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[2010] ZAECPEHC 48
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Nelson Mandela Bay Metropolitan Municipality v Fourie and Others (2958/09) [2010] ZAECPEHC 48 (10 August 2010)
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE HIGH
COURT, PORT ELIZABETH)
CASE NO: 2958/09
Date Heard: 20 May 2010
Date Delivered: 10 August
2010
In the matter between:
THE NELSON MANDELA BAY
METROPOLITAN MUNICIPALITY
Applicant
and
ZACCARIAS JOHANNES
FOURIE
1
st
Respondent
CRONJE BOUWER
2
nd
Respondent
LAUWRENCE ELIAS
KILIAN
3
rd
Respondent
CORNELUIS KRUGER
4
th
Respondent
DELIA RUDMAN
5
th
Respondent
FREDERICK VAN
NIEKERK
6
th
Respondent
NOELEEN VAN
NIEKERK
7
th
Respondent
LUYANDA LEONARDO VINQI
8
th
Respondent
KEVIN ADAMS
9
th
Respondent
CLYDE CLEVEDON
CANNON
10
th
Respondent
ZAMUXOLO PHILLIP
MAHLAHLA
11
th
Respondent
DAPHNE PHILANDER
12
th
Respondent
MARIO RUDMAN
13
th
Respondent
AUBREY GEORGE
WARREN
14
th
Respondent
WINEFRED MATILDA
ADAMS
15
th
Respondent
MAGGIE EACHELLS
16
th
Respondent
MARGARET FORTUIN
17
th
Respondent
JONATHAN LLEWELYN
GROOTBOOM
18
th
Respondent
SARIE JACOBUS
19
th
Respondent
VERONICA HOPE
LANGLEY
20
th
Respondent
NOMBEKO ANGELINA
MAFA
21
st
Respondent
VERA FREDRICKA
MAHONA
22
nd
Respondent
NDYEBO ANTHONY
NDABAMBI
23
rd
Respondent
NTOBEKO PHALTHROMAN
NYANDA
24
th
Respondent
CORNELIUS PRINS
25
th
Respondent
______________________________________________________________________
JUDGMENT
Y EBRAHIM J:
The applicant seeks an
order in the following terms:
‘
(a) Declaring that the
agreements annexed to the founding affidavit of Dawn Carol McCarthy
as annexures “R1” to “R25”
are invalid for
want of compliance with the provisions of section 2(1) of the
Alienation of Land Act, 68 of 1981.
(b) That there be no order as to the
costs of this application, save that any Respondent who opposes the
application be ordered
to pay the costs occasioned by his or her
opposition;
(c) That this Honourable Court grant
to the Applicant such further or alternative relief as it may deem
fit.’
The application is
opposed by the first, second, ninth, seventeenth and twenty second
respondents.
In the founding
affidavit the applicant asserts that serious allegations of
corruption and malpractice were made during 2005 about
‘
a
former contract employee of the Applicant
’
regarding the ‘
Budget
and Treasury/Housing Land Unit (Uitenhage)
’.
The employee, a Mr Stan Fitchett, had ‘
circumvented
and manipulated the Applicant’s land sale system in the
Uitenhage Housing Unit, thereby prejudicing the Applicant
and
potential land owners
.’
1
As a consequence a number of agreements for the sale of land did
not comply with the formalities stipulated in the Alienation
of Land
Act
2
and the agreements were invalid for want of compliance with the
provisions of s 2(1)
3
of the Act. The applicant’s claim of invalidity is disputed
by the respondents.
It is trite that all the
material terms of the sale must be set out in a written contract.
‘T
he material
terms of a contract of sale are not confined to those prescribing
the
essentialia
of a contract of sale, viz the parties to the contract, the
merx
and the
pretium
but include, in addition all other material terms
.’
4
The parties are
ad
idem
that the purpose of s 2(1) ‘
was
to avoid, as far as practicable, uncertainty and disputes …...
regarding the contents of contracts for the sale of
land ……
and to counter possible malpractices, including perjury and fraud in
connection therewith
.’
5
Clause 2 in the
agreements of sale stipulates that the purchase price and various
preliminary expenses are due and payable by
the purchaser and sets
out two options for payment of the amounts with the direction that
one of the options be deleted.
6
The purchaser had therefore to elect which option would be
applicable and the other had to be deleted. Due to the failure to
delete one of the options it is unclear whether the purchase price
and other amounts were to be paid in terms of option 1 or
option 2.
In stipulating two
options for payment of the purchase price it is evident that the
parties intended that the method of payment
be an essential, or at
least a material, term of the agreement and consequently such term
had to be recorded in writing.
7
The applicant contends
that the absence of consensus regarding the method of payment of the
purchase price renders the agreements
invalid. The respondents,
while acknowledging the factual position, contend the agreements are
valid as there was consensus
in respect of the option the purchaser
had elected in each instance. The parties are in agreement though
in respect of the legal
principles that must be applied in
determining the issue in dispute.
Mr Rorke, in his
submissions on behalf of the applicant, referred to a number of
cases in which s 2(1) (and similar preceding
enactments) had
been considered by the Courts. What emerges clearly from these
decisions is that ‘
the
disputes, the possibility of which the Legislature seeks to avoid or
minimize, are disputes concerning the terms of the contract
in
question.
’
8
The contract, it has been said, should place ‘
the
fact of consensus out of the range of the clash of will of the
parties
’.
9
Whether an agreement complied with the requirements of the
Alienation of Land Act had to be determined ‘
without
recourse to evidence from the parties as to their negotiations
and
consensus.
’
10
The deficiency that each
contract suffers from, as I have stated, is that it is uncertain
what agreement the parties had reached
regarding the manner in which
the purchase price had to be paid. I agree with Mr Rorke that this
is precisely the mischief that
s 2(1) seeks to proscribe.
In regard to the
purchase price, where the terms of payment are still to be arranged
11
or to be agreed upon
12
or a material term has been left over for further negotiation
13
there is no valid contract. An agreement in which the amount was to
be paid in instalments but interest had still to be agreed
upon was
held to be invalid.
14
Similarly, an agreement which stated that the purchase price was
payable in monthly instalments but did not specify the amount
of the
instalments or the period within which the purchase price had to be
paid was held to be invalid.
15
During argument,
Mr Paterson informed the Court that the first and second
respondents were not pursuing the issue of estoppel
(raised in the
heads of argument). The first and second respondents had also
abandoned the submission that the method of payment
of the purchase
price was not a material term of the contract.
Mr Paterson and Mr
Naidu (who appeared for the ninth, seventeenth and twenty second
respondents) submitted that the applicant’s
reliance on the
judgment of Dambuza J was misplaced as what had been in issue there
differed materially from the issue in the
present matter. The issue
there was blank spaces in the agreements whereas in the present
matter it was the method of payment
of the purchase price.
While the agreements in
the two matters exhibit different deficiencies, Mr Rorke’s
submission was that the same legal
principles that Judge Dambuza had
applied in the application before her were also applicable in the
present matter. This, the
respondents have not disputed. There is
no question, therefore, that the same principles must be applied in
determining the
dispute regarding validity of these agreements.
Mr Paterson contended
that the agreements complied in all respects with s 2(1) of the
Alienation of Land Act and were valid
and the applicant had not
produced any evidence to gainsay that there had been consensus there
would be two options. The options
were not irreconcilable and any
difficulties that arose from the discarded option not being deleted
could be remedied by construction
and interpretation.
16
There had been a lack of oversight on the part of applicant’s
authorised representative that one of the options be deleted
and the
Court should lean in favour of an interpretation of validity of the
agreements.
17
The documents of the first and second respondents showed they had
paid at least 10% of the purchase price. They had therefore
elected
option 1 as the method of payment and, in accordance with what
was said in
Johnston
v Leal
,
18
rendered option 2
pro
non scripto
.
I do not find merit in
Mr Paterson’s argument. I agree with Mr Rorke that the
two options are mutually exclusive.
The fact that the method of
payment in each is different, and read with the stipulation that one
be deleted, clearly indicates
the options are not reconcilable. In
addition, the election by the purchaser had to take place when the
deed of alienation was
signed and could not be deferred to some
future date.
19
In regard to
interpretation of the written agreement, whether or not the parties
had reached consensus must be determined from
the language expressed
therein. The language in clause 2 of the agreements is plain and
unambiguous. In my opinion it permits
of no other interpretation
than the purchaser having to elect one of the options and the other
having to be deleted. The submission
by Mr Paterson that clause 2
is reasonably capable of being interpreted as valid is without
merit.
The parties cannot have
recourse to extraneous evidence for the purpose of proving whether
or not there was consensus regarding
the method of payment.
20
It is not open to the respondents to rely on evidence of payments
they effected to the applicant, whether this was done before
or
after the conclusion of the agreement, to support their claim that
they had reached consensus on this issue.
21
The submission that
option 2 be regarded as
pro
non scripto
is unsustainable. The options were an integral element of one of
the
essentialia
of the contract and it is clear that the parties intended the
options to be part of their contract. It was only on deletion
of an
option that such option no longer formed part of the contract.
The cases cited
22
by Mr Paterson do not provide support for the defence raised by the
first and second respondents. In each case the Court dealt
with
omissions, in various forms, from a contract. In
First
Consolidated Holdings (Pty) Ltd v Bissett and Others
and
Pizani
and Another v First Consolidated Holdings (Pty) Ltd
these concerned deeds of suretyship and not agreements for the sale
of land. More pertinently, in the present application all
the
material terms in regard to the sale of the land are in the
agreement and a term agreed upon by the parties has not been
omitted.
It is the two
irreconcilable options in the agreements that create the ambiguity
and not the purported omission of any term.
The wording of clause 2
permits of no other interpretation than the intention of the parties
being that one of the options
should be deleted. The first and
second respondents admit there was a failure to delete one of the
options at the time the contract
was concluded but place the blame
for this on the applicant’s representative. This does not
assist them as they signed
the agreements cognisant of the fact that
such deletion had not been implemented. The onus was on both
parties to ensure that
the agreement correctly reflected the
consensus they had reached in respect of each of the material terms
therein.
There is no merit either
in the submission that
Magwaza
v Heenan
23
provides authority for rectification of the agreements should the
Court conclude the agreements were
ab intitio
void. In my reading of the judgment of Hoexter AJA (as he then
was) I do not find support for this. On the contrary, what
is
evident from the judgment is that if a contract for the sale of land
failed to comply with the prescribed statutory provisions,
which is
the position with the agreements in the present matter, it was void
ab
initio
and cannot be rectified.
24
In any event, as the respondents have not applied for rectification
I do not deem it necessary to comment further on this aspect.
It was contended by Mr
Naidu that the agreements contained all the materials terms but the
parties failed to omit option 2
and had not intended it should
be part of the contract. His clients effected certain payments to
the applicant prior to signature
of the agreements and had paid 10%
of the purchase price. There had been consensus therefore that
option 1 was applicable.
He contended that extrinsic evidence
could be led, as stated in
Johnston
v Leal
,
for the purpose of enforcing the contact but not to contradict or
add to it.
25
However, this was not necessary since there was documentary proof
that option 1 had been chosen.
These submissions are
devoid of merit. Consensus cannot be established by recourse to
‘
evidence to
prove a contemporaneous oral agreement or a subsequent oral
variation relating to the method of payment
.’
26
Reliance may not be placed on documentary evidence except a further
agreement in writing executed by the parties.
27
Consensus must be evident from the contract itself. In certain
circumstances a Court may have recourse to extraneous evidence
regarding the intention of the parties. This, however, is
manifestly not the position here, as is evident from what I have
stated previously.
The respondents
represented by Mr Naidu admitted that neither option had been
deleted when the agreements were concluded
but say they were under
the impression that the applicant’s representative would
attend to the necessary deletion. There
is no doubt, therefore,
that the parties had not reached consensus on the method of payment
of the purchase price. The submission
that option 2 should be
deleted by the Court is misconceived as this would amount to the
Court creating a contract for the
parties.
28
In the circumstances, I
am satisfied that each of the agreements is invalid for want of
compliance with s 2(1) of the Alienation
of Land Act. The
applicant is therefore entitled to the order that it seeks.
There has been a delay
in instituting this application. Mr Rorke conceded this was
regrettably so but said it did not mean the
agreements were valid.
The applicant, even though a party to the agreements, was obligated
to bring the application so as to
assist in ensuring open and
transparent government as required by the Constitution.
29
While the motives of the applicant are commendable, I am concerned
that the delay may have lulled the respondents into a false
sense of
security. Some have erected homes and other structures on the land
and, if compelled at this stage to vacate the land,
would be
rendered homeless and suffer financial loss. I trust that whatever
further legal steps the applicant intends pursuing,
that it acts
with compassion and is open to negotiating compromises that would
avoid the respondents facing an uncertain future.
In regard to costs, it
is trite that in the absence of persuasive reasons to order
otherwise, costs should follow the result.
As much as I appreciate
that the respondents may feel aggrieved at the applicant’s
delay in launching the application
it is not sufficient reason to
deny the applicant the costs of the application.
In the result, there is
an order in the following terms:
The agreements annexed
to the founding affidavit of Dawn Carol McCarthy as annexures “R1”
to “R25” are
declared invalid for want of compliance
with the provisions of
section 2(1)
of the
Alienation of Land Act,
68 of 1981
; and
The first, second,
ninth, seventeenth and twenty second respondents, jointly and
severally, the one paying the other to be absolved,
are ordered to
pay the costs of the application.
_________________________
Y EBRAHIM
JUDGE OF THE HIGH
COURT 10 AUGUST 2010
Counsel for the
Applicant: S C Rorke
Attorneys for the
Applicant: Gray Moodliar Attorneys
PORT ELIZABETH
Counsel for 1
st
& 2
nd
Respondents: N M Paterson
Attorneys for 1
st
& 2
nd
Respondents: Van Niekerk, Huisamen & Van Wyk Attorneys
PORT ELIZABETH
Counsel for 9
th
,
17
th
& 22
nd
Respondents: V Naidu
Attorneys for 9
th
,
17
th
& 22
nd
Respondents: Justice Centre
UITENHAGE
The
Nelson Mandela Bay Metropolitan Municipality v Fourie &
Others.CVJ
1
Page 9
of the papers
2
Act No. 68 of 1981
3
Section 2(1) prescribes: ‘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.’ See also
Stalwo (Pty) Ltd v Wary Holdings (Pty) Ltd and Another
2008 (1) SA 654
(SCA) at para [7]
4
Johnston v Leal
1980 (3) SA 927
(A) at 937H;
5
See
Hirschowitz v Moolman
and Others
1985 (3) SA 739
(A) at
757I to 758A where the Court, in relation to the Formalities in
respect of Contracts of Sale of Land Act, 71 of 1969,
said:
‘The object of the subsection and its predecessors was to
avoid, as far as practicable, uncertainty and disputes
(possibly
leading to litigation) regarding the contents of contracts for the
sale of land (recognising that such contracts were,
as a rule,
transactions of considerable value and importance) and to counter
possible malpractices, including perjury and fraud
in connection
therewith (see
Estate Du Toit v Coronation Syndicate Ltd and
Others
1929 AD 219
at 224;
Neethling v Klopper and Andere
1967 (4) SA 459
(A) at 464E-F;
Ferreira and Another v SAPDC
(Trading) Ltd
1983 (1) SA 235
(A) at 246B-D). What the
subsection requires is that (at least) all the material terms
of the contract be reduced to writing
and signed by the parties.’
See also
Clements v Simpson
1971 (3) SA I (A) at 7A where
the Court said: ‘The section is directed against uncertainty,
dispute and possible malpractices.’
What the Courts said in
these cases applies equally to the corresponding provision in the
Alienation of Land Act, No. 68 of 1981
.
See, further
Jurgens and Others v Volkskas Bank Ltd
[1992] ZASCA 152
;
1993 (1) SA 214
(A) at 218F G;
Kriel and Another v Le
Roux
[2000] 2 All SA 65
(A) at para [3];
Fourlamel (Pty) Ltd
v Maddison
1977 (1) SA 333
(A) at 343A;
Phillmatt (Pty) Ltd v
Mosselbank Developments CC
196 (2) SA 15
(A) at 25C
6
All the agreements have similar provisions except that the amount
of the purchase price and preliminary expenses differ in some
agreements. In Annexure R1.1, at page 46 of the papers, Clause 2
reads:
‘2.
PAYMENT
OF PURCHASE PRICE
The
following amounts shall be due and payable to the
MUNICIPALITY
PURCHASE PRICE:
……………….. R12209-50
Preliminary Expenses:
Survey and general
Township Expenses R 300-00
Advertising
cost
s re Auction Sale R 50-00
Administrative
Costs 2½% of Purchase Price R 305-24
VAT R1801-06
The said amounts shall be paid as follows by the Purchaser to the
Municipality:
OPTION 1
At least 10% of the
said purchase price shall be paid in cash on the date of the 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 the 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 eighteen (18) 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
eighteen (18) months whichever shall be the sooner.
OPTION 2
A cash deposit of
R300,00 (Three Hundred Rand) will be paid on the date of sale. A
guarantee acceptable to the Town Treasurer
will be produced for the
full amount plus interest (calculated at the standard rate) within
a period of 30 (thirty) days after
date of sale.
(DELETE OPTION NOT APPLICABLE)’
7
Jammine v Lowrie
1958 (2) SA 430
(T) at 431A;
Kuper
v
Bolleurs
,
1913 T.P.D. 334
;
van der Berg
v
van Leggelo
,
1935 T.P.D. 304
;
Neethling v Klopper en Ander
(
supra
fn 5) at 465B;
Sidali v Mpolongwana
1990 (4) SA 212
(C); and
see Christie R H -
The Law of Contract in South Africa
(5
th
Ed.) at p 122
8
Ferreira and Another v SAPDC (Trading) Ltd
1983 (1) SA 235
(A) at 246A-C – (although a minority judgment, the majority
did not disagree with the minority’s findings)
9
Clements v Simpson
(supra fn2) at 8A – (the Court
dealt with a similar preceding provision but what was said applied
equally to s 2(1)
10
Clements v Simpson
(
supra
fn 2) at 7F;
Benkenstein
v Nesius and Others
1997 (4) SA 835
at 846J
11
Rutstein v Elandsheuwel Farming (Pty) Ltd
1971 (1) SA 268
(T) at 270G H
12
Rutstein v Elandsheuwel Farming (Pty) Ltd
(
supra
fn
10) at 275B;
Engelbrecht v Nel
1991 (2) SA 549
(W) at 552A;
The Nelson Mandela Bay Metropolitan Municipality v African
Catholic Church & Others
– Eastern Cape High Court,
Port Elizabeth (Case No. 2957/09) at para [15] of unreported
judgment delivered on 4 May
2010
13
Margate Estates Ltd
v
Moore
1943 T.P.D 54
;
Scammell
v
Ouston
1941 (1) A.E.R. 14
(H.L);
Jammine v Lowrie
(
supra
fn 9) at 431B
14
Jammine v Lowrie
(
supra
fn 9) at 431C
15
Patel v Adam
1977 (2) SA 653
(A) at 665G-H and 666A-H to 667A
16
Blundell v Blom
1950 (2) (SA) 627 (W) at 632 and 633;
Oosthuizen v Wentzel
1957 (1) SA 653
(W) at 655D;
Miller
and Miller v Dickinson
1971 (3) SA 581
(A) at 589G-H;
First
Consolidated Holdings (Pty) Ltd v Bissett and Others
1978 (4) SA
491
(W) at 496G-H;
1979 (1) SA 69
(A) at 80H 81A
17
Steyn v McDonald
1965 (3) SA 693
(O)
18
In
Johnston v Leal
(
supra
fn
3) the Court stated:
‘
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 a printed form of contract (such as clause 11 in
annexure “A”) has not been
completed, in the sense that
blank spaces left for the 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 regard to 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 that for some
reason they had omitted to fill these 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): cf
Blundell
v
Blom
1950 (2) SA 627
(W)
at 632-3;
Miller
and
Miller
v
Dickinson
1971 (3) SA 581
(A) at 589E-H. If the facts be as under (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 s 1 (1).
King
v
Potgieter
(
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
for 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 the whole of what had been agreed between
the
parties and was intended by them to be incorporated in the writing.’
19
See the cases cited
supra
at fns 10, 11, 12, 13 and 14
20
Neethling v Klopper and Andere
(supra fn 5) at 465B; J
ohnson
v Leal
(supra fn 3) at 938C
21
Clements v Simpson
(
supra
fn
2) and
Johnston v Leal
(
supra
fn 3) at 938B-F
22
The Court had to rectify the citation of each case as Mr Paterson
had provided incomplete citations
23
1979 (2) SA 1019
(A)
24
See
supra
fn 21 at 1025A-H and 1026A-C;
Jammine v Lowrie
(
supra
fn9) at 431E;
Intercontinental Exports (Pty) Ltd v Fowles
1999 (2) SA 1045
(SCA) at paras [9] and [10]; See
The Law of
Contract in South
Africa (
supra
fn 7) at pp 122 and
123, for a brief discussion on the issue of rectification
25
Johnston v Leal
(s
upra
fn
3) at 938E
26
See
The Law of Contract in South
Africa
(
supra
fn 7)
27
Johnston v Leal
(s
upra
fn
3) at 940E
28
Kriel and Another v Le Roux
(supra fn 5) at para [3]
29
Nelson Mandela Bay Municipality v Africsec
Strategic Solutions (Pty) Ltd –
Eastern Cape High
Court, Port Elizabeth
(Case No. 865/07) at
para [34] of unreported judgment of
Froneman J
dated 26
June 2007