THE REPUBLIC OF SOUTH AFRICA 

IN THE HIGH COURT OF SOUTH AFRICA
 GAUTENG DIVISION, JOHANNESBUURG 

									Case number: A5009/2017

(1)	REPORTABLE: 		 
(2)	OF INTEREST TO OTHERS JUDGES:	
(3)	REVISED

______________	 _________________________
DATE		SIGNATURE	

In the matter between:
 BONGIE HLONGWANE 					First Appellant 
 MARIA HLONGWANE 					Second Appellant
 CHRISTINE HLONNGWANE 				Third Appellant
 And 
 MOIPONE MIRRIAM MOSHOALIBA 			First Respondent 
 THE STANDARD BANK OF SOUTH AFRICA  	Second Respondent 
 MPHO TSUBANE 						Third Respondent 
 JACOB MATABANE 					Fourth Respondent 
 THE SHERIFF OF SOWETO EAST 			Fifth Respondent 
 THE EXECUTOR OF THE LATE ESTATE 
 DENNIS HLONGWANE 					Sixth Respondent 
 THE DIRECTOR GENERAL OF THE
 DEPARTMENT OF HUMAN 
 SETTLEMENTS, GAUTENG PROVINCE 		Seventh Respondent 
 THE MEC OF THE DEPARTMENTS OF
 HUMAN SETTLEMENTS, GAUTENG PROVINCE	Eighth Respondent
 THE CITY OF JOHANNESBURG 
 METROPOLITAN MUNICIPALITY 			Ninth Respondent
 THE REGISTRAR OF DEEDS (JOHANNESBURG)	Tenth Respondent
													
 JUDGMENT
												 
 Molahlehi J 
 Introduction 
[1]	This is an appeal against the order made by the court below in the unopposed motion court on 30 May 2016 in terms of which the appellants’ application was dismissed. The reasons for the order were subsequently made on 30 June 2016.
[2]	The appeal is opposed by the second respondent, the Standard Bank of South Africa on the basis that the Title Deed was not endorsed to reflect the restriction that it was a “family house” as contended by the appellants. It further contends that neither it nor the first respondent was made aware of the agreement between the appellants and their brother. 
[3]	The appellants are three sisters who are occupiers of Erf 11 699 Diepkloof, house number 3097 Diepkloof zone 2 (the property). They are Ms Bongie, Ms Maria and Ms Christina Hlongwane. The other person who, for this judgment, occupied the property with them soon after the death of their father, Mr Thomas Hlongwane (the deceased) was their brother, Mr Dennis Hlongwane (Dennis) who has also since passed away.  
[4]	In the notice of motion, which served before the court below, the appellants sought the following relief:  
(1)	Cancelling the Title Deed No T17421/2008, which deed holds property known as ERF 11699, Diepkloof Township. Soweto, Gauteng. 
(2)	That the Mortgage Bond No: B22725/2008 be simultaneously cancelled with Title Deed No: T17421/2008, and which bond is registered in favour of the Second Respondent, Standard Bank of South Africa. 
(3)	Directing the Tenth Respondent (Registrar of Deeds, Johannesburg), to cancel Title Deed No T17421/2008, which deed holds property known as ERF 11699, Diepkloof Township, Soweto, Gauteng simultaneously with Mortgage Bond No: B22725/2008. 
(4)	That a “Family Title” be issued over the property, giving joint ownership to the First, Second and Third Applicant and also to Estate: Dennis Hlongwane, by a Housing Tribunal adjudication ruling made by Adjudicator T.I Lebeko under case number: 18518 and which is dated 18th November 2002. 
The legislative history
[5]	The focus of the dispute in this appeal concerns the validity of the acquisition of the property by the first respondent, Ms Moshoaliba from Dennis. 
[6]	The dispute has its historical basis in the prohibition of land ownership by black people in what was then demarcated as urban township areas under the apartheid regime.
[7]	As a general rule, citizens of South Africa who were classified as "black people" in the areas demarcated as urban areas were prohibited from ownership of immovable property. They were in the mid-50s, and late 60s allowed limited rights of occupation in the form of a 30 years lease. The lease arrangements were abolished in 1968 in terms of the Regulations Governing Control and Supervision of Urban Black Residential Areas and Relevant Matters, promulgated in terms of s 8 of the Black "Urban Areas" Consolidation Act.
[8]	The shift in the government policy resulted in the introduction of the short-lived 99-year lease over the properties in the urban areas. The significant change that came with this policy was that black people acquired rights to property in the urban areas. The failure of the 99-year leasehold registration resulted in the introduction of full ownership rights to black persons in urban areas in 1986 through the introduction of the Black Community's Development Act of 1984.
[9]	In 1988 the Conversion of Certain Rights into Leasehold or Ownership Act (the Act), was promulgated. The purpose of the Act was:
"to cater for the conversion of certain rights of occupation into leasehold or ownership and matters connected therewith.” 
[10]	The task and the power of converting occupational rights into ownership were accorded to the provincial administrators.
[11]	The Act was amended in 1993 and s 1 thereof provided for the conversion of site permits into ownership of properties in the urban areas. And in addition to the broad principles governing the conversion of rights acquired under the previous dispensation the Act also provides for the procedure and process to be undertaken by the Director General of a Province before making the conversion. The process entails conducting an inquiry into (a)  whether the site in issue falls within the formalized township for which township register had been opened and  (b)  whether those who claim the rights over the property satisfy the conversion requirements. 
[12]	The Director-General is given powers at the conclusion of the above process, and once satisfied that the person is the holder of a right envisaged in the Act, to declare him or her to be the owner of the property in question. The decision is however suspended pending the expiry of the period allocated for appeal envisaged in s 3 of the Act.
[13]	In terms of s 3 of the Act, any person who is aggrieved by the process of the decision of the Director-General may institute appeal proceedings in court against such a decision. 
[14]	In general, the decision to declare a person an owner of the property would be irregular and invalid if such a declaration is done without the inquiry envisaged in s 2 of the Act. The process of transferring property into the person declared to be the owner is set out in s 5 of the Act.  After the declaration of ownership, the Director-General is in terms of the process required to lodge such a declaration and a deed of transfer in terms of the Deeds Registries Act (the Deeds Act), in the name of the person who has acquired the right of ownership with the Registrar of Deeds.
[15]	The Registrar of Deeds deals with the lodgement of the transfer documents in the same manner as if the lodgement was executed in terms of s 20 of the Deeds Act which deems ownership to be transferred on the date of registration. 
Background facts 
[16]	As stated earlier it is common cause that the appellants together with Dennis continued the occupation of the property after the death of the deceased.  At the time the deceased passed away the family occupied the property in terms of the Urban Black Areas Consolidation Act.
[17]	The deceased and his late wife were granted permission to occupy the property in terms of the lease arrangement during 1961. At the time their children (the appellants and Dennis) were staying with their grandparents in the then Northern Transvaal. The appellants and Dennis joined their parents in 1970. Their names were then entered into the records of the Bantu Resettlement Board as residents of the property.
[18]	The residential permit which was reissued to the deceased also reflected the names of the siblings as residents of the property.  
[19]	The deceased passed away interstate in 1993 but because he had not acquired ownership rights the property remained the property of the City of Johannesburg. This meant that the occupation of the property by the siblings continued on the same basis as that of their deceased father.
Conversion of property to ownership.
[20]	The deponent to the founding affidavit stated that during 2002 the siblings were invited to the offices of the City of Johannesburg in Diepkloof, where they were advised of the changes in the law relating to ownership of the fixed properties in the urban arrears. They were further advised about the policy of the government to transfer urban areas’ houses to residents who occupied them in terms of the then housing system. 
[21]	They were also advised that in their case the transfer of the property would be done on the basis that the four of them would jointly own the property.  In response to this, they informed the municipality that they preferred the property to be a "family house" as they wished to benefit jointly from it. They were then referred to the Housing Transfer Bureau where they were assisted in drafting the agreement, titled the "Family House Rights Agreement."
[22]	The agreement was then presented before the adjudicator Advocate Lebeko (the first adjudicator) who after having regard to the document recorded his ruling on the matter in the following terms:
 		"Ruling 
I at this moment ruled that property number T30172,002 should be allocated to Dennis Hlongwane, to hold as a custodian of a family house on behalf of  Bongie, Tsakane, Mhlothi and Dennis Hlongwane.” 
[23]	The essence of the appellants’ case is set out in paragraphs 38 to 40 of the founding affidavit as follows: 
 "38  	We as the four (4) children of Thomas Hlongwane, agreed when assenting to the above mentioned agreement, mutually agreed to appoint our brother Dennis Hlongwane as a "custodian."  We assented to his appointment as custodian, because in our culture, a male child is usually given a responsibility to look after the family. His appointment of him as a "Custodian" was to give him a supervisory or safe-keeping role for and on behalf of the whole family. This did not mean he was being given ownership of the property.
  39.	 After all the formalities had been done and whishes recorded as per annexure H, a Title Deed numbered T19112\200 was then issued in the names of our brother Dennis Hlongwane, as we had mutually agreed and assented on 18th November 2002. I have attached his Title Deed already here as an annexure C.
40 	As I have repeatedly stated above, our brother Dennis Hlongwane,  was merely a "Custodian" and he could not do as he pleased with this "family property", since he was bound by the terms laid out in the "Family House Rights Agreement" which I have attached hereto as annexure H. The Title Deed issued to him meant that he was granted "ownership" of the property, but subject to this  "family agreement" and on behalf of the benefit of the whole family.” 
[24]	It is common cause that the Title Deed was issued during 2003 and for about three years after that, the siblings stayed together in harmony in the property. The relationship between them deteriorated during 2006 when Dennis is alleged to have mistreated, abused and threatened to chase the others away from the property. They resisted all his efforts, and during 2007, he left the property to go and stay at Brits in the Northwest province.
[25]	At the end of 2008, the appellants were approached by the first respondent Ms Moshaoliba who informed them that she had bought the property from Dennis. They refused to accept what she had told them and continued living in the property. At the beginning of 2009 eviction proceedings were instituted against them in the magistrate court but nothing seems to have come out of that process.
[26]	Dennis did not involve himself in the conflict relating to the sale of the property in 2007. After this, the applicants approached the housing department for assistance.  
[27]	The department appointed Ms. Tohlang as an adjudicator, (the second adjudicator) to consider the matter. She found that the registration of the property in the name of Dennis was done in terms of the ruling made by the first adjudicator and was made in terms of the regulations. She further found that the department when registering the property in the name of Dennis did so without indicating that the appellants had the right to continue residing on the property. 
[28]	It appears that Ms. Moshoaliba did not pursue the matter further after the report by the second adjudicator was issued. However, in 2015 the appellants were approached by the third and fourth respondents who claimed to have purchased the property from the second respondent, the Standard Bank of South Africa.
[29]	In the result, the appellants approached the department again for assistance. They were this time advised to have the title deed set aside in terms of section 6 of the Deeds Act.
Grounds for appeal.
[30]	The essence of the appellants’ complaint is that the court below erred in failing to take into account the fact that the agreement between them and Dennis was valid and binding on all parties including the first to fourth respondents. They also contend that Dennis was only a custodian holding the property on behalf of the family and thus did not have the right to sell it without their consent.
The decision of the court below. 
[31]	In dismissing the appellants’ application, the court below found that the property was registered under the Title Deed T19112\2003 in favour of Dennis with the knowledge and consent of the appellants.
[32]	The court below further found that the appellants were content and nominated Dennis as their representative and also to have the house registered in his name. 
[33]	It also found that there was nothing improper or irregular in the initial transfer of the property into the name of Dennis. It was for this reasons that it found that the transfer was lawful.
[34]	The court below further reasoned as follows: 
"16 	Absent a finding of invalidity in relation to Title Deed T19112\2003, or the underlying agreement which gave rise to the registration thereof, an Order for  the cancellation thereof in accordance with section 6(1) of the Deeds Registry Act 47 of 1937 would be without just caus and would bring about irreparable harm to subsequent transferees and mortgagees, such as the First and Second Respondents, who did not act with any knowledge of any defect in the title. De facto, there was no defect in title, least of all at the time. Subsequent misconduct on the part of a transferee cannot give rise to defects in the title, but is more likely to give rise to a claim sounding in damages." 
The issue 
[35]	The issue in this matter is whether there is a defect in Title arising from the failure to comply with the provisions of the real agreement of treating the property as the “family house,”   justifying the cancellation of the Title Deed. 
The Title Deed 
[36]	It is trite that although the Registrar of Deeds has the power to register Title Deeds of immovable properties, he or she does not have the power to cancel such registration unless with a court order. The correct procedure to follow in a case of the cancellation of a Title Deed is provided for in s 6 of the Deeds Registries Act, 1937 which reads as follows:
“6. Registered deeds not to be cancelled except upon an order of the court.
(1)	Save as is otherwise provided in this Act or in any other law no registered deed of grant, deed of transfer, certificates of title or deed conferring or conveying title land, or any real right in land other than mortgage bond, and no cession of any registered bond as security, shall be cancelled by a registrar except upon an order of court.
(2)	Upon the cancellation of any deed conferring or conveying title to land or any real right in land other than a mortgage bond as provided for in subsection (1), the deed under which the land or such real right in land was held immediately prior to the registration of the deed which is cancelled, shall be revived to the extent of such cancellation, and the registrar shall cancel the relevant endorsement thereon evidencing the registration of the cancelled deed.”
[37]	The purpose of the registration of immovable property in the Deeds Office which is a public office is to keep public records of registered immovable properties including any encumbrances that may be registered over such properties. They also provide information about the identity of the registered owner of property, the purpose of which is to inform the public whether such a person may transact in the alienation of such a property. 
[38]	The requirements of the passing of ownership in the case of an immovable property are delivery, through registration in the Deeds Office and a real agreement.  The requirement of a “real agreement” as stated in Legator McKenna Inc. v Shea, consist of: 
“an intention on the part of the transferor to transfer ownership and intention of the transferee to become the owner of the property.”
[39]	About the relevant theory governing the issue of transfer of property to Legator McKenna Inc, the Supreme Court of Appeal, held that the abstract theory applies to both immovable and movable property. In  Oriental Products (Pty) Ltd v Pegma 178 Investments Trading CC,  Shongwe JA in dealing with the issue of transfer held that:
"It is trite that our law has adopted the abstract system of transfer as opposed to the causal system of transfer. Under the causal system of transfer, a valid cause (iusta causa) giving rise to the transfer is a sine qua non for the transfer of ownership. In other words, if the cause is invalid, e.g. non-compliance with formal requirements, the transfer of ownership will also be void -See Carey Miller 'Transfer of Ownership' in Feenstra & Zimmerman Das Römisch-Holländische Recht 537; 'Transfer of Ownership' in Zimmerman & Visser Southern Cross: Civil Law and Common Law in South Africa 727 at 735-9. Under the abstract system the most important point is that there is no need for a formally valid underlying transaction, provided that the parties are ad idem regarding the passing of ownership: Meintjes NO v Coetzer 2010 (5) SA 186(SCA)."
[40]	The requirements of the abstract theory are set out in Lagator McKenna Inc, by the SCA as follows:
“[22]	In accordance with the abstract theory the requirements  for the passing of ownership are twofold, namely delivery – which in the case of immovable property, is effected by registration of transfer in the Deeds Office – coupled with a so-called real agreement or 'saaklike ooreenkoms'. The essential elements of the real agreement are an intention on the part of the transferor to transfer ownership and the intention of the transferee to become the owner of the property (see eg Air-Kel (Edms) Bpk h/a Merkel Motors v Bodenstein 1980 (3) SA 917 (A) at 922E-F; Dreyer and Another NNO v AXZS Industries (Pty) Ltd (supra) para 17). Broadly stated, the principles applicable to agreements in general also apply to real agreements. Although the abstract theory does not require a valid underlying contract, eg sale, ownership will not pass – despite registration of transfer – if there is a defect in the real agreement (see eg Preller v Jordaan 1956 (1) SA 483 (A) 496; Klerck NO v Van Zyl and Maritz NNO (supra) 274A-B; Silberberg and Schoeman op cit, 79-80).”
[41]	The issue in the above case related to the defect in the real agreement in terms of which McKenna’s intention to transfer ownership had been motivated by a mistaken belief that he had entered into a valid and enforceable agreement. 
[42]	The SCA agreed with the lower court about the existence of the mistake between the parties to the agreement but disagreed with the approach it adopted about the nature and the impact of the mistake on the transfer of the property. It accordingly held that: 
“[23] 	. . .  But I do not agree that a mistake of that kind could in itself render the real agreement void. If that were the position, we would effectively revert to the causal theory of transfer which we have jettisoned in favour of the abstract theory. I say that because I believe that very few parties (if any) to real agreements would deliberately give and receive transfer pursuant to an underlying transaction which, to their knowledge, is void. If a mistaken belief of this kind – whether unilateral or common – were therefore to render the real agreement invalid, there would not be much left of the abstract theory of transfer.
[24]	In any event, a mistaken assumption about the validity of the underlying causa constitutes a mistake in motive. About mistakes of this kind, it was said in Van Reenen Steel (Pty) Ltd v Smith NO 2002 (4) SA 264 (SCA) para 9:
“A party cannot vitiate a contract based upon a mistaken motive relating to an existing fact, even if the motive is common, unless the contract is made dependent upon the motive, or if the requirements for a misrepresentation are present.”
And in African Realty Trust Ltd v Holmes 1922 AD 389 at 403 it was said:
“But, as a Court, we are after all not concerned with the motives which actuated the parties in entering into the contract, except insofar as they were expressly made part and parcel of the contract or are part of the contract by clear implication.”
[43]	About the facts, the SCA held that the validity of the sale did not affect the effectiveness of the real agreement. It was for this reason that it held that the house was validly transferred to the purchaser. 
[44]	It is clear from the above authorities that the abstract theory does not require a valid underlying agreement for the transfer of property to take effect. The court will, however, not find that ownership has passed despite registration of property if a defect exists in the real agreement. 
Evaluation
[45]	There seems to be no doubt from a moral point of view that what Dennis did was not fair, and thus the situation in which the appellants find themselves in deserves some sympathy. There is also no doubt from the appellants’ papers that this is a matter of significant personal importance.
[46]	However, in law what needs to be considered is whether the agreement which the appellants concluded with Dennis and the subsequent transfer of the house into his name brought about valid and enforceable transfer. The same applies to the transfer of the property into the name of the first respondent and the registration of the mortgage bond simultaneously with the transfer. 
[47]	The appellants in their papers do not make out any case that there was any defect in the agreement they concluded with Dennis. The agreement and the transfer on their version were done with their consent. They agreed to have the property transferred into the name of their brother.  No endorsement was entered on the title deed to restrict his rights to transfer the property or to deal with it in any other way as a registered owner.  He was thus legally competent to transfer the property, and Ms Moshaoliba was legally competent to acquire the property. 
[48]	In light of the above, the conclusion reached by the court below that “de facto,” there was no defect in the title,” cannot be faulted. It was also correct in my view to say that the misconduct on the part of Dennis after the transfer of the property into his name cannot give rise to defects in the title, but rather it likely gives rise to a claim in damages. 
[49]	The appellants on their version knew from the advice of the officials that the property could be jointly registered into their names. They consciously elected, being fully aware of their rights, to have the property registered in the name of Dennis.  They did not insist on an appropriate endorsement of the title deed. Their agreement effectively replaced their right to ownership with the personal right. This means in selling the house he effectively breached his personal obligation to his sisters, the appellants.  
[50]	It is evidently clear from the papers that the intention was to transfer the house without the transfer being tainted. It accordingly follows in applying the abstract theory of transfer that the requirements of a valid real agreement were satisfied and thus the transfer to the bona fide purchaser was valid and enforceable and accordingly the property cannot be vindicated. 
[51]	The terms of the agreement that the property was to be the family house do not assist the case of the appellants in two aspects. The first being that there is no evidence that the first respondent was aware of the agreement or that it had been brought to her attention before purchasing the property. The second aspect is that the agreement was registered in the Title Deed to make the public aware of the restriction on the property.   
[52]	The complaint by the appellants that the department erred in registering the property without including the notion of “Family House” in the deeds registry does not assist the case of the appellant. There was, in this respect never a procedural attack on the procedural validity of the finding that the property should be registered in the name of Dennis.
[53]	The same applies to the comment by the department that it could not alienate the house nor bequeath any party the property in the face of the “Family House Rights Agreement.”  I have already mentioned somewhere else in this judgment that this notion was nothing but a personal arrangement between the siblings. It does not elevate that arrangement above the real right of ownership in the immovable property, registered through the transfer process.
[54]	The comment, more importantly, does not assist the case of the appellants because once the determination and the registration processes were completed the official of the department became funtus officio. In the circumstances, the advice of the department was misconceived particularly when regard is had to the fact that the Act makes no provision for the concept of a “Family House.” 
[55]	The validity of the decision of the Director-General to transfer and register the property in the name of Dennis, was never attacked in any proceedings, be it to appeal or review. It accordingly follows that the factual position arising from that decision and the legal consequences cannot be ignored. 
[56]	It can thus be inferred that before making the declaration that Dennis had met the requirements to be granted the ownership of the property and that it be transferred into his name, the Director-General complied with the requirements of s 2 read with s 3 of the Act. In other words, the determination made was published in the prescribed manner with an indication that the determination was subject to an appeal by any aggrieved person including the appellants. It should also be noted in this respect that the appellants did nothing to challenge the fact that in transferring the property the “restriction family housing” was not included and they instituted these proceedings nine years after Moshoaliba purchased the house. 
Conclusion 
[57]	In my view, based on the facts as presented by the appellants, there is no doubt that the determination as to who qualified for ownership of the property in terms of the Act is beyond doubt. The siblings were advised that the four of them qualified to benefit from the provisions of the Act as joint owners. They took their time to consider the matter and decided on their own that the property should be transferred into the name of Dennis. It was thus a consequence of the appellants’ conscious decision that in terms of the real agreement the property was transferred and registered into the name of the person of their choice. 

[58]	It is further my view that the transfer of the property in the name of Dennis was lawful, valid and enforceable in compliance with the provisions of the Act. 
[59]	In the circumstances, upholding the prayers of the appellants and accordingly annulling the registration of the property would amount to elevating a breach of personal rights by Dennis above real rights in the ownership of the property. It would also materially prejudice the first respondent as a bona fide purchaser of the property. The same would apply to the second respondent.   
[60]	In light of the above, I find no basis to interfere with the status quo which is a consequence of giving effect to the real agreement between the interested parties in effecting the transfer in terms of the requirements of the Act. 
[61]	In the circumstances, the appellants’ appeal stands to fail.  
Order 
[62]	In the premises, the appellants’ appeal is dismissed with costs.  

					
E Molahlehi 
Judge of the HighCourt;Johannesburg
I agree 

					M Ismail  
Judge of the High Court ; Johannesburg
I agree 

									NH Maenetje 
Acting Judge of the High Court; Johannesburg

Representation:
For the Appellants: Adv. L Memela 
Instructed by: Gcwencsa Attorneys
For the Second Respondent: Adv Konstantinides SC 
Instructed by: Van Hulstey Attorneys. 
Heard:  04 December 2017                 
Delivered:  02 February 2018