eThekwini Municipality v Mounthaven (Pty) Ltd

In 1985 the eThekwini Municipality’s predecessor sold vacant immovable property to Mounthaven (Pty) Ltd subject to special conditions incorporated into the deed of transfer. These included an obligation on the purchaser to erect buildings worth at least R100 000 within three years, failing which ownership would revert to the seller, who could demand re-transfer against repayment of the purchase price less costs. Mounthaven failed to develop the property within the stipulated period and the land remained undeveloped. In 2012, nearly 27 years after the sale, the Municipality invoked the reversionary clause and demanded re-transfer. When Mounthaven refused, the Municipality launched an application in 2014 for re-transfer. Mounthaven raised prescription as a defence, contending that the Municipality’s claim constituted a ‘debt’ that had prescribed after three years under the Prescription Act 68 of 1969.

The appeal was dismissed with costs, confirming that the Municipality’s claim for re-transfer had prescribed after three years.

The case clarifies the application of prescription to claims for re-transfer of immovable property arising from contractual reversionary clauses. It affirms that such clauses generally create personal rights rather than limited real rights, and that claims to enforce them may prescribe. The judgment provides important guidance on the interpretation of ‘debt’ under the Prescription Act in light of Constitutional Court jurisprudence, particularly Makate and Myathaza, within the context of property transactions.