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[2019] ZANCHC 61
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Dorfling and Another v Gamagara Local Municipality (790/2017) [2019] ZANCHC 61 (20 December 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
NORTHERN
CAPE DIVISION, KIMBERLEY
Not
reportable
Case
No: 790/2017
In
the matter between:
Cornelius
Hermanus Dorfling
First Plaintiff
AntoniTa
Dorfling
Second Plaintiff
And
Gamagara
Local Municipality
Defendant
Date
heard: 26 and 28 November 2019
Date
Delivered: 20 December 2019
JUDGMENT
Phatshoane
AJP
[1]
Mr Cornelius Hermanus Dorfling and Ms Antonita Dorfling, the first
and second plaintiff, are married
to each other in community of
property. They instituted action against Gamagara Local Municipality,
the defendant, to enforce a
contract of sale of an immovable property
they alleged to have concluded with the municipality. They tender an
amount of R860 000.00
(exclusive of VAT) as the purchase price
for the property in question and seek an order that the municipality
be ordered to sign
all the necessary documents to give effect to the
transfer of the immovable property concerned into their names,
including but
not limited to a written Deed of Sale. In the
alternative, they claim payment of an amount of R894 000.00 with
interest on
the basis that the municipality was enriched at their
expense.
[2]
At the commencement of the trial on 26 November 2019 the parties
applied for the separation of
the contractual claim, the main claim,
from the enrichment claim. They submitted that they have orally
agreed to do so during the
pre-trial conference. However, on their
pre-trial minute filed on 19 November 2018 it is recorded that there
existed “no
necessity for the issues to be separated”. In
other words the two disputes were to be dealt with jointly. This
appears to
have been an ideal way in respect of which the issues
ought to have been disposed of because the evidence adduce in respect
of
the contractual claim may have a bearing on the other claim. The
action was certified trial ready on both the merits and the quantum
on 19 February 2019. In my view, the separation of the disputes is a
dilatory exercise. The following remarks by Madlanga J in
Eke v
Parsons
2016 (3) SA 37
(CC) at 51 para 34, albeit said in the
context of settlement agreements, are apposite:
“
The court must
still act in a stewardly manner that ensures that its resources are
used efficiently. After all, its 'institutional
interests . . . are
not subordinate to the wishes of the parties'.
[3]
In view of the fact that the parties were unprepared for the hearing
of the enrichment claim, which in their
view would have required
experts to be called at additional costs, the matter proceeded on the
basis that only the contractual
claim was to be adjudicated upon.
[4]
Mr Dorfling entered into employment with the municipality on 01
January 2005. He is a chief traffic officer
and resides at 30
Geelhout Street, Kathu (“the property”), since the date
of commencement of his duties with the municipality.
The property
belongs to the municipality whereas he is a tenant. During 2014 he
informed Mr Tumelo Patrick Maamogwe, an asset manager
in the employ
of the municipality, that he was interested in buying the property in
issue. Later on, in July 2014, Mr Maamogwe
brought to him a letter
addressed to “To whom it may concern” with the subject:
“An offer to purchase”
which was not on an official
letterhead of the municipality but signed by Mr Maamogwe. It reads:
“
This
letter serves as a confirmation that the following property is owned
by Gamagara Municipality:
Stand No: 318
Address: 30 Geelhout
Street, Kathu, 8446
Market Value: R860 000
Vat excl.
The
generation
of
an offer to purchase for [Mr] Cornelius Hermanus Dorfling with
ID…..who is currently residing at the above mentioned
property
will be in terms of section 14 and 90 of the Municipal Finance
Management Act No: 56 of 2003 which speaks to the disposal
of
municipal property. The value will be market related as per 2014
property valuation roll of Gamagara Local Municipality, where
an
arm’s length transaction is concluded between the knowledgeable
willing buyer and willing seller.
Please feel free to
contact me in case of clarity needed regarding this matter.”
[5]
Mr Dorfling discussed the above document with Mr Maamogwe including
the purchase price of the property. He
then enquired from Maamogwe
when he would receive documents approved by the municipal council
authorising him to buy the property.
On 13 August 2014 Mr Maamogwe
provided Mr Dorfling with another “Offer to purchase”
couched in almost similar terms
as the previous offer to purchase. Mr
Maamogwe advised him to cause a letter to be delivered to the
municipality which shows that
he has an interest in purchasing the
property. On 25 September 2014 Mr Dorfling lodged an application with
the municipality to
purchase the property. His written motivation was
that he had been resident on the property for eight years and had
been in the
service of the municipality for the same period. He
incurred costs in effecting improvements on the property and was
entitled to
purchase it. At the end of the application he captured
words to the effect that a favourable consideration of his
application by
the municipal manager would be appreciated.
[6]
Mr Dorfling intimates that following the lodging of his application
to purchase the property he repeatedly
requested the municipal
manager to provide him with a document or proof which would enable
him to secure a loan to buy the property.
The Municipal manager never
reverted him. Almost a year later, following the launching of his
application, Mr Dorfling’s
attorneys dispatched a letter to the
municipality, on 11 September 2015, in which they demanded that the
municipality provide their
client with the aforesaid offers to
purchase; that despite numerous verbal requests that the municipality
provide their client
with the written Deed of Sale, so as to give
effect to the offer to purchase, it failed or refused to comply.
Attached to the letter
was a Deed of Sale which the attorneys urged
the municipality to sign and return. The municipality was furthermore
placed on terms
that should it refuse to adhere to the demand this
Court would be approached to compel it to do so.
[7]
Mr Maamogwe’s version slightly differs from that of Mr
Dorfling. He says that during 2014 Mr Dorfling
approached him for
advice on how to acquire the property that he leased from the
municipality. Few days later, Dorfling requested
him to assist him in
drafting a letter to acquire this property. He furnished Mr Dorfling
with an offer to purchase which was not
on the municipality’s
official letter head. The purpose of this he says was to give Mr
Dorfling some guidance on the process
to be followed to procure a
municipal property. He addressed this to “To whom it may
concern” because Mr Dorfling explained
that he would take the
letter in question to someone who would assist him on this score. He
further advised Mr Dorfling
that persons who wish to
acquire municipal properties ought to follow the procedures as
contained in ss 14 and 90 of the Local
Government: Municipal Finance
Management Act, 56 of 2003 (the “MFMA”).
[8]
According to Mr Maamogwe Mr Dorfling ought to know that he could not
sell the property to him because only
the municipal council is
empowered to dispose of municipal properties. Mr Maamogwe reproduced
the “Offer to purchase”
on the municipality’s
letterhead because Mr Dorfling informed him that “his people”
needed the letter to be captured
on the official letterhead. He then
captured the words “Precedent” to the letter in issue to
show that this was an
example of what Mr Dorfling had to do.
[9]
What arises for consideration is whether there was a valid offer to
sell the property by the municipality
and the acceptance thereof by
Mr Dorfling capable of being enforced by this Court. Section 14 of
the MFMA reads in part:
“
14
Disposal
of capital assets
(1) A municipality
may not transfer ownership as a result of a sale or other transaction
or otherwise permanently dispose
of a capital asset needed to provide
the minimum level of basic municipal services.
(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.
(3) A decision by a
municipal council that a specific capital asset is not needed to
provide the minimum level of basic municipal
services, may not be
reversed by the municipality after that asset has been sold,
transferred or otherwise disposed of.
(4) A municipal council
may delegate to the accounting officer of the municipality its power
to make the determinations referred
to in subsection (2)
(a)
and
(b)
in respect of movable capital assets below a value
determined by the council.
(5) Any transfer of
ownership of a capital asset in terms of subsection (2) or (4) must
be fair, equitable, transparent, competitive
and consistent with the
supply chain management policy which the municipality must have and
maintain in terms of section 111….”
[10] Section 90 of
the MFMA is phrased in similar vein as s 14 but applies to municipal
entities as opposed to municipalities.
The processes foreshadowed in
s 14 of the MFMA were not followed in this case. For example, it is
axiomatic that no municipal council
meeting that was open to the
public had been called to decide on reasonable grounds that the
property in issue is not needed to
provide the minimum level of basic
municipal services or to consider its fair market value including its
economic and community
value to be received in its exchange.
[11]
On the plain reading of the two purported “offers to purchase”
they certainly do not evince any intention
on the part of the
municipal council to sell the property to Mr Dorfling. The contents
of the so-called offers to purchase are
irreconcilable with their
subject heading “An offer to Purchase”. They refer to the
“
generation”.
Put differently, the creation of an
offer to purchase which “
will be”
subject to s 14
of the MFMA. It is also inconceivable that the said offers to
purchase were not directed to Mr Dorfling as a prospective
purchaser
but are addressed to an amorphous “To whom it may concern”.
In any event, it is incredible that the municipality
could have made
an offer to purchase instead of an offer to sell the property.
[12]
Mr Dorfling’s fared badly as a witness. In his account Mr
Maamogwe advised him to direct a letter to the municipality
expressing his interest to purchase the property which he did.
Therefore, I fail to comprehend his argument that the municipality
had made an offer to him which he accepted. Even more bizarre is that
he admitted being knowledgeable that the municipality had
the choice
to either approve or disapprove his application to purchase the
property. This clearly accords with the last sentence
in his
application urging the municipality to favourably consider it.
[13]
It is also remarkable that Mr Dorfling penned the application to
purchase the property after the purported offers to
purchase were
delivered to him. If these were valid offers, as he professes them to
be, then it makes no sense that Mr Dorfling
would make an application
to the municipality to purchase the property when he could have
simply accepted the offer.
[14]
Quite significantly Mr Dorfling explained that he made an offer which
was not responded to by the seller. This is in
total contradiction of
a case he made in his particulars of claim where he states the
following in paras 6.1 and 6.2:
“
6.1 On
25 September 2014 and at Kathu, the first plaintiff [Mr Dorfling],
acting in his personal capacity and on behalf
of the second plaintiff
[Ms Dorfling], accepted the written offer.
6.2 A
copy of the written acceptance is attached hereto as annexure “C”.
[15]
Annexure “C” to the particulars of claim is the
application Mr Dorfling made to the municipality to purchase
the
property referred to earlier. When probed on the above discrepancy
his response was that he did not settle his pleadings, fair
enough.
He also intimated not knowing if the municipality took a decision to
conclude a contract with him.
[16]
The Dorflings accepted in the Rule 37 pre-trial minute, correctly so,
that they bore the onus,
inter alia
, to proof that the
municipality made a valid written offer to sell the property to them
which they accepted. In my view, they failed
to discharge that onus.
What the Dorflings want the Court to do is to compel the municipality
to conclude a contract it does
not wish to enter into or to create an
opportunity for parties to transact. That is impermissible. The
Dorflings’ contractual
claim is ill-conceived and must fail.
Costs are to follow the results on party and part scale.
Order:
1. The
contractual claim of Mr Cornelius Hermanus Dorfling and Ms Antonita
Dorfling (the first and second plaintiff)
is dismissed with costs on
party and party scale.
_________________________
MV
Phatshoane AJP
APPEARANCES:
FOR THE FIRST AND
SECOND PLAINTIFF: Adv A. Stanton
Instructed
by Engelsman Magabane Inc.
FOR THE DEFENDANT:
Adv A.Sander
Instructed
by Van De Wall Inc.