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[2017] ZASCA 112
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Reclaimation Property Holdings (Pty) Ltd v Arcelormittal South Africa Limited and Others (1074/2016) [2017] ZASCA 112 (21 September 2017)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 1074/2016
In
the matter between:
RECLAMATION
PROPERTY HOLDINGS (PTY) LTD
APPELLANT
and
ARCELORMITTAL
SOUTH AFRICA LIMITED
FIRST RESPONDENT
THE
RECLAMATION GROUP (PTY) LTD
SECOND RESPONDENT
THE
NEW RECLAMATION GROUP (PTY) LTD
THIRD RESPONDENT
Neutral
citation:
Reclamation
Property Holdings (Pty) Ltd v Arcelormittal South Africa Ltd
(986/2016) ZASCA 112 (21 September
2017)
Coram:
Ponnan and Mathopo JJA and Plasket,
Ploos van Amstel and Rogers AJJA
Heard:
5 September 2017
Delivered:
21 September 2017
Summary
:
Section 67 of the Town-Planning
and Townships Ordinance 15 of 1986:
prohibition of sale of erf until township is declared an approved
township: definition of ‘erf’.
ORDER
On
appeal from:
Gauteng Local Division,
Johannesburg (Wepener J sitting as court of first instance).
1
Subject to para 2 below, the appeal is dismissed with costs,
including those
consequent on the employment of two counsel.
2
The first respondent is ordered to pay the costs of the opposed
application
for the introduction of the general plan by way of
further evidence.
JUDGMENT
Ploos
van Amstel AJA (Ponnan and Mathopo JJA and Plasket and Rogers AJJA
concurring):
[1] This
appeal concerns the validity of an agreement of sale of land in a
proposed township in Benoni, to be known as Benoni Extension
74. The
court a quo (Wepener J) held that the agreement contravened the
provisions of s 67 of the Town-Planning and Townships Ordinance
15 of
1986 (the Ordinance) and was consequently of no force or effect.
Section 67, generally speaking, prohibits the sale of an
erf in a
proposed township until such time as the township is declared an
approved township.
[2] The
background is briefly as follows. The Reclamation Group (which is the
name by which I shall refer collectively to the appellant
and the
second and third respondents) is one of the largest recyclers of
ferrous and non-ferrous metals in South Africa. In 1999
it purchased
the business of National Metal (Pty) Ltd, which was then a wholly
owned subsidiary of Iscor Ltd (Iscor). Iscor later
became
ArcelorMittal South Africa Ltd, the first respondent in this appeal.
The business had been conducted by National Metal on
land owned by
Iscor. The Reclamation Group continued the business on the same land,
which it leased from Iscor.
[3] In
2000 Iscor appointed professional town planners to investigate the
feasibility of establishing a township in Benoni with
a view to
disposing of redundant properties and facilities. Several immovable
properties fell into this category, including the
land occupied by
the Reclamation Group. The recommendation by the town planners
resulted in an application being made, in terms
of the provisions of
the Ordinance, for the establishment of a township to be known as
Benoni Extension 74 Township.
[4] The
Reclamation Group indicated its desire to purchase the land which it
was leasing from Iscor. This resulted in a written
agreement of sale
which was concluded in March 2003. In terms thereof Iscor sold the
land to the appellant. The land comprised
three properties, referred
to as (i) Remaining Extent of Erf 2665, Benoni Township, Registration
Division IR, Gauteng; (ii) Erf
5198 Benoni Township, Registration
Division IR, Gauteng; and (iii) Portion 32 of the farm Kleinfontein
67, Registration Division
IR, Gauteng. (I refer to this last property
as ‘Portion 32’). The agreement was subject to suspensive
conditions regarding
the establishment and approval of the township
in terms of the Ordinance. Two further properties featured in the
agreement. The
seller undertook to use its best endeavours to acquire
them, in which event the agreement would be amended so as to include
them
in the merx
,
without the purchaser having to pay any
additional consideration for them. One of these properties was
described as portion of
the Remaining Extent of Portion 14 of the
farm Kleinfontein 67, Registration Division IR, Gauteng, measuring
approximately 0,55
hectares. I shall refer to this property as
‘Portion 14’.
[5] The
establishment of the township was complex and required various
subdivisions and consolidations. Although it has been approved
by the
local authority it has not yet been declared an approved township in
terms of the Ordinance.
[6] It
was undisputed in the court a quo that Iscor worked towards the
fulfilment of the suspensive conditions. In January 2010,
however, a
dispute arose in this regard. Iscor contended that the agreement had
lapsed due to the non-fulfilment of the suspensive
conditions, while
the appellant contended that the time for their fulfilment had been
extended and that the agreement remained
valid. What led to the
current litigation, however, was an assertion by Iscor that the
agreement was of no force or effect as it
was prohibited by s 67 of
the Ordinance.
[7] In
October 2012 the Reclamation Group instituted an action in the
Gauteng Local Division, Johannesburg, for an order declaring
the
agreement to be valid and binding, and in the alternative claims
based on unjustified enrichment. The enrichment claims related
to
improvements, totalling some R73 million. The appellant, as the
purchaser, was the claimant in respect of the primary relief.
The
second and third respondents were the claimants in respect of the
alternative enrichment claims. Since the second and third
respondents
played no part in the present appeal, I refer to ArcelorMittal South
Africa Ltd simply as ‘the respondent’.
[8] When
the trial commenced before Wepener J he made an order, by agreement,
for the separation of the issues in terms of Uniform
rule 33(4). Four
separate issues were identified for determination. Three of these
fell away during the trial, so that the only
remaining issue which
the learned judge was asked to decide was whether the agreement was
valid and enforceable. He held that the
agreement was void as it was
in conflict with s 67, and dismissed the claim for declaratory
relief, with costs. The appeal before
us is with his leave.
[9]
Section 67 of the Ordinance provides as follows:
‘
Prohibition
of certain contracts and options,
(1)
After an owner of land has taken steps to establish a township on his
land, no person shall, subject to the provisions of section
70-
(a)
enter into any contract for the sale, exchange or alienation or
disposal in any other manner of an erf in the township;
(b)
grant an option to purchase or otherwise acquire an erf in the
township,
until
such time as the township is declared an approved township: Provided
that the provisions of this subsection shall not be construed
as
prohibiting any person from purchasing land on which he wishes to
establish a township subject to a condition that upon the
declaration
of the township as an approved township, one or more of the erven
therein will be transferred to the seller.
(2)
Any contract entered into in conflict with the provisions of
subsection (1) shall be of no force and effect.
(3)
Any person who contravenes or fails to comply with subsection (1)
shall be guilty of an offence.
(4)
For the purposes of subsection (1)-
(a)
“steps” includes steps preceding an application in terms
of section 69(1) or 96(1).
(b)
“any contract” includes a contract which is subject to
any condition, including a suspensive condition’.
[10] It
was common cause that neither s 70 nor the proviso in s 67 finds any
application in this matter. The first two properties
referred to in
the agreement formed part of another approved township at the time of
the sale and do not feature in the dispute,
save to the extent that
it was common cause that the transaction was indivisible. The real
dispute between the parties in the court
a quo, and in this appeal,
was whether Portion 32 fell within the definition of ‘erf’
in the Ordinance.
[11]
‘Erf’ is defined in section 1 of the Ordinance as
‘
land
in an approved township registered in a deeds registry as an erf,
lot, plot or stand or as a portion or the remainder of any
erf, lot,
plot, or stand or land indicated as such on the general plan of an
approved township, and includes any particular portion
of land laid
out as a township which is not intended for a public place, whether
or not such township has been recognised, approved
or established as
such in terms of this Ordinance or any repealed law’.
[12] It
will be noted that the definition consists of two distinct parts. The
first refers to land in an approved township. The
second refers to
land laid out as a township, whether or not such township has been
recognised, approved or established as such
in terms of the Ordinance
or any repealed law. The first part of the definition is not relevant
to s 67(1) as the prohibition for
which it provides only applies for
as long as the township has not been declared an approved township.
The issue therefore was
whether Portion 32 fell within the second
part of the definition.
[13] It
was common cause on the pleadings, and before us, that Portion 32
formed part of land which had been laid out for a proposed
township,
to be known as Benoni Extension 74. It was also common cause that
before the agreement of sale was concluded the owner
of the land had
taken steps to establish a township on its land, as contemplated in s
67(1).
[14] Mr
Dacomb, a professional town planner, testified on behalf of the
respondent. He had been involved, in his professional capacity,
with
the application for the establishment of the township since about
2002. He testified that the land that formed the basis of
the
application for the township included Portions 32 and 14, which were
intended collectively to become erf 8740 in the new township.
This
was indicated on the general layout plan of the township. The
township was approved by the local authority in 2009. Portions
32 and
14 form part of it and collectively constitute erf 8740.
[15] It
was submitted on behalf of the respondent that in those circumstances
Portion 32 fell within the definition of ‘erf’
as it was
a particular portion of land laid out as a township which has not
been recognized, approved or established as such in
terms of the
Ordinance or any repealed law, and was not intended for a public
space.
[16]
Counsel for the appellant submitted that Portion 32 did not fall
within the definition of ‘erf’ as it was not a
particular
portion of land in the proposed township. In other words, although it
was a particular portion of the land which was
laid out as a
township, it would lose its identity once the township was
established because it would become part of a larger plot
(Erf 8740),
without being demarcated as a particular portion of it.
[17]
Counsel however accepted that if the merx had been described in the
agreement as erf 8740 in the proposed township, then the
agreement
would have fallen foul of the prohibition in s 67(1). On the
interpretation contended for by the appellant a portion
of land laid
out as a proposed township, which is intended to form part of a
larger plot in the township, thereby losing its identity,
can
be sold validly as it does not fall within the definition of ‘erf’.
The same land would however be an ‘erf’
as defined if it
was intended to retain its identity in the township. This
interpretation is not supported by the wording of the
definition.
[18] The
context here is the prohibition in s 67(1). ‘Township’ is
defined in the Ordinance as any land laid out or
divided into or
developed as sites for the purpose and in the manner set out in the
definition. The prohibition in s 67(1) applies
until the township is
declared an approved township. The purpose of the prohibition is to
protect buyers of properties in a proposed
township. They may find
later that the developer is unable to provide the engineering
services which are essential for the establishment
of the township,
or the township may for some other reason never be approved in terms
of the Ordinance. See in this regard
Soja (Pty) Ltd v Tuckers Land
& Development Corporation (Pty)
Ltd
1981 (3) SA 314
(A),
where the court dealt with a similar prohibition in s 57A of the
Transvaal Town-Planning and Townships Ordinance 25 of 1965,
which was
the predecessor of the Ordinance we are dealing with. Trollip JA
referred to the risk of services not being provided
and Kotzé
JA referred to the risk of financial loss by the buyers. In
Tuckers
Land and Development Corporation (Pty) Ltd v Strydom
1981 (3) SA
231
(O), Flemming J referred (at 236F) to the potential prejudice of
purchasers of unproclaimed erven, e.g. where a purchaser pays the
purchase price, only to find much later that the establishment of a
township will not be permitted.
[19] I do
not see the logic, when interpreting the definition of ‘erf’,
in distinguishing between a portion of land
laid out as a township
which will retain its identity in the approved township, and one
which will be subsumed in a larger plot,
thereby losing its former
identity. In both cases the purpose of the prohibition in s 67 is
apparent.
It seems to me that once an
owner of land has laid it out as a township, and has taken steps to
establish the township, then the
prohibition in s 67 applies to any
particular portion of that land. It makes no difference whether the
particular portion is intended
to retain or lose its identity in the
township when it is approved.
[20] It
is true, as counsel pointed out, that an owner of land may in terms
of s 97 of the Ordinance apply to the local authority
for its consent
to enter into a contract contemplated in s 67(1). The local authority
may give its consent subject to any condition
it may deem expedient,
and the applicant is obliged, before the contract is entered into, to
furnish to the local authority a guarantee
that he will fulfil his
duties in respect of the engineering services contemplated in the
Ordinance. It seems plain that the risks
to which I have referred
will be substantially reduced in those circumstances.
[21] As a
further string to his bow, counsel for the appellant submitted that
the second part of the definition of ‘erf’
refers to a
particular portion of land, the whole of which portion has been laid
out as a township. He said that as Portion 32
was but one of several
portions making up the land laid out as a township, it did not fall
within the definition. However, counsel’s
interpretation makes
the words ‘particular portion of’ in the definition
superfluous. It also makes the words ‘which
is not intended for
a public place’ inapposite, as the whole of a proposed township
will never be intended for a public place.
The definition of
‘township’ in the Ordinance refers to sites for
residential, business or industrial purposes or similar
purposes. In
any event, it was held in
Headermans (Vryburg) (Pty) Ltd v Ping
Bai
1997 (3) SA 1004
(SCA) that where the entire property which
has been laid out as a township is sold, the contract is not
prohibited by s 67(1) as
the land cannot be said to be an ‘erf’
as defined in the Ordinance.
[22]
Counsel’s final point was that Portion 32 did not fall within
the scope of s 67 as the mischief sought to be avoided
by it did not
exist with respect to Portion 32. He said the Reclamation Group
has been conducting its business on the properties
concerned for many
years, did not need any further services, and there was no financial
risk against which it needed to be protected.
There is nothing in the
wording of s 67 or the rest of the Ordinance to support this
approach. On the contrary, s 67(3) provides
that any person who
contravenes or fails to comply with subsection (1) shall be guilty of
an offence. It is therefore not permissible
to carve out exceptions
as far as the prohibition in the section is concerned.
[23] It
follows in my view that part of the merx in terms of the sale
agreement was an erf as contemplated in s 67, with the result
that
the agreement was of no force and effect.
[24] The
approach in the court a quo was somewhat different, although the
result was the same. It seems that neither of the parties
approached
the matter there on the basis that the first part of the definition
of ‘erf’ was irrelevant and that it
was the second part
that mattered. This led to some confusion about the relevance of the
general plan. Counsel for the appellant
submitted in the court a quo,
and in his heads of argument in this court, that the respondent
failed to prove that Portion 32 was
an erf as defined, as it did not
enter the general plan in the evidence. As a consequence there was an
application before this
court to introduce the general plan as
further evidence, which was opposed by the appellant.
[25] The
general plan seems to me to be a red herring. It did not exist when
the agreement was concluded and was only approved in
August 2011.
In argument before us counsel for the
appellant accepted that the first part of the definition
of ‘erf’
was not relevant to the present dispute. As a result of this
concession counsel for the respondent did not
pursue the application
to introduce the general plan as further evidence before us. That
application was unnecessary and the respondent
will have to bear the
costs of it.
[26] The
order of this court is as follows:
1
Subject to para 2 below, the appeal is dismissed with costs,
including those
consequent on the employment of two counsel.
2
The first respondent is ordered to pay the costs of the opposed
application
for the introduction of the general plan by way of
further evidence.
________________
JA
Ploos van Amstel
Acting
Judge of Appeal
APPEARANCES:
For
the Appellants:
CM Eloff SC (with him SW Burger)
Instructed
by:
Bowmans, Johannesburg
Matsepes
Inc, Bloemfontein
For
Respondents:
R Du Plesis SC (with him JA Venter)
Instructed
by:
Deon Rens Attorneys, Parktown
Jordaan
Attorneys, Bloemfontein