Meridian Bay Restaurant (Pty) Ltd v Mitchell SC NO (686/2009) [2011] ZASCA 30; 2011 (4) SA 1 (SCA) (23 March 2011)

Meridian Bay Restaurant (Pty) Ltd v Mitchell SC NO (686/2009) [2011] ZASCA 30; 2011 (4) SA 1 (SCA) (23 March 2011)

The Supreme Court of Appeal held that the developer fraudulently altered the sectional title plans, converting common property into units and transferring them to associated entities without the knowledge of the original purchasers. The subsequent purchaser, Meridian Bay, acquired the disputed sections with actual knowledge of the prior personal rights of the original purchasers, as evidenced by explicit contractual provisions and disclosures. The doctrine of notice applies in such circumstances, rendering Meridian Bay's acquisition wrongful. The court found that the absence of contractual privity between Meridian Bay and the prior purchasers does not prevent the latter from claiming...

Citation
[2011] ZASCA 30
Parties
Appellant: Meridian Bay Restaurant (Pty) Ltd; Appellant: BOE Bank Limited; Appellant: Nedbank Limited; Respondent: D R Mitchell SC NO
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
23 March 2011
Case Number
686/2009
Procedural Posture
Civil Appeal / Appeal From Western Cape High Court (cape Town)
Outcome
Appeal dismissed with costs to be paid jointly and severally by the appellants, the one paying the others to be absolved.
Judges
NAVSA, PONNAN, SHONGWE
Legal Topics
Sectional Titles Act, Doctrine of Notice, Double Sales, Fraudulent Transfer, Specific Performance, Rectification of Deeds
Land and Property Civil Procedure Commercial and Corporate Sectional Titles Act Doctrine of Notice Double Sales Fraudulent Transfer Specific Performance +1 more

Case Brief

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Parties

Meridian Bay Restaurant (Pty) Ltd

Appellant

BOE Bank Limited

Appellant

Nedbank Limited

Appellant

D R Mitchell SC NO

Respondent

Procedural Posture

Civil Appeal / Appeal From Western Cape High Court (cape Town)

Legal Issues

  1. 1 Whether the doctrine of notice applies where a developer fraudulently creates and disposes of additional units out of common property in a sectional title scheme.
  2. 2 Whether the prior purchasers can claim directly from a subsequent purchaser who acquired with knowledge of the prior sale.
  3. 3 Whether the reconfiguration of common property into units to facilitate fraud bars invocation of the doctrine of notice.

Ratio Decidendi

The Supreme Court of Appeal held that the developer fraudulently altered the sectional title plans, converting common property into units and transferring them to associated entities without the knowledge of the original purchasers. The subsequent purchaser, Meridian Bay, acquired the disputed sections with actual knowledge of the prior personal rights of the original purchasers, as evidenced by explicit contractual provisions and disclosures. The doctrine of notice applies in such circumstances, rendering Meridian Bay's acquisition wrongful. The court found that the absence of contractual privity between Meridian Bay and the prior purchasers does not prevent the latter from claiming...

Court Disposition

Appeal dismissed with costs to be paid jointly and severally by the appellants, the one paying the others to be absolved.

Orders

  • The appeal is dismissed with costs to be paid jointly and severally by the appellants, the one paying the others to be absolved.
  • Sections 1, 7, 21 and 120 of the Harbour’s Edge Sectional Title Scheme are to revert to the Body Corporate as common property.