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1985
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[1985] ZASCA 38
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Hirschowitz v Moolman and Others (58/85) [1985] ZASCA 38; [1985] 2 All SA 319 (A) (24 May 1985)
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
HIMIE NORMAN HIRSCHOWITZ
appellant
and
PIETER BENJAMIN MOOLMAN
first respondent
STEPHANUS JACOBUS DANIEL MOQLMAN
..second respondent
DORSTFO
NTEIN COAL MINES LIMITED
third respondent
CORAM; Corbett, Miller, Cillié, Van Heerden JJA, et Smalberger
AJA.
DATE HEARD: 5 March 1985
DATE OF JUDGMENT: 24 May 1985
J U D G M E N T
CORBETT JA :
The appellant, Mr H N Hirschowitz, made application on notice of motion to
the Witwatersrand
/ Local
2
Local Division ("WLD") claiming an order for the enforcement of a right of
pre-emption held by him in respect of a farm known as "Welstand
No 55'' and
situated in the district of Bethal, Transvaal ("the farm") . The application
failed, as did an appeal to the Transvaal
Provincial Division ("TPD"). The
judgment on appeal has been reported (see
Hirschowitz v Moolman and
Others
1983 (4) SA 1
(T).). Leave having been granted by the TPD, appellant
now appeals to this Court against the dismissal of his application. The
essential
facts of the matter are as follows.
In 1955 first respondent, Mr P B Moolman, and his brother, the late Mr T D du
P Moolman, became the registered owners of the farm
in equal, undivided shares.
On 11 July 1977 there was registered a notarial prospecting contract, granted by
the brothers Moolman
in favour of Sun Prospecting and Mining Company (Pty) Ltd
("Sun Prospecting"), entitling
/ the
3
the latter to prospect for coal on the farm and giving the latter the option
to purchase the coal rights pertaining to the farm. On
7 December 1977 Sun
Prospecting ceded its rights, obligations and interest under and in the
prospecting contract to Zenith Enterprises
(Pty) Ltd, which later changed its
name to Dorstfontein Coal Mines (Pty) Ltd ("Dorstfontein") and which figured as
fourth respondent
in the Courts a quo and third respondent in this Court. On 19
December 1977 the cessionary exercised the option to purchase the coal
rights in
respect of the farm. Later these rights were formally ceded to Dorstfontein.
Some time between 19 December 1977 and 3 March 1978 - the precise date does
not appear from the papers -T D du P Moolman died, leaving
a surviving spouse,
Mrs C M Moolman, to whom he had been married in community of property, and a
son, Mr S J D Moolman, the second
respondent. Mrs Moolman was cited as third
respondent in the Court a quo,
/ but
4
but the appeal to this Court is not pursued against her. The late T D du P
Moolman and Mrs Moolman had in 1959 executed a mutual will
nominating the
survivor as the sole and universal heir or heiress of their whole joint estate,
subject to the following condition,
inter alia
:-
"Indien ek THEODORUS DANIEL DU PLESSIS MOOLMAN die Testateur eerste te sterwe
kom en indien ek CHRISTINA MAGDALENA MOOLMAN (gebore
Botes) die Testatrise
hertrou wil en bepaal ons dat ons onverdeelde een-helfte in die plaas 'Welstand'
nr. 34, distrik Bethal (geregistreer
in die naam van die Testateur) aan ons seun
STEPHANUS JACOBUS DANIEL MOOLMAN sal vererf en' in sy naam getransporteer moet
word."
On 15 May 1978 a written lease of the farm was granted to appellant by first
respondent and Mrs C M Moolman for a period of five years,
reckoned from 1
September 1978, The lease contains the following clause (which, it is common
cause, created a right of pre-emption);
/ "8. Ingeval....
5
"8. Ingeval die huurders die eiendom wens te verkoop gedurende die
huurtermyn, sal ' hulle aan die huurder die eerste reg en opsie
gee om dit te
koop vir 'n tydperk van 1 (een) maand vanaf datum van skriftelike kennisgewing
aan die huurder van hulle voor-nemens
om te verkoop. Indien die huurder nie
binne genoemde maand die eiendom van hulle koop nie sal die eerste reg om te
koop outomaties
verval".
Mrs Moolman signed this lease presumably in the anticipation that she, as
heiress under the will, would in due course become a registered
co-owner of the
farm, together with her brother-in-law, the first respondent. In fact this never
came to pass. For on 26 June 1978
she and her son entered into a redistribution
agreement ("herverdelingsooreenkoms"). This agreement records in its preamble
that
Mrs Moolman accepted the benefits of the joint will on 23 May 1978 and it
provides basically (a) that the one-half share in the farm,
together with all
mineral rights (other than rights to coal), be awarded to
/ second
6
second respondent; and (b) that the entire net residue of the joint estate
(including the proceeds of the sale of the coal rights)
be awarded to Mrs
Moolman. Subsequently Mrs Moolman remarried and is now Mrs Duvenhage. On 11 May
1979 and in pursuance of the redistribution
agreement an undivided half-share in
the farm was transferred to second respondent.
On 28 February 1980 first and second respondents,
as
owners of the farm, entered into an underhand prospecting
contract with third
respondent (Dorstfontein) in terms
whereof the latter was given the sole and
exclusive right
to prospect for all minerals, excluding coal, on the
farm.
(I shall refer to this contract as "the prospecting contract".)
Clause
4(a) of the prospecting contract provides as follows:
"Te enige tyd gedurende die Prospekteertydperk sal die Prospekteerder die
enigste en uit-sluitlike reg en opsie he om die gesegde
Plaas tesame met alls
regte tot enige minerals uitgesonder steenkool, van die Eienaar te koop teen 'n
koopprys bereken teen 'n koers
van R755,00 (sewehonderd vyf-en-vyftig rand) per
hektaar oor die hele omvang van die gesegde Plaas, betaal-
/ baar . ...
7
baar in kontant teen registrasie van oordrag daarvan in die naam van die
Prospekteerder, as sekuriteit vir welke betaling die Prospekteerder
die
gebruiklike bankwaarborg sal verskaf op aanvraag sodra die dokumente wat nodig
is oni sodanige registrasie be bewerkstellig gereed
is om by die Akte-kantoor
ingedien te word."
It is appellant's case that the grant in the prospecting contract of the
option contained in clause 4(a) "triggered off" the right
of pre-emption
contained in clause 8 of the lease, quoted above. On 8 August 1980 appellant's
attorneys addressed a letter to first
respondent and Mrs Moolman referring to
clause 8 of the lease and stating that their client had been informed of the
grant of an
option over the farm. The letter concludes —
"Indien u wel begerig is om die eiendom te verkoop, word u versoek om die
voor-waardes te stel sodat ons klient sy op-sie kan oorweeg
ingevolge bogemelde
klousule van die huurkontrak."
An exchange of correspondence ensued, culminating in the
/ attorneys
8
attorneys acting for first and second respondents on 2 December 1980 giving
written notice, in terms of clause 8 of the lease, that
their clients were
considering selling the farm at a price of R270 643,86 and that appellant,
therefore, had the prior right ("eerste
reg") to purchase the farm at the
offered price within a period of one month as from the receipt of the notice.
According to appellant,
discussions then took place between the attorneys acting
for the parties and a deed of sale was drafted. This was signed by appellant
on
10 December 1980, ie within the period of one month. Immediately thereafter
Dorstfontein intervened; first and second respondents
gave a written undertaking
to Dorstfontein not to sell the farm; and they notified appellant that the
notice of 2 December 1980 had
not been authorized by them and was of no force or
effect. Appellant's attorneys responded by demanding from first and second
respondents
a formal written offer in terms of clause 8
/ of the
9 of the lease, to sell the farm to appellant for the price
stated in the prospecting contract, namely R755,00 per hectare. In reply
thereto, they were asked to hold the matter in abeyance until 30 June 1981. This
they refused to do. In May 1981 appellant instituted
proceedings.
In his notice of motion (as amended) appellant claimed orders —
1 A. declaring that first and second respondents are obliged to offer the
farm to appellant (applicant) for sale on the same terms
and conditions,
mutatis mutandis
, as those set out in clause 4(a) of the prospecting
contract;
1 B. directing the respondents to deliver the offer to appellant within 30
days of the date of the court's order in compliance with
their obligations set
forth in paragraph 1 A, which offer shall comply with the provisions of the
Formalities in respect of Contracts
of Sale
/of
10
of Land Act 71 of 1969;
1 C. alternatively, declaring that first and second respondents are obliged
to accept an offer in the terms mentioned in 1 A;
2.
authorising the Sheriff of
the Transvaal or any of his lawful deputies to sign, execute and deliver such
offer to the appellant for
and on behalf of the first and second respondents, if
the respondents fail to do so;
3.
directing
first and second respondents to pay the costs of the application jointly and
severally, the one paying the other to be
absolved.
When the application came before the WLD
the presiding Judge, G0LDST0NE J, referred at some length to the various
judgments in the
case of
Owsianick v Afric
an
Consolidated Theatres
(Pty) Ltd
1967 (3) SA 310
(A) and
/ continued......
11
continued —
"The majority judges thus decided that the usual right of pre-emption, such
as the provision they were considering, does not, when
it comes into operation,
give rise to a binding contract of sale: i.e. the holder of the right, when he
exercises it, may not demand
either transfer of the land or a sale to himself.
If that is the proper construction of the pre-emptive right conferred by clause
7 of the lease in the Owsianick case, then I can find nothing in the provisions
of Clause 8 of the lease now before me which would
justify a broader
construction. Certainly, there are no words which would entitle me to hold that
the provision confers upon the
applicant a right to demand to become the
purchaser of the subject matter of the pre-emptive right i.e. the farm.
As the majority of the Court held in the Owsianick case, such a pre-emptive
right gives rise only to a claim for an interdict in a
suitable case or for
damages in the event of a breach thereof. No such claims are made in this case.
On this ground the application
cannot succeed."
The learned Judge then went on to consider a further argument by counsel for
the respondents that, in any event, even if a right of
pre-emption did entitle
the grantee thereof to claim transfer of the land or to demand to be-
/come
12
come the purchaser thereof, then such right had to comply
with the
provisions of sec. 1(1) of the Formalities in
respect of Contracts of Sale of
Land Act 71 of 1969 ("the
Formalities Act"). He concluded that sec. 1(1) of
the
Formalities Act was an "insuperable obstacle" in the way
of the Court
granting the relief sought against the second"
respondent in that the latter
had signed no written docu
ment obliging him to sell the farm to the
appellant or to
offer to sell it to him. Moreover, the claims
against
first and second respondents could only be made jointly,
not
jointly and severally. The application was accordingly
dismissed with
costs.
On appeal to the Full Bench of the TPD it was held (per COETZEE J, ESSELEN J
and PHILIPS AJ concurring) that (a) since the delivery
of judgment in the WLD
the Appellate Division had held that "its previous decision in
Owsianick
's case was wrong and that there (was) no reason why an order
for specific performance should
/ not
13
not be granted on the strength of a pre-emptive right such as that in issue.
See
Associated South African Bakeries (Pty) Ltd v Oryx & Vereinigte
Backereien (Pty) Ltd en Andere
1982 (3) SA 893
(A)"; and (b) the Formalities
Act was not a stumbling block in casu, (judgment, pp 4H to 5 E). This Court thus
overruled the grounds
upon which the decision in the WLD had been reached.
Nevertheless, the Court came to the conclusion that the application had been
rightly dismissed since there was no ground in law upon which second respondent
could be held to be bound by clause 8 of the lease
(judgment pp 6 F to 11 D). It
rejected a submission which was argued "but faintly", to the effect that
appellant
could succeed against first respondent in respect only of
his undivided share in the property (judgment p 11 E).
In this Court the two main issues which were argued were (i) whether the
Formalities Act was an insuperable obstacle to appellant's
claim, and (ii)
whether second respondent was bound by the lease and, more particularly,
/by
13
not be granted on the strength of a pre-emptive right such as that in issue.
See
Associated South African Bakeries (Pty) Ltd v Oryx & Vereinigte
Backeieien (Pty
)
Ltd en Andere
1982 (3) SA 893
(A)"; and (b) the
Formalities ' Act was not a stumbling block in casu, (judgment, pp 4H to 5 E).
This Court thus overruled the grounds
upon which the decision in the WLD had
been reached. Nevertheless, the Court came to the conclusion that the
application had been
rightly dismissed since there was no ground in law upon
which second respondent could be held to be bound by clause 8 of the lease
(judgment pp 6 F to 11 D). It rejected a submission
which was argued "but
faintly", to the effect that appellant could succeed against first respondent in
respect only of his undivided
share in the property (judgment p 11 E).
In this Court the two main issues which were argued were (i) whether the
Formalities Act was an insuperable obstacle to appellant's
claim, and (ii)
whether second respondent was bound by the lease and, more particularly,
/by
14
by clause 8 thereof. It was submitted by appellant's counsel that the
Formalities Act had no application to the present case and that
second
respondent became bound by clause 8 of the lease on one or more of the following
grounds, viz. -
(1) that second respondent elected to be bound by all the terms of the lease
including clause 8;
(2) that second respondent was aware of the right of pre-emption (at the latest)
by the time he received transfer of his undivided
half-share of the farm, i.e.
11 May 1979, and that he was therefore bound by the doctrine of notice;
(3) that second respondent, as a gratuitous successor in title, was bound by the
obligations _in
personam
incurred by his predecessor in title (Mrs
Moolman) in respect of the farm;
/ (4) that
15
(4) that second respondent was bound by the grant of the pre-emptive right by
reason of the doctrine of
huur gaat voor
koop
.
All these contentions were contested by
respondent's counsel. During the course of argument appellant's counsel
intimated . that he
was not pursuing the contention based on the doctrine of
notice.
1 proceed to deal with the argument based on the Formalities Act. Here it is
necessary to consider and analyse the provisions of sec.
1(1) of the Act, the
common law relating to rights of pre-emption and the relief sought by appellant
in the present case. It is to
be noted that the Formalities Act was repealed by
the
Alienation of Land Act 68 of 1981
("the new Act"). The relevant portions of
the new Act and the repeal came into operation on 19 October 1982 (see Proc. 148
of 1982,
G;G. 8344 of 20 August 1982). The relevant facts in this case occurred,
and
/ judgment
16
judgment in the WLD was given, prior to the new Act coming into operation. In
this Court counsel made no reference to the new Act
and appeared to be agreed
that the Formalities Act was the relevant legislation. ' This would seem to be
correct. In any event, sec.
2(1) of the new Act seems to have the same impact on
sales of land as did sec. 1(1) of the Formalities Act. I shall, therefore,
proceed
on the basis that the Formalities Act is the legislation to be
considered and I shall speak of it as though still operative.
Sec. 1(1) of the Formalities Act provides
(1) No contract of sale of land or any interest in land (other than a lease,
mynpacht or mining claim or stand) shall be of any- force
or effect if concluded
after the commencement of this Act unless it is reduced to writing and signed by
the parties thereto or by
their agents acting on their written authority."
This subsection replaced subsec. 1(1) of the General Law
Amendment Act 68 of 1957, which was in virtually identical
/ terms
17
terms, save that it included a "cession in respect of land".
Subsec. 1(1) of Act 68 of 1957 repealed and replaced provisions in Transvaal
and
the Orange Free State (sec. 30 Proc. 8 of 1902 (T) and sec. 49 of Ord. 12 of
1906 (OFS) ) similarly requiring contracts for the
sale of fixed property to be
in writing and signed by the parties thereto, or by their agents duly authorized
in writing. The object
of the subsection and its predecessors was to avoid, as
far as practicable, uncertainty and disputes (possibly leading to litigation)
regarding the contents of contracts for the sale of land . (recognising that
such contracts were, as a rule, transactions of considerable
value and
importance) and to counter possible malpractices, including perjury and fraud in
connection therewith (see
Estate Du Toit v Co
ronation
Syndicate, Ltd
and Others
1929 AD 219
, at 224;
Neethling v Klopper en Andere
1967
(4) SA 459
(A), at 464 E - F;
Ferreira and Another v SAPDC (Trading) Ltd
1983 (1) SA 235
(A), at 246 8 - D). What the subsection requires is that (at
least) all the material terms of the. contract
/ be..
18
be reduced to writing and signed by the parties. This does not mean that the
terms of the contract and the signatures of the parties
must necessarily be
embodied in one document. Thus, a written and signed offer by one party in one
document and a written and signed
acceptance thereof by the other in another
document would constitute compliance with the subsection, provided that these
documents
fully recorded the contract (see
Johnston v Leal
1980 (3) SA
927
(A), at 937 G_H;
Trever Investments (Pty) Ltd v Friedhelm Investments
(Pty) Ltd
1982 (1) SA 7
(A), at 18 C-E and the authorities there cited).
The juridical nature of a right of pre-emption (or "voorkoopsreg" or
"voorkeur van koop") was fully considered by this Court in
Owsianick
's
case (
supra
) and in the
ASA Bakeries
case (
supra
). It is
important to determine what precisely was decided in these cases.
/ in
19
In the former case the essential facts (somewhat simplified) were as follows.
The appellant owned certain cinema premises in Johannesburg.
A clause (clause 7)
in a written' lease of the premises, in respect of which the respondent had
become the lessee by assignment,
provided that if during the currency of the
lease the lessor (appellant) desired to sell the leased premises she should,
before concluding
any sale, offer the premises for sale to the lessee at the
same price and upon the same terms and conditions as she was prepared
to sell
the premises to any
bona fide
purchaser; and that the lessee should be
entitled to accept the offer within a period of seven days. During the currency
of the lease
the appellant concluded with one P a written contract of lease of
the cinema property, the lease to commence after the termination
of respondent's
lease. The lease to P contained a clause giving the lessee the option to
purchase the property
/ leased
20
leased at a price of R30 000 Respondent instituted action against appellant
claiming an order directing appellant, within, a time
to be fixed by the court,
to offer in writing to sell the leased premises to respondent at the same price
and upon, the same conditions
as she was prepared to sell the property to P and
directing further that respondent be entitled to accept the offer within a
period
of seven days. In its declaration respondent alleged that by concluding
the lease with P (and thereby conferring the option on P)
appellant had formed
and manifested a desire to sell the leased premises (within the meaning of
clause 7), but had refused to offer
the premises to respondent. Appellant filed
a plea in which she admitted the conclusion and contents of the two leases, but
(and
here I summarize the effect of the plea) denied that the conclusion of the
lease with and the grant of the option to, P brought into
operation the
pre-emptive right contained in clause 7 of the lease to respondent. Res-
/ pondent
21.
pondent took exception to the plea on the ground that it
disclosed no defence. The issue raised was whether or not on the facts which
were common cause on the pleadings the right of pre-emption provided for in
clause 7 had come into operation. The matter was heard
at first instance in the
Transvaal Provincial Division and the exception was upheld, i.e. it was found
that the right of pre-emption
had come into operation.
On appeal to this Court, counsel for the appellant, in addition to arguing
that the right had not come into operation, raised a new
point, viz. that in any
event respondent had no enforceable rights prior to appellant actually
concluding a contract of sale with
P and that then respondent's rights were
confined to a claim for damages, should appellant so sell, or for an interdict
restraining
transfer-pursuant to any such sale. The Court reached divergent
conclusions on these issues. OGILVIE THOMPSON JA held
/ that...
22
that the grant of the option to P had brought into operation
the right of
pre-emption contained in clause 7 and in coming
to this conclusion he
rejected the argument (advanced by
appellant's counsel) that clause 7 applied
only to a sale
concluded or proposed to be concluded during the
currency
of the lease to respondent. He held that by granting the
option
to P appellant had demonstrated during the currency
of the lease to
respondent a "desire to sell" the premises,
within the meaning of clause 7.
The learned Judge of
Appeal further held that (p. 320 G) -
"Subject to the discretion of the
Court to decline, in any particular case, to order specific performance, I am
of the opinion that the holder of a right of pre-emption
is, once the
contingency giving rise to that right has supervened, entitled by due exercise
of his right to become a purchaser."
(It would seem from the context and the authorities cited
that the learned Judge of Appeal was referring to the
/ specific
23
specific performance of the contract of sale resulting from the exercise by
the holder of his right of pre-emption.) Applying this
principle to the facts,
he concluded that appellant was "obliged to offer respondent the premises for
sale" upon the terms stipulated
in the option. Appellant's plea accordingly
disclosed no defence and the exception had been correctly upheld by the Court
below.
OGILVIE THOMPSON JA was thus of the opinion that the appeal should be
dismissed. WILLIAMSON JA concurred in the judgment of OGILVIE
THOMPSON JA on the
issue as to whether on the facts alleged the respondent's right of pre-emption
had come
into operation and agreed that the appeal should be dis-
missed. He was of
the opinion, however, that on the pleadings the only issue which arose, and had
to be decided on appeal, was whether
the right of pre-emption had come into
operation. As to the remedies available to the holder cf a right of pre-emption,
when his
right
/ comes
24
comes into operation, and the new argument raised by appellant's
counsel, WILLIAMSON JA was of the opinion that it was unnecessary
and
undesirable to decide this issue. He nevertheless expressed the "
prima
facile
view" that the conclusion of OGILVIE THOMPSON JA on this issue was
correct. BOTHA JA, in whose judgment POTGIETER JA concurred, held
that the grant
of the option to P did not bring the right of pre-emption contained in clause 7
of the lease into operation and was
accordingly of the view that the appeal
should succeed and the order of the Court a quo be altered to one dismissing the
exception
with costs. In his judgment he considered the nature and legal effect
of a right of pre-emption. In the course of doing so he
expressed, or
appeared to express, the following views:
(i) that a right of pre-emption does not"normally impose any enforceable
positive obligation upon the grantor of the right, but merely
restrains him from
selling to a
/ third
25
third party, save under the conditions prescribed in the agreement creating
that right (see pp 321 F and 323 G - H); (ii) that upon
a sale of the property
subject to a right of pre-emption in disregard of the rights of the grantee of
the right of pre-emption, the
latter may claim damages from the grantor, but
that there is no procedure known to our law whereby the grantee may in that
event
demand to be allowed to step into the buyer's place and compel a sale of
the property to himself (see pp 321 G to 323 E, in which
the contrary views
expressed by Van Zutphen,
Nederlandtsche Practycke
, s.v. "Voorcoop", were
considered and rejected, principally on the ground that Van Zutphen had wrongly
imported, in relation to a
conventional "voorkoopsreg", the legal position
applicable under the Dutch law of "naesting" or the legal "jus retractus"); and
(iii)
that the grantee of a right of pre-emption may in our law, in appropriate
circumstances, by interdict restrain a sale about to be
concluded with a third
party in breach of his rights (see p. 322 H). It would follow from the views
/ expressed
26
expressed by BOTHA JA that, a
fortiori
, the grantee of
a right of pre-emption would have no right to positively
enforce his rights where there had not been a sale to a
third party, but merely the granting to him of an option
to purchase. The fifth member of the Court, WESSELS JA,
agreed that the appeal should be allowed on the ground that
upon a proper construction of clause 7 the lessor (appellant)
could only be in breach thereof when a sale to a third party
was actually concluded during the currency of the lease
to respondent. He added (at p 328 F) -
"A threatened breach may entitle the lessee to an interdict, but that
circumstance could not give rise to an action for specific performance.
The
Court lacks power to issue a command in wider terms than that incorporated in
clause 7."
That this statement was merely an interpretation of the effect of clause 7
itself and was not intended as a general exposition of
the law relating to the
remedies available
/ to
27
to the grantee of a right of pre-emption, was made clear in
the last paragraph of the judgment, which reads (see p 328
G - H) :-
"I regard it as unnecessary for the purposes of my conclusion to deal with
the remedies which are available to the holder of a right
of pre-emption or to
consider whether a clause primarily designed to create a right of pre-emption
could be so formulated as to impose
on the grantor of the right a concurrent
positive obligation to offer the subject matter in question for sale to the
grantee in certain
spci-fied circumstances."
It is to be noted that, contrary to what has on occasion been said in
comments on this case, there was no majority decision on the
legal issues raised
in regard to the remedies available to the holder of a right of pre-emption;
there was a majority decision only
on the question as to whether the pre-emptive
right had come into operation and this decision determined the result of the
appeal.
/ The
28
The facts in the
ASA Bakeries
case (
supra
) were complex, but essentially the case related to a right of
pre-emption in respect of shares in and claims against a certain private
company. The holder of the right of preemption (a company) alleged that a sale
in conflict with its rights had taken place and brought
an application, making
claims which in the main were directed to a positive enforcement of its right of
pre-emption. At first instance
the application was refused, on grounds which are
not relevant. On appeal, this Court (by a majority decision) made an.. order
granting
the appellant certain relief. In the course of his judgment (which was
the majority judgment) VAN HEERDEN AJA, having considered
the judgments in the
Ow
sianick
case and the views of a number of writers on Roman-Dutch and
German common law, summarized the position
as follows (see p 907 E - G):-
/ "Die
29
"Die voorgaande uiteensetting van die menings van skrywers oor
die Romeins-Hollandse en Duitse gemene reg kan nou soos volg saamgevat
word:
(a) Behalwe dat die houer van 'n voorkoopsreg
'n bloot persoonlike reg
het, word geen tersaaklike onderskeid tussen enersyds,
sy reg en, andersyds,
'n naastingsreg
wat ex lege voortspruit en 'n
jus retractus
getrek nie.
(b) Indien 'n verkoper in stryd met 'n voor
koopsreg 'n koopkontrak met
derde
aangaan, kan die koper deur 'n eensydige
wilsverklaring in die plek
van die derde
tree. 'n Koopkontrak word dan geag aan-
gegaan te gewees het
tussen die ver
koper en die houer van die voorkoopsreg.
(c) Indien lewering reeds geskied het, kan
die reghebbende nie met sy
persoonlike
reg die koopgoed in die hande van die
derde opvolg nie tensy
laasgenoemde
bewus was van die bestaan van die voor
koopsreg".
(The first of these propositions has relevance to the grounds
advanced by BOTHA JA in the
Owsianick
case for rejecting the authority
of Van Zutphen. With reference to pro-
position (b) it is clear that the word "koper" hash
reference to the holder of the right of pre-emption, or
"voorkoopsreg".) After referring to similar principles
/ in
30
in modern German and American law, VAN HEERDEN AJA concluded
that there
was no reason why South African law should not
give effect to the common law
view of the nature of the
right of pre-emption, as set forth in (a) to (c)above.
In this respect he disagreed with the conclusions of
BOTHA JA (in the
Owsianick
case) as to the remedies
available to the holder of a right of pre-emption.
VAN HEERDEN AJA added,
for sake of clarity, that it was
not necessary for the purposes of the case
under appeal to
express any opinion in regard to the following questions
(see p 908 E - G):
"(i) Of die houer van 'n voorkoopsreg 'n koopkontrak tussen horn en die
ver-koper tot stand kan bring slegs nadat 'n koopkontrak met
'n derde aangegaan
is en nie ook, bv, indien die ver-koper 'n aanbod aan die derde gemaak het nie.
Moontlik kan die presiese be-woording
van die voorkoopsreg in hier-die verband
van belang wees.
/ (ii) Of.........
31
(ii) Of die reghebbende in die plek
van die derde kan tree indien die betrokke koopkontrak aan bepaalde
vormvereistes, soos bv in geval van verkoop van onroerende goed,
moet
voldoen.
(iii) Of die tydstip waarop die al of nie kennis van die derde aangaande die
voorkoopsreg van belang is, verband hou met die sluiting
van die koopkontrak of
met die lewering van die koopgoed."
In
further explanation of his views, VAN HEERDEN AJA emphasized that, although the
holder (grantee) of the right of pre-emption is
said to step into the shoes of
the third party ("in die plek van die derde tree"), he does not take the place
of the third party
in relation to that contract. The true position is that upon
the grantee exercising his rights after the conclusion of a contract
of sale
with a third party, a new independent contract -and not a substitutionary one -
comes into existence between the grantor
and the grantee and this does not
/ affect
32
affect the validity of the contract between the grantor and the third party
(p 919 C - E). The learned Judge found it unneccessary
to decide whether the
court can order a grantor who has acted contrary to the provisions of a right of
pre-emption to make an offer
to the holder of the right, but expressed grave
doubt ("sterk twyfel") as to whether the court had the power to do so.
BOTHA AJA, who delivered the minority judgment agreed with the conclusion of
VAN HEERDEN AJA that in principle the holder of the right
of pre-emption in
casu
could claim the positive enforcement of his right; he, however,
found it unnecessary to consider the interpretation of the authorities
discussed
by VAN HEERDEN AJA or the jurisprudential interpretation of what occurs when the
right is breached and the holder wishes
to enforce his right; but, for the sake
of argument* he accepted the exposition of VAN HEERDEN AJA in this
connection.
/ The
33
The impact of the majority judgment in the
ASA
B
ake
ries case
upon the divergent stand points adopted in the
Owsianick
case may, I
think, be summed up as follows:-
(1) The views of BOTHA JA (in the
Owsianick
case) that
a right of pre-emption does not impose on the grantor any enforceable positive
obligation, but that the grantee may only claim damages
in the event of a sale
in disregard of his rights or, in appropriate circumstances, an interdict to
restrain such a proposed sale,
were rejected; as also were his views on Van
Zutphen and the latter's reliability as an authority on the subject.
(2) The view of OGILVIE THOMPSON JA that in principle
the holder of a right
of pre-emption is entitled
(in addition to claiming an interdict or damages
in
appropriate circumstances) to seek the positive en-
/
forcement
34
forcemeat of his rights was endorsed, but in a number of respects (listed in
(3), (4) and (5) below) the majority judgment in the
ASA Bakeries
case
did not go as far as OGILVIE THOMPSON JA (and apparently WILLIAMSON JA) were
prepared to go.
(3) It was held by OGILVIE THOMPSON JA that once the
contingency bringing his
right of pre-emption into
operation had supervened, the holder could
under
the common law claim implementation of his con
tract with the
grantor before actual breach by the
latter (see
Owsianick
case, p 319
H - 320 A).
In the judgment of VAN HEERDEN AJA this point
was left open (
ASA Bakeries
case, p 908 F, point (i) ).
(4) It was held by OGILVIE THOMPSON JA that when the right
of pre-emption
comes into operation, the grantor is
/ subject......
35
subject to an enforceable obligation to offer the property for sale to the
grantee upon the terms offered to the third party (
Owsianick
case p 320 G
- H). As I have indicated, VAN HEERDEN AJA had
grave doubts as to whether in such circumstances the court had the power to
order the grantor to offer the property to the grantee
(
ASA Bakeries
case,
p 919 H)
(5) The property concerned in the Owsianick case was
immovable property. The question of the effect of the Formalities Act was not
raised. In ASA
Bakeries
the property concerned was movable and
VAN HEERDEN AJA expressly left open (p 908 G, point (ii) ) the question as to
whether the grantee of the right of pre-emption could
step into the shoes of the
third party where the contract had to comply with requirements as to form, as in
the case of the sale
of immovable property.
/ I return
36
I return now to the facts of the present case.
In discussing the argument based on the Formalities Act I shall proceed on
the premise that second respondent became bound by clause
8 of the lease, which
conferred the pre-emptive right upon the appellant,on one or other of the legal
grounds advanced by the appellant.
Were it otherwise,
cadit quaestio
.
It is to be noted that in this case the grantors of the right of pre-emption
(first and second respondents)
have not sold the farm to a third party in disregard of
appellant's rights as the holder of the right of pre-emption:
. they have merely granted to the third party an option to
purchase the farm. Now, the grant by an owner of property of an option to
purchase the property amounts in law to
an offer to the grantee of the option to sell the property
to him and an agreement to keep that offer open,for a certain
period. The grantee acquires the right to accept the offer
/ at .
37
at any time during the stipulated period and, if he does so, a contract of
purchase and sale immediately comes about. (See generally
Venter v
Birchholtz
1972 (1) SA 276
(A), at 283-4). In the
Owsianick
case the
grant of an option, even though it could not be exercised by the option-holder
until after the termination of the right
of pre-emption, was held by OGILVIE
THOMPSON JA and WILLIAMSON JA to bring into operation the right of pre-emption
there provided
for and to entitle the grantee to claim the positive enforcement
thereof. The right in that case was contingent on the grantor desiring
to sell
the property (cf. "die eiendom wens te verkoop" in clause 8 of the lease in
casu
). The reasoning of OGILVIE THOMPSON and WILLIAMSON JJA would apply a
fortiori in the present case where the option could be exercised
during the
currency of the right of pre-emption.
/ The
38
The correctness of this approach was left open in the
ASA Bakeries
case (see point (i) on p 908 F, quoted above).
I shall assume for the purposes of this case that the grant of the option to
Dorstfontein brought into operation appellant's right
of pre-emption, in that it
established that first and second respondents wished to sell the property, and
that at common law this
entitled appellant by a unilateral declaration of intent
("eensydige wllsverklaring") to step into the shoes of Dorstfontein, with
the
result that an independent contract of purchase and sale would by operation of
law then be deemed to have been concluded between
appellant
and respondents
at the option price (see
Sher
v Allan
1929 OPD 137
;
Hattingh v Van Rensburg
1964 (l) SA 578 (T) at p 582 E).
I shall furthermore accept that, although this was not appellant's case, the
signing of the draft
/ deed
39
deed of sale on 10 December amounted to a written declaration
of intent on
the part of appellant, capable at common law of bringing about an independent
contract of purchase and sale. The question
is whether such a contract could be
said to conform to the requirements of the Formalities Act. There are certain
difficulties It
is true that the appellant's declaration of intent was written
and signed by him. Even if this be regarded as the acceptance of an
offer, which
by operation of law was deemed to be made to appellant when the option was
granted to Dorstfontein, it is arguable that
what the Formalities Act requires
(where the contract consists of a separate offer and acceptance) is an offer and
acceptance in
the ordinary contractual sense, i.e. a
written and signed offer
in fact (and not merely notionally)
made by one party and a written and signed acceptance by the
person to
whom it was directed. It is also true that first
and second respondents
signed the written lease containing
the option to Dorstfontein, but the offer contained in this
/ option....
40
option was in fact made to Dorstfontein and not to the appellant. It is not
necessary, however, to decide this question for there
is, in my opinion, a more
fundamental difficulty confronting the appellant, viz. the fact that the
contract granting the right of
pre-emption was not signed by one of the persons
against whom appellant seeks to enforce the right of pre-emption.
Before elaborating upon this difficulty I would just point out that in a case
where the grantor of the right of pre-emption respects
the rights of the grantee
and, as is usually provided, gives him written notice of his desire to sell and
of the terms thereof and
the grantee exercises his right to purchase in writing,
there would normally be no difficulty in spelling out a contract in writing,
which would satisfy, the Formalities Act. Such a notice was given in the present
case by the attorneys acting for first and second
respondents, but their
authority to do so (which also had to be in writing) was denied on affidavit and
it was not
/ suggested.
41 suggested that the Court can go behind this denial.
As I have mentioned, appellant did not advance
the
case that the signing of the draft deed of sale
on 10 Decem
ber amounted to a declaration of intent, with the
possible consequences discussed above. And here. I must again
point out that
the application came before the WLD
prior to the decision in the
ASA
Bakeries
case. Appellant's case is, and always has been, that he is.
entitled to claim specific performance of his right of pre-emption; that
consequently first and second respondents may be ordered to offer the farm to
appellants upon the terms contained in the option to
Dorstfontein, such offer to
comply with the requirements of the Formalities
Act; and that the right of
pre-emption itself was not
hit by the Formalities Act. (See the claims in the notice of motion, quoted
above - claim 1 C does not seem to have been pressed.)
/ As.
42
As appears from my analysis of the
ASA Bakeries
case, the majority judgment expressed grave doubt
as to whether the court has the power to order a seller who has acted contrary
to
a right of pre-emption to make an offer to the holder of the right. I do not
think that this expression of opinion was confined,
or intended to be confined,
to the case where the seller concluded a contract of sale with a third party, as
distinct from granting
him an option to purchase. Nevertheless, I shall assume
in appellant's favour that at common law a right of pre-emption may be
specifically
enforced in the manner claimed by appellant in this case.
In concluding that the Formalities Act was "not a stumbling block" in this
case, the Court a quo' relied on the case of
Van der Hoven v Cutting
,
1903 TS 299
(see judgment p 5 D). But the problem here under consideration did
not arise for decision in
Van d
er Hoven's
/ case
43
case. A simplified version of the facts in that case may be stated as
follows. Cutting granted to S a written lease of certain stands
in a township.
The lease contained a clause giving the lessee the refusal of the properties for
£30 000, provided that he exercised
this right within 14 days after written
notice from the lessor that he wished to sell. S ceded all his rights under the
lease to
P. His right to do so was not disputed. It was not clear whether this
cession was in writing, but INNE CJ, at any rate, took it for
granted that it
was. The cession stipulated that the right of pre-emption be exercised by the
cessionary, P, within 10 days after
notice from S. Cutting gave notice to S
calling upon him to decide whether to exercise his right of pre-emption. S
notified P. P
exercised the right of pre-emption within the 14 days allowed by
the original lease, but not within the 10 days provided for by the
cession. In
an
/ action
44
action between Cutting, as plaintiff, and Van der Hoven, as defendant, the
details of which are irrelevant, the issue arose as to
whether the right of
pre-emption had been validly exercised. Cutting alleged in his replication that
the 10 days provided for in
the cession had been verbally extended to the full
term of 14 days provided for in the lease. Van der Hoven applied to have this
allegation expunged from the replication on the ground that such a verbal
extension was in conflict with sec. 30 of Proc. 8 of 1902
(Tvl) and, therefore,
invalid. The court of first instance refused the application (see
1903 TH 110)
and an appeal against this decision was dismissed by the Supreme Court. It was
held that at common law a cession of a right could
be verbally effected;
that
the cession of the right of pre-emption, i.e. the agreement
between S
and P, which was "presumably for good consideration" was neither a sale of land
nor a sale of a limited interest in land,
within the meaning of sec. 30, read
together with sec. 2, of the Proclamation; and that the right of
/ pre-emption
45
pre-emption had been validly exercised.
As I read it, the case of
Van der Hoven v Cutting
is not authority
for the proposition that a right of
pre-emption in respect of land need not
be in writing.
In fact, in that case the right of pre-emption in
question
was in writing, and was given effect to in writing and,
in the
opinion of INNES CJ, a written and valid contract
of sale came into existence
(see p 306). Nor is the case
authority for the proposition that the holder of
a verbal
right of pre-emption in respect of land may, when the
right comes
into operation, seek to enforce it by ob
taining from the court an order
compelling the grantor
to make to him a written offer complying with the
Forma
lities Act.
It may be accepted, as conceded by counsel for
respondents, that where A grants to B a right of preemption in respect of A's
land, A does not thereby enter
/ into...
46
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, i.e. 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 Dyer
1912 TPD 1
,
at p 5;
Lugtenborg v Nichols
/ 1936 TPD
47
1936 TPD 76
, at p 79; Wessels,
Law of Contract
, 2nd ed., par. 217; De
Wet and Yeats,
Kontraktereg en Handelsreg
, 4th ed., p 29; 5 LAWSA par.
117). It was a class of contract "very well known in the Civil Law" (see
Mcllrath v Pretoria Municipality
1912 TPD 1027
, at p 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
Mcllraths
'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
48
is often referred to as a species of pactum de
contrahendo
(see
Anglo Carpets (Pty) Ltd v Snyman
1978 (3) SA 582
(T), at p 585 H; De Wet
and Yeats, op.
cit
. pp 29-30; 5 LAWSA, par. 117 and 118; Kerr,
Law of
Contract
, 3rd ed., p 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
contra-hendo
, 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 Dyer
1912 TPD 1
, at p 5.
/ In
49
In this case the plaintiff alleged in its declaration that defendant had
purchased a certain leasehold at a public auction and, tendering
the grant of a
notarial lease (notarial execution was required by sec. 29 of Proc. 8 of 1902),
plaintiff claimed that defendant be
ordered to execute the lease before a
notary. Defendant's exception to the declaration on the ground that it disclosed
no cause of
action was upheld. DE VILLIERS JP, having referred to the terms of
sec. 29 of the Proclamation, stated (at p 5):
"Where the parties, therefore, have agreed upon all the terms of such a
lease, and have embodied them in a written document
duly signed, but have not executed the
lease before a notary public, the Procla-
mation lays down that the lease shall have
no force or effect in law. In such a case the one party cannot sue the other
party to execute the lease before a notary public. As
there is no lease before
the execution, there is no obligation,
and consequently no
vinculum juris
between
/ the.
51
p 787 C - D.) Goudsmit,
Pandecten-Systeem
, par. 27(a),
referred to
by DE VILLIERS JP, supports the proposition
for which it is cited. Par. 27(a)
contains the following
statement with reference to
pacta de
contrahendo
:
"De vereischten tot geldigheid, als ook
de vormen bij de
overeenkomstbelofte
in acht te nemen, zijn dezelfde als voor
de
overeenkomst, tot het aangaan waarvan
men zich verbonden heeft, "
Windscheid,
Lehrbuch des Pandektenrechts
, vol 2, §§ 310,
writing of the
pactum de contrahendo
, referred to by him as
a "vorvertrag", also states that the requisites for the
validity of the main agreement ("hauptvertrage"), and
in particular those relating to prescribed form, apply
also to the "vorvertrag".
In
Souter v Norris
,
1933 AD 41
, the appellant,
as plaintiff, had instituted action in the WLD alleging certain cessions of a
share in a patent owned by respondent (defendant) and
claiming an order
directing respondent to execute all the documents necessary to register
/ appellant
52
appellant as part-owner of the patent or alternatively
authorising the
Registrar of Patents to effect such
registration. On a special case submitted, this Court
held that since the
cessions (or assignments) had not been
registered they were, in terms of sec 45 of the Patents
Act, 9 of 1916, of
no force or effect against the respon-
dent. In argument appellant's counsel
raised the point
that an executory contract to assign was not hit by
sec
45 and could be specifically enforced. Only
one of the members of the Court
(BEYERS JA) appears to
have dealt with this argument and he did so
extremely
briefly. Having referred to the
Montrose
case, he stated
that this was the answer to counsel's argument concerning
pacta
de
contrahendo
(see p 50).
In the case of an option, the option itself contains the offer which, when
the option is exercised
by acceptance, forms the basis of the ensuing
contract.
/ It
53.
It follows that in the case of an option to purchase land the option must be
in writing and signed by the grantor of the option (see
Venter v
Birchholtz
,
supra
, at p 284 C - D) .
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 falling to
recognise or honour his right, to claim specific performance against the grantor
(assuming that he 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.
In the present case the contract containing the right of pre-emption was not
signed by second respondent.
/ Consequently
54
Consequently I am of the view that GOLDSTONE J was correct in holding that
the Formalities Act was an insuperable obstacle in the
path of appellant's
application. Indeed I did not understand appellant's counsel to contend that, if
the Formilities Act were applicable,
there had been compliance therewith. This conclusion renders unnecessary a
consideration of the further question as to whether second
appellant ever became
legally bound by the right of pre-emption.
The appeal is dismissed with costs, including the costs of two counsel.
M M CORBETT
MILLER, JA)
VAN HEERDEN JA) CONCUR.
CILLIé JA)
SMALBERGER AJA)