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[2010] ZAECPEHC 45
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Nelson Mandela Bay Metropolitan Municipality v African Catholic Church and Others (2957/09) [2010] ZAECPEHC 45 (4 May 2010)
IN THE
HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE, PORT ELIZABETH)
CASE
NO: 2957/09
DATE
HEARD: 18/03/10
DATE
DELIVERED: 4 MAY 2010
In the
matter between:
THE
NELSON MANDELA BAY
METROPOLITAN
MUNICIPALITY APPLICANT
And
AFRICAN
CATHOLIC CHURCH 1
ST
RESPONDENT
APOSTOLIC
EVANGELIST FREE CHURCH
IN
ZION OF SOUTH AFRICA 2
ND
RESPONDENT
APRIT
MINISTRIES 3
RD
RESPONDENT
ETHOPIAN
CATHOLIC CHURCH OF
SOUTH
AFRICA 4
TH
RESPONDENT
THE NEW
AFRICAN HOLY APOSTOLIC
FAITH
MISSION CHURCH OF SOUTH AFRICA 5
TH
RESPONDENT
CHURCH
OF ZION OF SOUTH AFRICA 6
TH
RESPONDENT
THE
ACTS OF THE APOSTIOLIC CHURCH
IN
SOUTH AFRICA
7
TH
RESPONDENT
NOMZOLISI
BRIDGING COLLEGE 8
TH
RESPONDENT
KHANYA
PRESCHOOL 9
TH
RESPONDENT
THOMAS
WILLIAM SMITH-SHEDDEN 10
TH
RESPONDENT
RONEL
SMITH-SHEDDEN 11
TH
RESPONDENT
ANDRE
FREDERIC VAN NIEKERK 12
TH
RESPONDENT
_____________________________________________________________________
JUDGMENT
_____________________________________________________________________
DAMBUZA J:,
The applicant
seeks an
order setting aside as invalid, agreements of sale between itself as
the seller and certain entities and/or individuals
as purchasers. It
maintains that the agreements are invalid for want of compliance
with provisions of section 2 (1) of the Alienation
of Land Act, Act
61 of 1981 (The Act or the Alienation of Land Act). Only three of
the 12 respondents oppose the application.
The first to seventh respondents a
re
religious or faith entities. They are, The
African
Catholic Church
, the
Apostolic
Evangelist Free Church in Zion of South Africa
,
the
Aprit Ministries
,
the
Ethiopian Catholic Church of South
Africa
, the
New
African Holy Apostolic Faith Mission Church of South Africa
and the
New Orphanage Widows Apostolic
Church in South Africa
. Their legal
status is not set out in the papers. They are all located within
Uitenhage.
The eigth and ninth respondents a
re
Educational entities, also located within Uitenhage. They are,
Nomzolisi Bridging College
and
Khanya Preschool.
Their
legal status is also not set out in the papers.
The ninth to
twelfth
respondents who oppose the application are,
Thomas
William Smith-Shedden, Ronel Smith-Shedden
and
Andre Frederick van Niekerk
.
They live in Uitenhage and jointly bought, from the applicant, the
property that is the subject matter of their agreement of
sale.
The agreements
which
are the subject-matter of this application relate to sale of various
immovable properties by the applicant to the respondents
through the
applicant’s Uitenhage Office. Some of the agreements were
concluded in 1999, others in 2001 and the one in
which respondents
nine to twelve are purchasers, was concluded in 2004. According to
the applicant, this application is a consequence
of a discovery,
during 2005, by the applicant of corrupt and/or irregular land sales
at its Uitenhage Housing Unit by one of
the applicant’s
erstwhile employees,
Stan Fitchett.
According to the founding affidavit deposed to by Dawn Carol
McCarthy who is employed by the applicant as a Director in the Land
Planning And Management Department, the irregularities in the sale
agreements include sale of the land below market value, failure
“to
follow (municipal) procedures”, failure to keep proper records
of payments and failure to verify the legal status
of the purchasers
where such purchasers are not natural persons.
I
n the main however, as
I have stated, the applicant contends that each these agreements is
invalid for want of compliance with
the formalities prescribed by
Alienation of Land Act. More particularly, in each agreements, the
number and amount of instalments
by which the balance of the
purchase price is to be paid is not set out in the agreements. There
is also no stipulation as to
when such instalments are due and
payable, when the purchaser shall take occupation or possession of
the property and when the
purchaser shall be liable for rates and
taxes on the property.
Clause 3 of each agreement
sets
out the purchase price and certain “preliminary expenses”
payable in respect of the property concerned and then
goes on to
provide that:
“
(a) At least 10%
of the said purchase price shall be paid in cash on the date of sale:
The balance of the purchase price
plus interest
calculated at the standard rate of interest as determined in terms
of Section 214 (1) of Ordinance 20 of 1974 from date of
sale to
date of payment together with expenses referred to above shall be
paid to the Municipality in cash within a period
of
months calculated from the date of issue of instructions for
transfer by the Town Clerk’s office to
the attorneys
concerned provided that the said attorneys shall not under any
circumstances lodge transfer documents with
the Registrar of Deeds
for registration nor shall the MUNICIPALITY’S Town clerk
complete any power of attorney to pass
transfer on behalf of the
MUNICIPALITY unless the balance of the purchase price plus
interest and expenses as aforesaid has
been paid in cash or the
PURCHASER has lodged with the MUNICIPALITY a guarantee acceptable
to the MUNICIPALITY’S Town
Treasurer in terms of which the
full amounts due to the MUNICIPALITY will be paid against
registration of transfer or on
expiry of the said period of
__________ whichever shall be sooner.”
8
.
Clause 5 of the agreement provides that:
“
Possession of the property,
subject to existing tenancy, if any, shall be given and taken on
, from which date
the property shall be at the sole
risk of the PURCHASER; provided that should the purchase price not
have been secured by then,
the SELLER’S insurable interest
shall be protected as follows:
(a) The PURCHASER shall be compelled
to insure all improvements on the property comprehensively at his
expense and to cede policy
of insurance to the SELLER as collateral
security.”
9.
Clause 6 provides that:
“
The PURCHASER shall be
responsible for rates and taxes on the property as from
, from which date
he shall further be liable for
all outstanding road and curbing charges, if any, levied, or that may
be levied against the property.
Interim rates and/or liquidated
damages, if any, for the year, shall be borne in the same
proportions, save that the SELLER shall
be entitled to any rebate
recoverable thereon and save that the purchaser shall be liable for
all rates on improvements effected
on the property after the
signature hereof”
As is evident from the above extract
s,
although the agreement provides that the method of payment of the
purchase price shall be by payment of a 10% deposit followed
by
instalments, the (blank) spaces relating to the number of months
within which the balance of the purchase price shall be paid
or a
bank guarantee is to be provided, the date on which possession of
the property shall pass to the purchaser, when risk shall
pass to
the purchaser, and the date on which the purchaser shall become
liable for payment of rates and taxes in respect of the
property
were never completed.
It was submitted on behalf of the applicant that
because these blank spaces
relate to
material
and/or essential terms of the agreements, the agreements are inchoate
and unenforceable in law.
Respondents nine to twelve contend that their
agreement is valid in law as it
s
tipulates a purchase
price payable in respect of the property and the deposit payable in
respect thereof. They contend that the
defects relating to the date
of possession of the property by the purchaser and the date from
which the purchaser will be liable
for payment of rates and taxes
does not render the agreement invalid as the law provides that in
instances such as these (where
no date is stipulated), possession of
the property by the purchaser and liability for payment of rates and
taxes in respect thereof
follows ownership of the property.
13
.
Section 2 (1) of the Alienation
of Land Act
provides
that:
“
No alienation of land after
the commencement of this section shall, subject to the provisions of
section 28, be of any force and
effect unless it is contained in a
deed of alienation signed by the parties thereto or by their agents
acting on their written
authority.”
I
t has been said that
the general approach to be adopted in deciding whether
the contents of a written contract are
sufficiently full and certain to comply
with Section 2(1) is the following:
“
The section being directed
against uncertainty, disputes and possible malpractices, meticulous
accuracy in the description of the
subject matter of the sale, the
parties, the price and the method of payment is not required.
Certum
est quod certum redid potest.
This
does not mean that the court is to make out a contract for the
parties where their intention cannot be ascertained with a reasonable
degree of certainty. In endeavouring to ascertain the intention of
the parties no recourse can be had to evidence from the parties
as to
their negotiations and
consensus,
but evidence of
identification or of an explanatory nature is admissible. The point
is that, to fulfil the intention of the legislature,
the
written contract must place the essentials of the contract of sale,
and all the material matters with which it deals, out of
range of the
clash of will of the parties.”
1
(
emphasis supplied)
1
5 The essentials of a
written contract of sale of land are; the subject-matter of
the sale, the
parties
thereto and the price of the land sold. As the price is an essential
term of any contract of sale, the method of payment
of the price is
also an essential or, at least, a material term thereof. So a written
contract that leaves the method of payment
vague or leaves it over
for further negotiation is void and cannot be rectified.
2
The method of payment may be made sufficiently certain by implied
terms, provided those terms can be implied from the document
itself.
Evidence to prove a contemporaneous oral agreement or a subsequent
oral variation relating to the method of payment is
inadmissible.
3
C
ounsel for both the
applicant and the ninth to twelfth respondents referred to
the case of
Johnston
v Leal
1980 (3) SA 927
(AD) in which
the Supreme Court of Appeal considered the validity of an agreement
of sale of land where blank spaces in the written
agreement of sale
had not been completed.
Corbett JA,
as
he then was, held, at 939H-940F, that:
“
Where, as in this case, and as
is often the case, a contract for the sale of land is reduced to
writing by the completion of a printed
form supplied either by one of
the parties to the contract or the agent who negotiated the contract,
it sometimes happens that
the blanks are left in the completed form.
Where these blanks relate to material terms of the contract, or
rather to what would
be material terms if completed and incorporated
in the contract, then problems may arise as to whether the contract
is complete
or merely inchoate and also as to whether the contract
complies with s 1 (1) of the Act.
Ex
facie
the document
and disregarding any extrinsic evidence, there are, it seems, at
least three possible constructions to be placed on
the fact that a
material clause in the printed form of contract (such as clause 11 in
annexure “A”) has not been completed,
in the sense that
blank spaces left for insertion of essential particulars in the
clause have not been filled in. They are: (i)
that the parties did
not intend the clause to form part of their contract (this situation
is, of course, not likely to arise in
the case of a clause providing
for one of the
essentialia
of the contract); (ii) that they intended the clause to form part of
their contract, but that at the time when the contract was
signed the
essential particulars had not yet been settled and that these
particulars were consequently left open for future agreement
between
the parties; and (iii) that the parties had intended the clause to
form part of their contract and had agreed upon the
particulars in
question, but for some reason they had omitted to fill the
particulars into the blank spaces. If factually (i) be
the position,
then the clause must be regarded as
pro
non scripto,
and
provided that the contract is otherwise complete and contains the
essentialia
of
a contract of sale the contract is valid and enforceable and complies
with s 1 (1).
Blundell
v Blom
1950 92) SA
627
(W) at 632-3;
Miller
and Miller v Dickson
1971
(3) SA 581
(A) at 589E-H. If the facts be as in (ii) above, then, in
accordance with the principles discussed above, the writing itself
does
not constitute a valid, enforceable contract, and, probably does
not comply with the provisions of s1(1).
King
v Potgierter (supra)
is
an apt illustration of this. Moreover a subsequent oral agreement
settling these particulars will not assist; only a further
agreement
in writing will suffice. Further if (iii) above reflects the factual
situation, then subject to a possible claim to rectification
in
certain circumstances (see however, in this regard,
Magwaza
v Heenan (supra)
)
,
the contract would
appear to be invalid in that it has failed to record in writing in
whole what had been agreed to between the
parties and was intended by
them to be incorporated in the writing.
It is thus evidence that where a
contract of this nature contains blanks relating to material terms-or
what would be material terms
if incorporated into a contract-it is
vital to know why the blanks were left in the printed form or, in
other words, to know which
of the actual postulated above actually
obtains. ”
17
I do not intend to
speculate on why the spaces in the agreements were left
blank. But
I am
persuaded that for each of the agreements to be valid the clause
relating to payment of the purchase price had to be complete
or set
out the required particulars. Details relating to the number of
months or the period within which the balance of the price
had to be
paid (or by which a guarantee had to be furnished) form part of the
essentialia
of the agreements and had to be specified at the time of the
conclusion of the agreements.
18. In
Patel v Adam
1977 (2) SA (A) 653 the agreement of
sale of immovable
property provided that “the purchase price
shall be paid in monthly instalments free of interest
”.
The Appellate Court confirmed a decision by the Court
a
quo
holding that the agreement was void
for uncertainty on the basis that the agreement left it to the
appellant alone, as the purchaser,
to decide what amount he wished to
pay every month, with the result that the court would not be able to
determine the monthly amount
to be paid by him. My view is that the
same situation obtains in this matter. If, for example, the applicant
would instruct conveyancers’
to pass transfer of the properties
or anyone of them as provided in clause three of the agreements, and
the respondents failed
to make payment for some time thereafter, a
court would not be able to determine whether payment should have been
made at a particular
point in time and/or how much should have been
paid at that time.
19. The fact that the full purchase price may
have been paid by the ninth to twelfth
respondent
s, as they
contend, is irrelevant. Section 28 (2) of the Alienation of Land Act
provides that an otherwise invalid agreement will
be valid
ab
initio
only in the event of
both
payment in full and transfer of the land having taken place. In this
case it is common cause that the land in question has not
been
transferred to the respondents.
20. Contrary to the submission on behalf of the
ninth to twelfth respondents I do
not agree that extrinsic evidence may be admitted
to give meaning to the defective terms of the agreements. Unlike in
Johnstone v Leal
the defective Clause 3 of the agreements is not ambiguous or capable
of more than one meaning. It is incomplete and any evidence
led to
complete it would, in my view be an attempt to make an agreement for
the parties.
21. Consequently,
I
agree with the submission on behalf of the applicant that,
insofar as the method of payment of the purchase
prices is not stipulated in the agreements under consideration, the
agreements
fall foul of the provisions of not only the provisions
Alienation of Land Act but also the general principles of law
relating to
purchase and sale agreements.
The
effect of non-compliance with the requirements of S 2(1) of the Act
is that the contract shall not “be of any force or
effect”.
“
A transaction which has
no force or effect is necessarily void
ab
initio,
and can
under no circumstances confer any right of action.”
4
For this reason alone the application must succeed.
That being my view, I do not consider it
necessary to deal with the submissions on behalf of the ninth to
twelfth respondents
regarding to clauses relating to possession of
the properties and liability for rates and taxes in respect thereof.
23. The following order shall therefore issue:
The agreements of sale annexed to the affidavit of Dawn Carol
McCarthy as annexures “A” to “J” are
declared invalid and of no force and effect;
The Ninth to Twelfth respondents are ordered to
pay the applicant’s costs occasioned by their opposition to
the application.
_________________
N.DAMBUZA
JUDGE OF THE HIGH COURT
Appearances:
For the Applicant: Adv Rorke instructed by Gray Moodliar
For the Respondent: Adv P Scott instructed by Lee Strydom Fourie
Inc.
1
Christie RH ; The Law of Contract; 5
th
edition, at 118-119; (The wording is that Holmes JA in
Clements
v Simpson
1971 (3) SA 1
(A) 7-8).
2
Christie;
Supra
at
122;
Patel v Adam
1977
(2) SA 653
A;
Engelbrecht v Nel
1991
(2) SA 549
(W) 552A-D
3
Neethling v Klopper
1967
(4) SA 459
(A) 465B
; Sidali v
Mpongolwana
1990 (4) SA 212
(C )
4
Wilken v Kohler
1913
AD 135
AT 143; see also
Jammine v
Lowrie
1958 (2) T where the court held
that a contract which is void
ab initio
(for failure to specify interest
payable on a second bond taken over a fixed property) cannot be
validated by tender of method
of performance which differs from that
specified in the contract itself.