hijacking the inner city
Building hijackings in Johannesburg: what can the courts do?
by
Morgan Wood (WDXMOR001)
Submitted to The University Of Cape Town
in fulfilment of the requirements for the degree LLB
Faculty of Law, University of Cape Town
Date of submission: 20 September 2012
Supervisor:Professor Hanri Mostert
Mentor: Cheri Young
Department of Private Law, University of Cape Town
Declaration
1.I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it is one’s own.
2.I have used the footnoting convention for citation and referencing. Each contribution to, and quotation in, this opinion from the work(s) of other people has been attributed, and has been cited and referenced.
3.This opinion is my own work.
4.I have not allowed, and will not allow, anyone to copy my work with the intention of passing it off as his or her own work.
Signature ______
hijacking the inner city
Building hijackings in Johannesburg: what can the courts do?
by
Morgan Wood (WDXMOR001)
Word Count: 9931
This paper was written under the auspices of the LandLawWatch project. The views and opinions expressed here are the author's own and should not be attributed to the LandLawWatch project or the University of Cape Town.
Abstract
This paper looks at the rise of building hijackings within the Johannesburg City Centre and the lacunae in the law that allow these situations to materialize. The economic implications of a failure to address sufficiently the problem of building hijackings are assessed. The “broken windows”theory is discussed to give context as to why hijacked buildings are prevalent in the city centre. Therefore it is appropriate to describe the current urban renewal strategies in place to tackle the problem of abandoned buildings falling prey to criminal syndicates. There are two acknowledged forms of building hijackings. The first concerns the fraudulent sale and transfer of a building without the knowledge of the owner. The second incident occurs when syndicates take control of abandoned buildings. In these incidents, the criminal syndicate rents out to tenants without the knowledge of the owner. The fate of the occupants in both cases is looked at with reference to case law.
Table of Contents
Abstract
Table of Contents
1. Introduction
2. Anatomy of the Problem
2.1. Economic Implications
2.2 The Broken Windows Theory
2.3 Current Urban Renewal Policies
3. Scenario 1: Philani-Ma-Afrika v Mailula
3.1 Certainty: The High Court’s Approach
3.2 Fairness: The Supreme Court of Appeal Approach
4. Scenario 2: Mpange v Sithole
4.1 The Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998.
4.2 Lessor needs no title
4.3 Unlawful Occupation
4.4 Abandoned Property
5. Evaluation and Conclusion
Bibliography
Literature
Printed
Electronic
Primary sources
Cases
Legislation
1
1. Introduction
Building hijacking is a relatively new phenomenon, particularly prevalent in Johannesburg. There are typically two instances which arise where buildings are “hijacked”: slumlords coerce rental tenants to pay their rent and municipal fees straight into the slumlord’s pockets, in effect bypassing the owner of the building.[1] Another scenario which presents itself is where fraudsters falsify registrations or deeds of sale or purport to have the authority to sell buildings when in fact they do not.[2] Tenants remain the most vulnerable in either situation.
Johannesburg saw a decline within its city centre after big corporations flocked to the suburbs of Sandton in the late 1980s towards the end of Apartheid.[3] It is the flocking of big corporations from the city centre to the suburbs which is the reason many high-rise buildings remain abandoned today. Willis J noted that “money seems to have flown out of the city and gone to places like Sandton.”[4] He has attributed this corporate migration from the central business district (CBD) to Sandton as the cause of the city’s gradual descent into decrepitude with rundown buildings.[5] Consequently the empty buildings in the CBD are overvalued which has delayed sales and urban regeneration. By the late 1990s, crime had reached epidemic proportions and slumlords held sway over the property market.[6]The prevalence of building hijacking is still rife. One source claims that one in twenty buildings within the Johannesburg CBD is hijacked.[7]
The Prevention of Illegal Evictions & Unlawful Occupation Act[8] (PIE) makes it slow and expensive to remove hijackers and unlawful occupiers. In addition to the burden that PIE presents, police have shown a hesitance in assisting aggrieved property owners. The perception is that eviction is a civil matter involving an application for default judgment.[9] This is indicative of the confusion that exists as to the treatment of perpetrators of building hijackings in particular.If the matter is to be treated as a civil one, the building hijacker would escape criminal sanction.
The phenomenon of building hijackings feeds off the uncertainties created by the lack of legal regulations.[10] There is no specific legislation which penalizes criminal syndicates from hijacking a building. Where the building is fraudulently sold, this is viewed as a crime of fraud.[11] The treatment of criminals who rent out abandoned buildings without the knowledge of the true owner is less clear, as illustrated in the case of Mpange v Sithole.[12] This is partly due to the fact that the common law only recognizes theft of property capable of being stolen.[13] This specifically excludes immovable property.[14] Criminals are thus likely to continue to invade abandoned properties with impunity as possession of such buildings is not considered theft. The fact remains that building hijackings are an infringement of ownership for which the law at present has no response in both cases of fraudulent sale and the unauthorized rental of abandoned buildings.
The principles of legal certainty are violated. Legal certainty demands that the conduct is recognized as a crime.[15] There can be no conviction or punishment for conduct not previously defined as a crime.[16] This is particularly important with the treatment of the perpetrators of building hijackings. Building hijacking is not a defined crime in legislation or the common law. For this reason perpetrators of building hijackings are often held guilty for fraud or punished using the provisions of PIE which prohibit the solicitation of money for unlawful occupation.
2. Anatomy of the Problem
Firstly, the economic implications are discussed to illustrate the result of a failure to take cognisance of the drastic consequences of building hijackings. The Broken Windows theory favours a preventative approach to the problem - the proper management of abandoned buildings will limit the propensity of opportunistic criminals from using these abandoned buildings as an illegal source of income. The current urban renewal plans, discussed below, endorse a preventative approach to the problem as well.
2.1. Economic Implications
Willis J in the High Court ruffled feathers recently in his judgment in Emfuleni v Builder’s Advancement Services[17] regarding the economic implications of a failure to evict tenants.[18]Willis J, in an obiter comment, stated that the entire system of property transfer would be undermined if property registration is not final.[19] Furthermore, a failure to evict unlawful occupiers would stagnate urban renewal targets.
In the result, a “hijacked” building in the inner city of Johannesburg remains “hijacked”…and others in comparable situations such as banks will have to ponder the security of a mortgage bond - hitherto considered as “good as gold” provided there was a comfortable positive margin between the value of the property and the amount lent.[20]
The risk involved should building hijacking persist would discourage any landlord from investing in low-income housing.[21] This is in stark contrast to aim of inner city rejuvenation and the desperate need for more housing.[22] Regeneration and increasing the rental market are not attainable, so the argument goes, if a landlord is not able to evict unlawful tenants.[23] Willis J viewed the courts as adopting a restrictive approach to economic freedom in that eviction has become a near impossibility.[24] Essentially Willis J argued that stringent eviction laws against illegal occupiers of property meant that property is just being stolen.[25] If control is lost over one’s property the only solution to regain control is to evict the occupant.[26]
Willis J opined that the correct way to generate more low-cost rental housing is not to make it a near impossibility to evict illegal tenants.[27] This will have the effect of banks refusing to lend due to the risks involved in the security of the mortgage bond.[28] Botha furthered this point by adding that the result will be investors considering other investment options rather than the risks associated with rental.[29] There is no incentive to invest in the inner city and rental housing if the investment is worthless.
Willis J has been lambasted by Motala for usurping the function of the government in making policy decisions.[30]Policy and economic matters fall within the domain of the legislature according to the maxim iudicis est ius dicere sed non dare which states that it is the function of the judge to interpret the law and not make it.[31]Willis J’s obiter critique of the Constitutional Court as well as his advancement of economic ideologies is a rarity for any judge. He has been criticised for “legislating economic policy from the bench”. [32]His account of economic progress has been viewed as callous as he did not focus on fundamental human rights but rather advocated economic freedom.[33]His argument in favour of ownership property rights ignored the body of law advocating socio-economic rights. Accordingly a passage in Mazibuko v City of Johannesburg[34] becomes relevant:
Ordinarily it is institutionally inappropriate for a court to determine precisely what the achievement of any particular social and economic right entails and what steps government should take to ensure the progressive realisation of the right. This is a matter, in the first place, for the legislature and executive, the institutions of government best placed to investigate social conditions in the light of available budgets and to determine what targets are achievable in relation to social and economic rights.[35]
Maass in her article noted the connection between urban poverty and tenure status as tenure status is one of the core elements in the poverty cycle.[36] Weak security of tenure has been noted to exacerbate poverty.[37] Insecure tenure creates problems such as unstable communities and discourages investment which directly affects poverty, social exclusion and limited access to urban services, Maass described.[38] Maass believed that South African development policy has neglected the connection between urbanisation and better tenure security.[39] This belief is in contradiction to the free-market approach advocated by Willis J above which does not afford vulnerable society members tenure security.
The above-mentioned economic consequences highlight why more clarity from legislature regarding building hijackings is needed given the drastic implications for urban regeneration, the rental market and property owners. As will be illustrated in the cases, it is clear that such economic ideologies influence the way that the given judge will remedy the problem of building hijackings due to the lack of legislative guidance. Willis J’s opinion, although relevant, fails to account for the desperation and plight of the poor. It is not in government’s interest to adopt such an eviction policy as they would be responsible for the provision of alternative accommodation.
2.2 The Broken Windows Theory
The Broken Windows Theory goes a long way to explain why building hijackings are common place in downtown Johannesburg and why they are likely to continue should the authorities not penalize owners who abandon their properties. This theory was first introduced by criminologists Wilson and Kelling who famously argued that crime is the inevitable result of disorder.[40] If a window is broken and left unrepaired, people walking by will conclude that no one cares and no one is in charge.[41] Soon, more windows will be broken and anarchy will spread.[42] It is an invitation to more serious crimes. The environment encourages criminal activity.[43] Abandoned properties facilitate the entry of criminal syndicates into the buildings. Johannesburg metropolitan police need to signal to slumlords, city dwellers and criminals alike that allowing buildings within the inner city to fall into disrepair or stand abandoned will not be tolerated. Taking care of this might ameliorate the susceptibility of these buildings to fall prey to syndicates in the first place.
2.3 Current Urban Renewal Policies
It is trite that the inner-city rejuvenation is at the forefront of local policy in Johannesburg. An analysis of the current urban renewal policies is necessary if one is of the opinion city degradation is the cause of building hijackings.This renewal initiative, in collaboration with the private sector, is aimed solely at the rejuvenation of urban decay in the Johannesburg inner city.[44] In an address to the media, Executive Mayor of the City of Johannesburg Amos Masondo, stated that “across the world, in most of the big cities, the state and appearance of a Central Business District is an important barometer to determine the ability of a city to attract and retain investment. It is also a reflection of the extent of the advancement to commerce and overall economic development”.[45] The Scheme acknowledges that in many instances the problem lies at the deterioration of buildings due to abandonment by owners or the “take-over” of the building by slumlords.[46] The programme operates by transferring flagged “bad” buildings such as those which are dilapidated, abandoned, illegally occupied and hijacked into the Inner City Property Portfolio which transfers ownership to companies.[47]Ownership is transferred once the building is refurbished to ensure refurbishing obligations are honoured.[48]
This is an acknowledgement of the Broken Windows Theory and constitutes a preventative approach to tackling the problem of building hijackings. The city has clear objectives to be a cleaner, safer, greener and growing CBD.The Constitutional Court made reference to the city’s housing policy goals in terms of expanding housing stock through the likes of private sector investment, inner city rejuvenation involving government and private stakeholders and stimulation of a functioning secondary property market.[49]
3. Scenario 1: Philani-Ma-Afrika v Mailula
Philani- Ma- Afrika v Mailula[50] dealt with the scenario in which property is purportedly sold and transferred without the owner’s consent. The buyer was under the mistaken assumption that the seller had the authority and title to sell the property.[51]
The appellant is a company through which the National Housing Board was able to subsidize and assist underprivileged persons to acquire Angus Mansions.[52] Company records, the appointment of directors and the functioning of the board were neglected and as such the register of members was never updated.[53] However, on 7 August 2006, a deed of sale was signed between Mr Mailula, the respondent, as buyer and Mr Mkhumbuzi who purported to act on behalf of the seller.[54] Contesting this representation, Philani-Ma-Afrika wished to set aside the sale of Angus Mansions to the respondent and compel the Registrar of Deeds to cancel the deed of transfer.[55]
In the news more recently, it was reported that Sinethemba Mkhumbuzi, the purported agent, was set to go on trial this year for the fraudulent sale of Angus Mansions in Jeppe Street.[56] This is four years after his arrest. The accused allegedly pocketed R3,5 million from the purported sale.The accused is charged with fraudulently inducing the sale of Angus Mansions with intent to defraud, resulting in the payment of R3,5 million to effect the transfer and registration.[57] Alternatively, the accused faces theft.[58] Mailula, the innocent buyer, has subsequently turned state witness in the criminal case pending against Mkhumbuzi on the basis that he was not aware the building was hijacked.[59] Mkhumbuzi is involved in connection with a further ten building hijackings in the Johannesburg inner-city.[60] The case was postponed until 7 June 2012 to allow the conveyance attorney also implicated, Kenneth Ntila, to prepare his defence in relation to the new charge sheet.[61]
The High Court and the Supreme Court of Appeal adopted disparate approaches to the central issue of ownership. The High Court showed a preference for the certainty that registration of immoveable property creates. The Supreme Court of Appeal opted for an approach based on fairness. The two approaches are discussed below:
3.1 Certainty: The High Court’s Approach
The High Court dismissed the application brought by Philani-Ma-Afrika and granted the eviction order. Willis J in the court a quo found the sale to be valid based on s 28(2) of the Alienation of Land Act. This provision reads that any alienation which does not comply with the provisions of section 2(1) shall in all respects be valid ab initio if the alienee had performed in full in terms of the deed of alienation and the land in question has been transferred to the alienee.[62] Willis J based his judgment on the finality of registration.[63] He stated that the entire system of property transfer would be undermined if this were not so. He went on to conclude that the conveyance attorney in this regard provided the safeguard.[64]