South African case provides lessons on servitudinal rights

The case, which has drawn attention in the property and environmental sectors, involved Snowy Owl Properties and Mziki Share Block, which had previously entered into an agreement to establish a functionally integrated game reserve on their properties.

The disagreement

Snowy Owl Properties and Mziki Share Block jointly own a game reserve. They had a dispute over servitudinal rights. The crux of the disagreement arose when Snowy Owl proposed the development of guest lodges on their property. Mziki claimed this would infringe its servitudinal rights of way, as the development would cause a blockage on the roads and prevent vehicle access.

The role of arbitration

Arbitration served as the primary means of dispute resolution between the parties in this case. Arbitration is often used in such disputes due to its efficiency, confidentiality, and the ability for the parties to select an arbitrator with appropriate expertise.

Arbitration is a consensual mechanism to resolve disputes by one or more private decision makers known as arbitrators, which are selected by the parties pursuant to a mechanism agreed by them in an adjudicatory procedure, through which the arbitrators issue a final and binding decision. It offers several advantages, including speed, flexibility, confidentiality, expertise, and cost-effectiveness. However, it also has its disadvantages, such as limited judicial review, lack of formal discovery, costs in certain instances, limited precedent, and a lack of public scrutiny.

The arbitration proceedings

An arbitral tribunal initially decided in 2016 that Snowy Owl could develop the lodges, but this decision was overturned on appeal. Despite this, Snowy Owl proceeded with the development, leading to another arbitration in 2020. Snowy Owl argued it was obliged to close certain roads to prevent ecological damage and to give effect to an environmental management plan. This plan was prepared to secure the declaration of the reserve as a protected area. Additionally, they claimed that temporary closure was necessary for maintenance work.

The award and its aftermath

In 2020 an arbitrator found that the closure of the roads was in breach of Mziki’s servitudinal rights and directed that Snowy Owl rehabilitate the roads and restore access to the Mziki reserve within specified time periods.

Snowy Owl failed to rehabilitate the roads, leading Mziki to get the arbitration award declared as an order of court in the KwaZulu-Natal division of the High Court of South Africa. On 15 October 2020, Mziki launched an application for an interdict – a court order – to require Snowy Owl from destroying the roads and to compel the restoration of access.

The appeal and its outcome

Snowy Owl’s appeal against the interdict was mainly premised upon the doctrine of res judicata – a legal principle that prevents issues that have already been determined in litigation to be re-assessed and ruled on by another forum. The appeal was, however, dismissed. Snowy Owl was ordered to pay costs on a punitive attorney-client scale after the court determined that its appeal was meritless and wasted judicial resources.

Lessons for businesses

The case between Snowy Owl Properties and Mziki Share Block emphasises the need for well-defined servitudinal rights from the outset of projects, and the weight they carry when in conflict with certain environmental considerations. It also highlights the importance of harmonious planning and consideration of both property and environmental aspects in the early stages of large-scale developments.

While arbitration is a valuable tool for resolving disputes in these cases, it is equally important to have clear and respected servitudinal rights to avoid prolonged disputes and encourage co-existence. Careful planning and foresight in property and environmental matters can help prevent expensive and time-consuming disputes in the future.

Co-written by Christin Kleingeld of Pinsent Masons.