SERVITUDE RIGHTS REQUIRE REGISTRATION

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Aldous Kennedy
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1 SERVITUDE RIGHTS REQUIRE REGISTRATION Troskie and Another v Liquidator of RSD Construction CC Wilbecar Liquidators CC t/a Bureau Trust Gauteng RSD Construction CC and Others (71322/2010) [2015] ZAGPPHC 321 (8 May 2015) It is not uncommon in close family circles that one grants the other servitude type rights over property on the understanding that such rights should be enforceable against third parties for the lifetime of the sibling or parent. However, compliance with the Alienation of Land Act as well as formal registration are requirements to convert such rights to "real rights" that are immune against attack from third parties, especially where the property changes hands. This judgment is a case in point. The Judgment can be viewed here. FACTS Mr JHW Troskie (JHW) was the registered owner of a 22 hectares immovable property. In 1976, he concluded an oral agreement (the 1976 oral agreement) with his brother, Mr Troskie, in terms of which certain rights over the property were granted in favour of Mr and Mrs Troskie, and which Mr Troskie described as a lifelong usufruct. The Troskies, at their own expense, built certain structures on the property and extensively improved approximately 8,000m² of the property. These structures included a dwelling house where the Troskies lived since From 1978 to date the Troskies have also utilised the property for business purposes to generate an income. 1 // 5 In 2005 JHW decided to sell the property and concluded a deed of sale with RSD Construction CC (RSD). In June 2005 RSD concluded a written agreement (the 2005 written agreement) with the Troskies, which expressly dealt with the rights granted to the Troskies by JHW. The agreement acknowledged the improvements effected by Mr Troskie and stated that it was agreed that the Troskies owned the house and buildings they erected at their cost and that they have a right of use in respect thereof, the value of which the parties recorded to be R750,000. The agreement recorded further that Mr Troskie was willing to waive these rights subject thereto that, on transfer of ownership of the property into the name of RSD, R750,000 will be paid to Mr Troskie and he will retain the right to stay in the house and use the outbuildings for 2 years after date of registration. The agreement further provided that such continued occupation by Troskie will be on the basis that no rent was payable, that Troskie will only be liable for pro rata rates and taxes, and so forth.

2 Transfer of the property into the name of RSD took place on 11 July RSD was subsequently placed in liquidation and the liquidators sought to sell the property by public auction. The Troskies then brought an action to court, seeking: (i) an order confirming the existence of a usufruct in favour of the Troskies; (ii) an order that the Registrar of Deeds must effect the registration of such usufruct against the title deed of the property; and (iii) an order confirming the existence of the Troskies improvement lien over certain structures erected on the property. They also argued (iv), that they acquired the servitude by way of prescription. The liquidators submitted that the 1976 oral agreement was invalid in that it did not comply with the Alienation of Land Act, 68 of 1981 (ALA). In addition they brought a counter-application wherein they sought an order evicting the Troskies from the property. HELD: Usufruct: general principles A usufruct is a personal servitude. It is a real right in terms of which the owner of a thing confers on the usufructuary the right to use and enjoy the thing to which the usufruct relates. Personal servitudes are real rights which cannot be transferred. A personal servitude is constituted in favour of the holder in a personal capacity and not in favour of the land. A personal servitude can be created by agreement. A duly executed agreement to grant a servitude becomes a real right only when it has been registered, after which it can be exercised against the whole world. Validity of 1976 oral agreement Our courts have held that the ALA was also applicable to servitudes over immovable property as a servitude constituted an alienation as defined in that Act. The oral 1976 agreement was therefore of no force and effect. It has further been held that an oral servitude is unenforceable against the successor in title of the servient tenement, even though such successor had notice of the oral agreement. In such cases the doctrine of notice found no application. 2 // 5

3 2 // 3 The 2005 written agreement meaning of The written agreement records that the Troskies held certain rights which they would waive in favour of RSD, subject to certain conditions. It cannot however be said that this agreement conveyed rights of usufruct on the Troskies. The recordal in the agreement was erroneous, because there was no valid usufruct or other real rights that could be waived. Rather, what was granted to the Troskies in terms of the written agreement was the right to occupy the dwelling for a further two year period. After the two year period, the Troskies could extend their stay for one year by written notice. (The period had lapsed and the Troskies were still in occupation of the dwelling, despite no written notice to extend.). The fact that the Troskies were granted a right to occupation for a further fixed period contradicts any interpretation that a lifelong right of usufruct, habitatio, or usus was created in terms of the written document. Rather, it was intended that RSD would pay the Troskies for waiving their existing (and ultimately invalid) rights, and would grant them a right of occupation for an additional period. Creation of usufruct by acquisitive prescription Alternatively to the creation of usufruct by agreement, the Troskies submitted that a usufruct was created by acquisitive prescription. Section 6 of the Prescription Act 68 of 1969 provided that "... a person shall acquire a servitude by prescription if he has openly and as though he were entitled to do so, exercised the rights and powers which a person who has a right to such servitude is entitled to exercise, for an uninterrupted period of thirty years or, in the case of a praedial servitude, for a period which, together with any periods for which such rights and powers were so exercised by his predecessors in title, constitutes an uninterrupted period of thirty years. The aforementioned section subsumed the requirements for prescription laid down in the previous Prescription Act of 1943, which required that the use of the property must have been nec vi nec clam nec precario for the period of thirty years. 3 // 5 Nec precario, the absence of a grant on request, has been subsumed into the requirement that the potential acquirer of the servitude must act as though he or she was entitled to exercise the servitudal right. It follows that either express or tacit consent would mean that the alleged acquirer did not act as if he or she was entitled to exercise the servitudal right.

4 The Troskies, on their own version, used the property with the consent and actual agreement of the owner, JHW. The requirement of nec precario was therefore not met for the period 1978 to Furthermore, in 2005, before a period of thirty years had been completed, the Troskies concluded the agreement with the RSD in terms of which they were granted the express right to use the property for a further two years. What happened after that two year period is unclear, but clearly the requirement of nec precario was also not met for the period after The Troskies reliance on acquisitive prescription therefore failed. Improvement lien Someone who has a right of retention over an immovable asset belonging to an insolvent estate is obliged to surrender possession of the immovable property to the trustee. In terms of section 47 of the Insolvency Act, a creditor will not lose his security by handing over the immovable property to which he has a right of retention if, when delivering the property, he notifies the liquidator of his rights and in due course proves his claim against the estate. The Troskies will therefore not lose any preference they may have had in respect of improvements, should the liquidators take possession of the immovable property, and there is no right of retention as a result. Counter-application for eviction The Troskies relied on section 4(7) and (8) of PIE, which enforces the principle that eviction will only be ordered where it is just and equitable to do so, after considering all the relevant circumstances. The Troskies occupation of the property was unlawful. Section 8 of PIE did not offer them a complete defence to the eviction application, but served merely to delay or suspend the exercise of the landowner's full proprietary rights until a determination was made whether it is just and equitable to evict the unlawful occupier and under what conditions. An eviction order should therefore be granted, and the only question is on what terms it should take place. The property constituted the Troskies primary place of residence. Mr Troskie was 62 years old and Mrs Troskie 61. The Troskies lived on the property since 1978 and they said that they have utilised a part of the property to generate an income. They said they had no alternative accommodation, or an alternative source of income. They 4 // 5

5 however did not disclose their financial position apart from bald allegations that they would not be able to afford alternative housing. They also did not indicate how their means of generating income would disappear were they evicted from the property. From the available evidence it was clear that the Troskies did not belong to the poor and vulnerable class of persons whose protection was obviously foremost in the Legislature s mind when it enacted PIE. However, it was a fact that an eviction order would operate harshly on them, as elderly people who lived on the property for about 37 years. The court postponed the eviction for a period of three months and held that since no urgency was shown in the liquidation proceedings and considering the Troskies plight, granted them a period of nine months to vacate the property, thus giving them sufficient time to make alternative living and working arrangements. 5 // 5

SERVITUDES OVER IMMOVABLE PROPERTY AND THEIR IMPLICATIONS

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