Eden Village (Meadowbrook) (Pty) Ltd and Another v Edwards and Another

• Jurisdiction: South Africa
• Judge: Joubert JA, Hoexter JA, Nestadt JA, Eksteen JA and F H Grosskopf JA
• Judgment Date: 11 May 1995
• Docket Number: 164/93
• Court: Appellate Division
• Hearing Date: 10 November 1994
• Citation: 1995 (4) SA 31 (A)

Eksteen JA:

The Eden Retirement Village tends to conjure up in the mind visions of the primeval paradise, and when in addition one reads that it is being managed by a company known as Liefde en Vrede, one may be G forgiven for thinking that it holds out promise of the dawn of some millennial age for all who seek to dwell within its bounds. That blissful prospect, however, was not vouchsafed to Mr and Mrs Edwards (the respondents) after they came to live in this would-be delectable meadow.

In August 1986 they entered into a written agreement with first appellant H - the owner and developer of Eden Village - in terms of which they lent it R59 900 as an interest-free loan. In return they were to receive vacant and undisturbed possession of a house in the village from 1 April 1987 to the death of the longest living of them. This house was to be built according to certain agreed specifications. The respondents also undertook to pay a monthly levy to be determined by the management I company, ie Liefde en Vrede (the second appellant). The agreement went on to provide that the cost of water and the rates and taxes would be included in the levy; that 'the complex Eden Retirement Village' would offer, inter alia, a frail care centre, a recreation centre where meals would be provided at a nominal charge, a seven-day free holiday at Warner J Beach annually, and that there would be full security

Eksteen JA

A at the main gate and patrolling of the grounds. In pursuance of this, and other agreements concluded with other people, Eden Village was built and the houses occupied by retired persons.

The possibility that the complex may at some future date be converted into a development scheme in terms of the Sectional Titles Act 95 of 1986 (hereinafter referred to as 'the Sectional Titles Act') was held out in B clause 5.4 of the agreement which provided that:

'5.4 On completion of the unit and in the event of a sectional title register being opened the occupier may cause a mortgage bond in an amount equal to the loan to be registered over the unit as security for repayment of the loan.'

Nowhere in the contract was there any undertaking by the first appellant C to convert the complex into a development scheme (ie a sectional title scheme) at any future time or at all. The clause I have quoted merely holds out the possibility of such an event occurring in the future and no more.

Clause 13 of the agreement provided that:

D '13. This agreement represents the entire agreement between the parties who acknowledge that no warranties have been made save as are set forth herein.'

As the number of residents grew so did the discontent at the administration and management of the village, and more particularly at the way in which the monthly levies were being spent. So serious did the dissatisfaction become that it was eventually agreed to submit the dispute E between the residents and the appellants to the mediation of Professor Louise Tager, who had been appointed chairman of the Business Practices Committee. The meetings attendant on the mediation seem to have been held during 1990, and the parties, which included 'the greater majority of residents', agreed to abide by the decision of Professor Tager. At one of F the meetings the first appellant indicated that it had begun to take steps to open a sectional title register and bound itself to take all steps necessary to expedite the opening of the register. It appears from the papers that the first appellant had instructed a firm of land surveyors, town planners, and sectional title consultants on 1 October 1990 to G prepare sectional plans for the units in EdenVillage.

The mediation procedure was apparently completed before the end of 1990, and on 15 January 1991 Professor Tager sent her ruling to the representatives of the residents, and presumably also to the appellants. This ruling provided for the administration of the village to be H undertaken by a committee consisting of five residents, to be elected from among the body of residents, as well as a representative of each of the appellants. The committee would be responsible for all 'staff matters' and would be entitled to see and monitor the books of account relating to the village.

I Pursuant to this ruling the appellants agreed to the election of a residents' committee on which they were also represented, and that this committee be 'afforded limited rights of participation in the management and administration' of the village. Such a committee was then duly elected. There is some dispute on the papers as to whether the appellants complied with all aspects of Professor Tager's ruling. The respondents say they did not. The appellants deny these allegations. In any event J the

Eksteen JA

A friction between the appellants and the residents seems to have continued. A series of letters containing allegations and counter-allegations passed between their attorneys. Eventually, by letter dated 8 October 1991, the appellants purported to cancel the 'agreement' relating to the administration and management of the village, and to regard the elected B committee of residents as 'defunct and without authority'. Appellants would in future administer the village on their own.

On 25 October 1991 the respondents approached the Witwatersrand Local Division on notice of motion seeking a declaratory order against the first appellant:

C 'That regs 7-14 inclusive published in Government Notice R1351 of 30 June 1989 in terms of the Housing Development Schemes for Retired Persons Act 65 of 1988 are applicable to respondent's retirement village being Eden Village (Meadowbrook).'

First appellant opposed the application and filed an answering affidavit on 13 December 1991. Therein it alleges inter alia that

D 'preparations in respect of the opening of a consolidated sectional titles register are well under way'.

After the respondents had filed their replying affidavit they applied to the Court to join the second appellant as second respondent. This application was granted and that is how the second appellant became a party to the suit.

E On 11 May 1992 second appellant filed its answering affidavit. From the allegations in para 4 thereof and in the annexures thereto, it appears that first appellant applied to the Germiston City Council (which is the local authority exercising jurisdiction over the land on which Eden Village had been established) for its approval of the proposed sectional F title development. This application appears to have been made on 17 February 1992, and on 17 March 1992 the City Council approved the application subject to the registration of a right of way along the eastern boundary of the property in favour of the Council.

After several more affidavits had been filed by both sides the Court G granted the order prayed for. The present appeal is brought against the grant of that order.

In argument before us Mr Slomowitz, who appeared for the appellants, relied on the following four grounds for his submission that the declaratory order should not have been granted, viz:

1.

That, as it had been the intention of the appellants to convert the H housing development scheme established by them to a sectional title scheme, and that they had applied to the Germiston City Council for and obtained their approval for the scheme, the regulations in question could not apply.

2.

In any event, he submitted, the regulations promulgated were ultra I vires the authority conferred on the Minister by s 11 of the Housing Development Schemes for Retired Persons Act 65 of 1988 ('the Act').

3.

The regulations could not be regarded as having been made in terms of the said s 11 as they had been made by the Minister of Trade and Industry and Tourism and not by the Minister of Economic Affairs and J Technology as contemplated by the Act.

Eksteen JA

4.

A The respondents ought to have joined all the residents of Eden Village as they must be regarded as having a direct and substantial interest in the matter.

I shall deal with each of the grounds in turn.

The first ground B

The Act came into force on 1 July 1989. In s 1 a 'retired person' is defined as 'a person who is 50 years of age or older' and a 'housing interest' in relation to a housing development scheme, as

'any right to claim transfer of the land to which the scheme relates, or to use or occupy that land'.

C A 'housing development scheme' is defined as meaning

'any scheme, arrangement or undertaking -

(a)

in terms of which housing interests are alienated for occupation contemplated in s 7 (ie only by retired persons or their spouses), D whether the scheme, arrangement or undertaking is operated pursuant to or in connection with a development scheme, or a share block scheme or membership of or participation in any club, association, organisation or other body, or the issuing of shares, or otherwise, but excluding a property time-sharing scheme, or

(b)

declared a housing development scheme by the Minister by notice in the Gazette for the purposes of this Act'.

E A 'development scheme' means a development scheme as defined in s 1(1) of the Sectional Titles Act, and a 'share block scheme' means a share block scheme as defined in s 1 of the Share Blocks Control Act 59 of 1980.

The term 'housing development scheme' therefore embraces a large variety F of schemes aimed at providing housing for retired persons, and includes inter alia a sectional title scheme, a share block scheme and a scheme such as the...