NEWSLETTER – ISSUE 02

NEWSLETTER
July 2019
Issue 02


FEATURED ARTICLES THIS MONTH
DEVIATION DUE TO CHANGED CIRCUMSTANCES WHEN EXERCISING A REAL RIGHT OF EXTENSION 

BY ALLEN WEST 
The deviation from the section 25(2)(a) and (b) plans when exercising a real right of extension has been a matter that has been deliberated on at length by our Courts and Registrars of Deeds.  Recent case law, in my opinion, has now finally put this thorny issue to rest

Background
In the case of Dolphin Whisper Trading 10 (PTY) LTD v The Registrar of Deeds and another (20645/08) [2009][ZAWCHC] dated 3 March 2009, it was held that if there is not sufficient evidence of changed circumstances, the real right of extension has to be exercised strictly in accordance with the section 25(2)(a) and (b) plans.  This case literally put the cat among the pigeons and developers had to approach the Court when any deviation from the section 25(2) plans occurred.  In the judgement of Roseparkadmin CC and others v Registrar of Deeds (WCHC) Case No 5522 dated 17 May 2011, it was held that section 25(13) of the Act allows the Developer to deviate, in instances of changed circumstances, from the section 25(2) plans and an owner who feels prejudiced may alone apply to court.  It was further held that the Act does not require the developer to first obtain the courts sanction for such deviation.  Two conflicting decisions on which Registrars had to implement a uniform practice

Registrars Ruling
Registrars of Deed at their annual conference in 2011 took cognizance of the Roseparkadmin-case, but felt it prudent to expand on the decision and to usurp the duty to ensure that the exercising of the real right of extension is within the physical boundaries of the reserved right (RCR12 of 2011).
The Chief Registrar furthermore issued a directive providing that proof must be submitted that the real right is exercised within the “foot print” on which the reservation took place, which proof must be in the form of a certificate from a surveyor or architect (see CRC 2 of 2012).

Recent Case Law
In terms of the most recent case in this regard, namely the unreported case of Hartenbos Woonwapark CC v Registrar of Deeds and others, Case No 3273/2017 dated 29 May 2017, the court held as follows:
“I cannot agree that the developer’s failure to divide the sections strictly according the site development plan due to the changed circumstances amounts to non-compliance with the provisions of the Act.  Although the Act requires the sections to be divided according to the site development plan, the Act does envisage that there may be situations where it is not possible to divide the sections strictly according to the site development plan due to “changed circumstances”.  The Act, in those instances, provides remedies to the owners of the units who may be affected by the deviation to approach the court.  I agree with the applicant’s submission that section 25(13) of the Act relates to situations where an owner of a unit in a scheme takes issue with a deviation, and approaches the court for an order obliging the developer to properly comply with the terms of the reservation or any other relief which the court may deem fit, including an award for damages.  It is clear from the reading of section 25(13) of the Act that this section is not concerned with the power of the Registrar of Deeds to refuse to register the transfer nor the court’s approval of the transfer of a unit which is subject”

Conclusion
Where the real right is clearly defined on a diagram, the exercising of the real right may not exceed the boundaries or encroach on other common property in the scheme. However, where no diagram exists, but merely a sketch plan, it is not incumbent on the Registrar of Deeds to police the foot print.


CALCULATION OF INTEREST OF A DEBT  

Carma Prinsloo

BY CARMA PRINSLOO 

The calculation of interest on a debt is governed by the Prescribed Rate of Interest Act 55 of 1975 (hereinafter “the Act”). The Act has been divided into two parts relating to the calculation of interest, being:
(1)  the rate at which interest on debt  is calculated in certain circumstances, and
(2)  interest on a judgment or unliquidated debt.

Interest on debt in certain circumstances
Section 1 of the Act applies in circumstances where the calculation of interest is not governed by any other law, agreement or trade custom.  In these circumstances, the rate of interest shall be calculated by using the repo rate as determined by the South African Reserve Bank, plus 3,5 % per annum.

Interest on a judgment debt
Interest on a judgment debt will become due from the day on which such judgment debt is payable.  As of 1 January 2019, the prescribed rate of interest is 10.25% per annum.

Interest on unliquidated debt
An unliquidated debt shall bear interest as per section 1 of the Act, stating that interest will be calculated by using the repo rate plus 3.5% per annum.

Interest on an unliquidated debt shall run from the date on which payment of the debt is claimed.  Payment of interest may be claimed by the service of a demand or summons.

Should damages claimed include an estimation of a loss (in whole or in part) which will occur in the future, interest on that part of the debt will only commence to run when quantum is determined by judgment or agreement.  Thereafter, the amount will be deemed to be a judgment debt.

The interruption of interest can occur where a debtor offers to settle a debt (whether by tender or making a payment into court).  The interruption will occur from the date of the payment into court or date of the offer made until the date of acceptance of the offer by the creditor.


THE LIABILITY OF THE ARCHITECT IN THE SOUTH AFRICAN LAW

Sumari Benade

BY SUMARI BENADE

McKenzie’s “Law of Building and Engineering Contract and Arbitration 7th Edition, p 129” defines

an architect as “a duly qualified professional person whose function it is to design and supervise the erection of buildings, or in the words of The Shorter Oxford English Dictionary: One whose profession it is to prepare plans of edifices and exercise a general superintendence over their erection.”  A person may only practise as an architect in South Africa if he is registered as such in terms of the Architectural Profession Act 44 of 2000.  Section 27 of this Act stipulates that the South African Council for the Architectural Profession must draw up a code of conduct for registered persons.  All registered persons must comply with the terms as included in this code and failure to do so constitutes improper conduct.

The preamble of the Code of Professional Conduct, issued under BN 154 of 2007, Government Gazette 32731, 27 November 2009, states that “it is an overriding obligation under the rules that, in carrying out professional work, a registered person is expected to act with due skill, competency and integrity”. Once an architect is appointed by the employer, a binding contract will be in existence between the parties.  Usually included in the tacit terms of the agreement is that the architect does in fact possess the required skill and ability to be reasonably proficient in his calling.  It is, however, important to be cognisant of the fact that the architect may be also held liable in respect of a delictual claim in the absence of any contractual agreement between the parties.

It is a well-established fact in the South African Law that a person who does not practice with the due skill and diligence will be regarded as negligent.  In the Supreme Court of Appeal matter, Goliath v MEC for Health, Eastern Cape 2015 (2) SA 97 (SCA), the Court referred to the matter of Van Wyk v Lewis 1924 A.D 438 in which the test for negligence has been defined as “the failure of a professional person to adhere to the general level of skill and diligence possessed and exercised at the same time by the members of the branch of the profession to which he or she belongs would normally constitute negligence.”  In the English matter of Nye Sanders & Partners v Alan E Bristow (1987) 37 BLR 92 (CA) the Court stated the following with reference to the position of an architect: “Where there is a conflict as whether he has discharged that duty [to use reasonable skill and care], the courts approach the matter upon the basis of considering whether there was evidence that at the time a responsible body of architects would have taken the view that the way in which the subject of enquiry had carried out his duties was an appropriate way of carrying out the duty, and would not hold him guilty of professional negligence merely because there was a body of competent professional opinion which held that he was at fault.”

Should it therefore be found that an architect’s conduct falls short of the conduct that would have been reasonably exercised by another person of the same profession, the architect will be held liable in damages to his employer.

In the matter of Bentel Associate International (Pty) Ltd v Loch Logan Waterfront (Pty) Ltd 2015 JDR 0323 (FB) the Court had to decide inter alia whether the defendant’s claim in reconvention, alleging that it has suffered damages as a result of the plaintiff’s failure to perform its obligations in a professional and workmanlike manner and without negligence, should be upheld.  The Court stated that “the architect’s liability is not absolute in the sense of being liable for whatever occurs. The architect is liable for substantial negligence (Dodd v Estate Cloete and Another 1971 (1) SA 376 (ECD)).”  It further referred to the matter of De Wet v Steynsrust Municipality 1925 OPD 151 in which it was held that “an architect must exercise the general level of skill and diligence exercised by other persons exercising the same profession, being skilled and experienced persons.”  The Court referred with approval to the position in international law pertaining to the liability of the architect and quoted John R. Heisse from his article “The Measure of Malpractice” Journal of the American College of Construction Lawyers Vol 5, Nr 2, 2011: “Noting that architects and engineers deal in somewhat inexact sciences and are continually called upon to exercise their skilled judgment in order to anticipate and provide for random factors which are incapable of precise measurement the courts have reasoned that the indeterminate nature of these factors makes it impossible for professional service people to gauge them with complete accuracy in every instance.”

The benchmark regarding the standard of care that should be applied by an architect in the law of the United States has been defined in the Maine Supreme Court matter of Coombs v Beede 89 Me. 187 A 104 (1896).  The Court held that the responsibility of the architect is the same as a doctor to patient or lawyer to his client, which is that the architect possess “some skill and ability in some special employment and offers his services to the public on account of his fitness to act in the line of business for which he may be employed.”  The Court further held that the undertaking of the architect implies that he consequently possesses the “skill and ability, including taste, sufficient to enable him to perform the required services at least ordinarily and reasonably well; and that he will exercise and apply, in the given case, his skill, ability, judgment and taste, reasonably and without neglect.”  The Court then attempted to define the exclusions from the architect’s duty of care, submitting that “the undertaking does not imply or warrant a satisfactory result.  It will be enough that any failure shall not be the fault of the architect.  There is no implied promise that miscalculations may not occur.  An error in judgment is not necessarily evidence of want of skill or care, for mistakes and miscalculations are incidents to all business of life.”  Negligence should therefore be evident from the conduct of the architect and it will not suffice to simply state that a mistake was made by the architect.

When the architect enters into an agreement, it is implied that he is able to perform the work with reasonable skill and diligence.  It does however not warrant that the result will be without fault and the architect therefore will not be held liable for the fault arising from defects in the plans because he does not imply or warrant a satisfactory result.


LATEST DEVELOPMENTS IN CASE LAW
NATIONAL HOME BUILDERS’ REGISTRATION COUNCIL & ANOTHER V XANTHA PROPERTIES 18 (PTY) LTD (780/2018 and 784/2018) [2019] ZASCA 96 (21 June 2019)

The respondent, Xantha Properties 18 (Pty) Ltd embarked upon the construction of a property development in Cape Town

consisting of a number of shops and 223 residential apartments.  It averred that it had no intention of selling these apartments or developing them under a sectional title scheme but with the sole intention to rent them to tenants. Although registered as a ‘home builder’ as defined in the Housing Consumers Protection Measures Act 95 of

1998, it disputed being  obliged to enroll this development project with the NHBRC or to
pay the prescribed enrolment fee under section 14(1) of that Act, arguing that the section did not require a home builder to
enroll houses being constructed solely for the purposes of being let.

The NHBRC and the Minister of Human Settlements, contended otherwise and insisted upon the respondent’s development being enrolled and that it pay the necessary enrolment fee, a sum in excess of R1.5 million. The respondent paid that sum under protest but proceeded to seek a declaratory order in the High Court, Cape Town to the effect that it was obliged neither to enroll its development nor to pay such fee. The respondent’s application succeeded but with the leave of the court a quo, the two appellants appealed against the decision.

The Supreme Court of Appeal allowed the appeal. In doing so it held that the fundamental underlying premise of the Act is to guard against builders constructing sub-standard homes.
Moreover the definition of a home builder’s business was amended specifically to include building homes for purposes of being let or rented out, and there was no reason why the legislature would have decided that homes build for leasing purposes should be treated differently from those constructed for resale. It held that the court a quo had incorrectly reached the conclusion that section 14 did not apply to homes being built for lease and rental purposes. The Supreme Court of Appeal therefore allowed the appeal and granted an order dismissing the respondent’s application with costs.


PUZZLES AND PUNS

If you can’t convince them, confuse them

-Harry Truman