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[2016] ZASCA 190
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Nuance Investments (Pty) Ltd v Maghilda Investments (Pty) Ltd and Others (32/2016) [2016] ZASCA 190; [2017] 1 All SA 401 (SCA) (1 December 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 32/2016
In
the matter between:
NUANCE
INVESTMENTS (PTY) LTD
APPELLANT
and
MAGHILDA
INVESTMENTS (PTY) LTD
FIRST RESPONDENT
JONATHAN
BRUCE SANDLER NO
SECOND RESPONDENT
GEOFFREY
ALAN WEST NO
THIRD RESPONDENT
CHRISTOPHER
HARDY BOULE NO
FOURTH RESPONDENT
REGISTRAR
OF
DEEDS
FIRTH RESPONDENT
CENTURUS
(PTY)
LTD
SIXTH RESPONDENT
INVESTEC
BANK LIMITED
SEVENTH RESPONDENT
Neutral
Citation:
Nuance
Investments v Maghilda Investments & others
(189/2016)
[2016] ZASCA
190
(1 December 2016)
Coram:
Tshiqi,
Seriti, Willis, Van Der Merwe JJA and Nichols AJA
Heard:
2
November 2016
Delivered:
1
December 2016
Summary:
Prescription
: No evidence that the appellant knew or could by the exercise of
reasonable care, have acquired knowledge of the facts
giving rise to
the invalidity of the sale agreement before the effluxion of the
three year period of prescription : Counterclaim
: the individual
registrations and transfers of ownership in the three individual
portions of land with their own cadastral descriptions
were effected
by separate real agreements and were not prohibited by law.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Fourie J sitting as court of
first instance):
1
The appeal is upheld with costs including costs of two counsel.
2
The order of the court a quo is set aside and replaced with the
following orders:
2.1 ‘It
is declared that;
(a)
the purported sale agreement dated 21 November 2007 is null and void
from the outset with no legal force
and effect;
(b)
the purported incidental development agreement dated 21 November 2007
is null and void from the outset
with no legal force and effect;
(c)
the purported lease agreement dated 15 January 2008 is null and void
from the outset with no legal force
and effect;
3
The special plea of prescription raised by the First to Fourth
Defendants is dismissed:
4
Against the transfer of the Remaining Extent of Portion 6 of the Farm
Elandsdrift 527 JQ to
the First Defendant, free from any mortgage
bond held by Investec Bank Ltd, the First Defendant is ordered to pay
an amount of
R17, 343, 214 to the Plaintiff; together with interest
on the amount of R17, 343, 214 at the prescribed rate of 9% per year
calculated
from the date of demand herein (which is 23 June 2009) to
the date of payment thereof;
5
Against the transfer of the Remaining Extent of Portion 4 of the Farm
Elandsdrift 527 JQ and
the Remaining Extent of Portion 39 of the Farm
Elandsdrift 527 JQ to the Second to Fourth Defendants jointly, free
from any mortgage
bond held by Investec Bank Ltd, the Second to
Fourth Defendants jointly are ordered to pay an amount of R42, 656,
786 to the Plaintiff;
together with interest on the amount of R42,
656, 786 at the prescribed rate of 9% per year calculated from 23
June 2009 to the
dated of payment thereof.
6
The counter-claim of the First to Fourth Defendants is dismissed:
6.1
The First Defendant and the Second to Fourth Defendants, jointly in
their capacities as trustees of the Sanjont
Trust, are ordered to pay
the costs hereof jointly and severally, the First Defendant paying
the Second to Fourth Defendants to
be absolved and the Second to
Fourth Defendants jointly paying the First Defendant to be absolved,
with such costs to include the
costs of two counsel.’
JUDGMENT
Tshiqi
JA (Seriti, Van Der Merwe JJA and Nichols AJA concurring)
[1]
I
have read the dissenting judgment of Willis JA and regret that I
cannot agree with him that the appellant, Nuance Investments
(Pty)
Ltd (Nuance) could, by the exercise of reasonable care, have acquired
knowledge of the invalidity of the agreement well before
the
effluxion of the three year period of prescription. I also do not
agree that Plan Practice, a firm of town planners which had
initially
acted on behalf of Maghilda Investments (Pty) Ltd (Maghilda) and
Sanjont Trust but which, after the conclusion of the
agreement
subsequently acted for Nuance, must have known that the necessary
consent was not obtained. Unlike Willis JA, I hold
the view that the
correspondence between the parties subsequent to the transfer shows
that they were unaware that the relevant
ministerial consent for the
sale in terms of s 3
(e)
of the Subdivision of Agricultural Land Act 70 of 1970 (the
Subdivision Act) had not been obtained. To my mind the correspondence
only shows that the parties concerned themselves about the further
subdivisions of the land, and not ministerial consent for the
sale.
For the reasons that follow, I hold the view that all the parties to
the sale agreement thought that the agreement was valid
and that
nothing could have alerted Nuance to the fact that the required
written ministerial consent had not been obtained before
the
agreement was concluded. I also find that the respondents have failed
to prove that the claim has prescribed.
[2]
Nuance
was the plaintiff, in the court a quo and the first respondent,
Maghilda, together with the second to fourth respondents
(the
trustees of the Sanjont Trust) (Sanjont) were the defendants in an
action by Nuance arising out of the following three agreements,
which
were all part of one overall scheme, and concluded in pursuit of a
proposed development of agricultural land:
a)
A
written sale agreement entered into on 21 November 2007 in terms of
which Nuance purchased five portions of the farm Elandsdrift
527 JQ
from Maghilda and Sanjont (the sale agreement);
b)
A
developmental agreement also entered into on 21 November 2007 between
Maghilda, Sanjont, Nuance and the sixth respondent, Centurus
(Pty)
Ltd (Centurus) in terms of which it was agreed that the proposed
development would be undertaken by Nuance and a certain
development
structure of the land was agreed upon (the incidental development
agreement); and
c)
A
long-term lease agreement entered into around 15 January 2008 between
Nuance and Maghilda (the lease agreement).
[3]
In
compliance with the terms of the agreements Nuance paid an amount of
R60 million to Maghilda and Sanjont. On 13 May 2008, three
of the
portions were transferred to and registered in the Deeds Registry in
the name of Nuance. Simultaneously with the transfers,
mortgage bonds
in favour of Investec Bank and Maghilda and Sanjont were registered.
It is common cause that there was no compliance
with the provisions
of s 3 of the Subdivision Act, before the sale and lease agreements
were concluded in that the written ministerial
consent prescribed in
subsecs 3
(d)
and
(e)
had not been obtained. Such ministerial consent was necessary because
two portions of the land were yet to be subdivided. The three
portions that were transferred, however, had historically been
subdivided and were thus three individual portions with their own
cadastral descriptions and no ministerial consent would have been
required if the agreement concerned only those three portions.
This
distinction is irrelevant for the purposes of prescription but is
determinative of the counterclaim.
[4]
On
29 May 2009, Maghilda and Sanjont’s legal representatives
addressed a letter to Nuance alleging that Nuance had breached
the
agreements in several respects and demanded that Nuance should remedy
the respective breaches within 30 days after the date
of the notice.
In response, Nuance sent a letter dated 23 June 2009 recording inter
alia, the amounts it had already paid in terms
of the sale agreement
and in consideration for the transfer of the properties to Nuance. It
noted that only three of the five properties
had already been
transferred and that a second bond had been registered over the
transferred properties for the balance of the
purchase price, even
though two properties still had to be transferred. It also stated:
‘
3
.
It
appears from the agreement of sale that these two properties (to be
subdivided portions of portion 46 and 5 of Elandsdrift 527
JQ
respectively) were at the time of conclusion of the agreement, and in
fact still are, portions of agricultural land and subject
to the
provisions of [the Subdivision Act]’.
4.
As you are aware any agreement of sale of a portion of agricultural
land entered into prior to having obtained the Minister of
Agriculture’s consent for such subdivision, is void.
5.
It was at all times contemplated by the parties that the sale of the
properties would be one indivisible transaction . . .
6.
Although it is attempted in clause 41 of the agreement to provide for
all transactions to be severable from the others, it should
be clear
that this was due to a common mistake of the parties, as such
provision would inter alia render impossible the method
of payment of
the balance of the purchase price of the already transferred
properties.
7.
We are respectfully of the opinion that the agreement as a whole is
therefore invalid
ab initio
, and that restitution should take
place. Our client hereby tenders re-transfer of the transferred
properties to your client upon
repayment of the amount of
R60 000 000.
8.
With reference then to your letter of demand of 29 May 2009, it
follows that should the sale agreement be void
ab intio
, the
“further agreement” would also not be applicable, as it
was (in clause 3 thereof) suspensive upon the conclusion
of the sale
agreement . . . .’
The
letter further recorded that the lease agreement was also void on the
basis that it ‘relate[d] to a subdivided portion
of
agricultural land’ and that the ‘Minister of Agriculture
ha[d] not granted its consent to such lease’.
[5]
Subsequently,
on 19 March 2012, Nuance issued summons against the first to the
seventh respondents in the North Gauteng High Court,
Pretoria
claiming repayment of the amounts paid on the basis that the sale,
lease and incidental development agreements were null
and void from
the outset, being in breach of s 3 of the Subdivision Act,
alternatively that the sale agreement was invalid as it
was in breach
of the Alienation of Land Act 68 of 1981(the Alienation of Land Act).
The action was subsequently withdrawn against
the fourth and fifth
respondents. In their plea, Maghilda and Sanjont averred that the
sale agreement was both illegal and invalid,
and simultaneously
raised a special plea of prescription in terms of s 11
(d)
read with s 12(3) of the Prescription Act 68 of 1969 (the
Prescription Act) alleging
the following:
‘
Prescription
in respect of any of the actions by Nuance … based on the
illegality or voidness of the sale agreement, incidental
development
agreement and … [the] lease agreement commenced running on the
dates of such illegality and voidness, ie 21
November 2007 (in the
case of the sale agreement and incidental development agreement) and
15 January 2008 (in the case of the
lease agreement).’
[6]
They
alleged that any action based on the voidness and the illegality of
the sale agreement and the incidental development agreement
ought to
have been brought by no later than 20 November 2010, and that in
respect of the lease agreement, by no later than 14 January
2011. In
the alternative, they alleged that in the event that the court found
that prescription arose when the payments were made,
ie on 13 May
2008, then the action ought to have been instituted by no later than
12 May 2011. In the further alternative it was
pleaded that
prescription commenced on a date after 13 May 2008. Simultaneously
they also filed a counterclaim alleging that by
virtue of the fact
that no legal consequences flowed from the void sale agreement, they
remained owners of the portions of land
already transferred and the
Register of Deeds fell to be rectified.
[7]
The
matter proceeded before Fourie J, who upheld the plea of prescription
and dismissed Nuance’s claim for repayment. He also
upheld the
counterclaim and ordered rectification of the Deeds of Transfer. The
effect of his order was that Maghilda and Sanjont
would retain the
amount of R60 million and that the land should also be re-registered
in its name.
[8]
It
was accepted by the parties during the trial that the defendants
(Maghilda and Sanjont) bore the onus to prove that the claim
had
prescribed. To this end the evidence of the second respondent, Mr
Jonathan Bruce Sandler was led. Mr Sandler was one of Maghilda’s
directors at the time the agreement was concluded and took part in
the negotiations between the parties prior to, and after the
agreement was concluded. No other witnesses were called and Nuance
closed its case without calling any witnesses.
[9]
Mr
Sandler testified about the discussions that had taken place during
the several meetings held by the parties and provided insight
into
some of the correspondence that was exchanged between the parties, as
well as letters exchanged with the Department of Agriculture.
The
gist of Sandler’s evidence was that during the negotiations,
everyone who was involved in the project knew that they
were dealing
with agricultural land. According to him they were all experienced in
property sales and development and therefore
Nuance’s
representatives must have known that ministerial consent for
subdivision was necessary. This, he stated, was because
‘they
had an obligation to do whatever they needed to do, to get the
requisite permissions to do the development’.
He however
conceded that there was never any discussion concerning
authorisation, consent, or approval or about the provisions
of the
Subdivision Act. He also stated:
‘
[Mr
Oosthuizen]: So when you signed this agreement on 21 November 2007,
you believed it to be a valid and binding agreement.
[Mr
Sandler]: We all did, M’Lord. A large amount of money was
transacted.’
[10]
During
his evidence, Mr Sandler was also referred to the following
correspondence. The first is a letter dated 5 May 2009 written
by
Nuance’s attorneys to the Department of Agriculture. It stated:
‘
REMAINING
EXTENT 5 OF THE FARM ELANDSDRIFT NO. 527 JQ. GAUTENG PROVINCE
We
refer to the discussions between Lebo from our offices and …
Mr Makhubela from your offices and confirm that we need the
Department’s confirmation in writing that the abovementioned
property does not fall under [the Subdivision Act].’
The
department responded on 9 June 2009 and said:
‘
According
to my records the above-mentioned land, the farm Elandsdrift No. 527
J.Q is still Agricultural Land in terms of the [Subdivision
Act]. A
formal application must be lodged for the subdivision thereof.’
[11]
Mr
Sandler was further referred to earlier correspondence between Plan
Practice, Nuances town planners and representatives, and
the
department. This correspondence similarly raised questions concerning
subdivision and did not deal at all with ministerial
consent required
before an agreement concerning sale of agricultural land may be
concluded. He was also referred to the letter
written by Nuance’s
attorneys to the attorneys representing Maghilda and Sanjont on 23
June 2009. This letter made the allegation
that the sale agreement
was void for the first time.
Prescription
[12]
Section
12(3)
of the
Prescription Act 68 of 1969
provides:
‘
A
debt shall not be deemed to be due until the creditor has knowledge
of the identity of the debtor and of the facts from which
the debt
arises: Provided that a creditor shall be deemed to have such
knowledge if could have acquired it by exercising reasonable
care.’
[13]
As
mentioned, the onus of proving that Nuance’s claim had
prescribed by 19 March 2012 when it served summons, was on Maghilda
and Sanjont (See
Gericke
v Sack
1978 (1) SA 821
(A) at 828C. In order to meet the requirements of
s
12(3)
they had to show the facts that Nuance was required to have
knowledge before prescription could commence running. This is so
because
the applicable period of prescription is three years. They
also had to prove that Nuance knew those facts before the date on
which
prescription was alleged to have commenced running. (See
Links
v Department of Health, Northern Province
[2016]
ZACC 10
;
2016 (4) SA 414
(CC) para 24. The facts that must have been
known are those that are material to the debt.
[14]
In
terms of s 3 of the Subdivision Act there are seven different
activities which individually require ministerial consent in writing.
(See section 3(1)(
a)
–
(g)
).
The knowledge at issue is confined to the entering of the lease
agreement in respect of a portion of agricultural land as envisaged
in s 3
(d)
and the selling of a part of agricultural land as envisaged in s 3
(e)
and
does not relate to the other activities contained in s 3. It is the
duty of the owner of the land, wishing to lease or sell
a portion of
agricultural land to obtain ministerial consent before concluding an
agreement. (See s 4 of the Subdivision Act).
The facts that are
material to the debt and which Nuance must be held to have known or
deemed to have known are that Maghilda and
Sanjont did not obtain the
necessary ministerial consent in terms of subsecs 3
(d)
and
(e)
before the agreements were concluded. It is not whether or not, the
parties knew that the land was classified as agricultural land
or
whether ministerial consent is a requirement for subdivision of
agricultural land.
[15]
Mr
Sandler’s evidence did not shed any light on whether Nuance or
its agents, Plan Practice, had the subjective knowledge
that Maghilda
and Sanjont had not obtained written consent from the Minister for
the sale before the contract was concluded. As
stated above, his
stance was that they ought to have known this because they had vast
experience in property sales and development
and should have known
that they were dealing with agricultural land. This evidence however
does not suggest that they knew that
ministerial consent for the sale
had not been obtained. Counsel for Nuance was prepared to accept that
Nuance probably knew, generally,
that ministerial consent was
required before the activities listed in s 3(
a)
–
(g
)
are undertaken and that it may be inferred from the correspondence
exchanged between the parties that the requisite consent for
the
subdivision of the land had not yet been obtained. He however
submitted that this was irrelevant as it did not relate to knowledge
that ministerial consent for the sale agreement had not been
obtained. I agree with this submission.
[16]
There
was no evidence at all that Nuance knew that Maghilda and Sanjoint
had failed to obtain the ministerial consent. Neither can
such
knowledge be inferred from the fact that the parties had vast
experience in property sales and development. Such a conclusion
would
amount to sheer speculation. In
Minister
of Finance & others v Gore NO
2007(1) SA 111 (SCA) it was stated:
‘
[17]
This Court has, in a series of decisions, emphasised that time begins
to run against the creditor when it has the minimum facts
that are
necessary to institute action. The running of prescription is
not postponed until a creditor becomes aware of the
full extent of
its legal rights, nor until the creditor has evidence that would
enable it to prove a case “comfortably”.
[18]
… Mere opinion or supposition is not enough: there must be
justified, true belief. Belief, on its own, is insufficient.
Belief
that happens to be true . . . is also insufficient. For there
to be knowledge, the belief must be justified.
[19]
It is well established in our law that:
(a)
Knowledge is not
confined to the mental state of awareness of facts that is produced
by personally witnessing or participating in
events, or by being the
direct recipient of first-hand evidence about them.
(b)
It extends to a
conviction or belief that is engendered by or inferred from attendant
circumstances.
(c)
On the other hand,
mere suspicion not amounting to conviction or belief justifiably
inferred from attendant circumstances does not
amount to knowledge.
It
follows that belief that is without apparent warrant is not
knowledge; nor is assertion and unjustified suspicion, however
passionately
harboured; still less, is vehemently controverted
allegation or subjective conviction. ‘
(Footnotes
omitted.)
[17]
I
must thus accept the contention by Nuance that until the lack of the
ministerial consent for the sale was mentioned for the first
time in
the letter dated 23 June 2009 from its attorneys, all the parties
were under the impression that the agreements were valid.
I am
fortified in this reasoning by the fact that in their letter dated 29
May 2009, Maghilda and Sanjont placed Nuance on terms,
alleging
breach of what they also perceived to be a valid contract. If
Maghilda and Sanjoint thought the agreement was valid, it
is not
clear to me on what basis I should find that Nuance held a contrary
view.
[18]
There
can be no reliance on the correspondence between Nuance, Plan
Practice and the Department of Agriculture as this correspondence
only dealt with the fact that the land was classified as agricultural
land, and that consent was required for its subdivision.
[19]
The
next question is whether Nuance could, by the exercise of reasonable
care, have known that the ministerial consent had not been
obtained
before the agreements were signed. Reasonable care for the purposes
of s 12(3) of the
Prescription Act is
not measured by the objective
standard of the hypothetical reasonable or prudent person but by the
more subjective standard of
a reasonable person with the creditor’s
characteristics. (See M M Loubser
Extinctive
Prescription
(1996)
at 105-106.) Mr Sandler confirmed that all the parties believed that
the agreement was binding at the time it was signed.
There was no
evidence that subsequent to this, there was anything or any incident
that should have warned Nuance that ministerial
consent for the sale
had not been obtained. It is to my mind inconceivable that Nuance,
and its team of experts, would proceed
and focus on the future
implementation of a development for which they had expended R60
million with knowledge or deemed knowledge
that it may not have been
above board. The queries sent by Nuance and Plan Practice to the
Department, concerning the subdivision
of the land suggest to me that
they were careful and wished to ensure that the project was above
board.
[20]
It
must thus be concluded that there was also no deemed knowledge on
their part. Consequently the only probable conclusion is that
the
first time that the lack of the ministerial consent came to their
knowledge was around 23 June 2009, when their attorney conveyed
this
to Maghilda and Sanjont’s attorneys.
[21]
Regarding
the non-compliance with the Alienation of Land Act, the same
considerations apply. Sandler in his examination in chief
suggested
that the parties intended the sketches, identifying certain areas of
land as the objects of the sale agreement, to be
rough assessments or
provisional sketches only. He however continued and stated that the
subdivisions were fairly identifiable
and that these sketches were
last elements in terms of finalising the transaction. During cross
examination it became clear that
the parties thought and believed
that they had sufficiently identified the areas of land in question
and that they thought and
believed that they had a binding and valid
sale agreement. In any event there is no evidence to the effect that
Nuance knew or
could be deemed to have known that the scale,
configuration, description and detail on the sketches were such that
it was not possible
to identify the property sold. The first occasion
on which the parties would probably detect the defect would have been
after the
approval of the development, when it would have been
necessary to re-transfer the relevant portions of land to Maghilda
and Sanjont.
The
counterclaim
[22]
The
counterclaim was based on the proposition that ownership of the three
cadastral properties did not in law pass to Nuance, despite
the
registration of transfer thereof to its name. As I will show herein
below, ownership passes on registration if there is a real
agreement
to do so, that is, an intention to transfer and receive ownership. It
is clear from the evidence that a real agreements
existed in respect
of the three properties. What Maghilda and Sanjont had to show in
order to succeed in their counterclaim was
that there was a defect in
the real agreements.
[23]
In
Legator
McKenna Inc & another v Shea & others
[2008] ZASCA 144
;
2010 (1) SA 35
(SCA), Mr Michael McKenna, an
attorney in Legator McKenna Inc, an incorporated firm of attorneys
was appointed a
curator
bonis
to the estate of Ms Clare Shea, who, at the time was not able to
conduct her affairs after she sustained injuries as a result of
a car
accident. McKenna purported to sell her house in his capacity as a
curator
bonis
but concluded the sale agreement before he was issued with letters of
curatorship by the Master as required in terms of the Administration
of Estates Act 66 of 1965 (the
Administration of Estates Act). Ms
Shea miraculously recovered from the injuries and was again able to
conduct her affairs. She sought an order to set aside the sale
and
the return of her house on the basis that there was non-compliance
with the
Administration of Estates Act. The
purchasers, Mr and Mrs
Erskines claimed damages for the loss they would allegedly suffer
through McKenna’s breach of an implied
warranty that he was
authorised to sell Ms Shea’s house. The trial court declared
the contract of sale both illegal and void,
and directed the
Registrar of Deeds to cancel the registration of transfer of the
house to the Erskines, against repayment of the
purchase price by Ms
Shea. This court held a contrary view to that of the trial court
concerning the legal status of the registration
and transfer process.
It said:
‘
[20]
….Should the transfer of the house to the Erskines be regarded
as valid despite the invalidity of the underlying sale
which was the
causa
for the transfer? The [Erskines’] contention that it should,
was rooted in the assumption that the abstract theory –
as
opposed to the causal theory – of transfer has been adopted as
part of our law. According to the abstract theory the validity
of the
transfer of ownership is not dependent upon the validity of the
underlying transaction such as, in this case, the contract
of sale.
The causal theory, on the other hand, requires a valid underlying
legal transaction or
iusta
causa
as
a prerequisite for the valid transfer of ownership. With regard to
the transfer of movables our courts, including this court,
have long
ago opted for the abstract theory in preference to the causal theory.
[21]
Some uncertainty remained, however, with regard to the transfer of
immovable property. In the High Courts that uncertainty
has been
eliminated in a number of recent decisions where it was accepted that
the abstract system applies to movables and immovables
alike. ...
These decisions are supported by academic authors advancing
well-reasoned arguments. … In view of this body of
authority I
believe that the time has come for this court to add its stamp of
approval to the viewpoint that the abstract theory
of transfer
applies to immovable property as well.
[22]
In accordance with the abstract theory the requirements for the
passing of ownership are twofold, namely the delivery which
in the
case of immovable property, is effected by registration of transfer
in the deeds office - coupled with a so-called real
agreement or
“saaklike ooreenkoms”. The essential elements of the real
agreement are an intention on the part of the
transferor to transfer
ownership and the intention of the transferee to become the owner of
the property… Broadly stated,
the principles applicable to
agreements in general also apply to real agreements. Although the
abstract theory does not require
a valid underlying contract, eg
sale, ownership will not pass - despite registration of transfer - if
there is a defect in the
real agreement.
Regarding
the facts of the matter the court said:
‘
[23]
The court a
quo found that in this case ownership did not pass because of two
defects in the real agreement. The first defect, so
the court held,
was that McKenna’s intention to transfer ownership had been
motivated by the mistaken belief that he had
entered into a valid
agreement of sale… In this light, so the court held, it cannot
be inferred that McKenna intended to
transfer the property even if
the sale agreement turned out to be null and void. In the same way as
the court a quo, I also believe
that McKenna – as well as the
Erskines, for that matter – probably thought that the sale
agreement … was valid
and enforceable. And, albeit for
different reasons, I also share the court a quo’s view that the
parties were mistaken in
that belief. But I do not agree that a
mistake of that kind could in itself render the real agreement void.
If that were the position,
we would effectively revert to the causal
theory of transfer which we have jettisoned in favour of the abstract
theory. I say that
because I believe that very few parties (if any)
to real agreements would deliberately give and receive transfer
pursuant to an
underlying transaction which, to their knowledge, is
void. If a mistaken belief of this kind - whether unilateral or
common were
therefore to render the real agreement invalid, there
would not be much left of the abstract theory of transfer.’
[24]
For
those reasons the court concluded that the house was validly
transferred to the Erskines and that the court a quo had erred
in
upholding Ms Shea’s claim for the restoration of her property.
[25]
The
three portions of land transferred were each a separate unit of land
with its own cadastral description.
Sections 3(
d)
of the Act prohibits a lease in respect of a portion of agricultural
land without ministerial consent and s 3
(e)
prohibits sale of a portion of agricultural land, whether surveyed or
not, without the requisite consent. The phrase ‘agricultural
land’ refers to a separate unit of land with its own cadastral
description as registered in the Deeds Registry. In
Adlem
& another v Arlow
[2012] ZASCA 164
;
2013 (3) SA 1
(SCA) paras 13-14, the phrase
‘portion’ in ss 3(
d)
and
(e)
of the Act was interpreted as meaning a part of property as opposed
to the whole property registered in the Deeds Registry. This
court
held that s 3
(d)
was
not applicable to the lease in question in that matter, because the
whole of the property owned by the respondent was the subject
of the
lease agreement. None of the three portions of land transferred is a
portion of agricultural land as envisaged in s 3. It
follows that the
individual registrations and transfers of ownership in the three
individual portions of land with their own cadastral
descriptions
were effected by separate real agreements and were not prohibited by
law.
I
make the following order:
1
The appeal is upheld with costs including costs of two counsel.
2
The order of the court a quo is set aside and replaced with the
following orders:
2.1 ‘It
is declared that;
(a)
the purported sale agreement dated 21 November 2007 is null and void
from the outset with no legal force
and effect;
(b)
the purported incidental development agreement dated 21 November 2007
is null and void from the outset
with no legal force and effect;
(c)
the purported lease agreement dated 15 January 2008 is null and void
from the outset with no legal force
and effect;
3
The special plea of prescription raised by the First to Fourth
Defendants is dismissed:
4
Against the transfer of the Remaining Extent of Portion 6 of the Farm
Elandsdrift 527 JQ to
the First Defendant, free from any mortgage
bond held by Investec Bank Ltd, the First Defendant is ordered to pay
an amount of
R17, 343, 214 to the Plaintiff; together with interest
on the amount of R17, 343, 214 at the prescribed rate of 9% per year
calculated
from the date of demand herein (which is 23 June 2009) to
the date of payment thereof;
5
Against the transfer of the Remaining Extent of Portion 4 of the Farm
Elandsdrift 527 JQ and
the Remaining Extent of Portion 39 of the Farm
Elandsdrift 527 JQ to the Second to Fourth Defendants jointly, free
from any mortgage
bond held by Investec Bank Ltd, the Second to
Fourth Defendants jointly are ordered to pay an amount of R42, 656,
786 to the Plaintiff;
together with interest on the amount of R42,
656, 786 at the prescribed rate of 9% per year calculated from 23
June 2009 to the
dated of payment thereof.
6
The counter-claim of the First to Fourth Defendants is dismissed:
6.1
The First Defendant and the Second to Fourth Defendants, jointly in
their capacities as trustees of the Sanjont
Trust, are ordered to pay
the costs hereof jointly and severally, the First Defendant paying
the Second to Fourth Defendants to
be absolved and the Second to
Fourth Defendants jointly paying the First Defendant to be absolved,
with such costs to include the
costs of two counsel.’
___________________
ZLL
Tshiqi
Judge
of Appeal
Judge
N P Willis
[26]
This
case concerns, primarily, the legal implications of a written
agreement that included the sale of both as yet undivided portions
of
agricultural land as well as other transactions relating to portions
of land that had, historically, been subdivided as so-called
‘cadastral units’. After this agreement had been entered
into, the transfer of certain cadastral units of agricultural
land to
the appellant had taken place. There was no transfer of any of the
undivided portions to which the agreement refers. At
issue is an
intricate web of tangled questions of law, including those affecting
the question of prescription, where there has
been a contravention of
s 3(1)
(e)
(i)
of the Subdivision of Agricultural Land Act 70 of 1970 (SALA)
inasmuch as the prior written consent of the Minister of Agriculture
(the Minister) had not been obtained. These questions of law are not
straightforward.
[27]
The
appellant, Nuance Investments (Pty) Ltd (Nuance), was the plaintiff
in the in the court a quo. It claimed the repayment
of moneys
(‘the purchase consideration’) against a retransfer by it
of the remaining part of the remaining extent of
Portion 6 (a part of
Portion 1) and the remaining extent of Portion 4 (a part of Portion
1) of the farm Elandsdrift 527 JQ. The
aggregate of the amount
claimed is in excess of R60 million. Relying on the nullity of the
transaction, Nuance contended that it
was entitled to the relief
claimed in terms of an enrichment action (whether this was the
condictio
ob turpem vel iniustam causam
or
the
condictio
indebiti
).
In the alternative, on the supposition that the transfer of land
could not be reversed, Nuance relied on the
rei
vindicatio
to seek the eviction of Maghilda Investments (Pty) Ltd (Maghilda),
the first defendant in the court a quo and first respondent
in the
present appeal, from those portions of the land that it occupied,
being the remaining extent of Portion 39 and Portion 51
of the farm
Elandsdrift 527JQ
[28]
The
first to fourth defendants in the court a quo not only resisted the
claim for the repayment of the money in a special plea of
prescription but also brought a counterclaim that a declaratory order
be made that they remained the owners of the properties in
question
and that the Registrar of Deeds (the fifth respondent) cancel the
transfers conferring title of the properties on Nuance.
Moreover, the
first to fourth defendants in the court a quo sought an order
cancelling the mortgage bonds registered over the properties,
including those in favour of Investec Bank Limited (the seventh
defendant a quo). In colloquial terms, the first to fourth
defendants wanted to ‘have their cake and eat it’. They
succeeded. The Gauteng Division of the High Court, Pretoria
(D S
Fourie J) dismissed the plaintiff, Nuance’s claim and upheld
the first to fourth respondent’s counterclaim. The
appeal is
with the leave of the court a quo. Investec, the seventh defendant a
quo, initially entered an appearance to defend the
action but later
filed a notice of withdrawal.
The
relevant facts
[29]
On
21 November 2007, Nuance, Maghilda and the trustees of the Sanjont
Trust (the second, third and fourth respondents) (the Sanjont
Trust)
entered into a single, joint, comprehensive written agreement in
terms of which:
(a)
Maghilda sold the remaining Extent of Portion 6 (a part of Portion1)
of the Farm Elandsdrift
No. 527, Registration Division JQ, Gauteng
Province, measuring 42,1878 hectares (Portion 6) to Nuance for
R23 909 536;
(b)
the Sanjont Trust sold to Nuance the remaining Extent of Portion 4 (a
part of Portion 1)
of the Farm Elandsdrift No. 527, Registration
Division JQ, Gauteng Province, measuring 22,5734 hectares (Portion 4)
for R30 702 018;
(c)
Maghilda sold to Nuance the remaining Extent of Portion 46 (a part of
Portion 7) of the
Farm Elandsdrift No. 527, Registration Division JQ,
Gauteng Province, measuring 17,3355 hectares (Portion 46) for
R6 113 234;
and
(d)
Maghilda sold to Nuance the remaining Extent of Portion 5 (a part of
Portion 1) of the Farm
Elandsdrift No. 527, Registration Division JQ,
Gauteng Province, measuring 21,53 hectares (Portion 5) for R29 248
427.
All
these properties are in the area commonly known as Lanseria, which in
recent decades has undergone a boom in development. The
second
respondent, Mr Jonathan Sandler, is a director of Maghilda.
[30]
In addition, this same agreement of 21 November 2007 provided for the
sale by the Sanjont Trust of its ‘hospitality
business’
to Nuance for R42 656 786. The ‘hospitality business’
comprised the remaining Extent of Portion
39 of the Farm Elandsdrift
No. 527 Registration Division JQ, Gauteng Province, measuring 42,1878
hectares (Portion 39), together
with a five year lease agreement
between the Sanjont Trust as lessor and Maghilda as lessee for
R30 702 018. On 15 January
2008, Nuance and Maghilda
entered into a separate agreement to develop Portion 39 and to extend
Maghilda’s rights as lessee
for a period of five years from the
registration of the transfer to Nuance of Portion 39, with yet a
further option for Maghilda
to extend for a further five years
thereafter. In the trial action, Nuance challenged the validity of
this lease agreement contending
that inasmuch as the period of the
lease was for ten years or more and had not been approved by the
Minister, it contravened the
provisions of s 3
(d)
of
SALA. With this proposition Maghilda and the Sanjont Trust agreed.
[31]
The sale in respect of Portion 39 was subject to ‘an excluded
portion’ thereof being retransferred and that portion
was
reflected in a sketch plan and described therein as ‘figure A’.
[32]
In the agreement, Nuance is defined as ‘the purchaser’.
In that agreement, clause 34.1 specifically provides that
the
purchaser shall, at its own cost do ‘all such things as are
necessary to endeavour to procure the excluded part of Portion
39,
the excluded part of Portions 46, 5 and Portion 51 become
registrable’.
[33]
Clause 28.2 of the agreement provides that:
‘
Transfer
of the excluded portion of 39 by the Purchaser back to the Trust
shall be effected by the Trust’s attorneys on or
as soon as
possible after the land is registerable, and at the cost of the
Trust.’
[34]
Clause 41 of the agreement expressly provides as follows:
‘
SEVERABILITY
41.1
Notwithstanding the form of this agreement as a single document, this
agreement, will be severable
with respect to each transaction as
contemplated in Part 2 to Part 7 (both inclusive).
41.2
Any provision which is or may become illegal, invalid or
unenforceable in any jurisdiction affected
by this agreement shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability and shall
be treated
pro non
scripto
and severed from the balance of this agreement, without
invalidating the remaining provisions of this agreement or affecting
the
validity or enforceability of such provision in any other
jurisdiction.’
Notwithstanding
the existence of this severability clause, the contending parties all
agreed in the pleadings that the entire agreement
(and not only a few
transactions contemplated therein) was invalid. I am not sure
that this is correct but, in the end, it
makes no difference to the
outcome of the case.
[35]
Moreover, on 21 November 2007, Nuance, Maghilda, the Sanjont Trust
and Centurus (Pty) Ltd (Centurus) (the sixth defendant in
the court a
quo and sixth respondent in the present appeal) entered into a
quadrate ‘incidental development agreement’
in terms of
which the properties in question would be developed by Nuance with
Centurus guaranteeing that it would administer and
control its
subsidiary, Nuance. Nuance claimed that, as the underlying substratum
of its agreement was invalid, so too was the
development agreement
itself. Centurus has agreed to abide the decision of this court.
Maghilda and Sanjont Trust do not take issue
with Nuance in this
regard.
[36]
The remaining Extent of Portion 6 (a part of Portion 1), the
remaining Extent of Portion 4 (a part of Portion 1) and the remaining
Extent of Portion 39 were all transferred to Nuance by the Registrar
of Deeds, Pretoria on 13 May 2008. In each case, the deed
of transfer
makes reference to the sale agreement of 21 November 2007.
Simultaneously with the registration of transfer, the mortgage
bonds
to which reference has been made were also registered. These
transfers did not, however, give effect to the anticipated further
subdivisions to which reference was made in the agreement. The
transfers were all of subdivisions that had been approved
historically,
prior to the agreement having come into existence.
[37]
No evidence was led on behalf of Nuance. Mr Sandler, the second
respondent testified. The thrust of his evidence was to the
effect
that, at all relevant times, everyone was aware of the relevant
provisions of SALA.
[38]
A letter from Mr Naidu, the financial director of Centurus to Mr
Sandler makes it clear that in October 2007, the two of them
were
well aware of the fact that the written approval of a subdivision of
the properties in question was required. This aspect
was confirmed by
Mr Sandler in his evidence in the trial. Part of his evidence was
that he was an honest, experienced businessman
who would have had no
reason, in his dealings with Nuance, to disguise the truth about the
requirement of ministerial consent and
that, on the contrary this was
openly discussed with them during their negotiations. He may well
have been unaware, at that time,
that the absence of ministerial
consent to a subdivision would have invalidated any agreement of sale
of that subdivision. I shall
deal with this aspect later.
[39]
Indeed, the agreement itself defines ‘registrable’ as
meaning:
‘
capable
of registration in the Deeds Office once approval by all competent
authorities has been obtained whether in terms of a land
development
application in terms of the DFA [Development Facilitation Act 67 of
1995] or a subdivision application in terms of
any other law.’
[40]
In a letter to the Department of Agriculture written on 13 May 2008 –
the very day upon which the properties had been
transferred –
Plan Practice, town planners employed as such by Nuance, described
itself as Nuance’s ‘authorised
agent’. Plan
Practice were experts in the field of property development. They had
originally acted as consultants to Maghilda
and the Sanjont Trust in
regard to the development of the properties in question and were
‘taken over’ by Nuance. On
20 January 2009, Ms Jeanne
Fourie, writing to the Department of Agriculture, on behalf of
Plan Practice wrote to enquire
whether the farm Elandsdrift was
‘excluded from the provisions’ of SALA.
[41]
Even if Nuance had been unaware, on the date of the agreement of 21
November 2007, that the sales in question would have required
written
ministerial approval, Plan Practice must have been aware of this
requirement by no later than 28 July 2008, when it received
confirmation thereof in a letter from the Department of Agriculture.
The summons was served on 19 March 2012 – more
than three years
after Plan Practice became aware of this requirement of ministerial
consent in terms of ss 3
(d)
and
3
(e)
(i)
of (SALA).
[42]
A letter written on behalf of the Minister to Nuance’s
attorneys in June 2009, read together with a letter sent by them
to
Maghilda and the Sanjont Trust’s attorneys in the same month,
makes it clear that the invalidity of the sale of the undivided
portions without the prior approval of the Minister was known to
Nuance at that time. About this there is no dispute. Insofar as
prescription is concerned, the critical issue is, obviously, when did
Nuance become aware of this fact – or at what point
in time may
this knowledge be imputed to it?
The
parameters of the issues in question
(a)
The significance of the fact that the land is ‘agricultural’
[43]
The definition of ‘agricultural land’ in SALA is widely
cast but for most practical purposes means any land, except
land
situated in the area of jurisdiction of municipalities. There is no
dispute between the parties
–
and
none seems possible
–
that
all the portions of land affected by the relevant agreement are
‘agricultural land’ as defined in SALA.
[44]
The relevant part of s 3
(e)
(i) of SALA provides that:
‘
[N]o
portion of agricultural land, whether surveyed or not, and whether
there is any building thereon or not, shall be sold or advertised
for
sale . . . unless the Minister [of Agriculture] has consented
in writing.’
In
similar vein, s 3
(d)
provides that:
‘
[N]o
lease in respect of a portion of agricultural land of which the
period is 10 years or longer, or is the natural life of the
lessee or
any other person mentioned in the lease, or which is renewable from
time to time at the will of the lessee, either by
the continuation of
the original lease or by entering into a new lease, indefinitely or
for periods which together with the first
period of the lease amount
in all to not less than 10 years, shall be entered into…
unless
the Minister [of Agriculture] has consented in writing.’
(b)
The special plea
[45]
A special plea is one that raises a defence that does not dispute the
allegations of a plaintiff in either its declaration
or particulars
of claim but is independent and separate therefrom.
[1]
At first blush, it may therefore seem logical first to consider the
defendants’ special plea of prescription. There is, however,
no
requirement in our law that a special plea should be considered first
or even separately from any other defence.
[2]
[46]
In
Schierhout
v Minister of Justice
1926
AD 99
, Innes CJ, delivering the unanimous judgment of this court held
that: ‘It is a fundamental principle of our law that a thing
done contrary to the direct prohibition of the law is void and of no
effect.’
[3]
The principle is trite. Counsel for both sides argued before us that
this principle operated in their favour. Reliance was also
placed on
Cool
Ideas 1186 CC v Hubbard & another
[2014]
ZACC 16
; 2014 (4) S 474 (CC), to argue that the nullity that arises
from an unlawful juristic act, transcends any claim of prescription.
In that case, it was said that: ‘It cannot be expected of a
court of law in such circumstances to disregard a clear statutory
prohibition – that would be inimical to the principle of
legality and the rule of law.’
[4]
I shall therefore first deal with this argument, that
Maghilda
and the Sanjont Trust’s defence of prescription was trumped by
the allegedly unlawful transfers of the properties.
No
prior written consent by the Minister – the question of
unlawfulness
[47]
I turn now to turn to the question of ministerial consent. The
transfer of an immovable property is not necessarily final,
in the
sense of not being irreversible. For example, t
his
court has made it clear that, where an underlying sale agreement was
tainted by fraud, the registration of transfer did not
divest the
seller of ownership of the immovable property in question.
[5]
[48]
Nuance is correct, however, in its alternative argument before us
that SALA was not aimed at prohibiting the sale and transfer
of
cadastral units of land or, put differently, agricultural land,
having its own cadastral description, and that had previously
been
registered in the office of the Registrar of Deeds as such.
[6]
What was prohibited was the sale of undivided portions or ‘parts’
of agricultural land, whether conditional or not
and unless and until
the subdivision had actually been approved by the Minister.
[7]
[49]
Commonly in South Africa, with the demands of urbanisation, farms
have had to, over time, be subdivided into portions. These
historical
subdivisions into portions are so-called cadastral units. SALA does
not prohibit the sale of agricultural land that
had, prior to that
agreement, been subdivided into so-called ‘cadastral units’.
Otherwise, the Minister would have
to approve the sale of every farm
in the country. Mr Oosthuizen, who appeared for Nuance conceded
that such an absurd result
could not have been intended. After all,
Tuckers
Land and Development Corporation (Pty) Ltd v Wasserman
1984 (2) SA 157
(T) at 160E-F and 162B-H, makes it clear that the
purpose of SALA is not so much to restrict either freedom of
contract or
testation or even to make of the Minister a purchaser’s
nanny. SALA is designed to ensure that agricultural land is not,
through uncontrolled subdivision, rendered economically unviable for
the purpose of farming. Ironically, the reason for which agreements
of the kind in question are entered into, namely the conversion of
agricultural land to uses other than farming, as a result of
rapid
urbanisation, was not the ‘mischief’ against which SALA
was directed.
[8]
That cadastral units fall outside of the scope of ss 3
(d)
and
3
(e)
(i)
and (ii) of SALA was made clear by this court in
Adlem
& another v Arlow
[2012]
ZASCA 164
;
2013 (3) SA 1
(SCA), when it was stated that (paras 12 and
13):
‘
The
Act does not confer on the Minister the power to control the use of
agricultural land absent a contemplated subdivision, whether
in the
literal sense as envisaged in s 3
(a)
and
(e)
(i),
or the extended sense as envisaged in s 3
(d)
(a lease for 10 years or longer) and 3
(e)
(ii)
(a right for 10 years or longer).
The
correct interpretation in my view is that advanced on behalf of the
appellants, namely that the word “portion” in
s 3
(d)
and in s 3
(e)
(i)
and (ii) means a piece of land that forms part of a property
registered in the Deeds Registry; and, on the authorities I have
quoted, the prohibition is aimed at preventing physical fragmentation
of the property, and the use of part of the property under
a long
lease — as well as, I would add, the granting of a right for an
extended period in respect of the property. In other
words, the word
“portion” in, inter alia, s 3
(d)
must be interpreted as meaning a part of a property (as opposed to
the whole property) registered in the Deeds Registry, and not
as
having the meaning used in the deeds registry to describe the whole
property.’
[50]
Even the most well-intentioned legislation may have unintended
consequences. Nevertheless, a sensible result in this case is
facilitated by bearing in mind the ‘mischief’ that the
Legislature had in mind, rather than adopting an ‘armchair’
approach. Sight should also not be lost of the fact that the
helter-skelter transfiguration of agricultural land into urban
settlements
may also be a ‘mischief’ requiring
Ministerial control.
[51]
Often, a proposal to convert agricultural land into an urban
aggregation will require considerable preparatory investment in,
for
example, surveying, research on the provision of utilities such as
water and electricity, town and regional planning, etc.
In the nature
of things, it will more often be the proposed developer rather than
the farmer who has resources of this magnitude
available.
Understandably, a prospective developer will be reluctant to commit
funds for these purposes without the assurance that,
if the venture
is approved at the level of government, it will have the right to
embark on the venture, rather than anyone else.
This was an aspect
that was discussed with counsel during the course of argument. It is
perhaps a matter that needs carefully considered
legislative review.
[52]
Whatever lacunae may exist in SALA, it is clear that it does not
require the Minister to approve the sale of portions of agricultural
land for which approval had previously been granted – namely,
cadastral units such as those which were transferred in the
present
case. The sale and transfers of the remaining Extent of Portion 6 (a
part of Portion 1) and the remaining Extent of Portion
4 (a part of
Portion 1) were not unlawful. I am fortified in this view by the
severability clause in the agreement that each transaction
was
severable from the others and that the invalidity of one transaction
would not affect the validity of the others. As I have
observed, the
fact that, on the pleadings it was common cause that the agreement
was invalid is perhaps surprising but as I hope
will soon become
clear, this is not dispositive of the issue of the reversibility of
the transfer of the properties in question.
[53]
Any
agreement for the sale of agricultural land concluded in
contravention of
s
3
(e)
(i)
of SALA is
null
and void.
[9]
The parties agree that this is so. The parties also agreed that the
lease agreement and the development agreement would, by parity
of
reasoning, also be null and void. The parties even agreed that the
sale agreement did not comply with the formalities required
by
s 2(1)
of the
Alienation of Land Act 68 of 1981
inasmuch as the descriptions
of Portions 39 and 46 were so defective that they could not properly
be identified. However, for reasons
that follow, these aspects are
irrelevant to the determination of the issues.
[54]
Insofar as the transfer of the remaining Extent of Portion 39 is
concerned, even if the agreement to retransfer some of it,
to develop
it and the sale of the hospitality business were invalid – as
the
decisions of this court in
Geue
& another v Van der Lith & another
[2003]
ZASCA 118
;
2004 (3) SA 333
(SCA) and
Four
Arrows Investments 68 (Pty) Ltd v Abigail Construction CC &
another
[2015]
ZASCA 121
;
2016 (1) SA 257
(SCA) paras 9 to 11 make clear –
this
does not necessarily affect the validity of the ‘saaklike
ooreenkoms’ to transfer Portion 39 according to its historical
cadastral description.
[10]
In
Quartermark
Investments (Pty) Ltd v Mkhwanazi & another
[2013]
ZASCA 150
;
2014 (3) SA 96
(SCA), this court, following the abstract
theory of transfer approved in
Legator
McKenna Inc & another v Shea & others
[2008] ZASCA 144
;
2010 (1) SA 35
(SCA) paras 20 to 22,
emphasised that ‘a valid underlying agreement to pass
ownership, such as in this instance a contract
of sale, is not
required [in order to pass ownership].’
[11]
The
transfers constitute separate real agreements.
[12]
This is underlined by the fact that
clause
28.2, which specifically envisages first a transfer of the excluded
part of Portion 39 to Nuance and then a subsequent ‘transfer
back’ to the Sanjont Trust.
[55]
If,
as counsel for Maghilda and the Sanjont Trust accept, the abstract
theory applies in regard to the transfer of immovable property,
then
surely the correct question to ask is whether the transfer itself
gives effect to that which is prohibited? The answer to
this question
must surely be: No! None of the anticipated further subdivisions
agreed upon by the parties in the agreement were
transferred. The
subdivisions that were transferred had been past, historical
subdivisions, approved prior to the parties entering
into the
agreement in question. The transfers in question did not dissemble
any illegality.
What
may matter is whether any of the transfers gave effect to any
unlawful agreement of sale.
[13]
[56]
In summary, by reason of the fact that –
(a)
SALA
does not prohibit the sale and transfer of agricultural land
according to its existing or ‘historically approved’
subdivision, ie of cadastral units; and
(b)
the
transfers were, in fact, of cadastral units;
the
orders granted by the High Court in terms of the counterclaim were
wrong and the counterclaim ought to have been dismissed with
costs.
This
leads to the question of prescription.
Defence
of prescription
Background
and first principles relating to the invalidity of the agreement
[57]
If I understood Mr Oosthuizen, who appeared for Nuance, correctly, he
submitted that
s 3
(e)
(i)
of SALA meant that the Minister could approve a sale of a portion of
agricultural land, once he had approved the subdivision
thereof. This
is not correct. The Minister cannot,
ex
post facto
,
validate or approve an invalid act. A plain reading of the subsection
is that the Minister must have approved the subdivision
before
any sale of any portion resulting therefrom may be concluded.
Geue
v Van der Lith
(above)
at 344A-C and
Four
Arrows Investments 68 (Pty) Ltd v Abigail Construction CC
(above)
paras 9 to 11, both of which were decided in this court, make this
clear. In
Four
Arrows Investments
,
Swain JA observed that (para 10):
‘
[T]he
object of the legislation was not only to prohibit concluded sale
agreements, but also preliminary steps which may be a precursor
to
the conclusion of a prohibited agreement of sale.’
To
my mind, it could hardly be plainer that the agreement, at least with
regard to the non-cadastral portions of agricultural land,
was
stillborn. It could not be revived, resuscitated or resurrected by
the Minister bestowing his consent at some time after the
parties had
conceived it.
Prescription
in relation to the claim for the reversal of the transactions
[58]
When it comes to the claim to reverse the transactions, the period of
prescription may be different from that which applies
in Nuance
alternative claim for eviction. Logically, it seems sensible to deal
with the claim in respect of the reversal of the
transactions prior
to the alternative claim for eviction. In terms of
s 11
(d)
read with
s 12(1)
of the
Prescription Act 68 of 1969
ordinary civil
debts (described as ‘any other debt’) become prescribed
three years from when they became ‘due’
– in other
words, prescription commences ‘to run as soon as the debt is
due’. In terms of
s 12(3)
of the
Prescription Act a
debt shall
not be deemed to be due until the creditor has knowledge of (a) the
identity of the debtor and (b) the facts from which
the debt arises.
Nuance, at all relevant times, had knowledge of the identity of both
Maghilda and the Sanjont Trust.
Prescription
and ignorantia juris
[59]
Section 12(3)
of the
Prescription Act also
provides that ‘a
creditor shall be deemed to have such knowledge [of the facts] if he
could have acquired it by exercising
reasonable care’. I shall
assume, in favour of Nuance, that the invalidity of the agreement
from the moment it was entered
into, by reason of the Minister not
having consented in writing to the subdivisions referred to in the
agreement, was the relevant
fact
in this case, rather that its being a discrete question of law.
The question that then arises is this: could Nuance, by the
exercise
of reasonable care, have become aware of this fact before the debt as
it were prescribed?
[60]
I am mindful of the fact that I may have been excessively generous
towards Nuance in making the assumption that I have.
A series
of decisions of both this court and the Constitutional Court have
made it clear that, when it comes to prescription, a
clear
distinction exists between the necessary factual ingredients that
found a cause of action upon which a litigant relies and
must prove
and the legal conclusions that are to be drawn from those facts.
[14]
In
Van
Staden v Fourie
1989
(3) SA 200
(A)
,
this court said (at
216D-E
):
‘
Artikel
12(3) van die Verjaringswet stel egter nie die aanvang van verjaring
uit totdat die skuldeiser die volle omvang van sy regte
uitgevind het
nie. Die toegewing wat die Verjaringswet in hierdie verband maak, is
beperk tot kennis van “die feite waaruit
die skuld ontstaan’’.’
This
may be translated as follows:
‘
Section
12(3)
of the
Prescription Act does
not postpone the commencement of
prescription until the creditor has knowledge of the full extent of
his rights. The concession
which the Prescription makes in this
regard is limited to knowledge of “the facts from which the
debt arises.”’
(My own translation.)
This
passage was referred to with approval in
Truter
& another v Deysel
[2006]
ZASCA 16
;
2006 (4) SA 168
(SCA) para 18
.
[61]
In summary, I can do no better than to quote the following by Lewis
JA in
Claasen v Bester
[2011] ZASCA 197
;
2012 (2) SA 404
(para
15):
‘
These
cases clearly do not leave open the question posed and not answered
in
Van
Staden
.
They make it abundantly clear that knowledge of legal conclusions is
not required before prescription begins to run. There is
no reason to
distinguish delictual claims from others. The principles laid down
have been applied in several cases in this court,
including most
recently
Yellow
Star Properties v MEC, Department of Planning and Local Government,
Gauteng
2009
(3) SA 577
(SCA) para 37 where Leach AJA said that if the
applicant “had not appreciated the legal consequences which
flowed from
the facts” its failure to do so did not delay the
running of prescription. See also
ATB
Chartered Accountants (SA) v Bonfiglio
[2011]
2 All SA 132
(SCA) paras 14 and 18.’
[62]
There is accordingly more than much to commend the submission of Mr
Fine, who appeared in this court for Maghilda and the Sanjont
Trust,
that the only relevant fact, regarding prescription in this case, was
that the parties had entered into an agreement that
provided for the
subdivision of agricultural land, without the written consent of the
Minister, the rest being pure questions of
law. Nevertheless, for
reasons that follow, Maghilda and the Sanjont Trust will not be
prejudiced by any generosity of assumption
on my part, in favour of
Nuance.
[63]
If I understood the argument of Mr Oosthuizen correctly, while he
accepted that Nuance may have known from a time before prescription
would have run to its completion that the consent of the Minister was
required in order for the subdivision to occur, it would
not have
known before 18 March 2009 that the agreements in question had not
been validly entered into.
[64]
In
Willis
Faber Enthoven (Pty) Ltd v Receiver of Revenue & another
[1991] ZASCA 163
;
1992 (4) SA 202
(A), this court made it clear that the
ignorantia
juris non excusat
rule in terms of which ‘everyone is presumed to know the law’
or ‘ignorance of the law is no excuse’ has,
for a
considerable period of time, not been of general application in South
African civil law.
[15]
The court held that ‘the age-old distinction between errors of
law and fact for the repayment of money duly paid in error’
should no longer be maintained.
[16]
In
Willis
Faber
,
the court followed the principle set out in
S
v De Blom
1977
(3) SA 513
(A)
.
[17]
Nevertheless,
De
Blom
asserted the principle that where a person engages in activity that
he or she could be expected to know is regulated, that person
can be
expected to take the necessary steps to be informed as to how the law
in that field of activity may affect him or her, more
especially in
regard to specific juristic acts.
[18]
How much more so must this apply in the field of property
developments involving millions of rand? Nuance did engage the
services
of experts in property development. Significant legal
consequences derive therefrom. As was noted in
De
Blom
,
in a modern State, our lives are highly regulated in almost every
field of activity.
[19]
Property development is no exception.
[65]
In
De
Blom
the example of an angler was given.
[20]
If a fly-fisherman is expected to familiarise himself with the
regulatory environment pertaining to his sport, how much more
so can
a developer of land in one of the booming peri-urban areas of Gauteng
be expected,
mutatis
mutandis
,
to do likewise? In a civil case involving prescription this must be
an apposite analogy when considering whether Nuance could
have
required knowledge of what was required for the validity of the
agreement by exercising reasonable care. In my opinion, Nuance
could,
by exercising reasonable care, have acquired knowledge of the
invalidity of the agreement well before the effluxion of three-year
period of prescription.
The
imputation of the knowledge of Plan Practice to Nuance
[66]
There are yet further reasons why the defence of prescription must
succeed in regard to the claim for the reversal of the transactions
in question. On its own version, by no later than 28 July 2008,
Nuance’s duly appointed town planners, Plan Practice,
became aware that certain of the sales in question would have
required prior written ministerial approval, from the date upon which
they received confirmation thereof in a letter from the Department of
Agriculture. Anyone in the position of Plan Practice is expected,
in
the ordinary course of business, to impart knowledge of such
importance and materiality to its principal.
[21]
The approval of the Minister, antecedent to the agreement of sale, is
not merely important; it is, in a quite literal sense, vital.
In the
language of lawyers, it is the
sine
qua non
,
which means that it is an indispensable and essential condition.
Indeed, as mentioned earlier, in a letter to the Department of
Agriculture written on 13 May 2008 – the very day upon which
the properties had been transferred – Plan Practice describes
itself as Nuance’s ‘authorised agent’. In all
probability, Nuance became aware of the requirement of ministerial
approval in terms of
ss 3
(d)
and
3
(e)
(i)
of SALA soon after 28 July 2008 – if they were not, in fact,
aware of it very much earlier. This too was the evidence
of Mr
Sandler, the second respondent.
A
summary in regard to the prescription of Nuance’s claims for a
reversal of the transactions
[67]
In my opinion, the fatal flaw in Nuance’s argument that its
claim has not prescribed is exposed by asking a single question:
why
does it persist in seeking to reverse the transfers that have taken
place? Any concern that it may have had about the invalidity
thereof
is laid to rest by the application of the abstract theory of transfer
of property. Where is the legally recognised enrichment
at its
expense? I regret to conclude that no other reason presents itself
other than a buyer’s remorse. The opportunism inherent
in this
stance casts a shadow over its reliance upon the fact that there is
no direct evidence that, until its attorneys received
a letter
written on behalf of the Minister in June 2009, it was aware that the
agreement was void. Having elected not to give any
evidence itself to
that effect, Nuance took a risk. Part of that risk was that the
conclusion that it did know the position very
much earlier may be
drawn by inference. More especially, and of particular importance in
deciding the issue of prescription is
not only that it could, by
exercising reasonable care, have known so earlier but also that the
knowledge of Plan Practice in this
regard may be imputed to it.
[68]
If one has regard to the principles and criteria set out in
Stellenbosch
Farmers’ Winery Group Ltd & another v Martell et Cie &
others
[2002] ZASCA 98
;
2003 (1) SA 11
(SCA) para 5,
[22]
the probabilities are that, well before the effluxion of the period
of prescription, Nuance became aware not only that ministerial
consent was required but also that any agreement that was conditional
upon his approval was invalid. In
Ocean
Accident and Guarantee Corporation Ltd v Koch
1963 (4) SA 147
(A), Holmes JA said (at 159B-C):
‘
As
to the balancing of probabilities, I agree with the remarks of Selke
J, in
Govan
v Skidmore
1952 (1) SA 732
(N) at 734, namely
“…
in
finding facts or making inferences in a civil case, it seems to me,
that one may, as Wigmore conveys in his work on
Evidence,
3
rd
ed., para 32, by balancing probabilities select a conclusion which
seems to be the more natural or plausible, conclusion from amongst
several conceivable ones, even though that conclusion is not the only
reasonable one.”’
This
dictum
has
been referred to with approval in numerous cases.
[23]
[69]
As has been said in the oft-quoted passage from
AA Onderlinge
Assuransie-Assosiasie Bpk v De Beer
1982 (2) SA 603
(A), decided
in this court (at 614H):
‘
Dit
is, na my oordeel, nie nodig dat ’n eiser wat hom op
omstandigheidsgetuienis in ‘n siviele saak beroep, moet bewys
dat die afleiding wat hy die Hof vra om te maak die enigste redelike
afleiding moet wees nie. Hy sal die bewyslas wat op hom rus
kwyt
indien hy die Hof kan oortuig dat die afleiding wat hy voorstaan die
mees voor-die-hand liggende en aanvaarbare afleiding
is van ’n
aantal moontlike afleidings.’
This
may be translated as follows:
‘
It
is, in my opinion, not necessary for a plaintiff that relies on
circumstantial evidence in a civil case must prove that the inference
which he asks the court to draw must be the only reasonable
inference. He will discharge the onus that rests upon him if he can
persuade the court that the inference that he advances is the most
plausible and cogent of a number of possible conclusions.’
(My
own translation.)
This
passage has also been referred to with approval in numerous
cases.
[24]
The parties agreed that Maghilda and the Sanjont Trust bear the onus
of proving prescription.
Mutatis
mutandis
,
the same principle applies.
[70]
As mentioned previously, the summons in this case was served on 19
March 2012. This was more than three years after Nuance
became aware
of the facts upon which it relies in seeking the relief. Even if this
conclusion is incorrect, the knowledge of its
duly appointed town
planners concerning the validity of dealings in agricultural land
must be imputed to Nuance. Even if that conclusion
is incorrect,
Nuance could, by the exercise of reasonable care, have acquired the
requisite knowledge well before the prescriptive
period had run.
Accordingly, any action it may have had to recover by way of an
enrichment action what it paid for the sale
and transfer of the
properties to it had prescribed.
The
question of eviction
[71]
Sight must not be lost of the fact that, in the alternative, Nuance
claimed the eviction of Maghilda from the remaining Extent
of Portion
39 and Portion 51 of the farm Elandsdrift, relying on the
rei
vindicatio
.
In
ABSA
Bank Ltd v Keet,
this court held that a vindicatory claim, because it is based on
ownership of a thing, cannot be described as a debt as envisaged
by
the
Prescription Act and
has 30 years to run before it
prescribes.
[25]
In
Staegemann,
which was approved in Absa v Keet,
Blignault
J said: ‘The
rei
vindicatio
is clearly a claim to ownership in a thing. It cannot on any
reasonable interpretation be described as a claim for payment of a
debt.’
[26]
Accordingly, Nuance must succeed in its alternative claim for the
eviction of Maghilda. This would obviously have a bearing on
costs.
Summary
of conclusions
[72]
For reasons that are different from those of the high court, I agree
that the Nuance’s claims for the repayment of monies
against a
retransfer by it of the remaining extent of Portion 6 and the
remaining extent of Portion 4 of the farm Elandsdrift were
correctly
dismissed with costs. These claims have prescribed. The alternative
prayer by Nuance for the eviction of Maghilda should,
however, have
succeeded. The counterclaim is defeated by the applicability of
the abstract theory in regard to the transfer
of property. The appeal
against the counterclaim should be upheld and replaced with an order
dismissing the counterclaim with costs.
Insofar as costs are
concerned, some kind of proportionality in regard to the respective
success of the parties should, naturally,
be reflected in the award
of costs, were this judgment to have prevailed.
______________________
N P Willis
Judge of Appeal
APPEARANCES
For
Appellant:
M M Oosthuizen SC (with C A C Korf)
Instructed
by:
VFV Attorneys, Pretoria
Symington
& De Kok, Bloemfontein
For
First to Fourth Respondents: D M
Fine SC (with T Dalrymple)
Instructed
by:
Knowles Husain Lindsay Inc, Pretoria
McIntyre
& Van der Post, Bloemfontein
[1]
In
Brown
v Vlok
1925 AD 56 at 58, Innes CJ said that a special plea ‘is
one which, apart from the merits, raises some special defence,
not
apparent
ex
facie
the declaration – for in that case it would be taken by way of
exception – which either destroys or postpones the
operation
of a cause of action.’ In the past, a ‘special plea’
was more commonly known either as a ‘plea
in bar’ or a
‘plea in abatement’ respectively. See for example
Glennie,
Egan & Sikkel v Du Toit’s Kloof Development Co (Pty) Ltd
1953 (2) SA 85
(C) at 88;
Jaffe
& Co (Pty) Ltd v Bocchi & another
1961 (4) SA 358
(T) at 371A-B;
Viljoen
v Federated Trust Ltd
1971 (1) SA 750
(O) at 759H-760D;
Avex
Air (Pty) Ltd v Borough of Vryheid
(2) SA 1972 (4) SA (N) at 678A-B as contrasted with
Brown
v Vlok
(above). See also
Mineworkers
Investment Co (Pty) Ltd v Modibane
2002 (6) SA 512 (W).
[2]
See for
example
David
Beckett Construction (Pty) Ltd v Bristow
1987
(3) SA 275
(W) at 277J-282D.
[3]
At
109.
[4]
Paragraph 55.
[5]
See
Preller
& others v Jordaan
1956 (1) SA 483
(A) at 496;
Meintjes
NO v Coetzer
&
another
[2010] ZASCA 32
;
2010 (5) SA 186
(SCA) para 9;
Gainsford
& others NNO v Tiffski Property Investments (Pty) Ltd &
others
[2012] ZASCA ; 2012
(3) SA 35 (SCA) paras 10, 11 and 50; and
Quartermark
Investments (Pty) Ltd v Mkhwanazi & another
[2013] ZASCA 150
;
2014 (3) SA 96
(SCA) para 27.
[6]
The meaning
of ‘cadastral’ was described in
National
Director of Public Prosecutions v Mohunram & others
[2006] ZASCA 12
;
2006 (1) SACR 554
(SCA) para 4, as ‘the
property as described in the deeds office. See also
Dlamini
& another v Joosten & others
[2005]
ZASCA 138
;
2006 (3) SA 342
(SCA) paras 10 to 17, where the terms is
used
.
[7]
Geue
& another v Van der Lith & another
[2003]
ZASCA 118
;
2004 (3) SA 333
(SCA) para 15 at 344A-C.
See
also
Adlem
& another v Arlow
[2012]
ZASCA 164
;
2013 (3) SA 1
(SCA) paras 12 and 13.
[8]
Tuckers Land
and Development
Corporation
(Pty) Ltd v Wasserman
1984
(2) SA 157
(T) at 160D-162H.
[9]
See
Geue
& another v Van der Lith & another
[2003]
ZASCA 118
;
2004 (3) SA 333
(SCA) para 15; and
Four
Arrows Investments 68 (Pty) Ltd v Abigail Construction CC &
another
[2015]
ZASCA 121
;
2016 (1) SA 257
(SCA) paras 9 to 11.
[10]
See for example
Legator
McKenna Inc & another v Shea & others
[2008] ZASCA 144
;
2010 (1) SA 35
(SCA) paras 20 to 22;
Quartermark
Investments (Pty) Ltd v Mkhwanazi & another
[2013] ZASCA 150
;
2014 (3) SA 96
(SCA) paras 24 and 25.
[11]
Paragraph 26.
[12]
Legator McKenna
Inc v Shea
(above) paras 20 to 22.
[13]
See for example
Gainsford
& others NNO v Tiffski Property Investments (Pty) Ltd &
others
[2012] ZASCA ; 2012
(3) SA 35 (SCA) para 38.
[14]
See for example
Evins
v Shield Insurance Co Ltd
1980
(2) SA 814
(A) at 838D-H;
Deloitte
Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman
Deutsch (Pty) Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A) at 532H-I;
Truter
& another v Deysel
[2006] ZASCA 16
;
2006 (4) SA 168
(SCA) paras 17 to 19;
Minister
of Finance & others v Gore NO
[2006]
ZASCA 98
;
2007 (1) SA 111
(SCA) paras 17 to 19;
Links
v Department of Health, Northern Province
[2016] ZACC 10
;
2016 (4) SA 414
(CC) paras 31 to 35;
Makate
v Vodacom Ltd
[2016] ZACC 13
;
2016 (4) SA 121
para 188.
[15]
At 223D-E. As Lord
Atkin made clear in
Evans
v Bartlam
[1937] AC 473
at 479, the position has never, in English law, been
as crude as to create a presumption that ‘everyone knows the
law’.
This position, in South African law, was affirmed in
S
v De Blom
1977 (3) SA 513
(A) at 529H.
[16]
Ibid.
[17]
Willis Faber
Enthoven (Pty) Ltd v Receiver of Revenue & another
[1991] ZASCA 163
;
1992 (4) SA 202
(A) a
t
223E.
[18]
At 528H-533B.
[19]
At 532A-B.
[20]
At 532A.
[21]
See for example
Van
Staden No & another v Firstrand Ltd & another
2008 (3) SA 530
(T) para 34. See also
Town
Council of Barberton v Ocean Accidents and Guarantee Corporation Ltd
1945 TPD 306
at 311;
Blackburn,
Low Co v Vigors
(1887) 12 AC 531
(HL). In
Blackburn
Lord Halsbury LC said, at 537: ‘When a person is the agent to
know, his knowledge does bind the principal.’
[22]
See also
National
Employers Mutual General Insurance Association v Gany
1931 AD
187
at 199;
AA Onderlinge
Assuransie Assosiasie v De Beer
1982
(2) SA 603
(A) at 614H
;
Koster
Koöperatiewe Landboumaatskappy Bpk v Suid-Afrikaanse Spoorweë
en Hawens
1974
(4) SA 420
(W) at 425
;
African Eagle
Life Assurance Co Ltd v Cainer
1980
(2) SA 234
(W) at 237
;
National
Employers’ General Insurance v Jagers
1984
(4) SA 432
(ECD) t 440E-441A
;
Baring
Eiendomme Bpk v Roux
[2001]
1 All SA 399
(A) para 7 in which the passage by Ecksteen AJP in
National
Employers’ General Insurance v Jagers
(above)
at 440E-441A was unanimously approved by th
is
court and
Koster
Koöperatiewe Landboumaatskappy Bpk v Suid-Afrikaanse Spoorweë
en Hawens
1974
(4) SA 420
(W) at 425
.
[23]
See, for example:
South
British Insurance Co Ltd v Unicorn Shipping Lines (Pty) Ltd
1976 (1) SA 708
(A) at 713 E-G;
Smit
v Arthur
1976 (3) SA 378
(A) at 386B-D;
Cooper
and Another NNO v Merchant Trade Finance Ltd
2000 (3) SA 1009
(SCA) at 1028B-C;
Hülse-Reutter
and Others v Gödde
2001 (4) SA 1336
(SCA) at para 14;
Jordaan
v Bloemfontein Transitional Local Authority
2004
(3) SA 371
(SCA) at para 379;
De
Maayer v Serebro; Serebro v Road Accident Fund
2005
(5) SA 588
(SCA) at para 18.
[24]
See, for example,
the judgment of Zulman JA in
Cooper
& another NNO v Merchant Trade Finance Ltd
2000 (3) SA 1009
(SCA) para 7;
Minister
of Safety and Security v Jordaan t/a Andre Jordaan Transport
2000 (4) SA 21
(SCA) para 9
.
[25]
ABSA Bank Ltd v
Keet
[2015]
ZASCA 81
;
2015 (4) SA 474
(SCA);
[2015] 4 All SA 1
(SCA)
paras
10-25.
[26]
Paragraph 21.