Cape Argus Sunday 23 November 2003

Property Editor

A RECENT finding of the Cape High Court has caused some controversy in the property market. The case concerned the apportionment of damages after it had been discovered that the owner of a newly erected holiday home had built part of the R3 million house on his next door neighbour's property.

Brian Lackey had purchased adjacent stands in Port Owen and erected a large home which his team of architects, surveyors and builders had assumed was straddling the two erven owned by Lackey. Unfortunately, a mistake in identifying the correct sites resulted in part of the house being erected on the opposite adjacent site belonging to a Dr Annandale. When the error was discovered, Lackey made Annandale an offer to purchase the site but the doctor declined, demanding that the offending section of the building on his property be demolished. The matter was sent to court and the judge, relying on a precedent in law which in essence declares that where the encroacher (Lackey in this case) would suffer damage significantly greater than the value of the property encroached upon (Annandale's) then the court had a discretion to find for the encroacher, who would then not have to pull down the encroaching section of the building but would be liable to pay damages to the encroached property's owner (Annandale).

The court did not specify the precise amount of damages Lackey would have to pay to Annandale, but the assumption has been that it would be substantially less than the rand value of the building erected on Annandale's property.

Alyce Collins of Collins Properties - emphasising that she was not commenting on the degree of responsibility for the original mistake in this particular case which would "presumably be subject to another civil case" - said the findings "might well raise more questions than they answer".

In his judgement Judge Bennie Griesel said that the only "realistic alternative" to awarding damages would be to demolish the offending section of the house. He found this onerous on Lackey.

Collins said the problem lay in the question of at what stage the damages were determined. "When Lackey's builders started constructing the house in September 2001, Annandale's property was worth not more than R 100 000, but in the past year Port Owen values for waterfront property have increased by more than 250% and waterfront sites, if you can find them, are changing hands at R 275 000 and higher.

"Should Annandale take the matter on appeal, which would delay everything by another year at least, the value could conceivably be nearer R 350 000. If Annandale is a speculator who intended keeping his property to re-sell in say, 2007, the value could be anything," Collins said.

In a similar case in the KwaZulu-Natal High Court, where the owner of the property on which a house had been mistakenly built had been well aware of the mistake from the inception of construction, the judge found that the owner fo the encroached property had sought to benefit unreasonably from another's mistake, and had limited compensation to the market value of the property at the time the mistake had been committed.

"A bone fide mistake is one thing but I am worried that the Cape Court was not specific enough in determining at one point damages had to be assessed," she said. "It also raises a hypothetical question, if somewhat preposterous, as to whether it opens the door for an unscrupulous owner, who covets a particular site, knowing that the owner is absent, to begin construction of a home, confident that as soon as the value of the home exceeds the value of the land, the court will find that he only has to compensate the property owner with the market value of the erf. It's something like the extension of the squatter nightmare."