Croxford Trading 7 (Pty) Ltd and Another v The Body Corporate of the Inyoni Rocks Cabanas Scheme No SS1/1978

A sectional title scheme known as Inyoni Rocks Cabanas was registered in 1978 under the Sectional Titles Act 66 of 1971. The developer, Inyoni Beach Apartments (Pty) Ltd, owned unit 64 in the scheme and reserved a right of extension, which was recorded in a conveyancer's certificate registered on 13 October 2003. In 2003, the developer transferred unit 64 to a third party, who subsequently transferred it to the Mahlangu Trust in 2007. On 16 July 2004, after the developer had disposed of unit 64 and no longer had any interest in the common property, it purported to transfer the right of extension to the first appellant (Croxford Trading 7 (Pty) Ltd) by Deed of Cession. The Body Corporate contended that because the developer's right had been acquired under the 1971 Act, it lost that right when it disposed of the unit, and therefore had no right to transfer at the time of the Deed of Cession.

• Whether a developer's 'right of extension' acquired under the Sectional Titles Act 66 of 1971 could be transferred after the developer had disposed of its interest in the common property of the scheme
• Whether the 1993 Amendment to the Sectional Titles Act 95 of 1986 removed the requirement for a developer to retain an interest in the common property when exercising a right of extension acquired under the 1971 Act
• The proper interpretation of section 60(1)(b) of the Sectional Titles Act 95 of 1986 as amended by the Sectional Titles Amendment Act 15 of 1993
• Whether the right of extension could exist independently of ownership of a unit in the scheme

The appeal was dismissed with costs. The high court's order granting the declaratory relief to the respondent Body Corporate and dismissing the appellants' counter-application was upheld.

A developer who acquired a right of extension under section 18 of the Sectional Titles Act 66 of 1971 loses that right when it disposes of its ownership interest in the common property of the scheme, notwithstanding that the Sectional Titles Amendment Act 15 of 1993 made such rights transferable. Section 60(1)(b) of the Sectional Titles Act 95 of 1986, as amended in 1993, requires that rights of extension acquired under the 1971 Act must be 'completed or exercised in terms of the provisions of the Sectional Titles Act, 1971, as if it has not been so repealed'. This means that the requirement under the 1971 Act that the developer retain an interest in the common property continues to apply, even though the 1993 Amendment made the right transferable. A developer who no longer owns any unit in a scheme established under the 1971 Act has no right of extension capable of being transferred to a third party.

The court observed that it was not necessary to decide on the proper classification of the right of extension, whether as a personal servitude, praedial servitude, or statutory real right sui generis. The court noted that it would not be unusual for the exercise of a registered real right to be dependent upon the ownership of another property, as is the case with a praedial servitude. The court also commented that nothing would prevent a mortgagee from stipulating a term that precluded the mortgagor (as holder of the extension right) from divesting itself of its whole interest in the common property and thereby triggering the forfeiture of its right of extension in favour of the body corporate. The court observed that the lawmaker, cognizant of the Erlax Properties judgment and having dispensed with the ownership requirement in section 25(5) of the 1986 Act, deliberately refrained from doing so in relation to rights acquired under the repealed 1971 Act, which could hardly have been an oversight given that section 25(5) was a substantial deviation from the structure of the 1971 Act.

This case clarifies the important distinction between rights of extension acquired under the Sectional Titles Act 66 of 1971 and those acquired under the Sectional Titles Act 95 of 1986. It establishes that while the 1993 Amendment made rights of extension acquired under the 1971 Act transferable (thereby overcoming the limitation identified in Erlax Properties), it did not remove the requirement that the developer or its successor-in-title must retain an interest in the common property to exercise such rights. The case is significant for its interpretation of transitional provisions in sectional titles legislation and confirms that the legislature's different treatment of rights acquired under different legislative regimes was intentional. It provides clarity for developers, purchasers, and bodies corporate regarding the exercise of rights of extension in older sectional title schemes.