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[2017] ZASCA 4
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De Villiers v Elspiek Boerdery (Pty) Ltd and Another (1196/2015) [2017] ZASCA 4 (9 March 2017)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case No:
1196/2015
In
the matter between:
MATTHYS
PIETER RUBEN DE VILLIERS
APPELLANT
and
ELSPIEK
BOERDERY (PTY)
LTD
FIRST RESPONDENT
REGISTRAR
OF DEEDS, CAPE TOWN
SECOND RESPONDENT
Neutral
citation:
De
Villiers v Elspiek Boerdery (Pty) Ltd
[2017]
ZASCA 4
(1196/2015) (9 March 2017)
Coram:
Shongwe,
Majiedt and Mocumie JJA and Fourie and Schippers AJJA
Heard:
24
February 2017
Delivered:
9 March
2017
Summary:
Validity of a notarially
executed 99 year lease : whether agent had the necessary authority to
bind her principal : held that power
of attorney with draft lease
attached thereto duly authorised the agent to execute the lease on
behalf of her principal : whether
the provisions of s 3
(d)
or
3
(e)
(ii)
of the Subdivision of Agricultural Land Act 70 of 1970 prohibited the
conclusion of the lease : held that these provisions
of Act did not
find application : lease held to be valid.
ORDER
On appeal from:
Western
Cape Division of the High Court, Cape Town (Binns-Ward J sitting as
court of first instance):
The appeal is dismissed
with costs, including the costs consequent upon the employment of two
counsel.
JUDGMENT
Fourie
AJA (Shongwe, Majiedt and Mocumie JJA and Schippers AJA concurring):
[1]
This appeal concerns the validity of a lease that was notarially
executed on 25 January 2010 (the lease) and registered against
the
title deed of the farm Elspiek (the property)
situated
in the Hex River Valley of the Western Cape Province. The appellant,
Mr M P R de Villiers (De Villiers), was at all relevant
times the
registered owner of the property and in terms of the lease he let the
property to the first respondent, Elspiek Boerdery
(Pty) Ltd
(Elspiek), represented by Mr G H de Kock (De Kock), for a period of
99 years commencing on 15 April 2009.
[2]
However, on 20 August 2012, De Villiers instituted action in the
Western Cape Division of the High Court, Cape Town, claiming
that the
lease was void; that the registrar of deeds should deregister the
lease as well as a subsequent notarial cession thereof;
and that
Elspiek be evicted from the property. Elspiek opposed the action and
raised a contingent claim in reconvention. In the
event, the trial
proceeded before Binns-Ward J, who ordered, by agreement between the
parties, that the claim in convention be
heard first, with the
counterclaim to stand over for later determination, if necessary.
[3]
De Villiers presented no oral evidence at the trial, while De Kock
gave evidence on behalf of Elspiek. Two main contentions
were
advanced at the trial on behalf of De Villiers in support of his
claim, first that the agent who purportedly acted on his
behalf to
conclude the lease lacked authority and, second, that the lease was
void by virtue of the prohibitions contained in s
3
(d)
and s 3
(e)
(ii)
of the Subdivision of Agricultural Land Act 70 of 1970 (the Act). The
court a quo dismissed the claim with costs, but granted
De Villiers
leave to appeal only in respect of the second contention above. This
court on petition subsequently extended the ambit
of the appeal to
include the rest of the findings of the court a quo in regard to the
issue of the validity of the lease, namely
the agent’s alleged
lack of authority.
[4]
In its judgment the trial court dealt at length with the relevant
background facts and circumstances giving rise to the litigation
between the parties. These facts and circumstances are largely common
cause and the correctness of the summary of the trial judge
is
accepted by both parties. There is accordingly no need to repeat this
laborious exercise. Where necessary, in dealing with specific
issues,
I will succinctly refer to the relevant facts or circumstances.
[5]
Before dealing with the grounds relied upon by De Villiers to have
the lease and its subsequent cession voided, it is necessary
to
record the following crucial finding made by the trial court in
analysing
the evidence that led to
the conclusion of the lease:
‘
There
is no doubting on the evidence that was adduced that the registered
contract [the lease], with the plaintiff [De Villiers]
as lessor,
reflects the common intention of the parties.’
Differently
put, the court a quo held that, on the evidence, the common intention
of the parties
was
that De Villiers, as owner, would let the property to Elspiek, as
lessee, for 99 years on the terms and conditions set out in
the
lease. De Kock’s evidence unequivocally demonstrated this. He
testified that De Villiers was willing to sign any document
to
achieve this goal. There is simply no evidence to gainsay the
evidence of De Kock, with the result that there is no basis for
attacking the above conclusion of the trial judge. As submitted on
behalf of Elspiek, De Villiers’ failure to testify is
a clear
indication that he could not dispute De Kock’s evidence.
[6]
In his original particulars of claim, De Villiers firstly attacked
the validity of the lease on the basis that the power of
attorney of
Ms Ronelle Miller (the agent), who appeared before the notary public
for purposes of the notarial execution of the
lease, mandated her to
conclude a lease with a trust as lessor, and not with him personally
as lessor. This cause of action was
abandoned after Elspiek had
closed its case. The particulars of claim were then amended to record
that the first attack of De Villiers
on the validity of the lease was
that the agent was not authorised by him to conclude the lease on his
behalf, as:
(a)
The special power of attorney granted by him authorising her to
notarially execute a deed, did not have the lease as an annexure
thereto.
(b)
The power of attorney related to a notarial deed referred to therein,
which was not the lease and could not have been the lease.
[7]
In order to appreciate the case of De Villiers regarding this first
ground of attack upon the validity of the lease, it is necessary
to
record the events preceding and following the creation of the
relevant documents: For a period of at least ten years immediately
prior to the notarial execution and registration of the lease, De
Kock had leased the property from De Villiers and farmed same,
either
personally or through a legal entity controlled by him. At all
relevant times during this period and thereafter, De Villiers
and his
family were and still are in occupation of the dwelling on the
property. During 2006, De Villiers and De Kock decided that
De
Villiers would sell the property to a company in order to serve as de
facto security for the repayment of loans which De Kock
and various
entities controlled by him had granted to De Villiers. As part of
this transaction, De Villiers and De Kock established
the M P R de
Villiers Trust (the trust), which it was envisaged would hold the
majority share in the company, representing De Villiers’
interest in the property, while the remainder of the shares would be
held by a company representing De Kock’s interests.
Elspiek was
acquired for the purpose of purchasing and holding the property.
[8]
To facilitate this transaction, a special power of attorney was
executed by De Villiers on 13 October 2008 (the power of attorney),
for the purpose of registering rights of pre-emption in
favour
of his two brothers, who
had testamentary rights of pre-emption over the property. The rights
of pre-emption that would be registered
in favour of the two
brothers, would replace the testamentary rights of pre-emption that
they enjoyed in the property against De
Villiers. The power of
attorney read as follows:
‘
SPESIALE
VOLMAG OM NOTARIëLE AKTE TE VERLY
Ek,
die ondergetekende,
Matthys Pieter Ruben de Villiers
Identiteitsnommer [5...]
Getroud buite gemeenskap van goed
nomineer,
konstitueer en stel hiermee aan Ronelle Miller met mag van
substitusie om my/ons wettige Agent te wees om voor ‘n
Notaris
Publiek in die Provinsie van die Kaap die Goeie Hoop te verskyn en
dan en daar as my/ons gemagtigde ‘n Notariële
Akte te
teken volgens die konsep hierby aangeheg welke konsep deur my/ons
geparafeer is vir die doeleindes van identifikasie, en
om sodanige
formele wysigings op die gemelde Notariële Akte aan te bring as
wat nodig mag wees vir die doeleindes van die
registrasie daarvan,
en
in die algemeen, ten einde voorgenoemde doeleindes uit te voer, te
doen of te laat doen al wat nodig is, net so volmaak en doeltreffend
asof ek/ons self teenwoordig was en hierin gehandel het, en ek/ons
bekragtig hiermee alles wat my/ons genoemde Prokureur en Agent
uit
krag hiervan wettiglik doen of laat doen.
Geteken
te
De Doorns
op
13 Oktober 2008
.’
[1]
[9]
However, the sale of the property to Elspiek could not be concluded
as one brother of De Villiers refused to waive his testamentary
pre-emptive right. In view of the failure of the contemplated sale,
De Villiers and De Kock then decided to conclude a 99-year
lease of
the property by Elspiek, which would afford De Kock and his entities
the security required for the repayment of the amounts
that they had
advanced to De Villiers. The parties further intended that De
Villiers and his family should not lack for a roof
over their heads
and that, notwithstanding the conclusion of the 99-year lease
agreement, they should have the right to continue
living in the house
on the property for as long as they might wish.
[10]
To facilitate the registration of the 99-year lease, a draft notarial
contract of lease (the draft) was executed in May 2009
and annexed to
the power of attorney which had by then not yet been utilised due to
the failure of the contemplated sale of the
property. The draft
identified the trust, represented by its trustees, as the lessor and
Elspiek as the lessee. It was plainly
a mistake to identify the trust
as the lessor as it had never been the registered owner of the
property and the parties never contemplated
that it would become the
owner. Nor did the trust have any right to encumber the property by
means of a lease. The uncontroverted
evidence of De Kock was that the
description of the trust as lessor in the draft was a common mistake.
The evidence further showed
that the trust had only featured in the
plans of the parties in 2006, when the sale of the property had been
contemplated. Once
that plan fell through, the trust had no purpose;
did not feature in any further plans; became dormant and continued in
existence
only in name.
[11]
In the event, the lease was notarially executed and registered after
the draft annexed to the power of attorney had been amended,
to
reflect De Villiers and not the trust as lessor. As recorded earlier,
the common intention of the parties was that De Villiers,
as owner,
would let the property to Elspiek as lessee – therefore the
draft had to be amended to give effect to the common
intention of the
parties. In this regard it should be borne in mind that the lease was
susceptible to rectification as it was a
common mistake that led to
the trust and not De Villiers being described as the lessor.
[12]
As recorded above, the first line of attack of De Villiers was that,
in terms of the power of attorney, he did not authorise
the agent to
conclude the lease on his behalf. The power of attorney was the
source of the agent’s authority to perform juristic
acts on
behalf of De Villiers and it is accordingly necessary to turn to the
document itself to determine the ambit and extent
of the authority
granted to the agent. As stated in 1
Lawsa
3 ed para 141, the power of attorney constitutes written authority to
the agent to perform the acts set out in that document on
behalf of
the principal. Where the words of the power of attorney are clear
they are to be followed and no question of interpretation
arises (see
A J Kerr
Law
of Agency
4 ed at 66).
[13]
The words of the power of attorney are clear and unambiguous. In
terms thereof the agent was mandated to appear before a notary
public
as the authorised representative of De Villiers and there to sign a
notarial deed in accordance with the draft attached
to the power of
attorney, which had been initialed by De Villiers for purposes of
identification, and to make such formal amendments
thereto as might
be necessary for the purpose of the registration thereof.
[14]
What the evidence shows, is that the draft attached to the power of
attorney was the lease as initialed by De Villiers, expressly
confirming that the agent was authorised by him in terms of the power
of attorney granted by him at De Doorns on 13 October 2008.
There was
no evidence of any other power of attorney executed on 13 October
2008, with the result that, when De Villiers initialed
the draft
attached to the power of attorney, he was aware that he was granting
the agent the authority to execute the lease before
the notary public
in terms of the power of attorney. This is borne out by the
uncontroverted evidence of De Kock as to the circumstances
surrounding the execution of the lease in accordance with their
common intention. As alluded to earlier, De Villiers, who bore
the
onus, failed to place evidence before the trial court to gainsay the
objective evidence and the evidence of De Kock. This failure
constituted a clear indication that he could not dispute this
evidence or, at least, that he and his legal advisers were satisfied
that, although he was able to give material evidence in this regard,
he could not benefit and might well, because of the facts
known to
himself, damage his case by giving evidence and subjecting himself to
cross-examination. (See
Galante
v Dickinson
1950 (2) SA 460
(A) at 465.)
[15]
It was submitted on behalf of De Villiers, that as the power of
attorney had initially been executed for another purpose, which
had
not materialised, namely the registration of rights of pre-emption
pursuant to the contemplated sale of the property to Elspiek,
it had
lapsed and could not thereafter serve as authority for the agent to
execute the lease. I agree with the finding of the trial
court, that
there was no bar to using the power of attorney for a different
purpose after it had become clear that the sale of
the property would
not be concluded. As held by Binns-Ward J, from a practical point of
view there was nothing exceptional about
such ‘economy of
documentation’. In any event, it is clear from the wording of
the power of attorney that its use was
not limited to the initial
purpose contemplated by the parties, or indeed to a sole purpose.
[16]
Finally, in regard to this line of attack, the proof of the pudding
is in the eating. The conduct of De Villiers subsequent
to the
execution and registration of the lease, unequivocally shows that the
registration of the lease was authorised by him personally
and that
it reflected the parties’ common intention. On 28 April 2010,
De Villiers executed a special power of attorney authorising
his
agent to act on his behalf to execute a notarial deed of cession of
the lease and to obtain the registration thereof. The draft
deed
attached to that power of attorney unambiguously described De
Villiers as the lessor of the property and, as in the case of
the
draft lease which he executed in May 2009, set forth a declaration
that he was the owner of the property that had been let.
As held by
the court a quo, this conduct in respect of the cession was wholly
irreconcilable with the case that De Villiers subsequently
sought to
advance, ie that the lease had been notarially executed and
registered without his authority.
[17]
Furthermore, two years later, in April 2011, De Villiers acknowledged
that the property had lawfully been let to Elspiek, when
approaching
an attorney to assist him to sell the farm to his brothers, stating
that he ‘stel geensins belang dat die grond
enigsins verder
verhuur word nie’.
[2]
What
is striking, is that De Villiers at this late stage made no mention
of the fact that the lease had been executed and registered
without
his authority. Had that been the case, one would have expected him to
have advised the attorney that, for this reason,
the lease was
invalid. In view of the above, I conclude that there is no merit in
this first cause of action relied upon by De
Villiers and that the
trial court correctly rejected same.
[18]
The second ground upon which De Villiers sought to have the lease
declared void, was that it fell foul of the provisions of
s 3
(d)
of the Act,
[3]
which prohibit
the letting of only a portion of agricultural land for an effective
period of 10 years or longer, without the prior
consent of the
Minister of Agriculture (the Minister). It is common cause that the
property constituted agricultural land as defined
in s 1 of the Act
and that the consent of the Minister was not sought or obtained for
the conclusion of the lease. De Villiers
contended that, upon a
proper construction of the lease, and in particular clauses 2.1 and
16 thereof, Elspiek leased only part
of the property and absent the
prior consent of the Minister, the lease is void.
[19]
It is clear from clause 2.1 of the lease, read with the definition of
‘eiendomme’ in clause 1 thereof, that the
four registered
land units that make up the entire property, constitute the subject
of the lease. However, De Villiers contended
that clause 16, which
provides that he has the right to reside in the house on the property
for as long as he wishes and to use
the outbuildings in the yard to
the extent that they are not required for Elspiek’s farming
operations, resulted in Elspiek
leasing only part of the property –
therefore the prohibition in s 3
(d)
of the
Act finds application.
[20]
I agree with the trial court that this argument of De Villiers finds
no support upon a proper construction of the lease. The
court a quo
duly rejected this line of attack, with reference to the relevant
jurisprudence, in particular the decision of this
court in
Adlem
& another v Arlow
2013 (3) SA 1
(SCA);
[2012] ZASCA 164.
[21]
It is clear from
Adlem
at para
13 that, to succeed with this cause of action based on s 3
(d)
of the
Act, De Villiers had to establish that the right reserved to him to
live in the house on the property, resulted in the lease
being in
respect of only part of the property with reference to its
registration in the deeds registry, rather than the whole of
the
property. This was simply not the case. The lease expressly provides
that the property, consisting of the four registered land
units which
make up the entire property, constitutes the subject of the lease.
The whole of the property was leased by Elspiek
as a single economic
unit for farming purposes. This included that part of the property
upon which the dwelling house and its yard
is situated.
[22]
Clause 16 of the lease merely constituted a temporary and limited
restriction of Elspiek’s right of use of the property
as a
whole in terms of the lease. As emphasised by the court a quo, the
limited nature of the right conferred upon De Villiers
in terms of
clause 16, is demonstrated by the fact that he has no right to use or
deal with the house if he vacates it. This limitation
on his ability
to deal with the house during the currency of the lease, stems from
the fact that De Villiers had let the whole
property to Elspiek in
terms of the lease.
[23]
Furthermore, the limited right granted to De Villiers to reside in
the dwelling, does not detract from the kind of ‘use
and
enjoyment’ conferred upon Elspiek by the lease, ie to utilise
the property as a whole for its farming enterprise. This
‘use
and enjoyment’ of the property as a farming enterprise
constituted the subject and substance of the lease, and
is not in any
way curtailed by the limited right conferred upon De Villiers to
reside in the house. See
Oatorian
Properties (Pty) Ltd v Maroun
1973 (3) SA 779
(A) at 785G-H.
[24]
The above construction accords with the object of the Act, as appears
from its long title, namely:
‘
To
control the subdivision and, in connection therewith, the use of
agricultural land.’
In
Adlem
at para 12 Cloete JA emphasised that ‘. . . what is sought to
be controlled is not both the subdivision and also the use
of
agricultural land, but the subdivision and,
in
connection therewith
,
the use of such land’. Therefore, what s 3
(d)
of the
Act seeks to prevent, is the ‘subdivision’ of
agricultural land by means of a lease in respect of a portion of
agricultural land for a period of 10 years or longer
and
the use thereof as an uneconomic portion of agricultural land. As
recorded above, in terms of the lease the whole property was
let to
Elspiek and its enjoyment of the property as a whole for purposes of
its farming enterprise was not in any way curtailed
by the limited
right of residence afforded to De Villiers. Neither does the right of
residence in any way result in uneconomical
fragmentation of
agricultural land. There is accordingly no basis upon which s 3
(d)
of the Act finds application.
[25]
During argument in the court a quo, De Villiers added a second string
to his bow, namely that the lease was in any event void
by virtue of
the provisions of s 3
(e)
(ii)
of the Act. This cause of action had not been pleaded, but the trial
court allowed De Villiers to raise it as it would not
have caused
prejudice to Elspiek in the conduct of its case.
[26]
Section 3
(e)
(ii)
of the Act, inter alia, provides that no right to a portion of
agricultural land shall be granted for a period of more than
10
years, except for the purposes of a mine as defined in s 1 of the
Mines and Works Act 27 of 1956, unless the Minister consents
in
writing. De Villiers contended that, if it is found that Elspiek had
leased the whole of the property (which it did, as recorded
above),
then the granting of the right to De Villiers to live on a portion
thereof, constituted a contravention of s 3
(e)
(ii)
of the Act, as it was effected without the prior written consent of
the Minister.
[27]
The court a quo rightly gave this alternative submission short
shrift. The granting of the right to use the farm house for
dwelling
purposes did not derogate from the character of the farm as a unit of
agricultural enterprise. Bearing in mind the object
of the Act, the
granting of the right had no subdivisional effect on the property and
no effect on the use of the property as a
notional single unit for
farming purposes.
[28]
The absurd consequences which would result from De Villiers’
construction of the subsection were highlighted thus by
the trial
court:
‘
Taken
to its extreme the plaintiff’s contention would mean that if a
right were to be granted to a farm worker to occupy a
single room in
a cottage on a farm for his lifetime or for periods which taken
together . . . might amount to more than 10 years,
that could
competently be done only with the prior written consent of the
Minister of Agriculture. That postulate would seem to
give rise to a
function for the Minister which bears no relationship whatever with
the recognised objectives of the Act.’
It
follows that the reliance on s 3
(e)(
ii)
of the Act is clearly misplaced.
[29]
For all the above reasons the appeal falls to be dismissed. The
matter justified the employment of two counsel and the following
order is made:
The
appeal is dismissed with costs, including the costs consequent upon
the employment of two counsel.
____________________
P B
Fourie
Acting
Judge of Appeal
APPEARANCES:
For
Appellant:
J W Olivier SC (with him P S Bothma)
Instructed by:
Muller
Terblanche & Beyers c/o Van der Spuy Attorneys, Cape Town
Symington
& De Kok Attorneys, Bloemfontein
For
Respondents:
T D Potgieter
SC (with him H C Jansen van Rensburg)
Instructed by:
Chris Fick &
Associates, Cape Town
Rosendorff Reitz Barry,
Bloemfontein
[1]
The trial judge
provided an accurate translation of the document as follows:
‘
SPECIAL
POWER OF ATTORNEY TO EXECUTE NOTARIAL DEED
I
the undersigned
Matthys
Pieter Ruben de Villiers
etc.
. . .
nominate,
constitute and appoint Ronelle Miller, with power of substitution,
to be my/our lawful Agent to appear before a Notary
Public . . . and
then and there as my authorised representative to sign a Notarial
Deed in accordance with the draft attached
hereto which has been
initialled by me/us for purposes of identification, and to make such
formal amendments thereto as might
be necessary for the purposes of
the registration thereof, and in general, for the achievement of the
aforementioned purposes,
to do or permit to be done everything as
completely and effectively as if I/we were personally present and
dealing with the matter,
and I/we hereby ratify everything that our
nominated Attorney and Agent lawfully does or permits to be done in
terms hereof.
Signed
at De Doorns on 13 October 2008.’
[2]
‘
was not
interested in the continued letting of the property.’
[3]
It is to be noted
that the commencement of the Subdivision of Agricultural Land Act
Repeal Act 64 of 1998, that repeals the whole
of the Subdivision of
Agricultural Land Act 70 of 1970,
has
not yet been promulgated.