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[2019] ZAGPPHC 233
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Brooklyn Edge (Pty) Ltd and Another v City of Tshwane Metropolitan Municipality (37681/2012) [2019] ZAGPPHC 233 (26 June 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
REPORTABLE:
YES
/ NO
OF
INTEREST TO OTHER JUDGES:
YES
/NO
REVISED.
CASE NO:37681/2012
26/6/2019
In the matter between:
BROOKLYN EDGE (PTY)
LTD
FIRST PLAINTIFF
PIVOT PROPERTY
DEVELOPMENT
SECOND PLAINTIFF
And
CITY OF TSHWANE
METROPOLITAN
DEFENDANT
MUINICIPALITY
JUDGMENT
STRIJDOM AJ
INTRODUCTION
[1]
This is a contractual claim for specific performance (“the
specific performance
claim”) and, in the alternative,
cancellation and damages to be determined later) (“the damages
claim”).
[2]
On or about 31 July 2003 and at Pretoria the first plaintiff (then
known as Nieuw
Pivot Investments (Pty)Ltd and the defendant, both
duly represented entered into a written deed of sale, a copy of which
is attached
to the particulars of claim marked annexure “A1”
(“the deed of sale”).
[1]
[3]
In the specific performance claim, the plaintiff’s claim that
the defendant
perform the remaining obligations in terms of the deed
of sale concluded by the first plaintiff and the defendant, to
enable
transfer of certain properties to the first plaintiff, and the
second plaintiff(the first plaintiffs’ nominee). In the damages
claim the plaintiffs claim cancellation of the deed of sale and the
resultant damages (to be determined later).
[4]
In this judgment, I will refer to the parties and other relevant
bodies or matters,
as follows:
4.1
the first plaintiff as “Brooklyn Edge”.
[2]
4.2
the second plaintiff as “Pivot Property”.
4.3
the first and second plaintiffs’ collectively as “the
plaintiffs”.
4.4
the defendant as “the City”.
4.5
the council of the municipality as “the Council”.
4.6
the MEC of Economic Development, Gauteng Province as “the MEC”.
4.7
Adriaan Venter as “Venter” and Roestoff Venter and Kruse
attorneys as “RVK”.
4.8
Metric Marketing Group trading as ‘acceleration’ as
“MMG”.
4.9
the sale agreement which is the subject of the action as “the
deed of sale”.
4.10
the properties which were sold in terms of the deed of sale to
Brooklyn Edge as “the properties”
and the portion of
those properties which are nominated to be transferred to Pivot
Property as “the nominated properties”.
4.11
Local Government Ordinance 17 of 1939 as “the 1939 Ordinance”.
4.12
Gauteng Removal of Restrictions Act 3 of 1996 as the “GRRA”.
4.13
Local Governmental: Municipality Finance Management Act 56 of 2003 as
“the MFMA”
4.14
the Institution of Legal Proceedings Against Organs of State Act 40
of 2002 as “ILPOSA”.
COMMON
CAUSE FACTS
[5]
The following are the material facts which are not in dispute (in
terms of the pleadings
or pursuant to the evidence in court),
5.1
the citation of the parties;
5.2
on 26 June 2003, the Council resolved that the City shall dispose of
the properties, in
terms of section 79(18) of the 1939 Ordinance
(“the 2003 resolution”);
5.3
the conclusion of the deed of sale by Brooklyn Edge and the City on
31 July 2013 and that
annexure A1” to the particulars of claim
is a copy of the deed of sale;
5.4
the City commenced the process in terms of section 63,67 and 68 of
the 1939 Ordinance to
close the properties as public open space
(“closure”);
5.5
the objections which were raised to the closure of the properties
were withdrawn and accordingly
there are no public objections to the
park closure;
5.6
the City has not provided notice to the Surveyor General and
the Registrar of Deeds
to confirm that the closure has been properly
effected(“ closure certificate”) as contemplated in
section 67(9) (a)
and 68 of the 1939 Ordinance, and the closure has
therefore not taken effect;
5.7
the City accepted and processed Brooklyn Edge’s application for
rezoning and to remove
title conditions (“the rezoning
application”) in order to amend the Pretoria Town Planning
Scheme, 1974, in accordance
with annexure C to the deed of sale
(clause 7.3 of the deed of sale)(“the amendment scheme”).
However, the city
failed to decide the application;
5.8
an appeal by Brooklyn Edge in terms of section 7 of the GRRA against
the unreasonable delay
of the City in the rezoning application, was
successful and the MEC has approved the rezoning application;
5.9
the amendment scheme was approved on appeal by the MEC but has not
been published in terms
of section 7(16) of the GRRA and has
therefore not taken effect;
5.10
the plaintiff has not pursued relief in terms of a review application
relating to the issuing of the closure
certificate or the publication
of an amendment scheme;
5.11
the process contemplated in section 14(2) of the MFMA has not been
implemented in respect of the properties;
5.12
ILPOSA applies to claim 5 in the particulars of claim;
5.13
the plaintiffs did not deliver a section 3(1) notice within the
6 months period contemplated in section
3(2)(a) of ILPOSA;
5.14
tax invoices (annexures “B1 to B56” of the replication)
were issued monthly by the defendant
to the first plaintiff.
THE
EVIDENCE
Plaintiffs’
witnesses
Ronel
van Coller
[6]
Van Coller testified that she was employed as legal advisor in the
City’s legal
division in 2003. She was involved with the
applications for the purchase of the City land.
[7]
Venter acting on behalf of Brooklyn Edge made application for
the purchase of
the properties and in doing so made representations
to Van Coller. Based on this application, Van Coller prepared a
report
to the Council, which recommended the sale of the properties
to Brooklyn Edge. The Council accepted the report at a public
meeting, which report then become the 2003 Resolution.
[8]
Van Coller further testified that she had no direct interaction with
the foreign investor
referred to in the 2003 resolution but was
informed about the foreign investor via Venters’
representations and the documents
he presented relating to the
foreign investor. Van Collers’ understanding was that MMG
will hold the majority shareholding
in Brooklyn Edge and that such
shareholding would materialize at the latest upon transfer of the
properties to Brooklyn Edge.
[9]
No representations were made by Venter directly to the Council.
She testified
that in respect of the closure of the properties as
public open space, objections were made to the proposed closure which
were
later withdrawn.
[10]
RVK was appointed in terms of the deed of sale as the conveyancers to
attend to the transfer.
Van Coller believed that the rezoning of the
property could reasonably be achieved within 18 months.
[11]
Once the 2003 resolution was issued and the deed of sale was signed,
both documents were sent
to the finance department to enable it to
generate invoices in terms of which interest can be charged and
against which payment
can be made. No decision to cancel the
deed of sale was taken while she was employed by the City.
Ben Espagh
[12]
Espagh testified that in 2003, he was employed by the City as
specialist valuator in the department
Corporate Services (Property
Valuation). He was not directly involved in the valuation of
the properties but served on the
property committee which recommended
to the City’s Legal Division the proposed value at which to
sell the properties.
He cannot confirm that a written
evaluation report exists however, the name of the valuer was on the
file. His own notes
confirm that he had formed a view regarding
the market value of the property.
Louis Van der Watt
[13]
Van der Watt testified that he is the chief executive officer of the
Atterbury Group and the
plaintiffs’ are subsidiaries of those
groups. He is also the chief executive officer of the
plaintiffs.
[14]
He further testified that MMG is the foreign investor who wanted to
headquarters its South African
business in Pretoria. Van Der Watt had
discussions with MMG’s South African representative, Michael
Roots, who requested
Van Der Watt to assist MMG in identifying a
property in Pretoria for MMG’s South African head office.
[15]
Because
the development envisaged on the properties was frustrated MMG
decided to establish its headquarters in Cape Town.
There was
no formal joint venture agreement between Atterbury Group and MMG.
What would have transpired is that a shareholders
agreement would be
concluded in due course, in terms of which the foreign investor and
Atterbury would hold shareholding in Brooklyn
Edge, which
shareholding would be pro rata to the floor area it would occupy
relevant to the total floor area of the development,
which would
result in a majority shareholding in MMG. The transfer of the
majority shareholding to MMG would occur upon transfer
of the
properties.
[16]
Van der Watt was involved in the process of developing plans for the
relocation of the sport
facilities to the Trim Park properties as,
envisaged by the deed of sale. Following onsite visits together
with City officials
and establishing what the City required, plans
were prepared by Jaques Niemann Designers (architects).Van der Watt
had engagements
with Michelle Wheeler of the City.
[17]
The City indicated where on Trim Park it wanted the proposed sport
facilities to be allocated
and the plans presented were based on the
City’s input. The plans make provision for tennis courts,
and a possible
5
th
, whereas the existing facilities on the
properties make provisions for 6 tennis courts. The City
indicated that the remaining
2 tennis courts should be constructed in
Soshanguve but never identified the specific site.
Derick
Griffiths
[18]
Griffiths testified that he is a professional property evaluator.
He valued the properties
by considering its highest and best use and
by looking at comparable sales. The value he come to is
approximately R40 million(R45 582 500.00-incorporating
50%
of the sports club replacing costs Brooklyn Edge is obliged to
pay in terms of clause 10.1 of the deed of sale.)
Daniel
Conrad Koen
[19]
Koen testified that he is a qualified Quantity surveyor. He
testified that his quantity
surveying firm (GK Projects) in
2005 prepared a cost plan based on drawings of Jaques Niemann
Designers (Architects)
[core bundle p891-895] (“the drawings”),
which provided for the construction of sport facilities on Trim
Park.
He further testified that the costs plans are reasonable
estimates of the costs to construct the work envisaged by the
drawings.
He testified that the drawings make provisions for
tennis courts whereas the existing sport facilities on the properties
make provisions
for 6 tennis courts. He did not have regard to
the plans of the existing sports facilities on the properties but
that GK
Projects simply prepare costings based on the drawings.
Peter
John Dacomb
[20]
Dacomb testified that he is a registered professional Town planner.
He was appointed by
Brooklyn Edge to conduct on its behalf the
rezoning application Plan. Practice also conducted the appeal
to the MEC against
the City’s’ unreasonable delay in
deciding the rezoning application. The appeal succeeded-the MEC
found there
was unreasonable delay on the side of the City and
decided the merits of the rezoning application in the applicants’
(Brooklyn
Edge) favour. He also confirmed the contents of his
report.
DEFENDANTS’
WITNESSES
Andre
Zybrand
[21]
Zybrand testified that he is a qualified valuer. He has been a
valuer for 43 years.
[22]
He testified that he valued the said properties by considering its
highest and best use and looked
at comparable properties. He
had regard to the properties set out in annexure C to his report and
based thereon determined
the properties to be the value of
R69 000 000.00. In a later evaluation he increased
his valuation to R72 million.
David
Neil Pienaar
[23]
Pienaar testified that he is a registered quantity surveyor. He
testified that the drawings
supplied to Koen does not mention that it
represent the original buildings or drawings to say it is comparable
with the original
drawings. There is no indication that the new
drawings represent the original buildings.
[24]
He testified that the assumptions are made in the costs plans and
that the drawings are not approved
building plans. These are
estimated costs to construct the project and may differ from actual
costs.
Gaza
Douglas Nagy
[25]
Nagy testified that he is a registered professional Town planner and
has been practising for
35 years. According to him 18 months to
3 years would be a reasonable period for the closure and rezoning of
the properties.
Evaluation
of the evidence
[26]
This matter turns largely on various legal points relating to the
interpretation of certain provisions
of the deed of sale and relevant
statutes. However, the court will take into consideration the
evidence tendered by the parties.
[27]
The evidence of van Coller is clear that it was not represented to
her that MMG was the current
majority shareholder in Brooklyn Edge
when Venter made representations to her, in the process of applying
to acquire the properties,
prior to the 2003 resolution and
conclusions of the deed of sale. There is no contradiction
between what-was conveyed to
van Coller about the foreign investor,
what she understood and what was contained in her report to Council
which became the 2003
resolution. Council made its decision to
sell the properties to Brooklyn Edge purely based on Van Collers’
report to
Council.
[28]
Espagh cannot confirm that a written valuation report exists.
However the fact that the
valuation committee sat to consider the
market value of the property establishes the probability that there
was a valuation done.
Espaghs’ own notes confirm that he
had formed a view regarding the market value of the property.
[29]
The 2003 resolution stands until it is set aside. There is no
counterclaim to set the 2003
resolution aside.
[30]
Van der Watts’ evidence is clear that there was to be a
majority shareholding in favour
of MMG in Brooklyn Edge, which would
have been calculated proportionate to MMGs’ area of occupation
of the floor area of
the envisaged development, and that such share
transfer would occur upon transfer of the properties.
[31]
The evidence of the valuators has no bearing on whether the
plaintiffs’ have succeeded
in proving their pleaded cause of
action.
[32]
In the joint report of Griffiths and Zybrand, Zybrand conceded that
two of the properties of
annexure C are not comparable and that he
would have to review his valuation.
[3]
During cross-examination Zybrand conceded that with the exclusion of
the two non-comparable properties, his valuation of
the properties
(i.e the properties which are the subject of the deed of sale) would
be in the region of R40 000.00.
[33]
The Quantity surveyors Koen and Pienaar testified that the estimate
may be slightly lower or
slightly higher than actual costs.
[34]
Dacomb (Town Planner) was involved in the rezoning application and
the appeal to the MEC against
the City’s’ unreasonable
delay. Nagy’s’ (Town Planner) evidence were
focussed on the reasonable period
for the closure and rezoning of the
properties (18 months to 3 years) according to him.
THE
ISSUES TO BE DECIDED
IS
THE DEED OF SALE INVALID?
[35]
The City’s’ contention is that the deed of sale is
invalid because of alleged non-compliance
with the provisions of
section 79(18)(b) and (d)(ii) relating to the publication and
valuation processes preceding the 2003 resolution.
[36]
Section 79(18)(d)(ii) in peremptory terms provides that prior to
defendants’ causing a
notice of the Council Resolution to be
published for public comment, it shall first cause a valuer to
evaluate both-
(a)
the immovable property it wishes to sell; and
(b)
the substituting property to which the existing sport facilities are
to be relocated and
erected.
[37]
Section 79(18)(e)(ii) further provides that the Defendants Council
shall not sell, alienate or
dispose of immovable property or “
at
a lower amount than the amount at which it has been evaluated.”
[38]
It was submitted by counsel for the defendant that the jurisdictional
fact necessary to exercise
the power conferred to Council in section
79(18)(a)(i) was absent in that the objections submitted in terms of
Section 79(18)(c)
as a result of a defective Section 79 (18)(b),
would necessarily have been made without the benefit of mature
consideration of
all relevant information. It was submitted
that this failure to comply with mandatory statutory provisions would
result in
“
the absence of the necessary jurisdictional fact
the Defendants’ Council could not validly exercise the power,
with the result
that the agreement was ab initio invalid
.”
[39]
The 2003 resolution does not become a nullity in consequence of the
mere assertion that there
was non-compliance with the 1939 Ordinance.
[40]
The question whether a legality challenge by the City is permissible
depends on whether a collateral
challenge may be raised against the
plaintiffs’ enforcement of the deed of sale, to which the City
is a party.
[41]
In
Oudekraal
[4]
the SCA held as follows:
“
It will
generally avail a person to mount a collateral challenge to the
validity of an administrative act where he is threatened
by a public
authority with coercive action precisely because the real force of
the coercive action will most often depend upon
the legal validity of
the administrative act in question. A collateral challenge to
the validity of the administrative act
will be available in other
words, only if the right remedy is sought by the right person in the
right proceedings
.”
[42]
The plaintiffs’ are not public authorities. The conclusion of
the deed of sale was not
an exercise of public power, but a private
treaty, preceded by the 2003 resolution passed by the Council.
[43]
The plaintiffs’ are not taking coercive action in enforcing the
deed of sale. Once
the deed of sale was concluded, it is
governed by contract law and not public law.
[5]
[44]
The enforcement of a contract to which the City is a party does not
constitute circumstances
under which a collateral challenge can be
raised, because the City is not “
threatened by the public
authority with coercive action
”. To raise such a
challenge in contractual proceedings are not the “
right
remedy…in the right proceedings.
”
[45]
It was incumbent upon the City to bring a legality review of its own
processes. The City
has opted a supine approach in these
proceedings and has failed to launch a challenge to the legality of
its own perceived irregularities
in concluding the contract with the
plaintiffs’.
[6]
IS
THE DEED OF SALE VOID FOR VAGUENESS?
[46]
The City contends that the purchase price is vague because the
replacement costs (which does
not have a specified value) of the
sport facilities has to be deducted from the purchase price.
[47]
It was submitted by counsel for the defendant that one of the
essentialia of an agreement of
sale is that the purchase price should
be certain or ascertainable. This is also an express
requirement in terms of the
Alienation of Land Act, No 68 of 1981
.
It was further submitted that the evidence established that the
actual costs of the relocation of the sports facilities
have to date
only been estimates and the actual costs have never been established.
[48]
In clause 1.1 of the deed of sale, the purchase price is determined
as R9 500 000.
The fact that an amount stands to be
deducted from the purchase price (being the cost to replace the sport
facilities) does not
render the purchase price vague. It does
not increase or decrease or make uncertain what the value of the
purchase price
is.
[49]
A contract of sale for a reasonable price is valid as the price can
be determined with reference
to objective tests. The reference
to the “
the same existing standards and sizes thereof
”
in clause 10.1 represent objective criteria. The cost to be
incurred is the reasonable costs which is also objectively
determinable.
IS
THE DEED OF SALE SUBJECT TO A SUSPENSIVE CONDITION?
[50]
The City made the following submissions:
50.1
That the 2003 deed of sale was subject to positive suspensive
conditions, that the closure and rezoning of
the property had to be
successfully finalised;
50.2
That these suspensive conditions suspended, in whole or in part, the
operation of the obligations flowing
from the contract pending the
occurrence of the specified events (closure and rezoning);
50.3
That the 2003 deed of sale contained an implied alternatively tacit
term that the closure and rezoning had
to be successfully finalised
within a reasonable time;
50.4
That clause 1.2.2 of the deed of sale expressly provided for the
mutual cancellation of the “transaction”
in the event of
the non-occurrence of the specified events (closure and rezoning).
[51]
It was further submitted by counsel for the City that the matter of
Hanuscke
Beleggings CC v Kungwini Local Municipality
[7]
is on material respects on all fours with the present matter, even
though the contract did not make provision of the mutual cancellation
of the deed of sale in the event of the non-fulfilment of the
suspensive conditions.
[52]
The question whether the deed of sale coming into force was subject
to the fulfilment of suspensive
conditions is not a question of
contractual interpretation.
[53]
Clause 1.2.1 of the deed of sale provides that should the closure and
rezoning not be finalised
successfully, the transaction shall be
mutually cancelled by the parties, in which instance the City shall
refund the payments
made in terms of the deed of sale, save for the
rates and services charges. Clause 1.2.2 does not use the
language “subject
to” or that the deed of sale would
“lapse” or “be void” if the requirement in
clause 1.2.2 is not
met.
[54]
Clause 1.2.1 provides that the purchase price deposit must be paid on
signature of the deed of
sale. Clause 1.2.2 provides that
interest shall be payable at the latest after 18 months from
conclusion of the deed of sale.
The identification of the
substituting property by the defendant shall be done within 30 days
of conclusion of the deed of sale
in terms of clause 1.2.2 none of
these clauses provide that its provisions are suspended until the
proviso of clause 1.2.2 of the
deed of sale is achieved.
[55]
The proviso in clause 1.2.2 is not construable as a suspensive
condition.
[56]
I am also of the view that an implied or tacit condition cannot be
implied into the proviso in
clause 1.2.2 to the effect that the
closure and rezoning of the properties had to be achieved within a
reasonable time. There
is no room (given the express provisions
of the deed of sale) for the importation of the tacit or implied
condition contended for
by the City.
[8]
[57]
The
Hanuscke
case can only be on all fours with this matter if
the terms of the contract in
Hanuscke
was the same as the deed
of sale. It was accepted in
Hanuscke
that the contract
was subject to suspensive conditions that closure and rezoning had to
be achieved. In
casu
the deed of sale is not subject to
suspensive conditions
.
[58]
Even if one assumes that the deed of sale has a tacit condition which
requires the closure and
rezoning to be achieved within a specific
period, the doctrine of fictional fulfilment of conditions has been
extended to the situation
where there has been a deliberate
frustration of contractual performance.
[9]
[59]
It was contended by the City that fictional fulfilment is not
applicable as per the Hanuscke
case. It was further argued that
the conditions are for the publics benefit and is statutory of nature
and cannot be deemed
to be fulfilled.
[60]
In my view the City, in breach of the deed of sale, has deliberately
frustrated the processes
of completion of the closure and rezoning of
the properties in order to prevent transfer of the properties.
Is
the deed of sale void for non-compliance with the ALA?
[61]
The ALA requires that the material terms of a contract of sale of
land must be in writing.
[62]
The deed of sale indicates the contracting parties (Brooklyn Edge and
the City) and the entity
that may be nominated to take transfer of
the nominated properties (Pivot Property) –see clause 7.4 of
the deed of sale,
the purchase price and a prescription of the
properties which are the subject of the sale. The identities of
the purchaser
and seller, the purchase price and the merx are the
material elements of an agreement of sale. The fact that Pivot
Property
is not a signatory to the deed of sale does not render it
non-compliant with the deed of sale.
IS
WRITTEN ACCEPTANCE BY PIVOT PROPERTY OF RIGHT TO TAKE TRANSFER OF THE
NOMINATED PROPERTIES REQUIRED?
[63]
It was contended by counsel for the City that the nomination of the
second plaintiff (Pivot Property)
is contrary to the express
provisions of the 2003 deed of sale the mandatory provisions of the
Land Alienation Act:
(a)
the first plaintiff has in accordance with clause 7.4 failed in
writing to duly nominate
the second plaintiff.
(b)
the second plaintiff has failed in writing to accept the provisions
of the deed of sale,
which written acceptance had to be addressed to
the defendant.
[64]
It was argued by counsel for the plaintiffs that the deed of sale
sets no requirements that Pivot
Properties acceptance of the deed of
sale had to be in writing.
[65]
I conclude that Pivot Property is not entitled in contract to claim
the nominated properties
because it did not accept the nomination in
clause 7.4 of the deed of sale.
WAS
THE DEED OF SALE INDUCED BY MISREPRESENTATION?
[66]
The only representations made to Counsel was the report of Van Coller
which became the 2003 resolution.
The evidence of Van Coller is
that it was not represented to her that MMG was the current majority
shareholders in Brooklyn Edge
when Venter made representations to her
in the process of applying to acquire the properties prior to the
2003 resolution.
[67]
The City has not proven that the conclusion of the deed of sale was
induced by misrepresentation.
The evidence does not establish
that the representations in Van Collers’ report were factually
inaccurate when the report
served before Council. Council made
its decision to sell the properties to Brooklyn Edge purely based on
Van Collers’
report to Council.
COMPLIANCE
WITH ILPOSA
[68]
Section 3(2) of ILPOSA provides that a notice to an organ of state of
the intention to institute
legal proceedings for damages must be
served within 6 months from the date the debt become due.
[69]
Claim 4 is predicated on this Court exercising its discretion against
the ordering of specific
performance and declaring that the deed of
sale has been cancelled. Alternatively, it is based on the
City’s’
failure to give effect to an order for specific
performance. The claim for damages (to be postponed in terms of
claim 4)
flows from the cancellation of the deed of sale.
That debt will only arise when the deed of sale is cancelled, which
will only follow if the court exercises its discretion against the
ordering of specific performance or when the City fails to comply
with an order for specific performance.
[70]
In my view there is no late notice in terms of section 3 of ILPOSA
concerning the debt which
is the subject of claim 4.
[71]
It was conceded by the plaintiffs’ that ILPOSA applies to claim
5 in the particulars of
claim. It does not apply to claims 1 to
3 because those are specific performance claims and the Act applies
only to claims
for damages.
[72]
Even if one assumes that ILPOSA is applicable to claim 4 and 5, the
Court may grant condonation
if the debt has not been extinguished by
prescription, good cause exists for the failure by the creditors, and
the organ of state
has not been unreasonably prejudiced by the
failure.
[73]
The section 3 notice was served in May 2012. The MECs’
decision in the rezoning appeal
was delivered in March 2010 but only
finally corrected in November 2011. The City has not asserted any
prejudice in consequence
of not receiving the section 3 notice
earlier than what it did. The plaintiffs have a cause of action
in terms of the deed
of sale which in my view has not prescribed.
In these circumstances the failure to comply with section 3(2)(a) of
ILPOSA
is condoned.
MFMA
[74]
Section 14 (2) of the MFMA requires of the City to take certain steps
prior to disposing of its
capital assets. It reads as follows:
“
(2) A
municipality may transfer ownership or otherwise dispose of a capital
asset other than one contemplated in subsection (1),
but only after
the municipal council, in a meeting open to the public-
(a)
has
decided on reasonable grounds that the asset is not needed to provide
the minimum level of basic municipal services; and
(b)
has
considered the fair market value of the asset and the economic and
community value to be received in exchange for the asset
.”
[75]
The MFMA came into force subsequent to the 2003 resolution and the
conclusion of the deed of
sale. The question is whether it
retrospectively affected the rights and obligations acquired in terms
of the deed of sale.
[76]
Section 12(2)(c) of the Interpretation Act 33 of 1957 provides that
where a law repeals any other
law, then unless the contrary intention
appears, the repeal shall not affect any right acquired or
accrued under any law
so repealed.
[77]
It was contended by the City that defendant is approving the transfer
of ownership of a capital
asset as contemplated in Section 14(2) of
the MFMA it does not give retrospective effect to the MFMA. In
such circumstances
the defendant is merely giving effect to the
limitations imposed upon it by the MFMA. It was further
submitted that the provisions
of the MFMA are prospective rather than
retrospective. In other words the MFMA prescribe the manner in
which approvals of
all transfer of ownership of capital assets are
managed.
[78]
The City’s decision to dispose of the properties was taken in
terms of the legislation
to the disposition of its assets at such
time (the 1939 Ordinance). The conclusion of the deed of sale
was authorised in
terms of the City’s’ resolution
pursuant to it following that legislative process. The MFMAs’
promulgation
thereafter does not undo the rights which were procured
in terms of the aforesaid processes. The question is whether
rights
to procure transfer vested before the MFMA.
[79]
Prior to promulgation of the MFMA a statutory process providing for
public interest to be considered
for purposes of disposing of the
properties was followed. (in terms of the 1939 Ordinance)
and the City resolved to
sell the properties to the plaintiff.
[80]
The MFMA does not operate retrospectively and does not impose a
new statutory public participation
process and a new requirement to
resolve to dispose of the properties, where those processes were
implemented prior to the promulgation
of the MFMA in terms of the
legislative regime that operate at the time.
TACIT
TERM PERTAINING TO INTEREST
[81]
Clause 1.2.2 of the deed of sale provides for the payment of interest
by Brooklyn Edge after
the earliest of the closure and rezoning of
the properties or 18 months.
[82]
The City’s frustrating of the closure and rezoning delays the
transfer of the properties
to the plaintiffs’ which results in
a prolonging of the period of interest payments on the purchase
price.
[83]
It was decided in Mac Duff E Co Ltd (in Liquidation v Johannesburg
Consolidated Investment Co)
Ltd
1924 AD 573
at 611 that:
“
a branch of the
broad equitable rule of law that no one can take advantage of his own
wrong, for it is unjust and contrary to good
faith that he should do
so.”
[84]
In my view the deed of sale contains a tacit or implied term that in
the event of the defendant
delaying the closure and rezoning of the
properties, the period of delay would be disregarded in calculating
the 18 months period
contemplated in clause 1.2.2 of the deed of
sale.
PAYMENT
OF DEPOSIT
[85]
Clause 1.2 of the deed of sale provides that payment of the
deposit must be made to the
City’s’ chief financial
officer. The evidence presented established that Brooklyn Edge paid
the deposit of R950 000.00
to the conveyancers upon instruction
of the City’s’ representative (Bekink). The deposit
was paid to the account
nominated by the City.
[86]
If the City wants to assert that Brooklyn Edge must pay the deposit
to the chief financial officer
and is in breach for not doing so, it
must afford Brooklyn Edge 30 days’ notice to remedy such breach
in terms of clause
11 of the deed of sale.
SUMMONS
PREMATURE
[87]
The issues are whether, prior to closure rezoning and fulfilment by
the plaintiff of all its
obligations in terms of the deed of sale,
the claim for transfer of the properties is premature. On the
one hand the City
argues that the right to claim transfer of the
properties has not arisen, and on the other that the right to
transfer of the properties
has prescribed.
[88]
The plaintiff acknowledge that the claim for transfer follows the
closure and rezoning of the
properties. Transfer is claimed
consequent to the closure(for issuing of the closure certificate) and
rezoning (by publication
of the amendment scheme) of the properties.
[89]
The City is obligated in term of section 67(9)(a) and 68 of the 1939
Ordinance to submit the
closure certificate to the Surveyor General
and the Registrar of Deeds.
[90]
The appeal in the rezoning application was upheld and section 7(16)
provides that the registrar
appointed by the MEC is the incumbent
person that must publish the approved amendment scheme. In my
view the claim for transfer
is not premature.
ADMINISTRATIVE
ACTION
[91]
The issue is whether the plaintiffs must take on review the failure
of the City to submit the
closure certificate to the Surveyor-General
and the Registrar of Deeds and may not in contract claim that the
City submit the closure
certificate.
[92]
The steps (following the decision to close the properties as public
open space) are not administrative
action.
[10]
[93]
A PAJ review is not required in response to the City’s failure
to take these steps.
Clause 7.1 of the deed of sale provides
that City must follow the provisions of section 67 of the 1939
Ordinance for purposes of
the closure of the properties. The
issuing of the closure certificate flows from its obligation to
implement the section
67 process. The City is not shielded
because it is a organ of state that performs administrative functions
against the enforcement
of obligations its contracted to perform by
private treaty.
[11]
PRESCRIPTION
[94]
The defendant has pleaded that the following debts have in terms of
the provisions of section
11 of the
Prescription Act 68 of 1969
prescribed:
94.1
close the property in terms of the provisions of the 1939 Ordinance;
94.2
the right of second plaintiff to exercise the right to accept benefit
as provided for in the deed of sale
concluded between first plaintiff
and defendant;
94.3
claim for transfer of the property alternatively claim for
cancellation of contract and damages; alternatively
damages equal to
amount of interest on the balance purchase price from 15 January 2007
until date of registration calculated in
terms of clause 1.2.2 of the
2003 deed of sale.
94.4
condonation in terms of section 3(4) of the Legal Proceedings Act;
94.5
claim based on the provisions of clause 10.1.1 of the 2003 deed of
sale;
94.6
claim to compel defendant to comply with its statutory or contractual
obligation to close the property;
94.7
claim for breach of statutory obligation to close the property, and
94.8
claim for breach of statutory obligation to rezone the property
[95]
Plaintiffs allege that the right to claim transfer against payment of
purchase price has not
prescribed in terms of section 11 of the
Prescribed Act on the basis of the following:
95.1
that the defendants’ issuance of monthly statements to the
first plaintiff constituted an acknowledgement
of debt, which
acknowledgement interrupted prescription in terms of
section 14(1)
of
the
Prescription Act, in
that prescription ran afresh from the date
of each of the aforesaid tax invoices; and
95.2
that the defendants’ obligation in terms of the 2003 deed of
sale to close the property and publish
the amendment scheme are
obligations reciprocal to the plaintiffs’ obligation to take
transfer and make payment of the purchase
price in terms of the 2003
deed of sale which reciprocal debts have yet to become prescribed.
[96]
It is trite that prescription commences to run as soon as the debt
becomes due, meaning that
from the date it becomes immediately
claimable by the creditor and immediately payable by the debtor.
[97]
The City’s contention is essentially that everything in the
deed of sale that has not been
implemented has prescribed. Not
every performance contemplated by the deed of sale constitutes a
debt. The right to
accept the nomination to take transfer of
the nominated properties, the right to the issuing of the closure
certificate and the
right to the identification of the substituting
property by the City are not debts because they are not obligations
to pay money,
deliver goods or render services.
[98]
The debt (as meant in the
Prescription Act) in
terms of the deed of
sale is the right to take transfer of the properties. That debt
will only become due (as meant in section
12(1) of the
Prescription
Act) when
it is immediately claimable.
[12]
[99]
Transfer of the properties is only immediately claimable in terms of
the deed of sale when the
closure and rezoning of the properties have
been affected –clause 7 of the deed of sale.
[100]
The debt (transfer of the properties) is not yet due and prescription
of that debt has not commenced.
[101]
Monthly tax invoices were issued by the defendant to the first
plaintiff in the period 13 October 2003-25 January
2013 pertaining to
the outstanding purchase price and interest thereon arising from the
purchase of the properties. It is
not in dispute that these tax
invoices were rendered by the City.
[102]
Each of the aforesaid monthly statements individually constitutes an
express or tacit acknowledgment by the defendant
of the liability due
in terms of the deed of sale dated 31 July 2013.
[13]
[103]
Section 14
of the
Prescription Act 68 of 1969
provides that:
“
(1)
The running of the prescription shall be interrupted by an express or
tacit acknowledgement of
liability by the debtor.
(2)
If the running of prescription is interrupted as contemplated in
subsection (1), prescription
shall commence to run a fresh from the
day on which the interruption takes place or, if at the time
thereafter the parties postpone
the due date of the debt from the
date upon which the debt again becomes due.
”
[104]
The summons was issued on 29 June 2012. By rendering the tax
invoices (continuously for a period of 10 years)
the City’s’
conduct objectively created the impression that the City admitted the
rights and obligations that arise
from the deed of sale.
[105]
A prescription period of 3 years could not have completed in respect
of any claim in terms of the deed of sale
prior to judicial
interruption of prescription by service of summons in January 2012.
CONCLUSION
[106]
The evidence establishes that the City is the cause of the non-
implementation of the deed of sale. The
process of closure was
started, objections were withdrawn, and the City ought then to have
issued the closure certificate, but
did not. The rezoning
application was launched and supported by the City Planning
Committee. The City ought to have
made a decision but did not.
[107]
Brooklyn Edge appealed successfully against the unreasonable delay
and procured approval of the rezoning from
the MEC in November 2011.
The City ought then to provide to the registrar the necessary
documents and information to enable
the publication of the amendment
scheme in the provincial gazette. The evidence shows Brooklyn
Edge’s readiness to
implement the deed of sale and the City’s
recalcitrance.
ORDER
[108]
In my view the plaintiffs’ are entitled to claim specific
performance.
[109]
In the result;
The Draft order marked
X as amended is made an order of court
.
JJ STRIJDOM
ACTING
JUDGE OF THE HIGH COURT
Matter
heard on:
13 May 2019
Judgment
delivered:
26 June 2019
Counsel
for Plaintiff:
ADV EC LABUSCHAGNE SC
AND HP PRETORIUS
Attorneys
for Plaintiff:
ADAMS &ADAMS
Counsel
for Defendant:
ADV T STRYDOM SC
AND T MKHWANAZI
Attorneys
for Defendant:
MPONYANA LEDWABA INC
[1]
See Deed of sale p 31 Annexure “A1”
[2]
Brooklyn Edge was formerly named Nieuw Pivot-the name appearing as
purchaser in the deed of sale.”
[3]
See expert bundle p 200
[4]
2004(6) SA 222(SCA) at par35
[5]
Government of the Republic of South Africa v Thabiso Chemicals PIL
2009(1)SA 163 SCA at par 18
[6]
See also Merafong City Local Municipality v Anglo Gold Ashanti
Limited
(2016) ZA CC 35
at para 41
[7]
2012 JDR 1654(SCA)
[8]
Wilken NO v Voges 1994(3) SA 130 (A)
[9]
Du Plessis No and Another v Galdco Motor Cycle Supplies (Pty) Ltd
2009(6) SA 617(SCA).
[10]
LAWSA 3
rd
ed Vol 2 par 29 referring to Kuzwayo v
Representative of the Executor Estate late Mailela 2011(2) ALLSA 599
(SCA) par 28
[11]
Cape metropolitan Council v Metro Inspection Services (Western Cape)
2001 (3) SA 1013
at par 20-22 SCA at 1025G
[12]
Benson v QWalter 1984 (1) SA 73 (A) 82
[13]
See Cape Town Municipality v Allie 1981(2) SA 1(C)