Meridian Bay Restaurant (Pty) Ltd and Others v Mitchell SC NO (in his capacity as Curator ad Litem of the Harbour’s Edge Body Corporate)

A sectional title scheme, Harbour’s Edge, was developed by Casisles Coastal Property Investments CC. Prior to the establishment of the body corporate, Casisles sold units to purchasers on the basis of sectional plans showing extensive common property. After the sales, the developer fraudulently registered a revised sectional plan appropriating large portions of the common property and converting them into additional sections, which were transferred to related entities. After the developer’s insolvency, some of these disputed sections were transferred to Meridian Bay Restaurant (Pty) Ltd and bonded in favour of BOE Bank Ltd and Nedbank Ltd. At the time of transfer and registration of the bonds, the appellants had knowledge of pending proceedings concerning the recovery of the disputed sections. A curator ad litem, appointed to the body corporate, instituted proceedings to have the disputed sections restored as common property and the deeds registry records rectified.

The appeal was dismissed with costs, jointly and severally. The order of the High Court directing that sections 1, 7, 21 and 120 revert to the body corporate as common property, that the sectional plans and deeds be rectified, and that the mortgage bonds be deleted, was confirmed.

The case is a leading authority on the application of the doctrine of notice in South African property law, particularly in the context of sectional title schemes and double sales. It confirms that transferees and bondholders who acquire rights with knowledge of prior personal rights or pending proceedings cannot rely on registration to defeat those rights, and it strengthens protection for body corporates and purchasers against fraudulent manipulation of sectional plans.