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[2012] ZASCA 209
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Mokala Beleggings (Pty) Ltd and Another v Minister of Rural Development and Land Reform and Others (2012 (4) SA 22 (SCA); [2012] 3 All SA 130 (SCA)) [2012] ZASCA 209; [2012] ZASCA 21 (23 March 2012)
THE SUPREME COURT OF APPEAL OF
SOUTH AFRICA
JUDGMENT
Reportable
Case No: 276/2011
In the matter between
MOKALA BELEGGINGS (PTY) LTD
…...................................
FIRST
APPELLANT
WILLEM HENDRIK STEYN SNYMAN
….............................
SECOND
APPELLANT
and
MINISTER OF RURAL DEVELOPMENT AND
LAND REFORM
….................................................................
FIRST
RESPONDENT
THE DIRECTOR-GENERAL OF THE
DEPARTMENT OF LAND AFFAIRS
….............................
SECOND
RESPONDENT
THE CHIEF LAND CLAIMS COMMISSIONER
…................
THIRD RESPONDENT
THE REGIONAL LAND CLAIMS
COMMISSIONER: GAUTENG AND NORTH
WEST PROVINCE
…........................................................
FOURTH
RESPONDENT
THE DEPUTY DIRECTOR: FINANCE,
DEPARTMENT OF LAND AFFAIRS
….................................
FIFTH
RESPONDENT
THE MINISTER OF FINANCE
…...........................................
SIXTH
RESPONDENT
THE REGISTRAR OF DEEDS
…....................................
SEVENTH
RESPONDENT
MAHLANGU ATTORNEYS
…............................................
EIGHTH
RESPONDENT
BAROLONG BA GA MARIBA COMMUNITY
…..................
NINTH
RESPONDENT
Neutral citation:
Mokala Beleggings (Pty) Ltd
& another v Minister of Rural Development and Land Reform and
others
(276/11)
[2012] ZASCA 21
(23 March 2012)
Coram: MPATI P, NAVSA, SNYDERS, MAJIEDT and WALLIS
JJA
Heard: 27 FEBRUARY 2012
Delivered: 23 MARCH 2012
Summary: Mora interest – interpretation of
clauses in contract
affecting mora interest – mora ex re and mora
ex persona.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from:
Land Claims Court (Randburg) (Mia
AJ, sitting as court of first instance):
The appeal is upheld.
The first to fourth respondents are ordered jointly and
severally to pay the costs of the appeal.
The order of the court below is set aside and
substituted with the following:
‘
(a) The first to fourth
respondents are ordered to pay interest to the first applicant at the
rate of 15.5 per cent per annum on
the amount of R1 450 000 (one
million four hundred and fifty thousand rand) from 28 November 2009
until 30 June 2010 and on the
further amount of R1 450 000 (one
million four hundred and fifty thousand rand) from 8 December 2009
until 12 July 2010;
The first to fourth respondents are ordered to pay
interest to the second applicant at the rate of 15.5 per cent per
annum on
the amount of R1 475 000 (one million four hundred and
seventy five thousand rand) from 8 December 2009 until 23 June 2010
and on the further amount of R1 475 000 (one million four hundred
and seventy five thousand rand) from 28 November 2009 until
2 July
2010.
The first to fourth respondents are ordered jointly
and severally to pay the costs of the application.’
______________________________________________________________
JUDGMENT
______________________________________________________________
MAJIEDT JA (MPATI P, NAVSA, SNYDERS and WALLIS JJA
concurring):
[1] ‘Interest is the life-blood of finance’
said Centlivres CJ six decades ago in
Linton v
Corser
.
1
The learned Chief Justice made this observation in the
course of finding that there is no reason to draw a distinction
between contractual
interest and mora interest. This appeal concerns
the latter and the crisp issue is whether a purchaser who
deliberately delays
effecting the transfer of property and payment of
the purchase price can be held liable for mora interest. The
appellants, as unsuccessful
applicants for, inter alia, an order
awarding them mora interest in the Land Claims Court, Randburg (the
LCC) before Mia AJ sitting
as court of first instance, are before us
with leave of this court.
[2] The appellants were the registered owners of fixed
property on which the Snyman family farmed. The property was the
subject
of a land claim which the appellants conceded. They
subsequently agreed to sell the property to the State. Two agreements
of sale
were drawn up as the property consisted of two separate
pieces of land and each appellant owned one of these. I shall revert
presently
to the salient terms of the agreements which were signed by
the purchaser on 29 January 2009. The State, as purchaser, was to
appoint
the conveyancers in terms of the agreements, which is
contrary to usual practice. The eighth respondent, a firm of
attorneys and
conveyancers, was duly appointed in this regard. The
agreements provided that transfer was to be effected to the land
claimants,
namely the Barolong ba ga Mariba community, the ninth
respondent (the community), although the National Department of Land
Affairs
(the department) was stipulated as purchaser, but nothing
turns on this. Of importance is that the agreements provided that
‘the
transferring attorney undertakes to effect the transfer of
the [properties] in the name of the purchaser within 2 (two) months
from the date of signature of [the] agreement by all parties
concerned’.
2
[3] It was common cause on the papers that the
conveyancers were ready to lodge papers in order to effect the
transfer during the
middle of June 2009. They were instructed,
however, by their client, the department, to delay lodgement, first
until 1 July 2009,
then to October 2009 and eventually indefinitely.
The reason given for this instruction was that the department had no
funds in
its budget to pay the purchase price. This, too, became
common cause. These delays caused the appellants to dispatch, by
registered
post, written letters of demand, which I will discuss in
more detail shortly.
[4] When the letters of demand proved fruitless an
urgent application was launched in the LCC for various orders,
including a claim
for mora interest. The urgent application elicited
a positive response from the department inasmuch as payment of 50 per
cent of
the purchase price was made to the first appellant on 30 June
2010 and the balance on 13 July 2010 and to the second appellant on
23 June 2010 and 2 July 2010 respectively.
3
Registration of the transfer of the properties was also
effected. But the department opposed the claims for mora interest and
for
a punitive costs order against it. The LCC declined to grant mora
interest and made the normal costs order. In the result the claim
for
mora interest forms the sole subject of this appeal.
[5] The appellants’ case for mora interest was
based firstly, on mora ex re in reliance on clause 5.2 of the
contracts and
secondly, on mora ex persona by virtue of the written
letters of demand. Shortly before the hearing of the matter in the
court
below, the appellants gave notice of an amendment of their
Notice of Motion in terms whereof it relied on mora ex re as the main
cause and in the alternative on mora ex persona. It was common cause
in the LCC that the State was in mora regarding the performance
of
its obligations before the application was brought. However, it
resisted the claim for mora interest on the ground that it was
not
obliged in law to pay interest. The LCC decided the matter on the
basis that the agreement did not make provision for the payment
of
interest; that payment of the purchase price depended on the
registration and transfer of the property and that the appellants
(as
applicants) failed to show when registration was effected and when
payment was received in order to calculate a date from which
interest
should run.
Mora ex re: clause 5.2 of the agreements
[6] It is well established that ‘mora’
simply means default or delay and that it finds application when the
consequences
of a failure to perform a contractual obligation within
the agreed time are determined.
4
Where a contract fixes the time (either expressly or
tacitly, but with certainty as to when it will arrive) for
performance, mora
ex re flows from the contract itself and there is
no need for a demand to place the debtor in mora.
5
The award of interest to a creditor where the debtor is
in mora in respect of the payment of a monetary obligation in terms
of an
agreement is, in the absence of a contractual obligation to pay
interest, based upon the principle that the creditor is entitled
to
be compensated for his loss arising from the fact that he was not
paid on the due date.
6
The loss is calculated on the basis of allowing interest
on the capital sum owing over the mora period.
7
[7] As stated, the appellants rely on clause 5.2, set
out above, for mora ex re. In its judgment the LCC came to the
startling conclusion
that clause 5.2 is to be regarded as
pro
non scripto
, since the Registrar of Deeds,
and not the department’s conveyancers, is responsible for
effecting the registration of transfer
of the property. This is a
material misdirection.
8
What was required of the LCC was to interpret the
clause, not to summarily dismiss it in the fashion that it did. While
the provision
is, on the face of it, plain and unambiguous, it is
fraught with difficulties. The conveyancers, represented by the
department,
furnished an undertaking to have the registration of
transfer effected within two months of the date of signature of the
agreements.
This was a tall order. But the clause cannot be
interpreted as fixing a date for transfer because the actual date of
transfer is
always dependent on various events extraneous to the
conveyancer, as it happened in this case. A subdivision and
consolidation
of the two properties sold by the different legal
entities (the appellants) had to be effected. In order to obviate
further delays,
the first appellant agreed to an amendment of its
sale agreement by altering the description of the property, thereby
eliminating
the need for a subdivision and consolidation. An addendum
to that sale agreement was consequently entered into on 15 May 2009.
A further cause for delay in the registration of the transfer was
that the clearance certificate in respect of one of the properties
had been lost and a new one had to be obtained from the municipality.
Thus the date on which the conveyancers were first ready
to lodge
transfer documents was the week following on 11 June 2009. These
examples illustrate that clause 5.2 could not and did
not establish
mora ex re. That being the case, one is constrained to consider the
breach provisions in the sale agreements and
the written notices, as
I do next.
Mora ex persona: the written notices
[8] Where a contract does not contain an express or
tacit stipulation with regard to the date when performance is due, a
demand
is needed to place the debtor in mora, ie mora ex persona.
9
In
Linton v Corser,
supra,
the court held the purchaser liable for mora interest (it was a case
of mora ex persona) for delaying the signing of the
transfer
documents and the delivery of the necessary guarantees. Mora in the
present matter concerned a delay in the payment of
the purchase price
as a result of the department’s delay in having the
registration of transfer effected by its conveyancers.
As stated, the
fact of and the reason for the delay was common cause. The delay was
deliberate, due to the department’s financial
constraints and
resultant inability to pay the purchase price. Of course our law does
not require fault on the part of a debtor
for a contractual damages
claim. All that is required is proof that the debtor is in mora.
10
[9] The sale agreements contained a breach provision.
Clause 14.1 made provision for the prejudiced party to notify the
defaulting
party to rectify the default, whereafter the former would
have the right, in the event of a continued default for 14 days after
receipt of the notice, to claim specific performance or to cancel the
agreement or to refer the matter to the LCC for adjudication.
Clause
15.1 set out the parties’ chosen domicilia; in the case of the
purchaser it is stipulated as ‘care of the Chief
Land Claims
Commissioner (ie the third respondent), Department of Land Affairs,
184 Jacob Maré Street, Pretoria’.
Clause 15.3 provided
that all notices required in terms of the agreements were to be in
writing and were to be delivered either
by hand or sent by pre-paid
registered post. It also contained a deeming provision to the effect
that notices by registered post
would be considered as having been
received by the addressee 14 days after it was posted, unless the
contrary is proved.
[10] The appellants, through their attorneys, caused
letters of demand to be sent by registered post. Both letters,
although bearing
different dates, namely 21 October 2009 in respect
of the first appellant, and 28 October 2009 in respect of the second
appellant,
were dispatched on 30 October 2009. They were both
addressed to ‘Barolong ba ga Mariba, c/o The Chief Land Claims
Commissioner,
Department of Land Affairs, Private Bag X03, Pretoria’,
and copied to the Deputy Director of Finance at the same address and
also to the department’s conveyancers. As stated, the letters
were sent by registered post, but in the case of the copy to
the
conveyancers, they were transmitted by telefax. The department took
issue firstly with the fact that the letters had been addressed
to
the community and not to the department (as the purchaser stipulated
in the agreements) and secondly with the postal address
which was not
the address stipulated in clause 15.1 set out above.
[11] The department’s case on the issues raised in
respect of these notices was pleaded in a rather disingenuous
fashion.
It did not allege that it had not received the notices. The
answer to the alleged dispatch of the notices was instead a bare
denial
that the notices had been sent as alleged. The fact that they
had been addressed to the community, instead of the department, was
also raised. But counsel for the department was driven to concede
that the contents of the notices themselves were plain and
unambiguous,
namely to put the department on terms regarding the
registration of transfer. He correctly conceded that if the
department had
indeed received the notices, it could not have
harboured any doubt as to what was required of it. The department has
not raised
a real and bona fide factual dispute in its answer. It
contented itself with an evasive answer to which it is bound.
11
[12] The failure to state positively that the department
did not receive the letters may have been contrived, since the
letters
were in fact sent to its postal address and copied to the
Deputy Director of Finance in the office of the Chief Land Claims
Commissioner
and to the department’s conveyancers. Clause 4.6
of the agreements designated the Deputy Director of Finance as the
official
responsible for making payment of the purchase price. The
inference is compelling that receipt of the letters could not be
denied
in view of this fact.
[13] In
De Beer NO v
North-Central Local Council and South-Central Local Council and
Others
(Umhlatuzana Civic Association
Intervening)
12
the Constitutional Court had to consider the adequacy of
notices sent by pre-paid registered post by a municipal council to a
defaulting
ratepayer prior to the institution of court proceedings,
in terms of s 105 of the Durban Extended Powers Consolidated
Ordinance
18 of 1976 (N). The court found
13
that ‘[t]here is no evidence of any significant
unreliability of the post office nor of any indication that delivery
of notices
sent by registered post is hampered by an unacceptable
degree of post office inefficiency. The notice provisions that
require posting
are reasonably capable of bringing the hearing to the
attention of the person affected’.
[14] The appellants have consequently established that
the letters of demand had been received and that the department had
been
properly placed in mora. There was no quarrel with the
appellant’s contention that, in the circumstances, mora
interest should
commence running 28 days after the date of dispatch
of the letters by pre-paid registered post, ie as from 28 November
2009.
14
[15] It was common cause that the appellants had
suffered loss as a result of the delay. The appellants’ farming
enterprise
was the main source of income for the Snyman family. They
had sold all their cattle during April 2009 in anticipation of the
transfer
of the properties to the State, which they had to vacate
within 48 hours of the registration. The appellants were plainly
dependent
on payment of the purchase price to re-establish their
farming business or to establish other enterprises from which to
derive
income. The financial prejudice and loss flowing from the
State’s prevarication is self-evident.
[16] Lastly, there is a disturbing aspect which must be
addressed. In the founding affidavit on behalf of the appellants, the
deponent
relayed advice that she had received that the department was
on record as stating that it only pays out monies due in respect of
agreements entered into (in respect of land claims), when ordered to
do so by a court of law. This damning accusation was left
unanswered
by the department. It is troubling that a State department can adopt
such an attitude, which is to be strongly deprecated.
It may well be
that the department is under severe strain to meet the financial
(and, it seems, the administrative) demands imposed
by the land
reform process. The restitution of land under the
Restitution of Land
Rights Act 22 of 1994
, is not only a constitutional imperative but a
highly emotive issue as well. Considerable circumspection, diligence
and sensitivity
are required on the part of all concerned, including
departmental officials. Agreements to purchase land for restoration
to dispossessed
communities should be honoured in accordance with the
terms agreed upon, lest the already demanding challenges of the
process are
further exacerbated.
[17] The appeal must therefore succeed. The matter was
not of sufficient complexity to warrant the employment of two
counsel. It
is hardly surprising that in the court below and in the
preparation of heads of argument for this court the appellants, who
now
seek the costs of two counsel, utilised the services of one
counsel only. The following order is made:
The appeal is upheld.
The first to fourth respondents are ordered jointly and
severally to pay the costs of the appeal.
The order of the court below is set aside and
substituted with the following:
‘
(a) The first to fourth
respondents are ordered to pay interest to the first applicant at the
rate of 15.5 per cent per annum on
the amount of R1 450 000 (one
million four hundred and fifty thousand rand) from 28 November 2009
until 30 June 2010 and on the
further amount of R1 450 000 (one
million four hundred and fifty thousand rand) from 8 December 2009
until 12 July 2010;
The first to fourth respondents are ordered to pay
interest to the second applicant at the rate of 15.5 per cent per
annum on
the amount of R1 475 000 (one million four hundred and
seventy five thousand rand) from 28 November 2009 until 23 June 2010
and
on the further amount of R1 475 000 (one million four hundred
and seventy five thousand rand) from 8 December 2009 until 2 July
2010.
The first to fourth respondents are ordered jointly and
severally to pay the costs of the application.’
___________
S A MAJIEDT
JUDGE OF APPEAL
APPEARANCES:
Counsel for appellants : H S HAVENGA SC (with him
OSCHMAN I)
Instructed by : Lourens Attorneys c/o Pieter Moolman
Attorneys, Bryanston
Symington & de Kok, Bloemfontein
Counsel for respondents : P NONYANE
Instructed by : The State Attorney, Pretoria
The State Attorney, Bloemfontein
1
Linton
v Corser
1952 (3) SA 685
(A) at
695G-H.
2
Clause
5.2 of the agreements.
3
The
agreements made provision for payment of 50 per cent of the purchase
price within 30 days after the date of signature of the
agreement
and for payment of the balance thereof within 10 working days of the
date of registration of transfer.
4
Scoin
Trading (Pty) Ltd v Bernstein NO
2011
(2) SA 118
(SCA) para 11.
5
Ibid.
6
Bellairs
v Hodnett and another
1978 (1) SA 1109
(A) at 1145D-E.
7
Bellairs
at
1145E-F; J van Zijl Steyn,
Mora Debitoris volgens die Hedendaagse
Romeins-Hollandse Reg
, pp 84 –
85.
8
Counsel
for the department conceded this point during argument.
9
Scoin
Trading (Pty) Ltd v Bernstein NO
, para
12.
10
Scoin
Trading (Pty) Ltd v Bernstein NO,
para
20.
11
Wightman
t/a JW Construction v Headfour (Pty) Ltd and another
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA) para 13.
12
De
Beer NO v North-Central Local Council and South-Central Local
Council and Others (Umhlatuzana Civic Association Intervening)
[2001] ZACC 9
;
2002
(1) SA 429
(CC).
13
De
Beer
para 20.
14
Calculated
on the basis of 14 days’ notice in terms of clause 14.1 added
to the 14 days of the deeming provision in clause
15.3, set out
above.