P.M.M v D.B.M and Another [2023] ZAGPPHC 385; A296/2020 (31 May 2023)

78 Reportability

Civil Procedure

Brief Summary

Civil Procedure — Exception — Appeal against upholding of exception — Appellant sought to enforce terms of a deed of settlement following divorce — First respondent raised exception arguing oral agreement for alienation of land was invalid under the Alienation of Land Act — Court a quo upheld the exception, but on appeal, it was found that the appellant's claim could be interpreted as seeking specific performance rather than direct alienation — Appeal upheld, exception dismissed with costs.

Comprehensive Summary

Summary of Judgment

1. Introduction

The matter concerned an appeal in the Gauteng Division, Pretoria, against a decision of the High Court (the court a quo) in which an exception to particulars of claim had been upheld. The court a quo had set aside the particulars of claim and granted punitive costs against the plaintiff. The appeal was heard by Millar J (with Van der Schyff and Munzhelele JJ concurring).

The appellant was the plaintiff in the action proceedings. The first respondent was the plaintiff’s former spouse and the excipient in the exception proceedings. The second respondent was the person appointed as receiver and liquidator (agent) of the parties’ joint estate in terms of a divorce settlement made an order of court.

Procedurally, the exception was upheld on 13 February 2020. The court a quo refused leave to appeal on 4 August 2020, but the Supreme Court of Appeal subsequently granted special leave to appeal on 9 November 2020. The appeal was argued on 19 April 2023 and judgment was delivered on 31 May 2023.

The general subject matter of the dispute was the enforcement of a term of a divorce settlement regulating the division of a joint estate, and specifically whether the plaintiff’s pleaded claim—based on an alleged oral agreement between former spouses concerning two immovable properties—was legally competent in light of the Alienation of Land Act 68 of 1981, raised via an exception.

2. Material Facts

The parties were divorced on 13 February 2019, and a deed of settlement was concluded and made an order of court. In terms of the pleaded settlement terms, the second respondent was appointed as receiver and liquidator to divide the joint estate between the former spouses. The pleaded mandate recorded that the second respondent was to distribute the net assets on a basis agreed between the parties, and if no agreement could be reached, to sell the assets either by public auction or private treaty.

The plaintiff pleaded that on or about 2 June 2019, the plaintiff and the first respondent concluded an oral agreement concerning the division of the two immovable properties in the joint estate, in terms of which each spouse would retain one of the properties.

The plaintiff further pleaded that the first respondent breached that oral agreement by making offers to purchase both immovable properties, which offers were allegedly accepted by the second respondent in his capacity as receiver and liquidator.

For purposes of the exception (and therefore for purposes of the appeal), the court approached the matter on the footing that the pleaded factual allegations were to be accepted as correct, without making final findings on whether the oral agreement was indeed concluded, what its precise terms were, or whether a breach occurred. Those factual matters were not determined; the focus remained on whether the pleaded facts could disclose a legally cognisable cause of action.

3. Legal Issues

The central legal question was whether, on the facts as pleaded, the particulars of claim disclosed a cause of action, or whether they were legally bad because the plaintiff relied on an alleged oral agreement concerning immovable property.

More specifically, the issue was whether the plaintiff’s claim was necessarily one for the alienation of land that had to comply with section 2(1) of the Alienation of Land Act 68 of 1981, requiring a deed of alienation signed by the parties (or their agents acting on written authority). The first respondent’s exception asserted that, because the plaintiff relied on an oral agreement, the claim could not succeed.

The dispute was primarily a matter of law and the application of legal principles to the pleaded facts within the confines of exception procedure, including the interpretive question whether the pleaded claim was capable of a construction that avoided invalidity under section 2(1).

4. Court’s Reasoning

The appeal court reiterated that, when determining an exception, the court is confined to the case as pleaded, and the pleaded averments are accepted as correct. The key inquiry was therefore not whether the plaintiff would ultimately prove the oral agreement or obtain the relief sought, but whether the excipient had shown that on every possible interpretation of the pleaded facts no cause of action could be sustained.

In applying the test for exceptions, the court relied on the principle that exceptions serve to eliminate cases without legal merit, but that an exception should only succeed where it is clear that on all possible readings of the facts no cause of action arises. The court treated this as placing a burden on the excipient to demonstrate that the plaintiff’s legal conclusion could not be supported on any interpretation of the pleaded facts.

The court a quo had reasoned that the “intended consequences” of the oral agreement were an exchange of ownership of land between the former spouses, and therefore the agreement could only be valid if it complied with the Alienation of Land Act’s writing requirement. On that view, because the plaintiff relied on an oral agreement, the claim was defective.

The appeal court considered that this construction of the pleaded claim was not the only plausible construction. It noted that the plaintiff did not seek, in terms, an order directly for the transfer of immovable property. Instead, the pleaded relief was directed to compelling the defendants to take steps to uphold and give effect to the oral agreement, in the context of the receiver and liquidator’s mandate arising from the divorce settlement that had been made an order of court.

The court emphasised that, in terms of the divorce settlement as pleaded, the second respondent was appointed to implement the liquidation and distribution of the joint estate, and was obliged to give effect to an agreement reached between the parties. Importantly, it was neither pleaded nor shown that the deed of settlement itself required that any agreement between the spouses regarding distribution had to be reduced to writing to be effective.

Turning to section 2(1) of the Alienation of Land Act, the court highlighted the statutory allowance that land may be alienated in a deed signed by the parties or by their agents acting on their written authority. On the plaintiff’s pleaded case, the second respondent’s authority derived from the divorce order (including the settlement made an order), which constituted written authority.

On this approach, the court reasoned that the pleaded case could be construed as one in which the plaintiff sought to compel the first respondent to abide by the oral arrangement and to compel the second respondent (as the parties’ authorised agent under the court order) to perform his mandate, which would include taking the necessary steps to give effect to the parties’ agreed allocation and thereafter to enter into the necessary deed or deeds of alienation on their behalf. The pleaded allegation that the first respondent made purchase offers to the second respondent, which the second respondent accepted in his capacity as receiver and liquidator, was treated as consistent with the notion that the second respondent was the operative actor implementing transactions concerning the immovable properties under the settlement mandate.

Accordingly, the appeal court held that it could not be said, on the pleadings, that the plaintiff’s claim was inevitably an impermissible attempt to enforce an oral alienation of land in contravention of section 2(1). Because the plaintiff’s particulars of claim were capable of a construction under which the statutory requirements could be met via the second respondent acting as agent on written authority, the excipient had not shown that no cause of action could arise on every interpretation.

5. Outcome and Relief

The appeal was upheld.

The order of the court a quo upholding the exception and setting aside the particulars of claim with punitive costs was set aside and replaced with an order that the exception is dismissed with costs.

The first respondent was ordered to pay the appellant’s costs of the appeal.

Cases Cited

Marney v Watson and Another 1978 (4) SA 140 (C)

Living Hands (Pty) Ltd and Another v Ditz and Others 2013 (2) SA 368 (GSJ)

H v Fetal Assessment Centre 2015 (2) SA 193 (CC)

Children’s Resource Centre Trust v Pioneer Food (Pty) Ltd 2013 (2) SA 213 (SCA)

SA Sentrale Ko-OP Graanmaatskappy BPK v Shifren en Andere 1964 (4) SA 760 (A)

Legislation Cited

Alienation of Land Act 68 of 1981, section 2(1)

Alienation of Land Act 68 of 1981, section 28

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that, on exception, the pleaded facts must be accepted as correct and the enquiry is whether the excipient has shown that on all possible interpretations of the pleaded case the claim discloses no cause of action.

On the pleaded case, the plaintiff’s claim was capable of a construction in which the second respondent, as receiver and liquidator appointed under a divorce settlement made an order of court, acted as an agent on written authority for purposes of section 2(1) of the Alienation of Land Act. The construction adopted by the court a quo—that the claim necessarily sought to enforce an invalid oral alienation of land—was not the only available construction. The exception therefore ought not to have been upheld.

LEGAL PRINCIPLES

The determination of an exception must occur within the confines of the pleadings, with the factual allegations in the impugned pleading accepted as correct for purposes of the exception.

An exception on the basis that no cause of action is disclosed will only succeed where the excipient establishes that, on every possible interpretation of the pleaded facts, no cause of action can be sustained.

Section 2(1) of the Alienation of Land Act 68 of 1981 requires that an alienation of land be contained in a deed of alienation signed by the parties or by their agents acting on written authority; where a pleading is reasonably capable of an interpretation in which the statutory formalities may be satisfied through an authorised agent, it cannot be rejected at exception stage solely because an underlying agreement is alleged to be oral.