Cape Explosive Works Ltd and Another v Denel (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judge: Vivier JA, Olivier JA, Zulman JA, Streicher JA and Mthiyane AJA
• Judgment Date: 19 March 2001
• Docket Number: 60/99
• Hearing Date: 22 February 2001
• Counsel: P A Solomon SC (with J Kentridge) for the appellants. G L Grobler SC (with L J Bekker) for the respondents.
• Court: Supreme Court of Appeal

Streicher JA: G

[1] This is an appeal against a judgment in the Transvaal Provincial Division reported as Denel (Pty) Ltd v Cape Explosive Works Ltd and Another; Cape Explosive Works Ltd v Denel (Pty) Ltd and Others 1999 (2) SA 419 (T). The main issue to be decided in this appeal is whether certain conditions registered in a title deed and erroneously omitted from subsequent title deeds are binding on the H present owner of the relevant property.

[2] During 1973 the first appellant, Cape Explosive Works Ltd (Capex), sold two immovable properties to the second respondent, the Armaments Development and Production Corporation of South Africa Ltd I whose name was subsequently changed to the Armaments Corporation of South Africa Ltd (Armscor). The properties were Farm No 1065, measuring 459,6830 ha, and portion 3 of the Farm Helderberg Sleeper Plantation No 787, measuring 11,3903 ha. Both properties were situated in the administrative district of Stellenbosch. In terms of clause 6 of the J

Streicher JA

deed of sale Armscor undertook that the properties would be used only A for the development and manufacture of armaments and in terms of clause 7(a) thereof Armscor granted to Capex the 'first right to repurchase' the properties, at a price to be determined in a prescribed manner, in the event of the properties no longer being required for the use set out in clause 6. Armscor agreed in terms of clause 7(a)(vii) to the registration of the right conferred B on Capex in terms of clause 7(a) against its title deeds to the properties in the Deeds Office. Clause 7(b) provided that in the event of Capex repurchasing the properties Capex would have the right to purchase all or any of the improvements and other facilities erected on the properties which Armscor was desirous of selling, at a price and on such further terms as might be agreed upon C between Capex and Armscor. Clause 6 (with the exception of certain definitions) and clause 7 are quoted in full in the judgment of the Court a quo at 426D - G and 426H - 427I respectively.

[3] The two properties were transferred to Armscor and '(i)ts successors in title or assigns (hereinafter styled the transferee)' by deed of transfer T40652/1974. The deed of transfer provided in respect D of each of the properties:

'Further subject in respect of the whole of the property hereby transferred to the following conditions which shall be binding on the transferee herein and its successors in title and which are imposed by the transferor herein its favour, namely: E

1.

The property hereby sold shall be used by the transferee only:

(i)

for the development and manufacture of armaments by virtue of the provisions of the Armaments Act 87 of 1964 as amended and the Armaments Development and Production Act 57 of 1968, as well as any future amendments of both the aforesaid Acts, and/or F

(ii)

by the Government of the Republic of South Africa for the development and manufacture of armaments, and

(iii)

whilst such development and manufacture of armaments as set out in (i) and (ii) above are being carried out, for any defence or military operational purpose by the South African Defence Force, and G

(iv)

whilst such development and manufacture as set out in (i) and (ii) are being carried out, for the manufacture at any time of anything whatsoever for commercial exploitation provided that such operations will in no way impinge on or compete directly or indirectly with the businesses conducted bona fide at that time by AE & CI Ltd (''AE & CI'') and/or any of its subsidiary and/or associated companies. H

(v)

for the purposes of the aforegoing condition:

(a)

the word ''armaments'' shall mean . . .

(b)

"subsidiary company'' . . .

(c)

"associated company'' . . .

(d)

"equity share capital'' . . .

2 (i)

In the event of the property being no longer required for the use as set out in clause 1(i) and 1(ii) above, the I transferor herein shall have the first right to repurchase the property (exclusive of improvements) from the transferee, at the price paid by the transferee herein suitably adjusted to make provision for any change in the value of money between the date of sale to the transferee herein and the time of receipt by the transferor of the notice referred to in clause 2(ii) hereunder. J

Streicher JA

(ii)

The transferee hereby undertakes that upon the property no longer being required for the use referred to in 2(i) above to advise A the transferor of that fact by notice in writing. The transferor shall thereupon be entitled to exercise the right referred to in clause 2(i) above within 90 days after the repurchase price has been agreed upon between the transferor and the transferee or failing such agreement, within 90 days after determination of the repurchase price as hereinafter provided. B

(iii)

Should the transferor and the transferee fail to reach agreement on the price at which the transferor shall be entitled to repurchase the property within 14 days following the date of receipt of the notice referred to in 2(ii), the price shall, if demanded by the transferor by notice in writing to the transferee within a period of seven days following the date of expiration of the aforesaid 14 days, C be submitted for determination to . . .

(iv)

. . .

(v)

If the transferor within the said period of 90 days referred to in 2(ii) by notice in writing to the transferee signifies that it will repurchase the property, the transferee shall sell the property to the transferor at the price agreed upon between the transferor and the D transferee and failing agreement, at the price determined in accordance with the provisions of this condition. Until the expiration of the said period of 90 days, the transferee shall not sell or otherwise dispose of or alienate the property or any portion thereof unless the transferor has by notice in writing to the transferee declined to repurchase the property. E

(vi)

. . . .'

(I shall hereinafter refer to these conditions as condition 1 and condition 2 respectively.)

Clauses 6 and 7 of the deed of sale differ in material respects from conditions 1 and 2. Clause 7(b), for example, has no counterpart in the deed of transfer and unlike clauses 6 and 7 F conditions 1 and 2 were expressly stated to be binding on Armscor's successors in title.

[4] Subsequent to the transfer of the properties

4.1

conditions 1 and 2 insofar as they applied in respect of portion 3 of the farm Helderberg Sleeper Plantation No 787 was cancelled by way of a notarial deed of cancellation registered on G 25 October 1977;

4.2

a portion, measuring 7007 m2, of farm 1065 was transferred leaving a remaining extent measuring 458,9823 ha;

4.3

a piece of land measuring 7007 m2 was consolidated with the remaining extent of farm 1065 to form farm 1105 measuring H 459,6830 m2 and a certificate of consolidated title T33717/1977 was issued in respect of the consolidated property;

4.4

Portion 1 of farm 1105 measuring 1,9258 ha was excised from farm 1105 and a certificate of registered title was issued in respect thereof; I

4.5

the remaining extent of farm 1105 measuring 457,7572 ha, was renamed to become the remaining extent of erf 632 Firgrove;

4.6

the remaining extent of erf 632 Firgrove was transferred by Armscor to the first respondent, Denel (Pty) Ltd (Denel), in terms of deed of transfer T75861/92; J

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4.7

the remaining extent of erf 632 Firgrove was consolidated with a number of smaller properties to form erf 635 Firgrove measuring A 458,0678 ha and certificate of consolidated title T1178/94 was issued in respect thereof;

4.8

Erf 637 Firgrove measuring 1,7163 ha was excised from erf 635 and certificate of registered title T1179/94 was issued in respect B thereof leaving a remaining extent of erf 635 measuring 456,3515 ha held by Denel in terms of certificate of consolidated title T1178/94.

[5] From the aforegoing it is clear that most of the land...