Armstrong v Sehadew Oree t/a Oree's Cartage & Plant Hire (315/2002) [2003] ZASCA 116 (14 November 2003)

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[2003] ZASCA 116
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Armstrong v Sehadew Oree t/a Oree's Cartage & Plant Hire (315/2002) [2003] ZASCA 116; 2004 (3) SA 152 (SCA) (14 November 2003)

REPUBLIC OF
SOUTH AFRICA
IN THE SUPREME COURT OF
APPEAL
OF SOUTH AFRICA
Case
number: 315/2002
Reportable
In
the matter between:
ROBERT
STANLEY ROSS ARMSTRONG APPELLANT
and
SEHADEW
OREE t/a OREE’S CARTAGE &
PLANT
HIRE
RESPONDENT
CORAM
: FARLAM, NAVSA, CLOETE
JJA, SOUTHWOOD et MLAMBO AJJA
HEARD
: 2
SEPTEMBER 2003
DELIVERED
: 14
NOVEMBER 2003
SUMMARY:
Section
3(1) Act 50 of 1956 – mineral – whether ordinary sand a ‘mineral’
within the meaning of section 3(1)
___________________________________________________________
JUDGMENT
___________________________________________________________
FARLAM JA
[1]
This is an appeal from a
judgment of the Natal Provincial Division (Van der Reyden and
Nicholson JJ) upholding an appeal against a
judgment given in favour
of the appellant in the magistrate’s court for the district of
Lower Tugela, sitting at Stanger, in which
the respondent was ordered
to pay the appellant R342 000, plus interest and costs.
[2]
The amount of R342 000 in
respect of which judgment was given in the magistrate’s court (to
which I shall hereinafter refer as ‘the
trial court’) represented
the value of 76 000 cubic metres of soil (computed at the rate of
R4-50 per cubic metre) which the trial
court found that the
respondent had removed from a property described as ‘Remainder of
Portion 43 of Erf 69 No 917’ without paying
for it. In what follows
I shall refer to the property from which the sand in question was
taken as ‘Portion 43’. At the time
when the respondent removed
the 76 000 cubic metres of sand from Portion 43, as found by the
trial court, Portion 43 belonged to
the Umhlali Beach Town Board. The
appellant and the Town Board anticipated that an agreement of
exchange would be formalised between
them in terms of which Portion
43 was to be exchanged for a property described as ‘Portion 151 (of
28) of the Farm Erf 69 No 917’
(to which I shall refer in what
follows as ‘Portion 151’). In the meantime the Town Board allowed
the appellant to use portion
43 as his own.
[3]
On 7 November 1991 the
appellant and the respondent had concluded a notarial agreement,
described as ‘Sale of Right to Win Sand’.
In terms of this
agreement the respondent acquired from the appellant what was
described ‘the sole and exclusive right to win sand’
from an
area, described in the agreement as ‘the extraction area’, which
was an area of land some two hectares in extent, which
was duly
demarcated on a plan annexed to the agreement, and which formed part
of a property belonging to the appellant described
as ‘Sub 28 of
Lot 69 No 917’ (in what follows I shall refer to this area as ‘Sub
28’).
[4]
This agreement provided
that the consideration payable by the respondent to the appellant for
the rights acquired thereunder would
be determined at a rate of R3-85
per cubic metre of sand extracted and removed from the extraction
area and that this rate would
be subject to increases agreed to by
the parties annually for as long as the agreement endured. It was
also provided in the agreement
that the respondent was to keep full
and proper records of the volume of sand recovered from the
extraction area and that he was
to pay an agreed amount to the
appellant weekly in advance for the sand to be extracted, subject to
an appropriate adjustment being
made weekly in arrears. The appellant
was entitled to employ a representative at the extraction area to
supervise his interests,
to check the loads of sand taken by the
respondent and to check the records kept by the respondent. The
notarial agreement contained
a clause to the effect that no amendment
or variation to it would be of any force and effect unless reduced to
writing and signed
by the parties.
[6]
What happened in practice
was that at the end of each month the appellant caused an invoice to
be made out setting out the quantity
of sand that had been removed by
the respondent during the month, based upon figures submitted to the
appellant by his checker, together
with the price.
[7]
When the sand to be
removed from the extraction area was exhausted, the respondent moved
to another portion of Sub 28, pursuant to
an oral agreement between
the parties. It is clear from the evidence that they regarded the
notarial agreement as having been orally
varied so as to alter the
area in which sand could be won.
[8]
On 12 September 1994 the
Umhlali Beach Town Board resolved to accept an offer made to it by
the appellant for the exchange of its
property, Portion 43, for the
appellant’s property Portion 151. On 4 November 1994 the appellant
wrote to the chief executive and
town clerk and said that he had no
objection to the Board’s utilising Portion 151 prior to transfer
but that he would require the
Board to give him the same rights over
Portion 43 prior to the transfer. It is clear from the evidence,
although no letter to this
effect appears to have been written, that
the Board accepted the appellant’s proposal in this regard.
[9]
From February 1995 the
appellant permitted the respondent to remove sand from Portion 43 as
if the notarial agreement applied to that
property also. The
respondent continued to remove sand from Portion 43 until April 1996
when he ceased the sand winning operation.
During the period from
February 1995 to April 1996 he was invoiced for a total of 23 519
cubic metres of sand, for which he paid
the appellant.
[10]
The appellant’s claim
for payment for the sand which he said was taken but not paid for
(which I shall in what follows call ‘the
extra sand’) was based
on a number of causes of action pleaded in the alternative,
viz:
payment in terms of the notarial agreement;
payment in terms of an oral agreement relating to
Portion
43 in terms of which the respondent bought the
appellant’s ‘right, title and interest in and to sand’ on
Portion 43 at a price
determined in accordance with the price
structure in the notarial agreement;
unjust enrichment.
damages for fraudulent mispresentation.
[11]
In his plea the
respondent denied that there was any extra sand that he had not paid
for and in respect of which he had made any misrepresentation.
He
also averred that all sand extracted from February 1995 came from a
property other than Sub 28. It followed from this averment,
if it was
correct (which it was), that the appellant could not have any cause
of action in respect of the extra sand based on the
notarial
agreement. The respondent pleaded further that the oral agreement
relating to the sand on Portion 43 was invalid because
the parties
thereto had not complied with the formalities prescribed for its
execution by section 3(1) of the General Law Amendment
Act 50 of
1956, the provisions of which are set out in para [19] below. In
regard to the appellant’s claim based on the alleged
unjust
enrichment of the respondent at his expense, the respondent pleaded
that the sand on Portion 43 vested at all times material
in the Town
Board and that the appellant was accordingly unable to pursue any
claim for compensation in respect of sand removed from
the property.
Finally the respondent denied all the appellant’s allegations
regarding the alleged fraudulent misrepresentation.
(In summarising
the respondent’s defences at the trial I pass over without further
mention a defence raised by the respondent in
the trial court and not
persisted in on appeal that if sand was taken, it was taken by his
close corporation and not by him.)
[12]
At the trial the
respondent admitted that during the period from March 1992 to June
1996 a total volume of 100 000 cubic metres of
sand was removed from
Portion 43. Apart from an allegation regarding the activities of a
firm of civil engineering contractors, Savage
and Lovemore, with
which I shall deal below, it was not suggested that any soil was
removed from the property between March 1992
and February 1995 or
between April 1996 and June 1996. The appellant’s statement that he
used 250 cubic metres himself was not
challenged. In fact in
computing his claim the appellant allowed for the use by himself of
500 cubic metres, ie, more than he had
in fact used. This left at
least 76 000 cubic metres unaccounted for. It followed that unless
someone else removed it the respondent
must have done so. The
respondent alleged at the trial that Savage and Lovemore, who were
constructing a freeway in the vicinity
of the area where the
respondent was ‘winning’ sand from January 1992 to December 1994
and had a batching plant on Portion 43
during that period, had
removed soil from the site.
[13]
In rebuttal of this
allegation the appellant called three witnesses, two of whom worked
for Savage and Lovemore at the time. All three
testified that Savage
and Lovemore removed no soil from the site. This evidence was
accepted by the trial court and that of the respondent
rejected. No
basis was advanced before us for disagreeing with the trial court on
this point.
[14]
The trial court found
that the respondent had removed the extra sand, but that the oral
agreement in terms of which the appellant
conferred on the respondent
the right to extract that sand was invalid because it did not comply
with section 3(1) of Act 50 of 1956.
It upheld the appellant’s
claim based on unjust enrichment. In this regard it relied on
evidence given by an official of the Town
Board to the effect that
the Board had no intention of instituting action for recovery of
money for the extra soil as its attitude
was that, in view of the
arrangement between it and the appellant that pending the transfer he
could use Portion 43 and it could
use Portion 151, the appellant, as
the magistrate put it, ‘bore the loss’ to the property.
[15]
The Natal Provincial
Division as I have said, upheld the respondent’s appeal. In his
judgment Van der Reyden J, with whom Nicholson
J concurred, found
that the appellant’s claim which had been upheld by the magistrate
amounted to a
condictio indebiti
and that the magistrate erred
in upholding this claim because, so it was held, the appellant had
been grossly negligent in authorising
the respondent to undertake
sand-winning operations on Portion 43 without ensuring compliance
with what were described as ‘the
peremptory legal formalities’
imposed by section 3(1) of Act 50 of 1956.
[16]
In view of the conclusion
to which I have come that the appellant’s first alternative cause
of action, based on an oral agreement
relating to Portion 43, was
established at the trial it is not necessary to discuss the many
interesting submissions made during
the argument in this Court as to
whether the judgment in favour of the appellant can be upheld if it
is found that the oral agreement
between the parties relating to
Portion 43 was invalidated by the provisions of section 3(1) of Act
50 of 1956.
[17]
Three issues are relevant
in regard to the appellant’s first alternative claim, viz:
(1) Did the respondent remove the
extra sand?
(2) Did he pay for it?
(3) Was the oral agreement between
the parties invalid because the formalities prescribed by s 3(1) were
not complied with?
If the appellant succeeded on these
three issues then it would not matter that he had not yet acquired
ownership or indeed any rights
to Portion 43 because the oral
agreement amounted in substance to a sale of sand and the fact that
the
merx
was a
res aliena
would be of no consequence,
as the respondent and his customers who bought the sand from him were
not disturbed in the possession
thereof.
[18]
In view of the
magistrate’s finding, with which I agree, that Savage and Lovemore
did not take the extra sand, it is clear that
the magistrate’s
finding that it was the respondent who removed the extra sand must be
accepted as correct. It is common cause
that the extra sand was not
paid for. In the circumstances it is only necessary to consider
whether the oral agreement was invalidated
by section 3(1) of Act 50
of 1956.
[19]
Section 3(1) of Act 50 of
1956 provides as follows:
‘
(1) No lease of any rights to minerals in land and
cession of such a lease shall be valid if executed after the
commencement of this
Act unless attested by a notary public …’
[20]
The meaning of the
expression ‘lease of rights to minerals’ as used in section 3(1)
of Act 50 of 1956 was fully discussed by Corbett
JA in
Wiseman v
De Pinna and Others
1986(1) SA 38(A) at 47E-48C, where it was
pointed out that the use of the term ‘lease’ to describe this
type of contract was inappropriate.
[21]
I shall assume in what
follows, in favour of the respondent, that the oral agreement between
the parties relating to Portion 43 contained
all the terms set out in
the
Wiseman
decision. Although Mr
Kemp,
who appeared on
behalf of the appellant, submitted that the onus was on the
respondent to prove that the sand which was the subject
matter of the
oral agreement between the parties was a ‘mineral’ to which s
3(1) applies, I shall also assume, in favour of the
respondent, that
it was for the appellant to prove that the sand in question was not a
‘mineral’.
[22]
In this regard there are
two matters to be considered, viz:
(a) to what kind of sand did the oral agreement relate?
And
(b) did Parliament, when it enacted s 3(1), intend the
formalities prescribed therein to have to be complied with in a
‘lease’
relating to such material?
[23]
The following evidence is
relevant as regards the kind of sand to which the oral agreement
related. The price in November 1991 of
similar sand to be extracted
from Sub 28 was R3-85 per cubic metre. After it was ‘won’ it was
sold on site to the respondent’s
customers, who took delivery then
and there. According to the appellant the 250 cubic metres he took
were used ‘to fill in certain
dongas, certain roads and general
farm usage’. The Savage and Lovemore witnesses said that the sand
on the site was of no use in
road building and one of them said it
was plaster sand. The sand to which the notarial agreement related,
which on the evidence was
similar to the sand taken under the oral
agreement, was described as ‘the sand (and more particularly the
sand which is suitable
for use in the building trade)’. No
contractual warranties were given as to the quality of the sand, and
no properties were specified
or guaranteed. In all the circumstances
I am satisfied that the sand in question was what may be described as
ordinary sand, some
of it at least suitable for use in the building
trade but ordinary sand nonetheless.
[24] Did Parliament intend s 3(1) to
apply to ordinary sand so that a ‘lease’ relating thereto has to
be attested by a notary
public? To answer this question it is
necessary, because the Act does not define the expression ‘mineral’,
to have regard to
the normal meaning of the word in the context in
which it is used. See, eg,
Jaga v Dönges NO : Bhana v Dönges
NO and Another
1950 (4) SA 653
(A) 662G-66A, cited with approval
many times since, for example in
University of Cape Town v Cape
Bar Council
1986 (4) SA 903(A)
at 914 A-D.
[25]
I dealt with the meaning
of the expression ‘mineral’ in
Minister of Land Affairs v Rand
Mines Ltd
[1998] ZASCA 32
;
1998 (4) SA 303
(SCA). At 329 I-J, after considering
South African cases on the point dating back to 1895 (to which may
now usefully be added
Kameelfontein Boerdery CC v Worldwide Expo
(Pty) Ltd
2002 (3) SA 248(T))
, I stated that the normal meaning
of the term mineral’ in South Africa does not include ordinary
clay, sand or stone. This was
undoubtedly the position in 1956 when
Act 50 of 1956 was passed. In the present case, which concerns what I
have called ordinary
sand, this means that unless there is something
in the contextual scene which leads one to believe that Parliament
intended ordinary
sand to be covered, it must be accepted that
‘lease’ contracts relating to ordinary sand are not hit by the
section.
[26]
Is there anything in the
contextual scene which indicates otherwise? I think not. On the
contrary, as Mr
Kemp
submitted, if ordinary sand is to be
regarded as a mineral under the Act, it would clearly lead to absurd
results because sand would
often be purchased, dug-up and loaded by a
party in circumstances where the requirement and cost of a notarially
executed ‘lease’
would exceed the value of the sand.
He
gave the following example:
‘[I]
f a pet shop
owner wishes to augment his delivery of cat litter, which did not
arrive, by buying and digging up a small bakkie-load
of sand from a
farmer, once a day for a week, this contract must be invalid unless
in writing and notarially executed, which would
probably cost 5 to 10
times the value of the sand.’
He submitted, correctly in my view, that that could
never have been contemplated by the Legislature. It follows from what
I have said
that the oral agreement between the parties was not
invalidated by s 3(1) of Act 50 of 1956.
[27]
In the circumstances I am
satisfied that the appellant succeeded in establishing on the
contractual basis pleaded in his first alternative
claim that he was
entitled to judgment against the respondent in the amount of R342
000. It follows that the court
a quo
erred in setting aside
the judgment given by the magistrate.
[28]
The following order is
made:
1. The appeal succeeds with costs.
2. The following is substituted for
the order made by the court
a quo:
‘The appeal is dismissed with costs.’
……………
..
IG FARLAM
JUDGE OF APPEAL
CONCURRING:
NAVSA JA
CLOETE JA
SOUTHWOOD AJA
MLAMBO AJA