CAPE EXPLOSIVE WORKS LTD AND ANOTHER V DENEL (PTY) LTD AND OTHERS

SUPREME COURT OF APPEAL

VIVIER JA, OLIVIER JA, ZULMAN JA, STREICHER JA, MTHIYANE AJA
2001. February 22; March 19.

This case makes clear that the Deeds Registry is not absolutely reliable: an omission of a real
right therefrom does not extinguish it. The judgment also provides a clear illustration of the
application of the two-fold test. Finally, the Court ruled that a use restriction and repurchase
right were inextricable and formed a composite whole. For a criticism of this interpretation see
Wille p.437.
FACTS
In 1973, Capex (the appellant) sold two pieces of land to Armscor (the second respondent). In the
deed of sale it was stipulated that (1) the properties would be used only for the manufacture of
arms, and (2) if the properties were no longer used as such Capex would have the first right of
repurchase. Armscor agreed to the registration of these rights in the Deeds Office. But through
various alienations and consolidations a significant portion of the land in question came under
the ownership of Denel (the first respondent) completely unencumbered by condition 2 and
mostly unencumbered by condition 1, ostensibly due to a clerical error in transfer. Denel brought
an application to the court a quo declaring its ownership of the land to be legitimately
unencumbered by condition 2, while Capex brought a counter-application for the reinstatement
of the conditions in title. The court found in favour of Denel on the grounds that condition 2 was
not registrable. Capex appeals to the present court.
LEGAL QUESTION
Does the omission of a real right from the registry affect its legal status?
REASONING
As follows a number of cited rulings on the matter, the intention with which transfer was given
and received is a key determiner of whether conditions 1 and 2 were transferred in title. Since
Capex sold and Armscor bought the property subject to those conditions and without complaint,
the transfer was presumptively completed with the intention to transfer those conditions. Other
circumstantial evidence confirms this.
We must then ask whether the condition results in a subtraction from the dominium of the land
in question. Counsel for Denel argued that condition 2 could not be a real right because it
imposed a positive obligation on the transferee to notify the transferor when the properties were
no longer required for arms manufacture. But the giving of notice is as much a right as an
obligation, because if Denel does not do so the land is useless to it.
Conditions 1 and 2, as a composite whole, patently constitute a subtraction from the dominium.
Because of the nature of a real right, being enforceable against anyone and in perpetuity, they
do not cease to exist simply by their erroneous omission from subsequent title deeds. As follows
case law and the negative system which is in place, the registry cannot be absolutely relied
upon as an accurate reflection of the true state of affairs.
ANSWER TO LEGAL QUESTION
No, such omission from the registry does not affect its legal status.

OUTCOME
The appeal is upheld with costs; the judgment of the court a quo is dismissed. The title deed
must be rectified so as to register conditions 1 and 2, and Denel is interdicted from using the
properties contrary to those conditions.