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[2009] ZAKZPHC 86
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Colchester Zoo SA Investments (Pty) Limited v Weenen Safaris CC (AR233/09) [2009] ZAKZPHC 86 (7 October 2009)
IN
THE KWAZULU-NATAL HIGH COURT, PIETERMARITZBURG
REPUBLIC
OF SOUTH AFRICA
APPEAL
CASE NO: AR 233/09
In
the matter between:
COLCHESTER
ZOO SA INVESTMENTS (PTY)
LIMITED
APPELLANT
and
WEENEN
SAFARIS
CC
RESPONDENT
JUDGMENT
Delivered
on:__________
NICHOLSON
J
[1]
During or about July and August 2005 the parties entered into
an option agreement relating to a game farming business on the Farm
Geluk. The appellant was intending to commence a game farm near
Colenso and had already_ purchased three adjacent properties and
the
two relevant properties in question were to be incorporated in that
endeavour.
[2]
In terms of the written option agreement the respondent
granted to the appellant an option to purchase the business
comprising the
two immovable properties described more fully in the
written agreement for the sum of R3,25 million. The option further
provided
that the option could only be exercised after the approvals
referred to in clause 3 had been obtained, which related to approval
from the authorities for the sub-division.
[3]
It is common cause that the land in question was agricultural
land.
[4]
The option stated that it would expire 30 days after
notification by the respondent to the appellant that the approvals in
clause
3 had been granted. In consideration for the option the
appellant paid the sum of R150 000.
[5]
In the event of the option being exercised by the appellant it
was provided that an agreement on the terms and conditions set out
in
a written agreement annexed would come into being.
[6]
The respondent undertook to do all things necessary to obtain
the approvals referred to in clause 3. The respondent approached the
Department of Agriculture and Land Affairs for the necessary
permission but required a water certificate which was not provided.
The respondent declined to pursue the matter of the water certificate
any further and the application became doomed to failure.
[7]
On behalf of the respondent a letter was sent on 10 November
2006 to the effect that the respondent no longer considered the
option
to be of any force and effect and not binding on it. The farm
was offered to the appellant for £3,25 million which at the
prevailing exchange rate amounted to about R45,8 million. The
respondent maintains that the last mentioned offer was a joke but
that is disputed.
[8]
This is an appeal from the decision of the Court a
quo
refusing an application for the following relief:
"(1) It is declared
that the written agreement of option to purchase signed on behalf of
the applicant on the 11 August 2005
and on behalf of the respondent
on 27 July 2005, annexed to the founding affidavit is valid and
binding between the parties.
(2) The respondent is
directed to take all reasonable steps, without undue delay, to obtain
the approvals referred to in clause
3 of the said agreement.
(3) The respondent is
interdicted and restrained from alienating the immovable property
referred to in the said agreement for as
long as the agreement
remains in force.
(4) The respondent is
ordered to pay the costs of this application."
[9]
The Court a
quo
held that the written option was
covered by the definition of sale in the Act and dismissed the
application. Mr Ploos van Amstel
SC argued that the Court erred in
that regard as an option to purchase is not a sale.
[10]
Section 3 of the Sub-division of Agricultural Land Act, No 70
of 1970 when it came into effect on 2 January 1971 provided that:
"Subject to the
provisions of Section 2 -
(a) agricultural
land shall not be subdivided;
(b) no undivided
share in agricultural land not already held by any person, shall vest
in any person;
(c) no part of any
undivided share of agricultural land shall vest in any person if such
part is not already held by any person;
unless the Minister has
consented in writing to the subdivision or vesting concerned."
[11]
There were two subsequent amendments to the section in
question which are relevant to this matter. Sub-sections (d), (e) and
(f)
were introduced by Act 55 of 1972, with effect from 2 June 1972.
[12]
Sub-section (e)(i) provided that no portion of agricultural land,
whether surveyed or not, and whether there is any building
thereon or
not shall be sold or advertised for sale unless the Minister of
Agriculture has consented thereto in writing.
[13]
It is clear that the above prohibition on a sale means that no
agreement of sale of agricultural land shall be entered into.
See
Palm Fifteen (Pty) Ltd v Cotton Tail Homes (Pty) Ltd
1978 (2)
SA 872
AD at 887 G - H.
[14]
Act 18 of 1981 introduced an extended definition of sale to include a
sale subject to a suspensive condition and this came
into effect on 4
March 1981. This was clearly a response by the legislature to the
cases mentioned below.
[15]
Mr Ploos van Amstel submitted that the appeal depended on a proper
interpretation of what a sale is in the relevant legislation.
The
Courts have held that the proper approach to the interpretation of a
statute is to seek the intention of the legislature. The
rules of
interpretation are set out in
S v Toms: S v Bruce
[1990] ZASCA 38
;
1990 (2) SA
802
(AD) at 807H-808A where the Court stated as follows:
''The primary rule in the
construction of statutory provisions is to ascertain the intention of
the Legislature. One does so by
attributing to the words of a statute
their ordinary, literal, grammatical meaning. Where the language of a
statute, so viewed,
is clear and unambiguous effect must be given
thereto, unless to do so... would lead to absurdity so glaring that
it could never
have been contemplated by the Legislature, or where it
would lead to a result contrary to the intention of the Legislature,
as
shown by the context or by such other considerations as the Court
is justified in taking into account... The words used in an Act
must
therefore be viewed in the broader context of such Act as a whole...
When the language of a statute is not clear and unambiguous
one may
resort to other canons of construction in order to determine the
Legislature's intention." (Case references omitted)
[16]
Where no problem arises and the words are capable of only one
meaning, effect must be given to such meaning. See
Public
Carriers' Association v Toi/road Concessionaries
1990(1) SA 925
AD at 942 I to 943 B.
[17]
I accept also that the Act must be interpreted restrictively as it
represents a radical departure from the common law. In
Regering
van die Republiek van Suid-Afrika v Disotto and Others
1998(1) SA
728 SCA the Court held as follows with respect to the Agricultural
Credit Act at page 735 D - E:
"Die Wet moet
beperkend vertolk word omrede dit 'n ingrypende inbreukmaking op die
gemeneregtelike beginsels met betrekking
tot die oordrag van
eiendomsreg daarstel en ander skuldeisers daardeur benadeel kan word
(vgl Caroluskraal Farms (Edms) Bpk v Eerste
Nasionale Bank van
Suider-Afrika Bpk; Red Head Boer Goat (Edms) Bpk v Eerste Nasionale
Bank van Suider-Afrika Bpk; Sleutelfontein
(Edms) Bpk v Eerste
Nasionale Bank van Suider-Afrika Bpk
[1994] ZASCA 23
;
1994 (3) SA 407
(A) op 4230)."'
[18]
In
Van der Bijl and Others v Louw and Another
1974 (2) SA 493
(C) Baker J, dealt with the purpose of the Act at 4990:
"The purpose of the
Act is manifest: its object is to prevent the subdivision of economic
units of farming land into non-viable
(uneconomic) sub-units or
smaller units."
[19]
Sales subject to a suspensive condition have been considered by the
Courts over the years. In
Corondimas and Another v Badal
1946
AD 548
a contract was concluded "subject to permission under the
pegging Act". Watermeyer CJ said the following about the nature
of a contract subject to a suspensive condition at page 551:
"Such an agreement
is clearly subject to a true suspensive condition. It is an agreement
to buy and sell if the Minister grants
a permit to the parties to
enter into it. According to the decision of this Court in the case of
Provident Land Trust v Union Government
1911 AD 615
, when a contract
of sale is subject to a true suspensive condition, there exists no
contract of sale unless and until the condition
is fulfilled. In
other words, the prohibited contract (e.g. a contract of sale), which
is declared null and void by s 5 (2) of
the Act, unless the Minister
consents to it, cannot come into existence unless and until that
condition is fulfilled. Until that
moment, in the case of a sale
subject to a true suspensive condition. such as this is, it is
entirely uncertain whether or not
a contract of sale will come into
existence at some future time. Until that moment there is certainly a
legal relationship, contractual
maybe (see Goudsmit para 61; Voet
18.1.24; Leo v Loots
1909 TS 366)
existing between the parties, which
may ripen into a contract of sale, but, in the particular case in
which the coming into existence
of a contract of sale is made, by
agreement between the parties, to depend upon consent to it having
been given by the Minister,
that relationship is not one which is
forbidden by the Act or declared by it to be of no force and effect."
[20]
In
Sentraal-wes Personeel Ondernemings (Edms) Bpk v Nieuwoudt
1979
(2) SA 537
(C) certain agricultural !and was incorporated into a
municipality for the establishment of a township but the announcement
by
the Administrator in terms of s 20 (6) (b) Ord 33 of 1034 (C) had
not yet taken place when the defendant and the plaintiff entered
into
a written contract of sale for the purchase of a stand in the
proposed township. Clause 6 of the contract reads as follows:
"This sale is
suspensive and subject to the proper proclamation of the township. In
the event of the township not being proclaimed
for any reason
whatever and regardless whether or not this is due to the failure of
the seller, then this agreement of sale shall
be regarded as void
from the beginning and the seller shall pay to the purchaser all
amounts paid by the latter free of interest
and no party shall have
any further claim against the other".
[21]
As the defendant in that case fell into arrears with her annual
payments the plaintiff claimed the amount from her. At the
conclusion
of the plaintiff's case the defendant applied for absolution from the
instance and judgment in terms of her counterclaim
for the amount
already paid. The magistrate declared the contract void and granted
absolution and judgment in terms of the counterclaim.
[22]
In an appeal, to the High Court it was held, that clause 6 had to be
regarded as constituting a suspensive condition and that
pending the
fulfillment of the suspensive condition, the contract could not be
described as a contract of sale. It was further
held by Vivier J,
that the word "sale" in section 3 (e) of the Subdivision of
Agricultural Land Act 70 of 1970 as amended
was used in the context
in the sense which the Courts had over the years assigned to it.
[23]
This principle has been applied in this country and abroad for many
years. Lord COLERIDGE described in
Barlows v Teal
15 QBD 403
at 405 how to interpret words that have received attention by the
courts.
"Acts of Parliament
use forms of words which have received judicial construction. In the
absence of anything in the Acts showing
that the Legislature did not
mean to use the words in the sense attributed to them by the Courts,
the presumption is that Parliament
did so use them."
[24]
In Niewoudt's case the Court concluded that the contract was not a
sale within the ambit of section 3 (e) of that Act.
[25]
As I have mentioned Act 18 of 1981 was thereafter passed which
introduced an extended definition of sale to include a sale
subject
to a suspensive condition and this came into effect on 4 March 1981.
[26]
To determine whether a sale, either on its own or subject to a
suspensive condition, would include an option it is necessary
to
consider the nature of an option. The Courts have dealt with the
nature of options and rights of pre-emption and in
Hirschowitz v
Moo/man and Others
1985 (3) SA 739
(AD) Corbett JA (as he then
was) held as follows at 765 G - 766 E:
"It may be accepted,
as conceded by counsel for respondents, that where A grants to B a
right of pre-emption in respect of
A's land, A does not thereby enter
into a contract for the sale of that land or even offer to sell that
land to B. Respondent's
counsel submitted, however (a) that the grant
of such a right is a contract whereby A undertakes and is obliged to
sell the land
to B if (i) the contingency bringing the right of
pre-emption into operation has supervened and (ii) B has exercised
the right
of pre-emption in writing; (b) that the grant amounts to a
promise by A to sell the land to B upon the happening of certain
events,
ie a pactum de contrahendo; and (c) that a pactum de
contrahendo must itself comply with any formalities which are
requisite to
the validity of the proposed second contract. This
submission seems to me to be sound.
A pactum de contrahendo
is simply an agreement to make a contract in the future (see Montrose
Diamond Mining Co v Oyer 1912 TPO
1 at 5; Lugtenborg v Nichols
1936
TPD 76
at 79; I Wessels Law of Contract 2nd ed para 217; De Wet and
Yeats Kontraktereg en Handelsreg 4th ed at 29; Joubert Law of South
Africa vol 5 para 117). lt was a class of contract "very well
known in the Civil Law" (see Mcilrath v Pretoria Municipality
1912 TPD 1027
at 1037 - per WESSELS J, BRISTOWE J concurring). Often
the pactum provides that the conclusion of the second (future)
contract
is to depend upon some contingency. In Mcllrath's case, for
example, the plaintiff contracted with the municipality to execute
for a term of years such cartage work as the municipality might from
time to time require at certain specified cartage rates. The
contract
was construed as placing no legal duty upon the municipality to
employ the plaintiff; but once it decided to call upon
plaintiff to
do certain work, it was obliged to pay him for the work at the
stipulated rates. Similarly, the portion of an option
constituting
the agreement to keep the offer open is often referred to as a
species pactum de contrahendo (see Anglo Carpets (Pty)
Ltd v Snyman
1978 (3) SA 582
(T) at 585H; De Wet and Yeats (op cit at 29 -
30);Joubert Law of South Africa vol 5 paras 117 and 118; Kerr Law of
Contract 3rd
ed at 47). Here the conclusion of the "second"
contract is dependent upon the contingency of the option-holder
deciding
to accept the offer contained in the option. In my view the
grant of a right of pre-emption also constitutes a kind of pactum de
contrahendo, the conclusion of the "second" contract being
dependent on the contingencies mentioned above.
In general a pactum de
contrahendo is required to comply with the requisites for validity,
including requirements as to form, applicable
to the second or main
contract to which the parties have bound themselves; Montrose Diamond
Mining Co v Oyer
1912 TPD 1
at 5."
[27]
It is clear that a sale subject to a suspensive condition is
qualitatively different to an option or a right of pre-emption.
In
the former situation if the condition comes about there is a binding
contract between the parties. In the situation of an option
if the
respondent acquires the requisite permission it is still open to the
present appellant as the option holder to elect whether
to enter into
a contract on the terms provided. The option giver would be bound if
the option holder elected to exercise his rights.
[28]
I accept that sales with suspensive conditions are subject to
the Act, even if the suspensive condition posits the permission of
the Minister. In
Geue and Another v Van der Lith and Another
[2003] ZASCA 118
;
2004
(3) SA 333
SCA the Court dealt with a matter where the owner of a
farm had sold an undivided portion of his land without the consent of
the
Minister as required by the Act, but subject to the suspensive
condition of such consent being obtained. In an appeal against the
refusal in a Provincial Division of an application for an order
declaring the agreement invalid for want of compliance with s
3(e)(i), the Supreme Court of Appeal held that the meaning of s
3(e)(i), read with the definition of "sale" in s 1 of
the
Act, which stated that '"sale" includes a sale subject to a
suspensive condition', was on first impression clear,
and it also
seemed clear that, in view of the definition, the agreement under
consideration fell squarely within the ambit of the
prohibition
contained therein. (Paragraph [4] at 3388.)
[29]
The Supreme Court of Appeal held, further, that the Court a
quo's
conclusion of absurdity was unjustified also because it
was based on the false supposition that the Legislature intended only
to
prevent an owner of agricultural land from parting with an
undivided portion of that land without the Minister's consent. That
this was not the only purpose of the Act was clear from s 3(e)(i),
which prohibited also advertisements for sale. Since advertisements
would obviously precede the actual sale, it was by no means absurd to
infer that the Legislature intended to prohibit any sale
of an
undivided portion of farmland, whether conditional or not unless the
subdivision had actually been approved by the Minister.
(Paragraph
{15) at 343J - 344C.)
[30]
Options and sales subject to suspensive conditions are very
different but Mr Hartzenberg submitted that an option is a
preliminary
step to a sale which is similar to advertising.
Advertising is prohibited because it relates to expenses that a
purchaser might
incur in going to a farm to inspect it when a sale
was not possible.
[31]
An option imposes no obligations on the holder who is merely
insisting on the option giver putting his house in order, as far
as
the obtaining of ministerial permission is concerned, before the
option holder decides whether or not to buy. The effect was
to prefer
the option holder to other potential buyers in the event of such
consent being granted. I cannot see that this would
result in
absurdity.
[32]
Even if it was strange that options are not mentioned the Court in
the Geue matter held that courts were not entitled, under
the guise
of absurdity, to avoid the clear intention of the Legislature merely
because they regard particular consequences to be
harsh or even
unwise. Moreover, once the intention of the Legislature was clearly
established, it could be dangerous to speculate
as to why it would
have intended a particular result. It would thus serve no purpose to
speculate why the Legislature had wanted
to prohibit a sale subject
to a suspensive condition of the kind in that case. (Paragraph (15)
at 344C - E.)
[33]
The Court held that if the legislature wanted the Court to ascribe a
meaning to the word 'sale' which was different to how
the term had
been understood and interpreted in the past it would have to give
some clear indication of this intention where necessary
through
legislative amendment. See page 342 F.
[34]
In none of the cases brought to my attention was a sale interpreted
to include an option to purchase. The option does not,
in my view,
undermine the objects of the legislation, it merely gives the
appellant an advantage over competing purchasers, which
seems to me
to be unobjectionable.
[35]
I accept Mr Ploos van Amstel's argument that parties are entitled to
arrange their affairs in such a manner so as to remain
outside the
effect of a particular statute. See
Michau v Maize Board
2003
(6) SA 459
SCA at 4648.
[36]
The meaning contended for by Mr Hartzenberg would mean that the Court
would have to insert words, to the effect that a sale,
includes an
option to purchase or any right of pre-emption, embodied in a
contract. If one is to interpret the Act restrictively
it is not
possible to include an option in the definition of sale. The previous
case law shows how the Courts have adopted a restrictive
interpretation on the word 'sale' and I am enjoined to adopt a
similar approach.
[37]
Mr Hartzenberg also argued that various provisions in the option
agreement created rights and obligations in the parties. These
consequences were such as would undermine the intention of the
legislature in prohibiting sales pending the requisite ministerial
authority.
[38]
He made mention firstly of the sum of R150 000 which was paid by the
appellant to respondent in terms of clause 4.
[39]
Secondly he drew attention to the obligation in clause 5 on
respondent to prevent hunting, culling or capture of wild animals
and
to maintain the land, fences, roads and buildings thereon until the
appellant was able to take transfer and occupation.
[40]
Finally he mentioned the obligation on respondent in terms of clause
6 to continue to burn firebreaks on the land in accordance
with good
farming practice.
[41]
I do not believe that these requirements carry the day in what is a
question of interpretation of a statute. The appellant
was receiving
a preference to other potential buyers of the property in terms of
the option and he had to pay consideration for
that benefit.
[42]
The reciprocal obligations on the respondent were imposed to ensure
that if the appellant eventually exercised his right to
enter into
the sale agreement, which he was not obliged to do, the land would be
in its pristine state.
[43]
I do not believe that a sale can be interpreted in the relevant
legislation to include an option.
[44]
I would therefore propose that the following order be made:
(a) The appeal
succeeds.
(b) The respondent
is ordered to pay the appellant's costs of appeal.
(c) The order made
by the court is set aside and replaced with the following order:
(1) It is declared
that the written agreement of option to purchase signed on behalf of
the applicant on the 11 August 2005
and on behalf of the respondent
on 27 July 2005, annexed to the founding affidavit is valid and
binding between the parties.
(2) The respondent
is directed to take all reasonable steps, without undue delay, to
obtain the approvals referred to in clause
3 of the said agreement.
(3) The respondent
is interdicted and restrained from alienating the immovable property
referred to in the said agreement
for as long as the agreement
remains in force.
(4) The respondent
is ordered to pay the costs of this application.
__________________
Balton
J
I
agree.
JUDGMENT
RESERVED ON: 4
th
AUGUST 2009
JUDGMENT
HANDED DOWN: 7
th
OCTOBER 2009
COUNSEL
FOR APPELLANT: ADV. PLOOS VAN AMSTEL (S.C.)
Instructed
by: Denevs Reitz c/o Tatham Wilkes
COUNSEL
FOR RESPONDENT: ADV. HARTZENBERG (S.C.)
Instructed
by: Jordaan Geldenhuys c/o Venn Nemeth & Hart