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[2016] ZANCHC 32
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Phokwane Municipality v Triple Seven Commercial Holdings CC and Another (1347/2014) [2016] ZANCHC 32; [2016] 4 All SA 606 (NCK) (9 September 2016)
Last
amended version 12 July 2024.
IN
THE HIGH COURT OF SOUTH AFRICA
NORTHERN
CAPE DIVISION, KIMBERLEY
JUDGMENT
Case
No:
1347/2014
Reportable:
YES
/NO
Circulate
to Judges:
YES
/NO
Circulate
to Magistrates:
YES
/NO
In
the matter between:
PHOKWANE
MUNICIPALITY
APPLICANT
AND
TRIPLE
SEVEN COMMERCIAL HOLDINGS CC
FIRST RESPONDENT
KAREL
ERASMUS ALBERTSE SECOND
RESPONDENT
Date
heard: 21 June 2016
Delivered
on: 09 September 2016
Phatshoane
J.
INTRODUCTION:
[1]
On 22
September 1999 Hartswater Municipality,
represented by
Mr Willem Karel De Jongh, its chief executive officer, concluded a
Deed of Sale with Triple Seven Commercial Holdings
CC (Triple Seven),
the first respondent, represented by Mr Karel Erasmus Albertse, the
second respondent, who bound himself
as surety and
co-principal
debtor
in favour
of the
municipality
for the due
and proper performance of all the obligations arising out of the
terms and conditions of the Deed of Sale.
[2]
In terms of
the Deed of Sale Triple Seven purchased a portion of Erf 285,
Hartswater, which was later renamed Erf 1898, a portion
of Erf 258,
Hartswater,
measuring
approximately 200 (two hundred) hectares from Hartswater Municipality
at the
purchase price of R1.00 (one rand) per hector,
in other
words, for about
R200.00 (two
hundred rand). The contract stipulates that should the extent be in
excess of 200 hectares, the purchaser would effect
immediate payment
of the balance following the survey of the property and should it be
less than the estimated 200 hectares, the
difference in the amount
already paid would be reimbursed to the purchaser.
In October
1999 the property was surveyed and measured 150, 9924 hectares. A
diagram of the subdivision thereof was prepared and
approved.
Apparent from the Deed of Transfer No T939/2005 is that the property
was sold for an amount of R150.91 (one hundred and
fifty rand, ninety
one cent).
[3]
The applicant,
Phokwane Municipality, is in terms of
s14(1)
of the
Local Government:
Municipal Structures Act, 117 of 1998
, the successor in law and in
title of Hartswater
Municipality,
a Transitional
Local
Municipal Council which was established by Provincial Proclamation
No: 10 of 1994, published in Provincial Gazette No: 09
dated
19 September
1994 in terms
of the provisions of the
Local Government
Transition
Act, 209 of
1993
, and later disestablished by Notice No: 27 of 2000, in terms of
s 14(2) of the Municipal Structures Act, 1998.
[4]
Phokwane
Municipality has a reversionary right to repurchase the land in issue
upon
the
nonfulfillment or breach
of certain
conditions
encapsulated
in the Deed of
Sale and the Deed of Transfer.
In this
application
the
municipality seeks a declarator that Triple Seven and its
co-respondent, Albertse, are in breach
of the amended
Clauses
15(1)
and 16 of the
Deed
of
Sale and Condition "C" of the Deed of Transfer No
T939/2005; and also seek an order directing the respondents to take
all steps necessary to retransfer Erf 1898, a portion of Erf 258,
Hartswater, to it. Put differently,
it seeks an
order to enforce its right of pre-emption reserved in terms of
Condition "C" of the Deed of Transfer No T939/2005
and
Clause 18 of the Deed of Sale.
[5]
I deal later
with the point
in
limine
relating
to extinctive prescription because its outcome hinges on the merits
of the case which are treated extensively hereinafter.
THE
CLAUSES OF THE DEED OF SALE AND THE DEED OF TRANSFER RELEVANT TO THE
APPLICATION AND THE FACTUAL MATRIX GIVING RISE TO THE APPLICATION:
[6]
The following
are the salient clauses of the Deed of Sale:
6.1
Clause 15 of
the Deed of Sale stipulates in part:
"15.1
The
purchaser is obliged to erect and construct within 3 (three)
[1]
years hereof anyone of the factories and development, or within such
extension of time as agreed upon by the seller.
15.2
Services as
far as purified water and electricity shall be supplied by the
seller, but the costs for the internal distribution,
system and lay
out shall be borne by the purchaser.
15.3
The purchaser
will negotiate water supply from the canal to the site with the
Department of Water Affairs and the seller shall assist
him in this
regard, costs for the account of the purchaser.
15.6
It is hereby recorded that the previous inhabitants of a portion of
the property have lodged a claim against the State with
the Land
Claims Court and the purchaser hereby acknowledges that he is aware
of this claim."
6.2
Clause 16
thereof stipulates:
"It
is recorded
that the property is sold to the purchaser to erect and develop a
beet sugar industry as well as a nursery -
and
aqua-cultural development, and the processing of by-products from the
above mentioned projects. For variation of this, written
consent must
be obtained from the seller, which shall not be withheld
unreasonably."
6.3
Clause 18
captures the pre-emptive right
(Voorkoopsreg)
as
follows:
"It
is recorded that the purchaser grants a pre-emptive
right to the
seller,
to
purchase
the
property
back
for
the
same
amount
as paid by the purchaser, in
the event that the proposed project does not realise, i.e. does not
commence as set out in Clause 15(1)
above.
In such event
all fixed
improvements
shall fall to
the seller and the seller shall have no obligation to reimburse the
purchaser for any improvements and shall be considered
as rue
bargain
(roukoop)."
[7]
On 20 October
1999 Hartswater Municipality and Triple Seven signed a memorandum of
agreement amending the Deed of Sale by adding
thereto Clause 19 to
deal with the "Ecological system involving the creek". On
13 December 1999 a further memorandum
of agreement was signed
amending Clause 16 above to read as follows:
"It
is recorded that the property is sold to the purchaser to erect and
develop a beet-sugar
or
sugar beet
industry
and/or
a nursery-
and/or
aqua-cultural
development and the processing of by-products from the above
mentioned projects. For variation of this, written consent
must be
obtained from the seller, which shall not be withheld unreasonably
.
"
[8]
Five years
later, on 23 February 2005, the property was transferred to Triple
Seven subject to certain conditions which were registered
against the
title
(Deed
of Transfer No T939/2005). The condition relevant for present
purposes
is
contained in Clause "C" of the Deed of Transfer. This
reads:
"The
transferee is obliged to establish at least one development on this
erf within a period of 2 years, calculated from the
date of
registration, onto the name of the transferee, or within such
extension of time as granted by the transferor. In the event
the
transferee failing to comply with this conditions, the transferee
hereby grants a pre-emptive right to the transferor to purchase
the
property back from the transferee for the same amount as paid by the
transferee in such event all fixed improvements on the
erf shall
become the property of the transferor and the transferor shall have
no obligation to reimburse the transferee for any
improvements."
[9]
Almost
two years later, in 2008, Triple Seven proposed to form a partnership
with the municipality for purposes of developing the
property. Around
18 November 2008 by Resolution 129/2008 the municipal council
resolved as follows
[2]
:
"1.
That council approves the partnership development with Triple Seven
for residential development on site
258 as per previous decision.
2.
That council
re-confirms
its decision
that on
undertaking
the
partnership
development
preference be
given to mixed claimants for the erven, before any other disposal is
undertaken.
3.
That the
process of development
be speeded up,
as it will assist with the growing need of the erven."
[10]
The
purported partnership development came to naught. Three years
following the aforementioned resolution,
on
08 June 2011, Triple Seven directed a letter to the municipality
in
these terms
[3]
:
"We,
Alfonso Visser and Stanley Rudman, as the interested parties in
Triple Seven Commercial Holdings CC, would hereby like
to request the
council of Phokwane to renounce any right it might have to the Triple
Seven lands and to enable the owners to transfer
the land to the
Department of Land Affairs.
We
have been working diligently for the past few years, in close
co-operation with the officials of Phokwane Municipality and members
of Council to develop a framework and future development of housing
on the current Triple Seven land to the south-east of Hartswater.
We
spent many hours to develop a joint venture between ourselves and
Council and spent large amounts of money to facilitate the
development of the town lay-out and the infra-structural design.
We,
together with the officials from the municipality, however, finally
came to realize that we do not have the capacity
to
embark
upon
a
project of this magnitude,
hence our decision to sell it to the Department of Land
Affairs, whom we are confident will be able to develop it further in
collaboration
with yourselves.
Since
there is a condition of sale attached to the Deed of Sale that the
Phokwane Municipality must renounce before we can proceed
with the
sale of the land, we hereby then wish to request your good selves to
give your consent and to sign the document attached
hereto." (My
emphasis)
[11]
By
means of Resolution 80/2011
[4]
dated
16 August 2011 the municipal council resolved not to renounce its
pre-emptive right attached to Condition "C" of
the Title
Deed recited in para 8 above.
At
the special council meeting held on 05 June 2013 it resolved
[5]
:
"1.
Council
rescinds Council Resolution 12912008
[6]
and any other resolution which was taken in favour of Triple Seven;
2.
Council
re-confirms its Resolution 80/2011;
3.
Council
resolves to implement Clause "C" of the Deed of Transfer;
4.
Council
commits
to availing a
portion of this land for use by the Mixed Location Claim."
[12]
The
municipality
contends
that Triple
Seven
did
not develop
the land as
agreed and therefore breached the amended Clause 15.1 and 16 of Deed
of Sale. Furthermore it contended that Triple Seven
did not comply
with Condition
"C"
as contained
in the Deed of Transfer. Mr Moeketsi Piet Dichaba, the municipal
manager of Phokwane Municipality and its deponent,
explained that the
municipality, having ascertained that Triple Seven had no capacity to
develop the property as set out in the
deeds, took a decision to sell
the property to the Department of Land Affairs. On 26 March 2014,
through the office of the State
Attorney, the municipality directed a
letter to Triple Seven notifying it,
inter
alia,
that
the municipality
"wants
to
exercise its right of pre-emption" in terms of Condition "C"
of the Deed of Transfer and tendered payment in the
amount of
R150.91,
being
the
original
purchase
price,
as
reflected
in the Deed
of Transfer.
It also requested Triple Seven to provide it with the Title Deed and
to confirm that its conveyancer would attend to
retransferring the
property to the municipality
within 14 days
from date of the letter in question. It is this failure by Triple
Seven to comply with the demand which precipitated
this application.
[13]
Mr Pieter
Alfonso Visser, the sole member of Triple Seven, acknowledged that
the land was purchased to promote development within
the
municipality. He intimated that he and one Mr Dirk Van Rensburg
purchased the members interest in Triple Seven in October 2006
for an
amount of R500 000.00 on the exclusive
basis that
Triple Seven was the owner of the property
in issue
and that the
initiative
to
develop
the
property
for
residential
purposes
was on course.
He says that when he became the only member of Triple Seven, on the
date unspecified, there was already a prickly
pear orchard
established on the land by Triple Seven with the knowledge of the
municipality. This being phase 1 of the planned
prickly pear nursery.
He says that on 03 September 2007 one Adv Ndwanya, a legal advisor of
the municipality, directed a letter
to Triple Seven in terms of which
it was notified that the municipality
sought to
exercise its right of pre-emption in accordance
with Condition
"C" of the Deed of Transfer on the basis that Triple Seven
was obliged to have at least one development
on the erf
within a period on two years, calculated from date of registration of
the Deed of Transfer. Ndwanya averred therein that
the two-year
period expired without the development of the property. Triple Seven
was placed on terms to comply with Condition
"C" within
seven days from the date of the letter. On 05 October 2007 Mr Daan
Botha, the
erstwhile
attorney
of Triple
Seven, responded to the municipality partly as follows:
"It
was our client's instructions that it did comply with its obligations
in terms of the now amended Clause 16 of the agreement.
It
is our client's obligations to develop and erect a nursery on the
property, alternatively to erect and develop an aqua-cultural
development on the property.
Our
client did comply as can be seen from the enclosed pictures.
This
development started on 03 January 2007 and is now in its first phase.
Our
client will start with the erection of whatever processing facilities
after the establishment of the plants on the property.
We
shall request your good selves to attend to an onsite visit to point
out the development".
[14]
Visser states
that an onsite inspection took place during October 2007. Present
were Visser, Daan Botha and Mr Zithulele Nikani
of the municipality,
who was satisfied that there was compliance with Clauses 15.1 and 16
of the Deed of Sale read with the conditions
contained in the Title
Deed of the property. He says that Nikani's satisfaction was
confirmed in a letter from the municipality
to Duncan and Rothman
attorneys dated 05 November 2007. I should point out that the alleged
contentment by Nikani is not apparent
from this letter. On the
contrary, this letter disputes that a prickly pear orchard qualified
as a nursery or that such development
was made within the time-frame
set out in the Deed of Sale. It goes on to state:
"We
therefore have no intention of withdrawing our claim and reiterate
that your
client
comply with our request as per Condition "C" and our
correspondence dated 03 September 2007"
.
[15]
Following the
inspection referred to in the preceding paragraph Visser says that
the need for residential development came to the
fore with Triple
Seven commencing the process and sought the municipality's consent to
use the land for that purpose. The negotiations
were lengthy and
ongoing which led to the municipal council, on 18 November 2008,
resolving to approve the
establishment
of the aforesaid partnership with Triple Seven for residential
development.
[16]
Visser
intimated that, after the conclusion of the partnership, Triple Seven
commenced with the earthworks in preparation of the
land for the
residential development. In that process the prickly pear orchard
which had been established
on the land
was destroyed.
He reminded
that the
municipality
had to deliver
municipal services to the developed property as part of its
obligation towards
the
development
and added
that the
seller (municipality)
would in
future receive income tax on the developed land. Visser claims that
the municipality reneged on its obligations as a partner
in the joint
venture. This resulted in the development
not
progressing.
He says that
Triple Seven decided,
if at all
permissible,
to sell the
land to the Department
of Land
Affairs. It
therefore
forwarded
the letter
dated
08
June
2011(quoted
in para
10 above) to
the municipality
requesting
it to
relinquish its right of pre-emption.
It did so with
caution as the municipality's right had already been extinguished by
prescription.
He says that
the sentence which starts with the phrase
"We
do not have capacity. ....",
as
appearing in this letter, was with reference to the municipality's
lack of capacity and claimed that Triple Seven had at all
relevant
times and still has the capacity to develop the land. This, I must
hasten to say, defies credulity.
[17]
In reply Dichaba
states that the allegations regarding the prickly pear orchard is a
feeble last minute attempt to misrepresent
facts concerning Triple
Seven's alleged compliance with the conditions precedent to the Deed
of Sale and the Title Deed when the
municipality insisted on proof of
compliance. He states that prickly pears grow naturally in that area.
Approximately 100-200 m2
of that land
was cleared of alien plants and/or trees and debris. The mowed down
prickly pears
cactus
were
subsequently
replanted
in
rows
and
watered.
Dichaba
intimates that
the Housing Unit of the municipality, of which Nikani is an official,
conducted an onsite inspection on 05 March
and 31 August 2007 and
found no development whatsoever on the property. He says that the
ground works were fresh and the pieces
of planted prickly pear blades
were loose with no roots. Nikani's report to Ndwanya to the effect
that no development took place
is attached to the replying affidavit.
Dichaba says that the prickly pear orchard is neither a beet-sugar
industry nor nursery
or even an aqua-cultural development as
envisaged in Clauses 15 and 16 of the Deed of Sale. Nikani attested
to a confirmatory affidavit
to the replying affidavit by Dichaba. He
denied, amongst others, having attended an onsite inspection where
Daan Botha was present.
[18]
Dichaba
questioned the basis upon which Triple Seven purportedly
commenced the
ground work for purposes of residential development because the
partnership agreement never came into being. The Deed
of Sale, which
encapsulates a non-variation clause, was never varied by the parties.
In any event, he says, there was no infrastructure
to demolish and no
residential development could have commenced without rezoning the
land from farming to a residential land. No
environmental impact
study was conducted by the registered owner of the land nor was the
municipality placed on terms for the alleged
breach of the
partnership agreement, because there was no breach.
THE
POINT
IN LIMINE:
[19]
Triple Seven
took a point
in
limine
that
the municipality's claim to exercise its right of pre-emption was
extinguished by prescription. Mr Van Niekerk SC, for Triple
Seven,
relies on s 10(1) read with
ss 11(d)
,
12
(1) and
16
of the
Prescription Act, 68 of 1969
. He contended that the municipality's
claim to exercise its pre-emptive right and have the property in
issue transferred into its
name is a debt as envisaged in
s 16
of the
Prescription Act. He
argued that the municipality's pre-emptive right
became due and enforceable after the expiry of two years reckoned
from 23 February
2005, this being the date in respect of which the
property was registered in the name of Triple Seven. This is so
because the restrictive
condition set out in Clause "C" of
the Deed of Transfer provides that Triple Seven is obliged to
establish at least one
development on this erf within a period of 2
years, calculated
from the date
of registration
of the
property into
its name. In the event the transferee failing to comply with the
condition, the pre-emptive right to repurchase the
property would be
due and enforceable. He argued that prescription commenced running
around 23 February 2007 and that in terms
of
s 11
of the
Prescription
Act the
three year period, within which the municipality ought to
have enforced its right, lapsed around 22 February 2010. He contended
that this application was filed on 07 August 2014, long after the
claim had prescribed.
[20]
Ms Mdalana,
for the
municipality,
countered
that the Deed
of Sale
and the Deed
of Transfer are silent on a period within which the right of
pre-emption could be invoked. According
to counsel
prescription
ought to run
from the date of the notice given by the grantor of the pre-emptive
right of his/her intention to sell the land to
the grantee. As no
such notice was issued by the grantor to the grantee the right of
pre-emption
remained in
force and intact, the argument went.
[21]
Deeksha
Shana in the
article "Pre-emption as an option? The saga continues in
Van
Aardt v
Weehuizen [Van Aardt and Another v Weehuizen and Others
2006
(4)
SA
401
(N)]
2008
SALJ 680
aptly
gives the
narrow
and
wide
definitions
of pre-emption
as follows:
"A
contract of pre-emption is a preliminary agreement in terms of which
the grantor agrees to give preference to the grantee
to purchase a
particular merx in the event of its sale by the grantor. In other
words, the grantee of a right of pre-emption obtains
a conditional
preferential right to purchase. The suspensive condition (the
so-called trigger event) is usually the grantor's manifestation
of a
decision to sell (Floyd op cit at 253; Bhana op cit at 571 and 574).
To expound, upon occurrence of the trigger event, the
grantor must
make an offer to sell the merx to the grantee first
(Soteriou
(supra) at 932E-H
[Soteriou v Retco Poyntons (Ply) Ltd
1985
(2) SA 922
(A)] and
Hirschowitz
(supra) at 762B-J)
[Hirschowitz
v Moolman
1985 (3) SA 739
(A)] or
alternatively, the grantor must give the grantee the first
opportunity to make an offer to purchase the merx which the
grantor
must then consider seriously
(Hartsrivier
(supra) at
705H-706A)
[Hartsrivier Boerderye (Edms) Bpk v Van Niekerk
1964
(3) SA 702
(T)].
To
reiterate: the pre-emption contract contemplates
action on the
part of both the grantor and the grantee. Importantly, the content of
the envisaged main contract is within the (substantive)
discretion of
the party who is required to make the offer.
The other
party then has discretion
in terms of
acceptance
of
the offer in question. The pre-emption contract is thus meant merely
to facilitate
the
bilateral
process of
concluding the substantive contract of sale between the grantor
and the
grantee
(Bhana
op cit at
571-3).
This
view of the pre-emption contract
constitutes
the narrow
definition of pre-emption.
It is often
referred to as pre-emption
in its 'true'
sense because it emphasizes
not only the
presence of
a
trigger
event
but
also
the
contemplation
of
bilateral
action
involving
an exercise
of
substantive
discretion.
(Note
that
I
use
the
term
'substantive
discretion' to describe discretion that relates to the actual
determination of the
terms of the
envisaged
contract
and not the
relevant
party's
decision
whether he is
agreeable to those terms or not; see Bhana op cit at 570n11 and
571-5
.
)
There is also a wider definition of the pre-emption contract which,
in addition to encompassing the narrow conception of pre-emption,
allows for a prescribing of the
content
of
the
envisaged
main
contract
ex
ante.
In
other
words,
the complete
main offer can be set out in certain or ascertainable
terms in the
pre emption contract itself (Reinecke
& Otto op
cit at 23-5;
Krauze
v Van Wyk
1984
(2) SA 702
(NC);
Hattingh
(supra)
[Hattingh v
Van Rensburg1964
(1)
SA 578 (T)]). The result is that upon occurrence of the trigger
event, the main offer becomes unconditional. The grantee can
then
bring the envisaged main
contract into
being by mere acceptance of the offer. The wider definition therefore
regards the presence of the trigger event as
the definitive feature
of pre-emption so that a pre-emption contract can contemplate either
bilateral
or unilateral
action."
[22]
It
should firstly be determined whether the claim by the municipality to
exercise its pre-emptive
right
is a debt as contemplated
in
s 10(1)
of the
Prescription Act
[7
]
.
This
matter raises an important issue of public interest and property
rights which are subject to the protection entrenched in s
25 of the
Constitution.
In
Makate
v Vodacom Ltd
2016
(4) SA 121 (CC)
[8]
the ConCourt
did not determine the exact meaning of the word "debt" as
envisaged in
s 10
of the
Prescription Act. However
, it reaffirmed the
legal position enunciated in
Fraser
v ABSA Bank Ltd
2007(3)
BCLR
219 (CC)
at
para 43 that Courts must at all times bear in mind the provisions
of
s 39(2)
when interpreting legislation.
If
the provision under construction implicates or affects rights in the
Bill of Rights, then the obligation
in
s 39(2)
is
activated. The court is duty-bound
to
promote the purport, spirit and objects of the Bill of Rights in the
process of interpreting the provision in question.
[9]
[23]
The relief
sought by the municipality
is vindicatory
in nature.
In
ABSA
Bank Ltd v Keet
2015
(4)
SA 474
(SCA) at 4838-484A para 25 the SCA pronounced as follows on
the phrase "debt" with regard to vindicatory actions:
"[25]
In the circumstances the view that the vindicatory action is a 'debt'
as contemplated by the
Prescription Act, which
prescribes after three
years is in my opinion contrary to the scheme of the Act. It would,
if upheld, undermine the significance
of the distinction which the
Prescription Act draws
between extinctive prescription on the one
hand and acquisitive prescription on the other. In the case of
acquisitive prescription
one has to do with real rights. In the case
of extinctive prescription one has to do with the relationship
between a creditor and
a debtor. The effect of extinctive
prescription is that a right of action vested in the creditor, which
is a corollary of a 'debt',
becomes extinguished simultaneously with
that debt. In other words,
what the creditor loses as a result of
operation
of extinctive
prescription
is his right of action against the debtor, which is a personal
right.
The creditor does not
lose a
right
to a thing.
To equate the
vindicatory
action with a 'debt' has an unintended
consequence in that by way of extinctive prescription the debtor
acquires ownership of a
creditor's property after three years
instead
of 30 years
that is
provided
for in
s 1
of the
Prescription
Act.
This
is an absurdity and not a sensible interpretation of the
Prescription Act."
(my
emphasis).
[24]
In
Van
Deventer v Ivory Sun Trading
77
(Pty) Ltd
2015 (3)
SA 532
(SCA) at 538 para 20 the Court accepted, without deciding,
that the obligation of grantor of pre-emptive right to perform in
terms
of the grantee's right of pre-emption constituted a debt. In
determining when such debt became due the Court made the following
seminal enunciation at 542 paras 36-39:
"[36]
In
Hirschowitz [Hirschowitz v Moo/man and Others
1985 (3) SA
739
(A) at 765] Corbett JA said the following with regard to the
exercise of a right of pre emption and specific performance:
'It
seems to me that in order that the holder of a right of pre-emption
over land should be entitled, on his right maturing and
on the
grantor failing to recognise or honour his right, to claim specific
performance against the grantor (assuming that [h]e
has such a
right), the right of pre-emption itself should comply with the
Formalities Act.
Were this not so, the anomalous situation would
arise that on the strength of a verbal contract the grantee of the
right of pre-emption
could, on the happening of the relevant
contingencies, become the purchaser of land. This would be contrary
to the intention and
objects of the Formalities Act.'
[37]
Specific
performance can only be ordered if the holder of such right had been
presented with a written offer which had then been
accepted.
According to the wording of the right as contained in the title deed
and its context, it is clear, viewed objectively,
that an option
had to be given which
complied
with
the
formalities
as
prescribed
in
s
2(1)
of
the
Alienation
of Land Act 68 of 1981. If such an offer was not presented the
appellant would not have been able to exercise his right,
or claim
specific performance.
[38]
Therefore,
the appellant did not have a complete cause of action for specific
performance, as Johannes did not make a written offer
to the
appellant to exercise his right of pre-emption.
[39]
In the
premise I am of the view that the respondent failed to show that
there was a trigger event that initiated the running of
prescription.
The trigger event, according to the wording of the clause, would be
the granting of a written option, and in that
event the right to
purchase, if not exercised, would lapse in 60 days."
(My
emphasis).
[25]
The
municipality has attempted on several occasions since 2007 to
exercise its pre-emptive right by directing letters to Triple
Seven
and placing them on terms. For example by means
of a letter
dated 03 September
2007 it sought
to exercise its pre-emptive
right because
it was of the view that Triple Seven did not establish at least one
development
on
the land as set out in Conditions
"C"
of the Deed of Transfer. On 05 November 2007 it reiterated its demand
to exercise its pre-emptive right. Almost four
years later, on 08
June 2011, Triple Seven requested the municipality to renounce its
pre-emptive right.
It proposed to
sell the land to a third party without offering same to the
municipality by virtue of its preferential or reversionary
right to
buy. On 16 August 2011 the municipal council refused to renounce its
pre-emptive right. Almost two years later, on 05
June 2013, it once
more resolved to exercise its right of pre-emption. All the efforts
by the municipality became ineffectual because
Triple Seven
frustrated
its
right of pre-emption or its claim of specific performance.
[26]
Insofar
as the exercise of the right of pre-emption
in
casu
concerns
the sale of land, on the basis of the authorities cited above, the
grantor of the pre-emptive right ought to provide an
offer to the
grantee which complies with
s 2(1)
of the
Alienation of Land Act, 68
of 1981
,
[10]
and same ought to
be accepted by the grantee. There was no compliance
with
s 2(1)
of the
Alienation of Land Act in
this
case
to
complete
the
course
of
action
which
would
trigger
the
running
of
prescription.
Therefore
there is no merit in the point
in
limine
raised
and stands to be dismissed.
[27]
Even
if
I
am
wrong
Triple
Seven
is
faced
with
another
hurdle.
It
relies
on
s 11(d)
in
its contention that the municipality's claim to exercise its right of
pre emption had prescribed.
Section 11
of the
Prescription Act
provides
:
"11
Periods of prescription of debts
The
periods of prescription of debts shall be the following:
(a)
thirty years
in respect of-
(i)
any debt
secured by mortgage bond;
(ii)
any judgment
debt;
(iii)
any debt in
respect of any taxation imposed or levied by or under any law;
(iv)
any debt owed
to the State in respect of any share of the profits, royalties or any
similar consideration payable in respect of
the right to mine
minerals or other substances;
(b)
fifteen years
in respect of any debt owed to the State and arising out of an
advance
or
loan of money or a sale or lease of land by the State to the debtor,
unless a
longer period applies
in respect of
the debt in question in terms of paragraph (a);
(c)
six years in
respect of a debt arising from a bill of exchange or other negotiable
instrument
or from a
notarial contract,
unless
a longer
period
applies
in respect
of the debt in
question
in
terms
of
paragraph
(a)
or (b);
(d)
save where an
Act of Parliament provides
otherwise,
three years in
respect of any other debt."
[28]
There can be
no question that the so-called debt arose out of the sale of land.
Having said this it is important to consider whether
a municipality
falls within the purview of the phrase "the State" for
purposes of
s 11(b)
of the
Prescription Act.
[29]
In
Holeni
v
The
Land
and
Agricultural
Development
Bank
of
South
Africa
[2009] 3
All SA 22 (SCA) the term "State" as envisaged in
s 11(b)
of
the
Prescription Act came
under scrutiny. At 26c-27b paras 17-22 the
Court pronounced:
"[17]
It should also be borne in mind that, when the Act was promulgated,
the definition of "organ of State" in section
239 of the
Constitution was more than two decades into the future. It can hardly
be contended that the legislature, at that time,
had in mind a
broader meaning of "the State" to coincide with what is
presently contained in that definition. In any
event, the
Constitution itself differentiates between the State and organs of
State. The Constitution can, therefore, not be used
as authority for
the proposition that "the State" in the Act should be
interpreted so as to include organ of State.
[18]
I agree with
the submission on behalf of Mr Holeni that, since section 11
(b)
of the Act
provides for a 15-year prescription period -
an exception
to the general
prescription
period
of three years
-
the
meaning
attributed
to "the
State" should be restricted.
[19]
The benefit
for the State provided by section 11(1)(b) came about because it was
thought that the treasury should be protected.
To my mind,
contextually, the plain meaning
of "the
State" as it appears
in section
11
(b)
of the Act
is that of a juristic person, capable of suing in its own name for
what is due to the treasury. It is being referred
to in its
incarnation as government, going about government business and
recovering monies due to treasury. Further support
for this
conclusion appears in the next three paragraphs.
[20]
The State is
referred to in two other places in the Act. In section 19, the
following appears:
"This
Act shall bind the State."
This
provision was necessary because of the rule, at the time, that the
State is not bound by its own laws. The reference here must
be to the
State as a governing entity with legal personality.
[21]
In section
11(a)(iv)
of the Act,
referred to above,
the State has
the benefit of a 30-year period of prescription in respect of any
share of profits, royalties or any similar consideration
payable in
respect of the right to mine minerals or other substances.
There can be
no doubt that the reference to the State in that context must mean
the State in its role as government
acting for the
benefit of the treasury.
[22]
Thus, in terms
of the rule of interpretation that the same words must be similarly
interpreted in different parts of an Act, the
reference to "the
State" in section 11 must also be to the State as government
and as a
juristic person
in its own
right, unless there are indications to the contrary
...
"
(Footnotes omitted)
[30]
In
Greater
Johannesburg
Transitional
Metropolitan Council v Eskom
2000
(1) SA 866
(SCA) at 875-876 the Court held:
"[15]
.....In its ordinary meaning for the purposes of domestic law the
word [State] is frequently used to include all institutions
which are
collectively concerned with the management of public affairs unless
the contrary intention appears. In this sense the
State may manifest
itself nationally (through the executive or legislative arm of
central government), provincially, locally and,
on occasions,
regionally. In
R v Bethlehem Municipality
1941 OPD 227
Van den
Heever J said the following at 231:
'A
facile distinction is sometimes drawn between municipalities and
other
entities
with legislative and executive powers on the ground that
municipalities are mere creatures of statute. This is undoubtedly
so,
but so are provincial councils and, for that matter, the Union
Parliament. With respect to authority of course they differ
vastly
and are ordered in a definite hierarchy, but the function
of
each
is
government.
A
municipality
is
not
merely
a
corporation
like
a company; it
is a phase of government,
local it is
true, but still government.'
And
in
Hleka v Johannesburg City Council
1949 (1) SA 842
(A) the
same Judge commented at 855:
'The
modern trend is to recognise that municipal government may be local,
yet it is a phase of government.'... "
[16]
As Baxter points out in Administrative Law at 95, although the
expression 'the State' is extensively employed in legislation,
it is
not used with any consistency. The precise meaning of 'the State'
depends on the context within which it is used."
And
at 879 para 23 the Court held:
"[23]
To sum up: regional service councils and the appellant are both
authorities which exercise a myriad of governmental functions
- at a
regional level in the case of the former and at a local level in the
case of the latter. As such they are organs of government.
.. "
[31]
In
Johannesburg
Metropolitan Municipality v Gauteng Development Tribunal
and
Others
2010
(6) SA 182
(CC) at 199 para 43 the ConCourt held thats 40 of the
Constitution defined the model of government contemplated in the
Constitution.
In terms of this section the government consists of
three spheres: the national, provincial and local spheres of
government. These
spheres are distinct from one another and yet
interdependent and interrelated. Each sphere is granted the autonomy
to exercise
its powers and perform its functions within the
parameters
of
its defined
space.
Furthermore,
each sphere
must
respect
the status, powers and functions of government in the other spheres
and 'not assume any power or function except those conferred
on [it]
in terms of the Constitution'. See also
Independent
Electoral Commission v Langeberg Municipality
[2001] ZACC 23
;
2001
(3) SA
925
(CC)
at para 27
where the Court
held
that the term
'State' is broader than 'national government'
and embraces
all spheres of government.
[32]
From the
aforegoing authorities I am persuaded to conclude that the
municipality, for purposes of the claim in issue, falls within
the
realm of the phrase "the State" as contemplated in
s 11(b)
of the
Prescription Act. Insofar
as the debt owed to it arose out of
a sale of land by it to Triple Seven it could only be
extinguished
by
prescription
after
the
lapse
of
fifteen
years.
To
hold otherwise
would, in my view, offend against the public policy which must be
determined with reference to the values that underpin
our
constitutional democracy.
Triple Seven's
reliance on
s 11(d)
is misplaced.
THE
MERITS OF THE APPLICATION:
[33]
What remains is
whether
the
condition
set
out in the amended Clauses 15(1); 16 and 18 of the Deed of Sale and
Condition "C" of the Deed of Transfer were fulfilled
or
whether they had been breached by Triple Seven. Just to recap, Clause
16 stipulates that the property is sold to Triple Seven
to erect and
develop a beet-sugar or sugar beet industry and/or a nursery- and/or
aqua cultural development and the processing
of by-products from
the above mentioned projects. Condition "C" of the Deed of
Transfer No T939/2005 which was registered
on 23 February
2005 should be read in conjunction
with Clause 18
of Deed of Sale. It obliges
Triple Seven
to establish at least
one
development on the land within a period of 2 years, calculated from
the date of registration
of the
property
into
its name
or within
such extension
of time as may
granted by the municipality. Failing compliance Triple Seven accorded
a pre-emptive right to the municipality to
repurchase the land from
it for the same amount
as paid for by
Triple
Seven
in which event
all fixed
improvements
on the
property would be the property of the municipality
free of
charge.
[34]
There
is a dispute of fact on whether the purported establishment of the
prickly pear orchard is a development or a nursery as contemplated
in
the amended Clause 16 of the Deed of Sale or Condition "C"
of the Deed of Transfer. In accordance with the trite
Plascon-Evans
[11]
rule,
where disputes of fact arise on the affidavits, a final order can be
granted only if the facts as set out in the applicant's
affidavit,
which have been admitted by the respondent, together with the facts
set out by the respondent, justify such an order.
This approach was
reaffirmed as follows in
Fakie
NO v CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006
(4) SA 326
(SCA):
"[55]
That conflicting
affidavits
are not a
suitable means for determining disputes of fact has been doctrine in
this court for more than 80 years. Yet motion proceedings
are quicker
and cheaper
than trial
proceedings
and,
in the
interests of justice, courts
have been at pains not to permit unvirtuous respondents to shelter
behind patently implausible affidavit
versions or bald denials. More
than 60 years ago, this Court determined that a Judge should not
allow a respondent to raise 'fictitious'
disputes of fact to delay
the hearing of the matter or to deny the applicant its order. There
had to be 'a bona fide dispute of
fact on a material matter'. This
means that an uncreditworthy denial, or a palpably implausible
version, can be rejected out of
hand, without recourse to oral
evidence.
In
Plascon-Evans
Paints
Ltd v Van Riebeeck
Paints
(Pty) Ltd,
this
Court extended the ambit of uncreditworthy denials. They now
encompassed not merely those that fail to raise a real, genuine
or
bona fide dispute of fact but also allegations or denials that are so
far-fetched or clearly untenable that the Court is justified
in
rejecting them merely on the papers.
[56]
Practice in this regard has become considerably more robust, and
rightly
so.
If it were otherwise, most of the busy motion courts in the country
might cease functioning
.
But the limits
remain, and however robust a court may be inclined to be, a
respondent's version can be rejected in motion proceedings
only if it
is 'fictitious' or so far-fetched and clearly untenable that it can
confidently be
said, on the papers alone, that it is demonstrably and clearly
unworthy of credence."
[35]
Triple Seven's
version that
the prickly pear orchard constitutes
a development
or nursery is not without difficulty.
On 08 June
2011 it purported to sell the land in issue to the Department
of Land
Affairs and confessed
that it
"together
with the officials
from
the municipality,
however,
finally
came to realize that we do not have the capacity to embark upon
a
project of
this magnitude".
The
confession followed on the failed partnership between itself and the
municipality to develop the land for residential purpose.
Its
tactical turn around subsequently to lay the blame
for lack of
capacity
on
the municipality
cannot
avail it
because it founders
in the face of
its contractual obligations as set out in the Deed of Sale.
[36]
By Triple Seven's own
admission the professed prickly pear orchard development was
destroyed when it commenced with earthworks preparing
the land for
residential development. What it omits to say is what methods of
earthworks were carried out on the land. Neither
did it produce any
document showing that the necessary town planning approvals and
rezoning of the land were obtained from the
municipality.
It is
important
to
bear in mind that Clause 12 of the Deed of Sale states that any
relaxation or indulgence which the seller may
show
the
purchaser
shall
not
in
any
way
prejudice
its
rights
under
the
agreement or be construed as
a waiver or novation by the seller of its rights. Triple Seven
and the
municipality's unsuccessful
attempt
to create
a partnership
for purposes of residential development did not change the validity
or efficacy
of
the Deed of Sale or render it ineffectual.
This is so
because Clause
13 of the Deed
of Sale
stipulates
that no
variation
of
the agreement shall be binding unless it is reduced to writing and
signed by both parties. No variation of the agreement had
been
produced.
[37]
The conclusion
is irresistible that Triple Seven's version that the extinct prickly
pear orchard establishment on approximately
100 -
200 m
2
of
about the 150 hectares of land constituted a nursery or development
as contemplated in the various deeds is untenable.
Indeed the
statement to the effect that out of 150 hectares
of
land
the
prickly
pear
orchard
was
established
in
just
about 100-200
m
2
thereof
surfaced in the replying affidavit. In my view, nothing prevented
Triple Seven to seek leave of the Court to file a further
set of
papers in response to this averment. Regard being had to Clauses 15
and 16 of the agreement there can be no doubt that the
transfer of
the land to Triple Seven was intended to benefit the community of
Hartswater. A decade later, it could hardly be said
that that
objective was achieved.
[38]
Lastly, Triple
Seven's argument that a party is entitled to enforce its right of
pre emption if it tenders payment of the appropriate
purchase
price is
unsustainable.
There is no question
that the
municipality
tendered the
amount of R150.91, this being the amount reflected in the Deed of
Transfer as the purchase price. On the whole I am
satisfied that the
municipality
is entitled to
the order prayed for.
[39]
On the
question of costs: Mr Albertse, the second respondent, did not oppose
the application.
No order as to
costs was sought against him. In respect of Triple Seven, there
appears to be no reason why costs should not follow
the results. I
make the following order
.
Order:
1.
It is
declared that Triple Seven Commercial Holdings CC and Mr Karel
Erasmus
Albertse,
the
first
and second respondents
(the
respondents), are
in
breach
of
the
amended
Clause
15(1)
read
with
the
amended
Clause 16 of the Deed of Sale entered into between Hartswater
Municipality and the respondents;
2.
It is
declared that the respondents are in breach of Condition "C"
registered
against the Deed of Transfer No T939/2005;
3.
The
respondents and/or their successors in title are ordered to take all
steps necessary including compliance with the requirement
of
s 2(1)
of the
Alienation of Land Act, 68 of 1981
, for purposes of
eventuating the passing of the transfer of the property known as
Erf
1898, a portion of Erf 258, Harstwater, situated in the Municipality
of Phokwane, Division of Vryburg, in extent 150.9076 and
held by the
Deed of Transfer No T939/2005, into the name of Phokwane
Municipality, the applicant, failing which the sheriff of
this Court
is authorised to sign all the necessary papers to cause the transfer
of the property mentioned into the name of the
applicant;
4.
Triple
Seven Commercial Holdings CC, the first respondent, is ordered to
pa
yth
e
costs of the application.
MV PHATSHOANE
JUDGE,
NORTHERN CAPE DIVISION
On behalf of the
Applicant
Adv M.P Mdalana
Instructed by
The Office of the
State Attorney
On behalf of the
First Respondent
Adv J.G Van Niekerk
SC
Instructed by
Engelsman Magabane
Inc
[1]
In
terms of the Deed of settlement which was made an order of this
Court on 17 December 2004 under Case No: 916/02 the phrase
"three
years hereof" was deleted and substituted with the phrase”
24 [twenty four] months from date of transfer
of the property".
This Court order is annexure “
G"
to
the answering affidavit and appears at page 74-77 of the record. Not
much is said in the papers about the proceedings under
Case No:
916/02 but it appears that whatever was at issue in those
proceedings was resolved.
[2]
Council
Resolution 129/2008 was attached to
the
founding affidavit
as
"MPD5" (page 37 of the record).
[3]
The
letter is marked "MPD6" and is to be found at page 38 of
the papers.
[4]
The
extract from the minutes of a council meeting held on 16 August
2011
which
captures Resolution 80/2011 is marked
"MPD7"
to
the
founding affidavit, page 39.
[5]
The
extract from the minutes of a special council meeting held on 05
June 2013 appears at annexure "MDP8", page 40.
[6]
This
is a resolution pertaining to the formation of a partnership between
Phokwane Municipality and Triple Seven.
[7]
Section
10(1)
of the prescription Act provides that: "Subject to the
provisions of this Chapter and of Chapter IV, a debt shall be
extinguished
by prescription after the lapse of the period which in
terms of the relevant law applies in respect of the prescription of
such
debt.
[8]
See
para 92 of the judgment
[9]
See
para 88 of Makate's judgment.
[10]
Section
2(1)of the
Alienation of Land Act, 68 of 1981
, provides:
No
alienation of land after the commencement of this section shall,
subject to the provisions of
section 28
, be of any force or effect
unless it is contained in a deed of alienation signed by the parties
thereto or by their agents acting
on their written authority.
[11]
[1984] ZASCA 51
;
1984
(3) SA 623
(A} at 634H -I.