The Rock Foundation Properties & Another v Dosvelt Properties (Pty) Ltd and Another

The second applicant, Ms Ndegwa, was the sole member of the first applicant, The Rock Foundation Properties. Ms Ndegwa owned immovable property (Erf 298 Sandown Extension 24) which she purchased in a derelict state and improved with a home loan from Absa Bank. She envisaged developing the property into a gated cluster complex but required subdivision approval. In 2007, Ms Ndegwa fell into arrears with bond repayments and faced a sale in execution. As a judgment debtor, she could not obtain finance from financial institutions. On 28 June 2018, she met Mr Chaitowitz (second respondent, sole director of first respondent, Dosvelt Properties) and concluded a suite of three simultaneous agreements: (1) a deed of sale whereby Ms Ndegwa sold the property to Dosvelt for R3 million; (2) a lease agreement giving the Rock Foundation the right to remain in occupation and develop the property; and (3) an option agreement giving the Rock Foundation an option exercisable within three years to purchase the property back for R3.3 million. Transfer was registered to Dosvelt on 30 October 2018. The Rock Foundation defaulted on rental payments despite an addendum granting indulgences. On 23 December 2020, Dosvelt cancelled the lease and option agreements.

• Whether exceptional circumstances existed to justify reconsideration under s 17(2)(f) of the Superior Courts Act 10 of 2013 of a refusal of a petition for leave to appeal
• Whether the suite of agreements constituted simulated transactions intended to disguise a credit agreement under the National Credit Act 34 of 2005
• Whether the alleged credit agreement fell foul of the National Credit Act as Dosvelt and Mr Chaitowitz were not registered credit providers
• Whether leave to appeal should be granted on grounds of public interest or grave injustice

The matter was struck from the roll. The applicants were ordered to pay, jointly and severally, the one paying the other to be absolved, the costs incurred by the respondent in opposing the application for reconsideration.

The binding legal principles established are: (1) It is for the Court to which the President's referral under s 17(2)(f) of the Superior Courts Act is made to decide, as a jurisdictional requirement, whether exceptional circumstances exist. (2) Section 17(2)(f) is intended to be restricted to matters that are truly exceptional, involving substantive points of law, an issue of great public importance, or a strongly arguable prospect of denial of grave justice should reconsideration be refused. (3) Exceptional circumstances cannot be established by mere repetition of arguments that have been rejected by the high court and by judges of the Supreme Court of Appeal on petition. (4) The inquiry into whether transactions are simulated is in each case one of fact, for which no general rule can be laid down. (5) Where applicants raise no substantive issue of law, no new arguments on facts, and no new insights on interpretation, and merely rehearse submissions previously dismissed, there are no exceptional circumstances to justify reconsideration.

The Court made non-binding observations distinguishing true Brusson-type schemes from the present case. The Court noted that Brusson-type schemes involve fraud perpetrated on financially distressed property owners who believe they are offering property as security for a loan but are duped into passing transfer to a third party in on the scam, raising different considerations from cases where parties intentionally agree that what appears to be a sale is intended to be a secured loan. The Court observed that the suite of agreements in this case demonstrated no more than a common commercial arrangement where the purchaser bought the property while giving the seller an opportunity to develop it and potentially exercise an option to repurchase within three years, with nothing unusual or suspicious in such an arrangement. The Court also noted that Ms Ndegwa sought transfer of the property back without any concomitant tender to repay the purchase price received, highlighting the problematic nature of the relief sought. The Court mentioned that s 17(2)(f) was amended with effect from 3 April 2024, with the phrase 'in exceptional circumstances' deleted and substituted with 'in circumstances where a grave failure of justice would otherwise result or the administration of justice may be brought into disrepute'.

This case confirms the restrictive approach to reconsideration applications under s 17(2)(f) of the Superior Courts Act 10 of 2013. It clarifies that exceptional circumstances are not established by mere repetition of arguments that have been rejected by the high court and on petition, even where applicants claim grave injustice or public interest concerns. The judgment reaffirms that the determination of whether exceptional circumstances exist is a jurisdictional requirement for the Court seized with the reconsideration application. The case also provides guidance on the distinction between true Brusson-type fraudulent schemes and alleged simulated transactions where parties intentionally structure agreements to disguise their true nature. It reinforces that simulation is fundamentally a question of fact requiring proof of common intention, not merely a legal characterization of agreements. The judgment demonstrates judicial discipline in restricting access to reconsideration proceedings to truly exceptional cases involving substantive legal points, great public importance, or strongly arguable grave injustice, rather than allowing reconsideration to become a standard further avenue of appeal on factual disputes.