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[2013] ZASCA 109
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Le Roux and Another v Nel and Another (246/2013) [2013] ZASCA 109 (16 September 2013)
THE SUPREME COURT OF APPEAL OF
SOUTH AFRICA
JUDGMENT
NOT REPORTABLE
Case No: 246/2013
In
the matter between:
PIETER PAUL LE ROUX
.................................................................
FIRST
APPELLANT
JOHANNA CATHARINA LE ROUX
............................................
SECOND
APPELLANT
and
PAUL
STEENKAMP NEL
.............................................................
FIRST
RESPONDENT
ALWYN
JACOBUS MULLER NO
...........................................
SECOND
RESPONDENT
Neutral citation:
Le Roux v
Nel
(246/13)
[2013] ZASCA 109
(16 September 2013).
Coram:
Brand, Nugent, Malan,
Majiedt JJA
et
Van der Merwe AJA
Heard:
5 September 2013
Delivered: 16 September 2013
Summary: Option to buy land in
favour of appellants – subsequent sale of same land to first
respondent – application
of doctrine of notice – whether
exercise of option complied with s 2(1) of
Alienation of Land
Act 68 of 1981
– application of doctrine of fictional
fulfilment.
_________________________________________________________________
ORDER
_________________________________________________________________
On appeal from:
Northern Cape
High Court, Kimberley (Williams J sitting as court of first
instance):
The application for reinstatement of
the appeal is dismissed with costs including the costs of the appeal
and the costs of the appellants’
application for the amendment
of their particulars of claim.
_________________________________________________________________
JUDGMENT
_________________________________________________________________
BRAND JA
(NUGENT, MALAN,
MAJIEDT JJA
ET
VAN DER MERWE AJA CONCURRING):
[1] This is an appeal against the
judgment by Williams J in the Northern Cape High Court, Kimberley,
with the leave of this court.
It is opposed by the first respondent
while the second respondent abides the judgment on appeal. The issues
arising will be better
understood against the background that
follows. The first and second appellants, Mr and Mrs le Roux, are
husband and wife. On 13
July 2000 they obtained a written option from
Mr Jan Harmse Steenkamp, since deceased (the deceased) to buy his
farm near Niewoudtville
in the province of the Northern Cape for the
relatively modest purchase price of R141 000. The option
expressly required the
appellants to exercise the option within two
months of the death of the deceased.
[2] The deceased died on 13 September
2003. On 26 September 2003 the appellants attended at the office of
their then attorney, Mr
D C Coetzee and instructed him to exercise
the option. Coetzee gave effect to this instruction by writing a
letter to the second
respondent, Mr Alwyn Muller, who is the executor
in the deceased’s estate. It then transpired, however, that the
deceased
had, during his lifetime, on 8 July 2003, sold the farm to
the first respondent, Mr Paul Nel, and that in pursuance of the sale,
the farm had in the meantime been transferred to him. The first
respondent was clearly aware of the earlier option in favour of
the
appellants when he bought the farm from the deceased. That much
appears from the indemnity, expressly provided for in the deed
of
sale, by the first respondent in favour of the deceased against any
potential claim by the appellants, arising from the option.
[3] When the appellants became aware
of the sale and transfer of the farm to the first respondent, they
instituted action in the
Northern Cape High Court, Kimberley, against
the first appellant and against the second appellant in his capacity
as executor of
the deceased’s estate. What they essentially
sought was an order declaring that they were entitled to transfer of
the farm
in their names and that the two respondents be compelled to
take all necessary steps to effect that transfer. In addition they
claimed damages from both respondents for their alleged loss of the
profits they would have earned from farming activities had the
farm
been registered in their name.
[4] In support of their claim for
transfer the appellants relied on principles embodied in what has
become well known in our law
as the doctrine of notice. The operation
of this doctrine in the sphere of successive sales has been described
in previous cases
along the following lines. The starting point is
the basic principle of our law that a real right generally prevails
over a personal
right, even if the personal right is prior in time,
when they come into competition with one another. Accordingly, in the
ordinary
course, i
f a seller, A, sells a thing
– be it movable or immovable – to B and subsequently
sells the same thing to C, ownership
is acquired, not by the earlier
purchaser, but by the purchaser who first obtains transfer of the
thing sold. If the first purchaser,
B, is also the first transferee,
his or her right is unassailable. If the second purchaser, C, is the
first transferee, his or
her right of ownership is equally
unassailable if he or she had purchased without knowledge of the
prior sale to B. But, if C had
purchased with such prior knowledge, B
is entitled to claim that the transfer to C be set aside so that
ownership of the thing
sold can be transferred by A to B. In
exceptional circumstances B may be allowed to claim transfer directly
from the purchaser
with knowledge, C.
(See eg
Bowring NO v
Vrededorp Properties CC & another
2007 (5) SA 391
(SCA) para
11;
Meridian Bay Restaurant (Pty) Ltd & others v Mitchell NO
2011 (4) SA 1
(SCA) para 12.)
[5] Equally well established by now is
the principle that for purposes of the doctrine of notice, a prior
option places the holder
in the same position as a prior purchaser
(see eg
Le Roux v Odendaal & others
1954 (4) SA 432
(N) at
442F-G;
Cussons & andere v Kroon
2001 (4) SA 833
(SCA)
paras 10-13). It follows that if attorney Coetzee’s letter of
26 September 2003 constituted the proper exercise of
a valid option,
the appellants would be entitled to transfer of the farm in their
names. In his plea the first respondent denied,
however, that the
option was validly granted because, so he alleged, it was induced
either by undue influence or misrepresentation
on the part of the
first appellant. In addition, and in any event, he denied that the
option was properly exercised.
[6] When the matter came before
Williams J in November 2007, it ran for three days during which the
evidence was presented, on behalf
of the appellants, of the first
appellant himself and of an expert in support of their damages claim.
Thereafter the matter was
postponed until August 2009. When the
hearing resumed, an application was brought on behalf of the first
respondent for the separation
of issues in terms of
rule 33(4).
The
application was supported by the appellants and the second respondent
and eventually granted by Williams J. In terms of the
separation
order that followed, the issue to be determined first turned on the
first respondent’s contention, which was then
squarely raised,
that the option had not been validly exercised for failure to comply
with the formalities prescribed by
s 2(1)
of the
Alienation of
Land Act 68 of 1981
. All other issues stood over for later
determination.
[7] At the end of the preliminary
proceedings, during which no further evidence was led, Williams J
upheld the first respondent’s
contention, which resulted in the
dismissal of the appellants’ claims with costs. The appellants
then brought an application
in the court a quo for leave to appeal
against that judgment. At the same time they brought an application
to amend their particulars
of claim. In essence, the import of the
amendment sought was to introduce the proposition that even if it
should be held that their
exercise of the option was not valid for
failure to comply with the required formalities, such compliance
should be deemed to have
been complied with by operation of the
doctrine of fictional fulfilment.
[8] In the court a quo both the
appellants’ application for leave and their application for the
amendment of their particulars
were unsuccessful. Subsequently the
appellants sought and obtained leave to appeal from this court. In
the wake of the leave thus
obtained, the appellants renewed their
amendment application. After all that, the appellants’
attorneys allowed the appeal
to lapse for failure to file the record
within the prescribed period. That gave rise to an application for
reinstatement, which
was opposed by the first respondent. In argument
before us it was common cause between the parties that the matter
should be approached
on the basis that the outcome of the
reinstatement application rests on the appellants’ prospect of
success on appeal. But
that, whatever the outcome, the costs of the
application should be borne by the appellants.
[9] In that light, I turn directly to
the merits of the appeal. I propose to start with the first
respondent’s contention,
which found favour with the court a
quo, that attorney Coetzee’s purported acceptance of the option
on behalf of the appellants
did not comply with
s 2(1)
of the
Alienation of Land Act 68 of 1981
. This section provides in relevant
part:
‘
No
alienation of land after the commencement of this section shall, . .
. be of any force or effect unless it is contained in a
deed of
alienation signed by the parties thereto or by their agents acting on
their written authority.’
[10] In terms of the definition
section in the Act, a ‘deed of alienation’ can consist of
more than one document. In
principle the letter signed by Coetzee
could therefore constitute a proper acceptance of the offer contained
in the option if it
could be said that he was acting on their written
authority. The court a quo held that he was not. In support of this
finding,
reference was made to the first appellant’s concession
under cross-examination, on more than one occasion, that the
instructions
to Coetzee were given orally. For their argument to the
contrary the appellants relied on evidence, firstly, that attorney
Coetzee
wrote down the instructions which he was given; secondly,
that the letter of acceptance itself recorded in writing that Coetzee
was acting on behalf of the appellants; and, thirdly, that the letter
of acceptance was apparently sent on more than one occasion.
[11] As to the pertinent legal
principles, the requirement of written authority contained in
s 2(1)
is by no means a new provision in our law. It was first introduced in
s 30
of the Transvaal Transfer Duty Proclamation 8 of 1902,
which also required that a contract of sale of land, if not signed by
the
principal, must be signed by his agent ‘duly authorised in
writing’. Thereafter the requirement was consistently repeated
in subsequent legislation until it was finally re-enacted in
s 2(1)
,
virtually in its original form. It is an important provision. Over
the years many seriously intended contracts have foundered
on the
ground that the agent signed the deed of sale without being duly
authorised in writing to do so. The object of the provisions
of
s 2(1)
, it has been said, is to put the proof of alienation of
land beyond doubt in order to avoid unnecessary litigation in the
public
interest (see eg
Thorpe & others v Trittenwein &
another
2007 (2) SA 172
(SCA) para 8). The way in which this
particular requirement sought to achieve the stated object, so it has
also been said, is to
minimise the risk of subsequent disputes as to
the authority of an agent.
[12] Yet, perhaps contrary to its
laudable purpose of avoiding litigation and despite its deceptive
simplicity, the requirement
has over the years yielded a rich crop of
decided cases. Any attempt to measure the facts of a particular case
under consideration
against those of reported decisions will
ordinarily result in no more than a futile exercise, unless, of
course, the facts of the
previously decided cases are in point. With
regard to the cases relied upon by the appellants, it suffices to
say, in my view,
that the facts of those cases bear no resemblance to
those of the present case. As to the facts of this case, the
appellants, as
I have said, relied firstly on the evidence that
attorney Coetzee took notes while they gave their instructions to
exercise the
option. But the notes were never discovered nor
presented in evidence. Hence their contents remain obscured. In this
light it is
not necessary to decide whether a written recordal of the
agent’s mandate by the agent himself would satisfy the
requirements
of
s 2(1).
[13] Then the appellants relied on
Coetzee’s confirmation in the letter in which he exercised the
option, that he was doing
so on behalf of the appellants, which must
mean, with their authority. But I do not believe that this statement
in itself could
satisfy the requirements of
s 2(1).
As counsel
for the appellants rightly conceded in argument, the statement in a
letter ‘I have an oral mandate to exercise
the option’
could hardly in itself convert the oral mandate mentioned into a
written one. Since we know from the first appellant’s
own
evidence, that at the time when Coetzee wrote the letter, he had no
more than oral instructions, that is all that the letter
could
convey. In any event, I do not think it can be said that, in the
words of
s 2(1)
, Coetzee ‘was acting on their written
authority’ when he wrote the very letter that the appellants
now seek to regard
as constituting that written authority.
[14] Finally, the appellants relied on
the fact that Coetzee had apparently sent the same letter in which he
exercised the option
on more than one occasion. But once it is
accepted that the statement in the letter did not in itself
constitute compliance with
s 2(1)
, mere repetition of the same
statement could not meet that requirement. Moreover, there is no
evidence that the appellants had
read the letter or that they were
otherwise aware of the written representation of authority that it
contained, when it was sent
on the second or subsequent occasions.
Whether it would make any difference if they had that knowledge, is
once again unnecessary
to decide. In this light, the court a quo, in
my view, rightly held that Coetzee had failed to satisfy the
requirement of
s 2(1)
when he purported to exercise the option
on the appellants’ behalf and that in consequence the contract
of sale relied upon
by the appellants as the basis of their claim for
transfer, was never concluded. A further consequence is that the
option then
lapsed through effluxion of the stipulated period of two
months after the death of the deceased and that in the event the
appellants
no longer derived any rights from the option agreement,
[15] An alternative argument raised by
the appellants for the first time on appeal was that even if the
exercise of the option was
held to be invalid, the doctrine of notice
allows them to claim transfer of the farm directly from the first
respondent. As authority
for that proposition, the appellants sought
to rely on this court’s judgment in
Bowring NO v Vrededorp
Properties CC
(supra) paras 13-18. What this court held in the
part of the judgment relied upon, is that although the doctrine of
notice normally
entitles the first purchaser, B, to set aside the
transfer to the second purchaser, C, which then opens the way for B
to claim
transfer from the original seller, A, B may sometimes be
allowed to claim transfer directly from C. Since their claim for
transfer
is directly against the first respondent, in the position of
C – so I understood the appellant’s argument – it
matters not that the exercise of their option was invalid vis-à-vis
the original seller, A, simply because they are not
claiming from A.
I find this argument fundamentally flawed. The flaw seems to lie in a
complete misunderstanding of the judgment
in
Bowring.
The
reasoning in
Bowring
clearly pre-supposes that the first
purchaser, B, has a valid claim for transfer. This court could not
and did not suggest that
B would be entitled to claim transfer from
anybody without any right to support that claim at all. Once this is
understood, it
should be apparent that the appellants can derive no
support from
Bowring
. Absent the valid exercise of the option
in their favour, they simply have no right to claim transfer from
anybody.
[16] This brings me to the appellants’
application to amend their pleadings so as to introduce their
contention based on the
doctrine of fictional fulfilment. The
contention relies entirely on the judgment of this court in
Du
Plessis NO & another v Goldco Motor & Cycle Supplies (Pty)
Ltd
2009 (6) SA 617
(SCA). Indeed, it is apparent from the
application itself that it was exclusively inspired by the
Goldco
judgment. Broadly stated the facts of
Goldco
were that the
appellant, a trust represented by Du Plessis, granted an option to
the respondent, Goldco, to purchase a commercial
property. The option
agreement pertinently provided a mode of acceptance, namely that it
had to take place by way of a written
deed of sale prepared by the
trust’s attorneys, Rossouws, which had to be signed at
Rossouws’ offices within 24 months.
Subsequently the trust,
however, decided that it no longer wanted to sell the property at the
price stipulated in the option. When
Goldco
thus intimated its
intention to exercise the option within the stipulated period,
Rossouws refused to draw up the written contract.
This court
concluded that the trust, through its attorney and agent had
deliberately frustrated the respondent’s acceptance
of the
option. On this premise the court then held that, by application of
the doctrine of fictional fulfilment, the option must
be deemed to
have been exercised by
Goldco
.
[17] The doctrine of fictional
fulfilment came to prominence in our law in
MacDuff & Co (in
liquidation) v Johannesburg Consolidated Investment Co
1924 AD
573.
As concisely held by Innes CJ in that case (at 591) it entails
that
‘
[B]y
our law a condition is deemed to have been fulfilled as against a
person who would, subject to its fulfilment, be bound by
an
obligation, and who has designedly prevented its fulfilment . . ..’
[18] In
Goldco
, Lewis JA,
writing for the majority, accepted that the drafting of a written
contract by the trust’s attorneys was not a
condition in the
true sense. At the same time she pointed out that the operation of
the doctrine had been extended in earlier cases
to the deliberate
frustration of contractual performance by the other party. This, she
held, is what happened when the attorneys
of the trust refused to
prepare a written contract. Hence she concluded that the option must,
by operation of the doctrine of fictional
fulfilment, be deemed to
have been accepted, although in fact it was not.
[19] The starting point of the
appellants’ argument based on
Goldco
is the sale and
transfer of the property to the first respondent. By acting in this
way, their argument went, the deceased intentionally
frustrated the
appellants’ exercise of the option. This, so the argument
concluded, gave rise to the situation recognised
in
Goldco
where the option should be deemed to have been validly exercised
though in fact it was not. I find this line of argument misguided.
Unlike in
Goldco
, the appellants were never prevented from
exercising the option. On their case they did in fact do so. Though
the deceased may
have acted in breach of the option agreement, that
breach had nothing to do with the acceptance of the offer contained
in the option.
If the appellants’ purported acceptance of that
offer was valid, it would have brought about a binding sale. That
sale would
by operation of the doctrine of notice, be enforceable
against both the deceased and the first respondent, despite the
transfer
to the latter. After all, this was the nub of the
appellants’ whole case. Hence the appellants’ inability
to obtain
transfer is not the result of any action on the part of the
deceased. It was through the fault of their own attorney who failed
to obtain written authority.
[20] In this light the issue that the
appellants seek to introduce by way of an amendment to their
pleadings is not a ‘triable
issue’ in the parlance of
amendment applications (see eg
Ciba-Geigy (Pty) Ltd v Lushof Farms
(Pty) Ltd & ‘n ander
2002 (2) SA 447
(SCA) para 34). In
that context an issue is said to be triable if it is viable in the
sense that, if allowed to be raised, it could
make a difference to
the outcome of the case. Since the issue which the appellants’
amendment application seeks to introduce
does not make this grade,
the application cannot succeed. It follows that the application for
amendment should be dismissed and,
because I find no merit in the
appeal, the application for reinstatement of the appeal should follow
the same fate.
[21] It is ordered that:
The application for reinstatement of
the appeal is dismissed with costs including the costs of the appeal
and the costs of the appellants’
application for the amendment
of their particulars of claim.
___________________
F D J BRAND
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANTS: C N CUTLER
INSTRUCTED BY: N M E NILSEN & ASS
PAROW
CORRESPONDENTS: HILL, McHARDY &
HERBST INC
BLOEMFONTEIN
FOR FIRST RESPONDENT: D J VAN DER WALT
SC
INSTRUCTED BY: DUNCAN & ROTHMAN
KIMBERLEY
CORRESPONDENTS: McINTYRE & VAN DER
POST
BLOEMFONTEIN