Cape Explosive Works Ltd v Denel (Pty) Ltd 2001 (3) SA 569 (SCA)

Cape Explosive Works Ltd v Denel (Pty) Ltd 2001 (3) SA 569 (SCA)

Issue:Whether certain conditions registered in a title deed and erroneously omitted from subsequent title deeds are binding on the present owner of the relevant property.

Facts:

In 1973, Cape Explosive Works Ltd (Capex) sold two immovable properties to Armscor. The deed of transfer for each property contained two conditions:

• The land was only to be used for the manufacturing of armaments.
• When no longer required for that purpose, Armscor was to advise Capex thereof and Capex would have first right to repurchase the land.

These conditions were expressly stated to be binding on Armscor's successors in title.

In 1982, Armscor transferred one of the properties to Denel (Pty) Ltd (Denel). The condition relating to the first right of repurchase was erroneously omitted from the deed of transfer for the property transferred to Denel.

In 1992, Denel applied to the High Court for an order declaring its ownership of the property to be unencumbered by the condition relating to the use of the land for the manufacturing of armaments. Capex brought a counter-application for an order directing that the documents of title in terms of which the land had been held subsequent to its transfer to Armscor be rectified to include the conditions relating to the use of the land and the first right of repurchase.

The High Court granted Denel's application and dismissed Capex's counter-application. Capex appealed to the Supreme Court of Appeal (SCA).

Key Facts:

• Capex sold two immovable properties to Armscor in 1973.
• The deeds of transfer for the properties contained two conditions: (1) the land was only to be used for the manufacturing of armaments and (2) when no longer required for that purpose, Armscor was to advise Capex thereof and Capex would have first right to repurchase the land.
• The conditions were expressly stated to be binding on Armscor's successors in title.
• In 1982, Armscor transferred one of the properties to Denel.
• The condition relating to the first right of repurchase was erroneously omitted from the deed of transfer for the property transferred to Denel.
• Denel applied to the High Court for an order declaring its ownership of the property to be unencumbered by the condition relating to the use of the land for the manufacturing of armaments. Capex brought a counter-application for an order directing that the documents of title be rectified to include the conditions.
• The High Court granted Denel's application and dismissed Capex's counter-application.
• Capex appealed to the SCA.

Court's Decision

The SCA held that the conditions registered in the title deeds of the properties sold by Capex to Armscor were binding on Denel, even though the condition relating to the first right of repurchase was erroneously omitted from the deed of transfer for the property transferred to Denel.

The SCA reasoned that the conditions were real rights that had been created in favor of Capex and that were attached to the land. The SCA also reasoned that the conditions were valid and enforceable, even though they had not been registered in the Deeds Office.