Municipal Employees’ Pension Fund and Others v Chrisal Investments (Pty) Ltd and Others

The Adamax co-owners owned and operated three shopping centres through a letting enterprise. They sold a 55% undivided share in that letting enterprise to the Municipal Employees’ Pension Fund (MEPF) for R550 million as a going concern. The transaction included transfer of a 55% undivided share in the immovable properties and cession of lease rights, and was governed by a detailed sale agreement and a co-ownership agreement (COA). The COA regulated management, income distribution, duration, and exit mechanisms, including pre-emptive rights. Despite these arrangements, the Adamax co-owners applied to the High Court for division and sale of the properties under the actio communi dividundo, seeking to dissolve the co-ownership.

The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order dismissing the application with costs, including the costs of two counsel.

The case clarifies the distinction between free and bound co-ownership in South African law and confirms that the actio communi dividundo is not universally available. It is particularly significant for commercial property and investment structures, emphasising that detailed contractual arrangements can exclude unilateral termination of co-ownership.