Constitutional Court orders transfer of property to woman who paid more than half the purchase price

Posted 10 June 2014 Written by Arlene Levy
Category Constitution

The Constitutional Court has upheld an appeal against a judgment by the Northern Cape High Court against Lorraine Botha which prevented transfer of a property into her name on the grounds that she had fallen behind on her payments. The ConCourt ruled in favour of Ms Botha, who argued that in terms of Section 27 of the Alienation of Land Act, she was entitled to have the property transferred into her name as she had paid more than half the purchase price.

The ConCourt statement reads as follows:

In November 2003 Ms (Lorraine) Botha entered into an instalment sale agreement with the trustees of the JJW Hendricks Trust for the purchase of immovable property. After having paid more than half of the purchase price, Ms Botha began to default in her outstanding payments.

In May 2008 Ms Botha demanded transfer of the property from the Trust in terms of section 27 of the Alienation of Land Act (Act). This section gives purchasers the right to demand transfer of property into their names once they have paid more than half of the purchase price. In response, the Trust applied to the Magistrates’ Court to cancel the agreement, and to evict Ms Botha from the property on the basis that she had breached the agreement by falling into arrears with her instalments as well as municipal rates, taxes and services fees. Judgment, which was subsequently abandoned by the Trust, was granted against Ms Botha.

Ms Botha again defaulted in her payments. The Trust then instituted motion proceedings in the High Court for an order cancelling the agreement alternatively declaring it cancelled. Ms Botha made a counter-application to compel the Trust to transfer the property to her. The High Court dismissed the counter-application and held in favour of the Trust.

Ms Botha subsequently lodged an application for leave to appeal directly to the Constitutional Court. The application was dismissed on the basis that it was not in the interests of justice to hear the matter at that stage. Following a successful petition, the Supreme Court of Appeal remitted the matter to the Full Bench of the High Court for determination. In March 2013 the Full Bench dismissed Ms Botha’s appeal and held that her counter-application in the High Court had no merit. She then appealed to this Court.

In a unanimous judgment, written by Nkabinde J, the Constitutional Court granted leave to appeal and found in favour of Ms Botha. The Court held that Ms Botha is entitled to the transfer of the property as the common law contractual remedy of specific performance is not excluded by section 27 of the Act. The Court further held that it would be unfair to deprive Ms Botha of the transfer as she had already paid a considerable portion of the purchase price. However, the Court held that it would equally be unfair to the Trust to entitle Ms Botha to the transfer of the property without her paying the outstanding arrears.

Relying on the principles of reciprocity in contracts and good faith, the Court ordered that Ms Botha is entitled to the transfer of property. However, she must, in return, register a bond over the property as required by section 27 of the Act and to pay all outstanding amounts to the Trust. The Trust was ordered to pay the costs.

Section 27 of the Alienation of Land Act (1981) reads as follows:

Rights of purchaser who has partially paid the purchase price of land

(1) Any purchaser who in terms of a deed of alienation has undertaken to pay the purchase price of land in specified instalments over a period in the future and who has paid to the seller in such instalments not less than 50 per cent of the purchase price, shall, if the land is registrable, be entitled to demand from the seller transfer of the land on condition that simultaneously with the registration of the transfer there shall be registered in favour of the seller a first mortgage bond over the land to secure the balance of the purchase price and interest in terms of the deed of alienation.

(2) The conditions as to the rate of interest and redemption as well as other conditions of the mortgage bond contemplated in subsection (1), shall not be more onerous than the conditions which applied in respect of the deed of alienation.

(3) If for whatever reason the seller is unable, fails or refuses to tender transfer within three months of the receipt of the demand referred to in subsection (1), the purchaser may cancel the relevant deed of alienation, in which case the parties are entitled to the relief provided for in section 28(1): Provided that nothing contained in this subsection shall detract from any additional claim for damages which the purchaser may have.

(4) The provisions of this section shall not apply in respect of a deed of alienation in terms of which the State or a local authority is the seller.

Case: Lorraine Sophie Botha and Another v Henry Robins Rich NO and Others:  CCT 89/13 [2014] ZACC 11)

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