Bondev Midrand (Pty) Limited v Puling Puling and Tapiwanashe Puling; Bondev Midrand (Pty) Limited v Petrus Kgosi Ramokgopa

Bondev Midrand, a property developer, sold residential properties in Midstream Estate to the respondents with conditions registered against the title deeds. The conditions required purchasers to erect dwellings within 18 months, failing which Bondev would be entitled (but not obliged) to claim re-transfer of the property against repayment of the original purchase price. Transfer to Ramokgopa occurred in November 2006, with the 18-month period expiring in May 2008. Transfer to the Pulings occurred in March 2000, with their building period expiring in September 2008. Neither party built a dwelling within the prescribed period. Bondev instituted proceedings in January 2014 (Ramokgopa case) and March 2014 (Puling case), seeking orders for re-transfer of the properties. The respondents raised prescription as a defence, arguing that the debt had become due when they failed to comply with the building obligation and had prescribed three years later. The Gauteng Division, Pretoria dismissed both applications on the basis of prescription.

• Whether a registered condition entitling a developer to claim re-transfer of property creates a real right or a personal right
• Whether such a claim for re-transfer constitutes a 'debt' capable of prescribing under the Prescription Act 68 of 1969
• If the claim constitutes a debt, whether the prescriptive period is three years under s 11(d) of the Prescription Act
• Whether the two clauses of the condition (the obligation to build and the right to claim re-transfer) form an inseparable composite whole creating a real right
• The status and authority of the judgment in Bondev Midrand (Pty) Ltd v Madzhie & others 2017 (4) SA 166 (GP) regarding the constitutionality and enforceability of repurchase clauses

Both appeals were dismissed with costs.

A registered condition entitling a developer to claim re-transfer of property upon breach of a building obligation creates a personal right, not a real right, as it can only be enforced by a particular person against a determined individual and does not bind third parties. Such a right does not become a real right merely because it is registered against a title deed in contravention of s 63(1) of the Deeds Registries Act 47 of 1937. Where such a condition consists of two clauses - one creating an obligation to build (a real right) and another giving the developer an option to claim re-transfer (a personal right) - the two clauses do not form an inseparable composite whole unless the second clause provides a mechanism to terminate the restriction created by the first clause. A claim for re-transfer of property constitutes a 'debt' capable of prescribing under the Prescription Act 68 of 1969, with a prescriptive period of three years under s 11(d), running from the date the debt becomes due (when the building obligation is breached).

The court made significant observations regarding the judgment in Bondev Midrand (Pty) Ltd v Madzhie & others 2017 (4) SA 166 (GP). It stated that it was inappropriate for that court to have pronounced on constitutional issues regarding the enforceability of repurchase clauses when: (1) the applicant had withdrawn the application; (2) the issues had not been raised or canvassed in the papers; and (3) interested parties had neither been forewarned nor heard. The court emphasized that sound judicial policy requires courts to decide only what is demanded by the facts and necessary for proper disposal of a case, particularly in constitutional matters where jurisprudence should develop incrementally. The court noted it was unfortunate that the Registrar of Deeds regarded the Madzhie judgment as binding and consequently refused to register deeds containing repurchase clauses, and stated that those in the Deeds Office should not regard Madzhie as authoritative or binding. The court also noted that repurchase clauses of this nature are relatively common and regularly registered at the instance of developers and local authorities.

This judgment clarifies important principles regarding the distinction between real and personal rights in South African property law, particularly in the context of registered conditions on title deeds. It establishes that a condition giving a developer the right to claim re-transfer of property creates a personal right (akin to an option to purchase), not a real right, even when registered against a title deed and even when coupled with another clause creating a real right, unless the two clauses form an inseparable composite whole. The judgment confirms that personal rights erroneously registered do not become real rights merely by virtue of registration. It also clarifies the application of the Prescription Act to claims for return of property, confirming that such claims constitute debts capable of prescribing under s 11(d) with a three-year prescriptive period. The judgment's criticism of the Madzhie decision reinforces the principle that courts should not decide constitutional issues unnecessary for proper disposal of a case, particularly where interested parties have not been heard, and establishes that the Madzhie judgment should not be regarded as authoritative or binding.