In that case, however, the
landowner prevailed and removal was ordered.

[26] Professor Z T Boggenpoel, in an article in the South African Law Journal,7
dealing with the rights of a landowner in respect of encroachments, states with
reference to a number of authorities, that removal of the offending structure is
„ordinarily explained as being the default remedy in the case of encroachments‟. She
goes on to analyse cases that have reaffirmed the discretion to award compensation
instead of ordering the removal of encroaching structures.

[27] Professor Boggenpoel was rightly critical of Victor J‟s judgment in this case for
not being sufficiently analytical. She reasons with justification that the cases relied

6 Phillips v South African National Parks Board [2010] ZAECGHC 27.
7 Z T Boggenpoel „The Ambit of the discretion of courts in the case of encroachment: Fedgroup
Participation Bond Manager (Pty) Ltd v Trustee of the Capital Property Trust Collective Scheme in
Property‟ (2015) 132 SALJ 5.

upon did not provide the necessary authority to conclude that an encroacher can
claim as of right that his neighbour‟s land should be transferred to him.

[28] Professor Boggenpoel, in a separate article,8 very usefully traces the history
of our law in relation to an aggrieved landowner‟s right to seek removal of an
encroachment. The remedy has its roots in Roman law.9 The point of departure in
Roman Law was that an encroachment should be removed.10 This could be done by
self-help or by way of the actio negatoria where the encroachment protruded into
airspace. The learned author, while acknowledging that the remedy had undergone
significant development and modification when it was received into South African
case law states that there appears to be no mention of a power of a court to order
transfer of the encroached upon land to the encroacher.

[29] Similarly there is no mention of such a power in Roman-Dutch law.
Boggenpoel explains that in Roman-Dutch law, the point of departure was the same
as in Roman law, namely, that if anybody suffered as a result of something
belonging to his neighbour overhanging or encroaching on his property, he could
force the neighbour to remove it.11 In the context of acquisition of ownership, Grotius
stated that ownership is transferred to the affected landowner where someone built
on his land.12 According to Voet, „whatever someone lets unto or constructs on
another‟s tenement, becomes the property of him to whom the ground belongs.13
Boggenpoel explains that no mention is made in the commentaries regarding an
order for the transfer of the encroached upon land to the encroacher.14 She states
that her examination of early South African case law confirms the view that such an
order was not competent at common law.15 With reference to Christie, Boggenpoel
concludes that in that case the court merely facilitated a bilateral agreement and that

8 Boggenpoel „Compulsory transfer of encroached-upon land: A constitutional analysis‟ (2013) 76
THRHR 313 at 317.
9 Boggenpoel (2013) at 317. See also Corpus juris civilis (D 9.2.29.1) S P Scott The Civil Law:
Including the Twelve Tables; The Institutes of Gaius; The Rules of Ulpian; The Opinions of Paulus;
The Enactments of Justinian; and the Constitutions of Leo (1973)); J R L Milton „The law of
neighbours in South Africa‟1969 Acta Juridica 123 at 234; Van den Heever Aquilian damages in
South African law (1944) at 84.
10 See D 9.2.29.1.
11 Van Leeuwen Het Roomsche-Hollandsche Recht 2.20.6.
12 Grotius Inleidinge tot de Hollandsche Rechtsgeleerdheid 2.10.6.
13 Voet Commentarius ad Pandectas 8.2.4.
14 Boggenpoel (2013) at 318.
15 And in this she relies on C G Van der Merwe Sakereg 2 ed (1989) at 203.

the transfer that was ordered was not against the affected landowner‟s will.16
Similarly, in Van Boom v Visser,17 the plaintiff did not press his rights of ownership
and was willing to accept £100 to tolerate the encroachment. The court gave
judgment in favour of the aggrieved landowner, reiterating that removal was the
default remedy. The court stated, as an alternative, that the defendant could pay £25
for the transfer of the property and £10 damages. The following statement by the
author is worth repeating:
„Although the end result in this case was that transfer was ordered, a very important
qualification should be emphasised. The transfer of the encroached-upon land was
dependant on the willingness of the affected landowner to give up his property and it was not
an involuntary judicial transfer of the affected land.‟

[30] Boggenpoel considered Meyer as well as the decision in De Villiers v Kalson18
as illustrations that an order for transfer does not necessarily have to be made when
a court exercises its discretion to grant compensation rather than order removal. The
learned author submits that the power to transfer the encroached upon land, which
she says has typically formed part of the court‟s discretion in the context of building
encroachments, is a separate power that should be entirely dependent on the
willingness of the affected landowner to give up his property. She submits that the
judgments that endorse the view that the power exists for a court to effect an
involuntary transfer of property do not provide adequate authority for that position.
The following part of the article bears repeating:
„As the matter stands there is no authority in either common law or legislation in terms of
which a court can sanction a forced sale of land in the context of building encroachment,
against the will of the affected landowner. It should be kept in mind that South African courts
only have the powers granted to them by common law or legislation. In this regard, there is
no common law principle or legislation that grants them the authority to order compulsory
transfer of land.
Furthermore, if the affected landowner does not want to give up his property, the involuntary
transfer of property that the court authorises with a transfer order may be problematic in light
of section 25 of the Constitution. The order will result in a deprivation of property, which will
have to comply with section 25(1). Additionally, if the loss of property in the case where the

16 Boggenpoel (2013) at 318.
17 Van Boom v Visser (1904) 21 SC 360.
18 De Villiers v Kalson (1928) EDL 217.

decision is made to leave the encroachment in place and transfer the encroached-upon land
to the encroacher amounts to expropriation of property, the requirements of section 25(2)
and (3) of the Constitution would also be applicable.‟

[31] The learned author submits that the deprivation of property rights that occurs
as a result of leaving encroachment in place and ordering transfer of the encroached
upon land, must comply with s 25 of the Constitution which, she suggests, might be
problematic. She reaches the following conclusion:
„It is argued here that although it should be possible in terms of the court‟s discretion
to leave (even significant) building encroachments in place against compensation, the power
to order transfer of the affected property is an entirely different matter. The discretion of a
court in the context of building encroachments to decide on an appropriate remedy does not
include the authority to effect a forced transfer of the land affected by the encroachment.
Therefore, a compulsory transfer order will no doubt conflict with section 25(1) in as far as
the common law does not authorise such an order and the transfer order will be unjustified
and therefore arbitrary.‟

[32] Other academics have expressed similar concerns about the constitutionality
of court orders refusing the removal of encroachments, particularly where the
encroachments are extensive or where a transfer of ownership of the encroached
upon land is also ordered, on the grounds that this may constitute arbitrary
deprivation of property.19

[33] Our law has always been careful to protect the right of ownership, particularly
of immovable property. It is a most important and extensive right.20 It is thus
protected by registration in the Deeds Office. Limited real rights in land may also be
required to be registered. Silberberg and Schoeman’s The Law of Property,21 in
dealing with the exclusion of personal rights from the registration process, states the
following at 65:

19 See, for example, A Pope „Encroachment or accession? The importance of the extent of
encroachment in light of South African constitutional principles‟ (2007) 124(3) SALJ 537; AJ van der
Walt „Replacing property rules with liability rules: Encroachment by building‟ (2008) 125(3) SALJ 592
at 622; H Mostert (ed) and A Pope (ed) The Principles of the Law of Property in South Africa (2010) at
140.
20 Chetty v Naidoo 1974 (3) SA 13 (A) at 20 A - D.
21 P J Badenhorst, JM Pienaar and H Mostert Silberberg & Schoeman’s The Law of Property 5 ed
(2006).

„This exclusionary approach indicates support for the notion that ownership is the pinnacle of
– or the most important right within – a hierarchy of rights, with limited real rights following
close at heel. Other rights are understood as being in stages of inferiority to ownership as far
as their protection in property law and publicising thereof are concerned.‟
The learned authors provide a qualification, namely, that this hierarchical approach
has come under scrutiny for failing to provide acceptable solutions to the increased
pressure brought about by a proliferation of land reform legislation. However, it does
not follow from this that the right of ownership should not be afforded its appropriate
weight.

[34] Before us, counsel on behalf of Fedgroup, when engaged by this court on
how they would circumscribe the right the encroacher was seeking to enforce in the
court below, experienced difficulty in doing so. The response ultimately was that no
right could be circumscribed but that it would be a sad day if this court did not come
to Fedgroup‟s assistance especially in the face of the present impasse. Counsel on
behalf of CPT responded as follows; it was the owner of the land; it had not sought
the removal of the offending structure; and as far as it was concerned there was no
justiciable dispute. There was thus no impasse.

[35] With few exceptions, the decisions discussed earlier in this judgment flowed
from an owner seeking to enforce his full rights of ownership. Acquisitive prescription
aside, we have difficulty in conceiving a basis on which an encroacher might
offensively, as of right, claim the transfer of ownership into his or her name of
another‟s land. An encroacher might be able to defend an action or application for
removal on the basis that it is unjust and unfair to order demolition and removal. This
is a defensive position that might rightly be adopted. Courts, in exercising what has
now been accepted as a „discretion‟ to award compensation instead of ordering
removal, do so on the basis of policy considerations such as unreasonable delay on
the part of the landowner, or on the basis of what might be viewed as
acquiescence.22 Prejudice and the principles of neighbour law are taken into
account. However, an encroacher does not have an independent cause of action. He
or she cannot offensively compel another to part with rights of ownership. Estoppel is

22 In this regard, see Z T Boggenpoel „The Discretion of courts in encroachment disputes‟(2012) 23(2)
Stell LR 253 at 256-257.

an apt analogy. It is thus unsurprising that counsel on behalf of Fedgroup
experienced difficulty in formulating the legal basis for approaching the court below
as did Victor J in dealing with prescription. She had difficulty in determining what, in
effect, had been said to prescribe.23 In concluding in sweeping terms that a court has
a wide discretion to consider granting the relief sought by Fedgroup, the court below
erred. In our view, the response of counsel on behalf of CPT set out at the end of the
preceding paragraph is correct.

[36] It is clear from what is set out above that adjudication in relation to
encroachment is fraught with complexities. For example, is compensation to be
calculated in relation only to the value of use and occupation of the land, or should
the negative impact of the deprivation of the full use of the land be taken into
account? If the determination occurs in relation only to use and occupation it might
obviate the need to consider transfer of ownership. Does the right to use and occupy
endure only for the lifetime of the encroacher? In determining whether an
encroachment should remain in place, town planning and zoning considerations
might come into play. Ought compensation to be calculated in relation to the full
market value of the land? If the answer is in the affirmative, does it mean that
registration and transfer has to follow? If it does, does it amount to deprivation of
property within the meaning of s 25(1) of the Constitution. Of course these difficulties
arise only in the event of a landowner being unwilling to part with his or her property.
Carefully crafted legislation, preferably upon the advice of the South African Law
Reform Commission, may address at least some of these complexities.

[37] In the present appeal, Fedgroup has an insuperable difficulty. No court has
ever gone as far as ordering the transfer of land greater than the area of
encroachment. Such an order is just not competent.

23 In this regard, Victor J‟s reliance on Barnett was misplaced. That case dealt with the prescription of
an owner‟s vindicatory claim. Brand JA , himself, in a later judgment, namely, Bester NO & others v
Schmidt Bou Ontwikkelings CC 2013 (1) SA 125; [2012] ZASCA 125 (SCA) recognised that he had
erred in accepting that a vindicatory claim was a debt that prescribed after three years. In Absa Bank
v Keet [2015] ZASCA 81 (SCA), this court reiterated the significance of the distinction between real
and personal rights and held that the vindicatory action is not a „debt‟ that prescribes after three years
in terms of the Prescription Act 68 of 1969. The point is that in the present case prescription was
raised by the owner as against the encroacher. The court below, as is apparent from para 15 of the
judgment, approached the matter from a flawed perspective.

[38] And even if a court had an inclination to come to Fedgroup‟s assistance, there
is yet a further difficulty that Fedgroup cannot overcome, namely, several material
disputes in relation to values and ultimately in respect of computation of
compensation. On CPT‟s valuations and tendered evidence the compensation would
be inadequate and it would suffer the greater and irreparable prejudice.

[39] As suggested by Boggenpoel in her 2015 SALJ article, an intractable problem
for Fedgroup is that the encroaching structure it sought to have remain in place and
of which it required transfer was erected unlawfully, more particularly, no building
plans were submitted.24 A court will not countenance or be party to perpetuating
unlawful conduct.25 For all the aforesaid reasons, the appeal cannot succeed. The
difficulties referred to in paragraph 36 do not fall for consideration.

[40] It is necessary to deal briefly with the application to amend the notice of
motion on appeal. As noted earlier, Fedgroup sought to amend its notice of motion
on appeal to include an alternative prayer for transfer of only the encroached-upon
land (and excluding the additional vacant land sought in the initial prayer). Fedgroup
was emphatic in its founding affidavit that transfer of only this lesser area was
worthless. It is difficult to comprehend why it is now pursuing that worthless
endeavour. Furthermore, the case that CPT was called upon to meet was the
transfer of the extensive area initially sought and it marshalled evidence in relation to
valuation and prejudice relative to that case. The ground has now shifted radically to
CPT‟s prejudice. This cannot be countenanced. The application to amend the notice
of motion thus falls to be dismissed with costs.

[41] Insofar as the cross-appeal is concerned, it was in reality conditional.
Considering the conclusions reached, the question of prescription has been
rendered moot. The cross-appeal falls to be dismissed without an order for costs.

24 Section 4 of the National Building Regulations and Building Standards Act 103 of 1977 provides:
„4
Approval by local authorities of applications in respect of erection of buildings
(1) No person shall without the prior approval in writing of the local authority in question, erect
any building in respect of which plans and specifications are to be drawn and submitted in terms
of this Act.
. . .
(4) Any person erecting any building in contravention of the provisions of subsection (1) shall be
guilty of an offence . . . .‟
25 See Lester v Ndlambe Municipality [2014] 1 All SA 402 (SCA).

[42] For all these reasons the following order is made:
1. The application to amend the notice of motion is dismissed with costs including
the costs of two counsel.
2. The appeal is dismissed with costs including the costs of two counsel.
3. The cross-appeal is dismissed and no order is made as to costs.

_____________________
M S NAVSA

Acting Deputy President

_____________________
H SALDULKER
Judge of Appeal

APPEARANCES:
Appellant
J G Wasserman SC with G F Porteous
Instructed by:
Gideon Pretorius Incorporated, Cape Town
Van Der Merwe & Sour, Bloemfontein

Respondent
J Both SC and J Moorcraft

Instructed by:

Kokinis Incorporated, Randburg

McIntyre & Van Der Post, 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

30 June 2015

STATUS

Immediate

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

Fedgroup Participation Bond Managers v Trustee of the Capital Property Trust [2015]
ZASCA 103 (30 June 2015)

MEDIA STATEMENT

Today, the Supreme Court of Appeal (SCA) delivered a judgment (i) dismissing an application by
Fedgroup Participation Bond Managers (Pty) Ltd (Fedgroup) for leave to amend its notice of motion;
(ii) dismissing the appeal by Fedgroup; and (iii) dismissing a cross-appeal by the trustee of the
Capital Property Trust Collective Investment Scheme in Property (CPT).  Consequently, the court
upheld the order of the Gauteng Local Division, Johannesburg, and refused to grant Fedgroup’s
application for transfer of certain land belonging to CPT.

The appeal before the SCA concerned the issue of whether someone encroaching on another’s land
is entitled, in the absence of an action or an application being brought by the owner of the land for a
demolition order, to approach a court for an order compelling the owner to transfer, not only that part
of the land on which there is encroachment, but also to seek transfer of additional vacant land against
a tender of compensation.  The cross-appeal of CPT concerned the question of whether, if an
encroacher has such a right, it had prescribed in this instance.

The facts of the matter are as follows. Originally, Fedgroup owned two adjacent pieces of prime
commercial land in Sunninghill, Gauteng. In 2006, Fedgroup sold one of these pieces of land to CPT.
In 2008, it was discovered that a substantial but incomplete structure on Fedgroup’s land encroached
upon what was now CPT’s land. Negotiations aimed at an amicable resolution were unsuccessful,
and Fedgroup launched an application for transfer of (i) the land encroached upon by the incomplete
structure, as well as (ii) further vacant land which, Fedgroup alleged, was necessary for the optimal

development of its property. The total extent of the land claimed by Fedgroup constituted 20% of
CPT’s property.

In its founding papers, Fedgroup was emphatic that its prayers for transfer of land were not in the
alternative, and that its case was squarely based on transfer of both pieces of land. However, before
the SCA, it sought leave to amend its notice of motion to include an alternative prayer for transfer of
only the encroached upon land. The SCA held that this represented a radical shift in its case, to
CPT’s prejudice, and that this could not be countenanced. Accordingly, the application for leave to
amend Fedgroup’s notice of motion was dismissed.

With regard to the main appeal, the SCA held that Fedgroup’s appeal (and, therefore, its application)
must fail for four reasons.  First, after reviewing the old authorities and South African case law and
academic opinion on the powers of a court in encroachment matters, the SCA held that while a court
may have a discretion to refuse an application for removal of an encroaching building in certain
circumstances, this discretion is only activated where there is in fact an application by the owner for
demolition or removal. An encroacher does not have an independent cause of action to compel the
owner to part with his rights of ownership. In this regard, the SCA expressly rejected the conclusion to
the contrary reached by the court a quo. Second, Fedgroup had sought transfer of not only the
encroached upon land, but also additional vacant land. Such an order, it was held, is just not
competent. Third, there were several material disputes in relation to the properties and their values,
and on CPT’s valuations, the compensation tendered by Fedgroup would be inadequate and CPT
would suffer the greater and irreparable prejudice. Fourth, the encroaching structure which Fedgroup
sought to have remain in place was erected unlawfully. The SCA reiterated that a court will not
countenance or be party to perpetuating unlawful conduct.

With regard to the cross-appeal, the SCA held that the dismissal of the appeal rendered the cross-
appeal moot and so it also fell to be dismissed, without a full determination of the question in issue
being necessary. Nonetheless, the SCA did in passing criticise the approach and reasoning of the
court a quo on this topic.

Accordingly, the SCA dismissed (i) Fedgroup’s application to amend its notice of motion; (ii) the
appeal; and (iii) the cross-appeal.

--- ends ---