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[2010] ZAFSHC 29
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Morkel v Thornhill (A105/2009) [2010] ZAFSHC 29 (4 March 2010)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Appeal No. : A105/2009
In
the appeal between:
DRICKY
MORKEL
Appellant
and
IRIS
THORNHILL
First
Respondent
_____________________________________________________
CORAM:
HANCKE,
J
et
EBRAHIM, J
et
MOOLLA,
AJ
_____________________________________________________
HEARD
ON:
1
MARCH 2010
_____________________________________________________
JUDGMENT
BY:
HANCKE,
J
DELIVERED
ON:
4
MARCH 2010
_____________________________________________________
[1] This
is an appeal against a finding of the court
a
quo
(Rampai, J) that the lease agreement between the parties was null and
void in view of the applicability of section 3(d) of the
Subdivision
of Agricultural Land Act, No. 70 of 1970 (“the Act”).
The appellant was ordered to vacate the land, described
as “a
certain portion of the remaining extent of the farm Platbergdrift No.
924 (approximately 4 hectares) situated in Ladybrand
district”
and to pay 70% of the respondent’s costs. The appellant
successfully petitioned to the SCA after an application
for leave to
appeal was refused by the court
a
quo
.
[2] The
respondent is presently the owner of the said property and the
successor in title of Mr. Gert Hendrik Pienaar who entered
into a
lease agreement with the appellant on 6 September 2001. The lease
was agreed upon for an initial period of nine years and
eleven months
with an option to extend the lease for three further periods of five
years each.
[3] The
main issues in this appeal are:
1. Whether
the lease agreement was null and void
ab
initio
,
seeing that it was concluded without the consent of the Minister;
2. Whether the respondent
had properly and legally cancelled the agreement between the parties
due to the alleged breach of contract
by the appellant.
[4] As
far as the first issue is concerned, section 3 of the Act provides as
follows regarding a lease relating to agricultural
land:
“
3
Prohibition of certain actions regarding agricultural land
Subject
to the provisions of section 2-
no lease in respect of a portion of
agricultural land of which the period is 10 years or longer, or is
the natural life of the
lessee or any other person mentioned in the
lease, or which is renewable from time to time at the will of the
lessee, either
by the continuation of the original lease or by
entering into a new lease, indefinitely or for periods which
together with the
first period of the lease amount in all to not
less than 10 years, shall be entered into;...
unless the Minister has consented in
writing.”
[5] It is appellant’s
case that the said property does not constitute agricultural land as
envisaged by the Act, in view of
the fact that nobody ever considered
the leased portion of the farm land to be agricultural land; that
such portion of land was
in any event so small that no economic
farming could be sustained thereon; that there were vested business
rights in respect of
the particular portion of land; that the
authorities are exercising control over such portion of land; the
division of the farm
land by a national road has so fragmented the
farm land that the leased portion cannot be economically utilised for
agricultural
purposes. The court
a
quo
dealt in
extenso
with this aspect. I agree with the conclusion reached in this
regard. Section 1 defines “agricultural land” as “any
land except land as described in sub-sections (a) to (f) thereof”.
The ground raised by the appellant is of no consequence
in the
circumstances of this case because it does not bring it within the
exceptions as envisaged in sub-sections (a) to (f) of
the Act. The
lease is subject to the Act.
[6] The further question
is whether the court
a
quo
was
correct in finding that although the initial agreement was for a
period of nine years and eleven months and therefore less than
10
years, the three optional periods of five years each, add up to 24
years and 11 months; therefore, in the absence of the written
consent
of the Minister, the lease agreement was
ab
initio
null and void, because the lease agreement falls squarely within the
provisions of section 3(d) of the said Act.
[7] There is ample
authority for the view that in general a lease in such circumstances
will be void.
PALM
FIFTEEN (PTY) LTD v COTTO TAIL HOMES (PTY) LTD
1978 (2) SA 872
(A) at 887 H – 890 G;
TUCKERS LAND AND
DEVELOPMENT CORPORATION (PTY) LTD v WASSERMAN
1984 (2) SA 157
(T) at 162 B – 164 H;
LETABA
SAWMILLS (EDMS) BPK v MAJOVIL (EDMS) BPK
[1992] ZASCA 195
;
1993 (1) SA 768
(A) at 772 F – I.
[8] It seems to me that
this aspect should be approached from the view whether the contract
dealing with the initial period of nine
years and eleven months is
severable or divisible from the subsequent options. In
EASTWOOD
v SHEPSTONE
1902 TS 294
the parties entered into a contract for the sale of two
farms together with the right to supply quarterly 250 labourers. The
court
found that the contract in respect of the labour clause was
void. On p. 303 Innes CJ stated the following:
“
Where a contract is divisible,
that is to say, where the parties have so expressed themselves,
either in the original agreement
or in any subsequent valid variation
of it, that a subject matter of the contract and the consideration
can be divided into two
or more parts, then if one part be void and
bad, and one part be good, the Court will, at the request of one of
the parties, reject
the bad portion and enforce the good.”
And continued on p. 305:
“
The contract was split up and
divided by the agreement of the parties; and that being so, the valid
portion must be enforced, while
the invalid portions fall to the
ground.”
[9] In
CAMERON
v BRAY GIBB & CO (PVT) LTD
1966 (3) SA 675
(R) Goldin J stated the following at p. 676 B:
“
The general rule is that where
the illegal part of a contract cannot be severed from the legal part,
the contract is altogether
void, but where these parts can be severed
the bad may be rejected and the good retained; and this whether the
illegality be created
by statute or by common law.”
On p. 676 H – 677
A he continued as follows:
“
The test appears to be whether
the illegal promise is substantially the whole or the main
consideration for the promise sought to
be enforced. If the contract
is divisible into a number of separate promises and the elimination
of one or more of the invalid
promises would still leave the
substantial character of the contract unchanged, then the legal
portion will generally be enforced.”
[10] It is clear that the
options in this matter are stipulations in the contract for the
exclusive benefit of the appellant. In
DU
PLOOY v SASOL BEDRYF (EDMS) BPK
1988 (1) SA 438
(A) Van Heerden JA stated the following at 456 H:
“
Indien 'n kontrak dus slegs uit
die oogpunt van een party ondeelbaar is en dit 'n nietige bepaling
bevat, het die party in wie se
guns die bepaling beding is die keuse
om die kontrak te vernietig of dit in stand te hou. Die kontrak is
met ander woorde nie nietig
nie, maar vernietigbaar ter keuse van die
betrokke party.”
In the said case the
contract between the parties contained provisions in respect of the
purchase of coal rights not complying with
the formalities in respect
of Contracts of Sale of Land Act 71 of 1969. The said provisions
were not mutually dependant on the
rest of the contract and severable
from the remainder of the contract. The court accordingly found that
the rest of the contract
could indeed have an independent and legally
valid existence.
See also
The
Law of Contract in South Africa
(5
th
Edition) by R H Christie, p. 388 – 391.
[11] It is also important
to have regard to the probable
intention
of the parties as it appears from the terms of the contract or the
facts of the case.
DU PLOOY v SASOL
BEDRYF (EDMS) BPK
,
supra
,
at 451 A – B;
SASFIN (PTY) LTD v
BEUKES
1989 (1) SA 1
(A) at 16 B.
It is clear that in the
present case the respondent never manifested an intention to cancel
the contract on the ground that it was
unenforceable or that she was
not bound by the contract.
BANTJIES v KUNTZE
1998 (4) SA 201
(C) at 205 G – 206 D.
[12] The allegation that
the contract was unenforceable was never raised in any correspondence
between the parties. To the contrary,
in a letter dated 19 June 2006
addressed by the respondent’s attorney to the appellant’s
attorney, the following was
inter
alia
stated:
“
We also note that this long
term lease has not been notarialy registered and it is therefore our
submission that the lessee is only
protected by the ‘huur gaat
voor koop’ – doctrine for the first nine years and eleven
months of the lease contract.
It is therefore our instructions to
inform the lessee that this lease expires on 31 May 2011, when he has
to vacate the property
and deliver it to the lessee in free and
undisturbed possession.”
[13] The first time it
was raised since the agreement was concluded on 6 September 2001
(i.e. eight years ago), was after the filing
of papers by both
parties when the respondent applied for a postponement to enable her
to amend her notice of motion.
[14] It appears from the
papers that the main lease was for a period of nine years and eleven
months which period was not ensnared
by the statutory provision. The
only reason why clause 1 of the lease was possibly hit by the
statutory provisions of the legislation,
was because of the
contemplated options which lengthened the initial period of the lease
beyond ten years. It is important to
note that the first of such
options had not yet been exercised and that the three options would
only come in operation after the
expiry of the main or initial lease
period.
[15] The options were
clearly stipulations in the contract for the exclusive benefit of the
appellant who could, of his own accord,
irrevocably renounce them.
In view of the fact that the appellant had already irrevocably
renounced the three options in his answering
affidavit, such
renunciation had effectively removed the illegality which
contaminated the lease agreement. The wording of section
3(d) of the
said Act does not assist the respondent in this regard. The purpose
of the said Act is clearly to prevent circumvention
of the maximum
period of ten years in the manner stated in section 3(d). It follows
therefore that the court
a
quo
erred in its finding that the said agreement was not severable and
therefore illegal and
ab
initio
void.
[16] As far as the issue
of cancellation is concerned, it is the respondent’s case on
the papers that the appellant was in
material breach of several
essential terms of the contract, including the erection of structures
which did not comply with the
stipulations of the contract; certain
people were in unlawful occupation of the premises; the premises were
dirty and unhygienic,
and that she was therefore entitled to cancel
the contract. There exists a serious dispute of fact with regard to
the respondent’s
allegations in this regard. I deem it
necessary first to deal with the question whether the respondent had
properly and legally
cancelled the contract.
[17] According to the
lease agreement the lessor is entitled to cancel the agreement in the
following circumstances:
“
10. In die geval van
wanbetaling van enige huurgeld, of by nie-nakoming van enige
wesenlike voorwaarde in hierdie huurkontrak sal
die verhuurder die
reg hê om hierdie huurkontrak nadat hy 14 (veertien) dae
skriftelike kennis aan die huurder gegee het
om die gebrek te
herstel, te kanselleer en besit te neem van die perseel sonder
afbreek van die verweerder se reg om ‘n eis
in te stel teen die
huurder vir agterstallige huurgelde of vir vergoeding vir enige skade
deur hom gelei weens beëindiging
van die huurkontrak.”
[18] On 19 June 2006 the
respondent’s attorney wrote a letter to the appellant alleging
that he had breached clause 4 (regarding
a sub-letting without
informing the respondent in writing of his intention to sub-lease and
informing her about particulars of
the sub-lessee) as well as clause
5 (not supplying approved building plans for the erection of certain
structures on the property).
It also states that
“
If this breach is not rectified
within 14 (fourteen) days from date hereof, the lessor hereby cancels
the lease with immediate effect.”
It also informs the
appellant that the lease expires on the 31
st
May 2011 due to the fact that the appellant,
“
is only protected by the ‘huur
gaat voor koop’ – doctrine for the first nine years and
eleven months of the lease
contract.”
[19] In reply to the said
allegations the appellant’s attorney stated in a letter dated
28 June 2006 that there was no sub-lease
entered into by the lessee
in respect of the leased property. As far as the alleged
contravention of clause 5 is concerned, the
appellant’s
attorney stated that the necessary plans were made available to Mr.
Pienaar, the respondent’s predecessor
in title.
[20] On 8 August 2006 the
respondent’s attorney wrote another letter to the appellant,
referring to a discussion between the
parties on 20 July 2006:
“
To address problems regarding
the lease and reiterate that you are still in breach of contract due
to the following...”
The letter concludes as
follows:
“
We want to be fair to you by
giving you a final opportunity to rectify the problem within 7
(seven) days from the date of service
hereof, failing with an
interdict will be sought to prevent all construction and for the
cancellation of the contract. You will
further be held liable for
legal costs, should it be necessary to approach a court. We hope and
trust that you will respond to
our letter in order to prevent legal
action that could not be beneficial to anyone.”
[21] A final letter
addressed by the respondent’s attorney to the appellant is
dated 28 August 2006 in which previous complaints
are repeated and
then concluding as follows:
“
Please comply with my requests
to give these matters your urgent attention immediately.”
Nothing is said about
cancelling the agreement.
[22] The object of
cancellation is to terminate the primary obligations of an agreement
i.e. the obligations of both parties to
perform. A notice of
cancellation must therefore be clear and unequivocal which takes
effect from the time it is communicated
to the appellant.
SWART v VOSLOO
1965 (1) SA 100
(A);
KRAGGA KAMMA
ESTATES CC AND ANOTHER v FLANAGAN
[1994] ZASCA 137
;
1995 (2) SA 367
(A) at 375 E – F.
[23] In her founding
affidavit the respondent alleges that she was more than reasonable in
affording the appellant an opportunity
to rectify the breach. She
alleges that she acted in terms of clause 10 of the contract
“
and therefore consider the
contract as cancelled by the second letter of cancellation marked
annexure IT5”
i.e.
the letter dated 8 August 2006, although the Notice of Motion alleges
that the “lease agreement ... is cancelled on 19 June
2006”.
[24] It
is important to have regard to what Watermeyer AJ stated in
SEGAL
v MAZZUR
1920 CPD 634
at 644:
“
Now, when an
event occurs which entitles one party to a contract to refuse to
carry out his part of the contract, that party has
the choice
of
two courses. He can either elect to take advantage of the event or
he can elect not to do so. He is entitled to a reasonable
time in
which to make up his mind, but when once he has made his election he
is bound by that election and cannot afterwards change
his mind.”
See
also Christie
op
cit
at 538 – 541.
[25] Having
regard to the wording of the letter dated 19 June 2006, (being the
only notice affording the appellant 14 days in terms
of clause 10 of
the agreement to rectify an alleged breach), it is not clear whether
the respondent has already made up her mind
to cancel the contract.
If any doubt exists it is removed by a later letter dated 28 August
2006 where the appellant is again
requested to give certain matters
his urgent attention, which is inconsistent with an election to
cancel.
[26] It
follows from the aforegoing that the respondent has not communicated
a clear and unequivocal notice of cancellation to the
appellant. On
the contrary it appears that the respondent elected not to cancel the
contract and that she is bound by that election.
The respondent (as
applicant in the court
a
quo
)
has therefore not made out a case for the main relief claimed. As
far as the alternative relief is concerned, no argument was
advanced,
and no relief was asked. In view of the decision reached in this
regard, it is not necessary to deal with the dispute
of fact
regarding the respondent’s allegations of breach of contract.
[27] Accordingly
the appeal succeeds with costs. The order of the court
a
quo
is set aside and substituted with the following order:
“The application
is dismissed with costs.”
________________
S.P.B.
HANCKE,
J
I
agree.
___________
__
S. EBRAHIM, J
I agree.
_______________
E.A. MOOLLA, AJ
On
behalf of the appellant: Adv. S.J. Reinders
Instructed
by:
Rosendorff
Reitz Barry
BLOEMFONTEIN
On
behalf of the
respondent: Adv. D.M. Grewar
Instructed
by:
McIntyre
& Van der Post
BLOEMFONTEIN
/sp