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[2017] ZACC 25
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Mokone v Tassos Properties CC and Another (CCT113/16, CCT291/16) [2017] ZACC 25; 2017 (10) BCLR 1261 (CC); 2017 (5) SA 456 (CC) (24 July 2017)
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Heads of arguments
CONSTITUTIONAL COURT OF
SOUTH AFRICA
Case CCT 113/16 and 291/16
In the matter between:
NTSWAKI JOYCE
MOKONE
Applicant
and
TASSOS PROPERTIES
CC
First Respondent
BLUE CANYON PROPERTIES
125 CC
Second Respondent
Neutral citation:
Mokone v Tassos Properties CC and Another
[2017] ZACC 25
Coram:
Nkabinde ADCJ,
Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla
J, Mojapelo AJ, Pretorius AJ and Zondo J
Judgments:
Madlanga J (majority): [1] to [75]
Froneman J (concurring): [76] to [88]
Heard on:
9 March 2017
Decided on:
24 July 2017
ORDER
On appeal from the High Court of South
Africa, Gauteng Local Division, Johannesburg:
1.
Leave to appeal is granted in both applications.
2.
Both appeals are upheld.
3.
In both appeals, the orders of the High Court of South Africa,
Gauteng Local
Division, Johannesburg (High Court) are set aside.
4.
It is declared that the extension of the lease between Ms Ntswaki
Joyce Mokone
and Tassos Properties CC on 3 May 2006 resulted in the
extension of the right of pre-emption in favour of Ms Mokone.
5.
The action for the prosecution of the right of pre-emption referred
to in paragraph
4 is remitted to the High Court for the determination
of issues which, in accordance with the pleadings, remain
outstanding.
6.
The final determination of the appeal in respect of the proceedings
brought by
Blue Canyon Properties 125 CC in the Boksburg Magistrate’s
Court for the eviction of Ms Mokone is held in abeyance pending
finalisation of the action referred to in paragraph 5.
JUDGMENT
MADLANGA J (Nkabinde ADCJ,
Jafta J, Khampepe J, Mhlantla J, Mojapelo AJ,
Pretorius AJ and Zondo J
concurring):
Introduction
[1] These are two applications for leave
to appeal against judgments of the High Court of South Africa,
Gauteng Local Division,
Johannesburg (High Court). The
applications raise the following issues:
(a)
whether, when parties renew a lease without saying more
(
simpliciter
), only terms that are “incident to the
relation of lessor and tenant” are renewed;
(b)
whether a right of pre-emption granted orally or in writing without
signature
is invalid; and
(c)
the circumstances under which a court may stay proceedings pending
finalisation
of other proceedings.
Background
[2] On 1 March 2004 Ms Mokone, the
applicant in both applications, entered into a written lease
agreement with the first respondent
in the first application, Tassos
Properties CC (Tassos). In terms of the agreement, Tassos
leased premises to Ms Mokone
at 119 Commissioner Street,
Boksburg (leased premises) at a monthly rental of R4 500.
The lease was for an initial period
of one year ending on 28 February
2005, renewable for a further period of a year at a rental to be
agreed upon. Since
the conclusion of the lease to date, Ms
Mokone has been conducting a business under the name “Nick’s
Bottle Store”
on the leased premises.
[3] Clause 6 of the lease agreement
reads:
“The [tenant]
shall have the [right of first refusal] to purchase the leased
premises when the [lessor wishes] to sell the
leased premises. The
purchase price shall be negotiated when the [lessor wishes] to sell
the leased premises.”
[4] For the period 1 March 2005 to 3 May
2006 Ms Mokone and Tassos concluded an oral agreement on the same
terms and conditions
as the written lease. On 3 May 2006
they agreed to an extension of the lease until 31 May 2014.
This they
did by means of a manuscript endorsement on the face of the
first page of the original written lease signed by only a
representative
of Tassos. The endorsement reads: “Extend
till 31/5/2014 monthly rent R5 500”.
[1]
[5] On 15 July 2009 Tassos entered into
a deed of sale with Blue Canyon Properties 125 CC (Blue Canyon) in
terms of which it sold
the leased premises to Blue Canyon. Blue
Canyon is the second respondent in the first application and the only
respondent
in the second application. Transfer to Blue Canyon
took place on 1 March 2010.
[6] In 2010, after becoming aware of the
sale, Ms Mokone brought an application in the High Court seeking: a
declarator that Tassos
was in breach of the right of pre emption;
cancellation of the sale and reversal of transfer of the leased
premises; and an
order compelling Tassos to comply with clause 6 of
the written lease (the clause containing the right of
pre-emption).
[2]
She later withdrew this application.
[7] On 27 January 2012 Ms Mokone
notified Tassos in writing that she was exercising her right of
pre-emption. She tendered
payment of R55 886.60. The
following documents reflected this amount as the price at which
Tassos sold the leased premises
to Blue Canyon: the power of attorney
to pass transfer; a South African Revenue Service document reflecting
the purchase price
on which transfer duty was payable; and the deed
of transfer.
[3]
Tassos rebuffed Ms Mokone, arguing that the right of pre-emption was
no longer part of the lease. On 3 April 2012
Ms Mokone initiated action against Tassos and Blue Canyon in the
High Court to set aside the sale and transfer of the leased
premises
and compel a sale of the property to her. In the alternative,
she asked for damages. Her contention was that
the manuscript
endorsement that extended the lease to 31 May 2014 had also extended
clause 6 containing the right of pre-emption.
She sought to
upset the transfer to Blue Canyon on the basis that Blue Canyon
was aware of her right of pre-emption before
it took transfer.
[8] The High Court separated issues in
terms of rule 33(4) of the Uniform Rules of Court. All that the
High Court had to determine
was whether the right of pre-emption had
been extended. And it had to do this on the basis of stated
facts, which were that—
(a)
“the initial period of the written lease commenced on 1 March
2004 and
terminated on 28 February 2005”;
(b)
“from 1 March 2005 there existed an oral lease between [Ms
Mokone] and
[Tassos] on, essentially, the same terms and conditions
as contained in the written lease”; and
(c)
“on 3 May 2006 the initial written lease was extended until
31 May 2014
at a monthly rental of R5 500.00 as per the
manuscript on the first page of [the initial written lease
agreement]”.
[9] The High Court held against Ms
Mokone. It concluded:
“[T]he word
‘extended’ is appropriate to the continuance of the
period of the lease, and not the continuance of
the right of
pre-emption, especially if one has regard to the fact that the right
of pre-emption is collateral [and not an incident]
to the relation of
[lessor] and tenant and terms that are collateral to and independent
of such relationship are not renewed when
a lease is renewed
simpliciter
, unless the parties make it clear that they
intended this.”
[4]
[10] In short, the High Court held that
the manuscript endorsement did not result in the right of pre-emption
being incorporated
in the extended new lease. It made a
declarator to that effect. Because there were other issues
raised by the pleadings
that were still outstanding, the High Court
postponed the matter indefinitely.
[11] The High Court and, later, the
Supreme Court of Appeal refused leave to appeal. This is what
has given rise to the first
application before us.
[12] Whilst the action was pending
before the High Court, the latest period of the lease came to an
end. Despite this, Ms
Mokone continued to occupy the leased
premises. Blue Canyon, which had stepped into the shoes of
Tassos as lessor after it
had taken transfer, continued to accept
rent. There was thus a tacit month-to-month lease between Ms
Mokone and Blue Canyon
from 1 June 2014. On 10 December 2014
Blue Canyon gave Ms Mokone written notice to vacate the leased
premises by
31 January 2015. Ms Mokone refused to
vacate. On 17 February 2015 Blue Canyon sought her eviction
from the
Boksburg Magistrate’s Court on the basis that: it was
the owner of the leased premises; the lease had come to an end
through
effluxion of time; and Ms Mokone had been given due notice to
vacate the premises.
[13] Ms Mokone resisted the application
on the grounds that: Blue Canyon’s alleged ownership was under
challenge in proceedings
that were pending before the High Court;
as a consequence, Blue Canyon had no right to terminate Ms Mokone’s
occupation;
since issues relevant to the eviction proceedings were
pending before the High Court, the eviction proceedings were
premature and
had to be held in abeyance pending the determination of
the action pending before the High Court. The Magistrate’s
Court dismissed the eviction proceedings. But Blue Canyon
subsequently succeeded on appeal before the High Court.
[14] The Supreme Court of Appeal refused
special leave to appeal. The second application before us is a
sequel to this.
Issues
[15] This matter raises the
following issues:
(a)
whether leave to appeal in both applications should be granted;
(b)
whether the right of pre-emption contained in the written lease
agreement was
renewed when the lease was extended on 3 May 2005;
(c)
whether the endorsement on the face of the lease
agreement extending the lease had to comply with the formalities
contained in section
2(1) of the Alienation of Land Act;
[5]
and
(d)
whether, despite the fact that the lease has ended through effluxion
of time
and Ms Mokone has been given due notice to vacate the leased
premises, there is a basis on which she can – in the meantime
–
resist eviction.
Leave to appeal
[16]
Each application engages our jurisdiction in
terms of section 167(3)(b)(ii) of the Constitution.
[6]
The first application concerns the question whether the right of
pre emption was renewed with the last extension of
the lease.
Leases with terms similar to clause 6 of the lease at issue here are
commonplace. Unsurprisingly, therefore,
the question of the
effect of an extension or renewal of a lease on clauses of this
nature arises not infrequently. That
much is plain from the
reported cases on the subject.
[17] I thus conclude that, although in
this litigation this question affects only the parties, “its
impacts and consequences
are substantial, broad-based, transcending
the litigation interests of the parties, and bearing upon the
public interest”.
[7]
“[I]ssues do not have to be of importance to all citizens or
the whole nation in order to be of ‘general public
importance’”.
[8]
It is enough if the issues are “of importance to a sufficiently
large section of the public”.
[9]
The question at issue in the first application meets the test.
[18] The second application raises two
questions. The first is whether a
pactum de contrahendo
(loosely, a contract whose aim is to conclude another contract)
[10]
that could lead to a sale of land – like the right of
pre-emption – must comply with the formalities contained in
section 2(1) of the Alienation of Land Act. The second is
whether, outside of certain circumscribed circumstances,
[11]
a court may stay proceedings pending finalisation of other
proceedings. For reasons similar to those I have discussed in
relation to the first application, these issues too are of general
public importance.
[19] The issues raised by both
applications are arguable
[12]
and of some import and, as will appear shortly, they bear prospects
of success. They ought to be considered by this Court.
[13]
Leave to appeal must be granted.
Renewal of right of pre-emption upon
extension
[20] Our courts have proceeded from an
assumption that English law on this subject forms the basis of our
common law.
[14]
What does the English law say? It tells us that a term that is
collateral, and not an incident, to the relation of
lessor and
tenant, continues during the period of extension of a lease only if
it is clear that this is what the parties to the
lease intended.
The English authorities I refer to deal with options. Like an
option, a right of pre-emption is considered
to be collateral to, and
independent of, the relation of lessor and lessee.
[15]
[21] The principle is put thus in
Halsbury’s:
“[A]n option
is collateral to, independent of, and therefore not incident to, the
relation of [lessor] and tenant. It
is not, therefore, one of
the terms which will be incorporated in the terms of a yearly tenancy
created by the tenant holding over
after the expiration of the
original lease . . . . If the parties agree that a lease is to
be extended, unless it is clearly
shown that it was their intention
that the option to purchase should continue throughout the extended
period, it will not be deemed
to be one of the terms of the extended
tenancy.”
[16]
(Footnotes omitted.)
[22] Here is how
Levy
captures
the English position:
“The
principle of the English law seems to be clear. When a lease is
renewed
simpliciter
all the terms are renewed that are
incident to the relation of [lessor] and tenant. Terms that are
collateral to and independent
of such relationship are not renewed
unless the parties make it clear that they intended this.”
[17]
[23] This approach has been followed in
South Africa and Zimbabwe.
[18]
I must say it appears to coincide with the Roman-Dutch law position.
Pothier says:
“Where by the
same deed a property has been sold, and has been let by the purchaser
to the seller for a certain period, and
after the expiry of that
period a tacit relocation has taken place, a distinction must be made
between those clauses of the deed
which pertain to the contract of
sale and those which pertain to the contract of lease. It is
only the latter that are deemed
to be repeated in the tacit
relocation and not those which pertain to the contract of sale rather
than to the lease . . . .
[I]f you have let me a property and
it is stated in the lease that, if the property pleases me, you
undertake to sell it to me
whenever called upon by me to do so during
the period of the lease, you will be discharged from this obligation
at the termination
of the lease, if I have not called upon you to
sell me the property, and though there has been this tacit relocation
your promise
is not deemed to have been repeated in it. For
though contained in the same deed as the lease, it is not deemed to
be part
of the terms of the lease, unless it appears from the
circumstances that it was actually such and that the lessee had
accepted
the lease only upon this condition.”
[19]
[24] More than being interpretative, the
rule applied by English courts (and followed by ours) sounds more
like a categorical substantive
rule. Take, for example, the
words of Lord Atkinson in
Batchelor
:
“It is quite
true that when there is a collateral agreement, it is not necessarily
transferred by a transfer of the lease,
but it is perfectly competent
to the contracting parties if they are so inclined to use language
which will carry in a collateral
agreement just as well as any
stipulation springing from the relation of landlord and tenant.”
[20]
[25] The
Levy
[21]
rendition of the English rule also makes this plain.
[22]
Likewise, Pothier tells us about it not being “
deemed
”
that an option is “part of the terms of [an extended] lease,
unless it appears from the circumstances that it was
actually
such”.
[23]
This is definitely a categorical substantive rule.
[26] On first principles, the issue at
hand concerns the interpretation of the words in terms of which an
extension was effected.
We should be wary of generalisations or
positions assumed
a priori
. A fundamental problem I have
with the present approach is that it proceeds from what seems to be
the understanding of not
just lawyers, but lawyers in the know
insofar as this subject is concerned. As an illustration, what
happened in
Sherwood
[24]
is instructive. In that matter the trial Judge took the view
that, as lay people who had extended the lease without the assistance
of lawyers, the lessor and lessee must have intended to extend the
contents of the entire document that contained the terms of
the
lease. Not according to Pollock MR who sat on appeal. He
said:
“I protest
against the doctrine that the meaning of words ought to be construed
according as they are used by laymen or by
lawyers. I think
that we have to take the words as they stand and construe them, and
that we ought not to speculate upon
what was the probable intention
of the parties. Their intention is to be found in the meaning
of the words which they have
used, properly construed.”
[25]
[27] The Master of the Rolls then
proceeded to “construe” the words that had been used in
that matter. They were
“we agree that this lease be
extended”. And the construction led him to this:
“[A]re those
words apt to cover the option as well as the extension of the
demise? I think they do not cover the option.
There is a
clear distinction between the two things. The first is the
demise of the premises by the [lessor] to the tenant,
and although it
is to be found in an agreement, or in a lease signed and executed by
the parties, still the option is a separate
and independent contract
whereby a chance is given to the tenant . . . to purchase the
freehold of the premises which are demised
to him . . . .”
[26]
[28] That may be the understanding of
lawyers. Is it likely to be the understanding of ordinary lay
people? Would lay
people not likely regard the contents of a
document setting out the terms of their lease and a related
pactum
de contrahendo
of whatever nature as their “lease”?
I think it is more likely that they would. Indeed, they would
most
likely regard the document itself as their lease. Put
differently, it is more likely that to them their lease would be the
lease proper and the
pactum de contrahendo
. That should
mean, when ordinary lay people use the words “we agree that
this lease be extended”, they may well
be intending to extend
all the terms of the written agreement,
pactum de contrahendo
and all. This I say because I cannot conceive of ordinary lay
people being able to draw a distinction between terms that
are
“collateral to, and independent of, the lessor and lessee
relation” and to then extend or renew their lease in
accordance
with that distinction.
[29] Interpreting a contract concerns
establishing the meaning of its wording.
[27]
According to Wallis JA, the proper approach to interpretation “is
from the outset to read the words used in the context
of the document
as a whole and in the light of all relevant circumstances”.
[28]
Ordinary lay people are capable of understanding ordinary words.
And they are likely to use them in accordance with
that
understanding. Surely, the use of language by non-lawyers who
know nothing about the distinction drawn in
Sherwood
and, of
course, other cases must be part of the “relevant
circumstances”. It escapes me why a lawyer’s
understanding – especially on ordinary words (
not legalese
)
– should effectively become an imposed meaning to non-lawyers.
[30] Crucially, it does happen that lay
people make extensions of this nature without involving lawyers.
The present extension
is an example; and so is the extension in
Sherwood
.
[31] In
Levy
Tredgold CJ sought
to justify the English approach on the basis that it is “essentially
reasonable”. Here is how
he articulated this:
“[T]he
approach of the English law seems to me to be essentially
reasonable. If there is in existence an agreement
containing a
lease and matters that are not incident to the relationship of
landlord and tenant, and if agreement is reached simply
‘to
renew the lease’ then surely any reasonable person would
understand that the lease and nothing more was to be renewed,
and
would feel it incumbent upon him, if he wished to extend any other
portion of the agreement to stipulate expressly that this
should
happen.”
[29]
[32] I disagree. This too suffers
from the very problem of imposing the understanding of lawyers on
non-lawyers. Rather
than speak of “any reasonable
person”, the Court should have spoken of “any reasonable
lawyer”. It
seems more reasonable that, when non-lawyers
write the word “extended” across the face of a written
agreement containing
the terms of a lease, generally they mean to
extend not only the lease, but everything contained in the document.
And that
includes even a
pactum de contrahendo
. Of
course, because this is about interpretation, it may be apparent from
the nature of certain terms in the document that
they were not meant
to be extended. That is the answer to the examples given in
Levy
to demonstrate the perceived reasonableness of the
English approach. Here are those examples:
“Supposing a
farmer leased his farm and, in the same agreement sold a hundred head
of cattle at a fixed price and agreed to
manage the farm at a fixed
salary for the period of the lease, and supposing there was an
extension of the lease, no reasonable
person would claim that he had
been sold another hundred head of cattle and any reasonable tenant,
if he wanted the [lessor] to
continue as manager, would see that
express provision was made to that effect.”
[30]
[33] If the only accompanying agreement
were the management of the farm, I would incline towards an
interpretation that says that
too was extended. As for the
sale, it would indeed be unreasonable of a lessee to think that the
extension meant a sale of
another hundred head of cattle.
Because of that, the result should be that this term was always meant
to be a once-off event.
That is a result yielded by an
interpretative process, not by a position adopted
a priori
.
[34] Another example that may well be
held not to have been meant to endure beyond the initial period of
the lease would be an option
to purchase the leased premises at a
specified price.
[31]
That is so because the market value of premises may increase between
the time of conclusion of the lease agreement and of
its renewal.
Beyond the initial period, it might be prejudicial to seek to
hold the owner to the specified price, regardless
of the length of
time that has elapsed and the increase in the market value of the
property. But, as I say, these are results
that we get to
through a process of interpretation, not through predetermined legal
rules. Ultimately, the question must
be: what does an
interpretative exercise yield?
[35] The problem with the present common
law rule, which, as I say, proceeds from an
a priori
position,
is that it favours lessors. I cannot conceive of a convincing
reason why that should be the case. It is less
about
interpretation and more about laying down a categorical substantive
legal rule.
[36] In sum, where, in extending their
lease, parties – without stipulating anything more – say
their lease is extended,
generally I read that to mean all the terms
of the lease, including terms that are “collateral, and not
incident, to”
[32]
a lease are being extended. Certain terms may be of such a
nature that it is plain that it could never have been within the
contemplation of the parties to extend them either at all or in this
manner. All this is about
meaning
. And, since this
concerns interpretation, that is what it should be about: the
ascertainment of the meaning of the words
used in extending the
lease. Where there is no readily ascertainable meaning, the
ordinary rules of interpretation to ascertain
the meaning must
apply. That must happen without adopting any
a priori
position. If a term or terms are not meant to be extended, that
must be made plain.
[37] On the approach that I prefer, the
party against whom the term in issue may be operating oppressively
can always stipulate
expressly or tacitly – at the time of
renewal – that that term will not be extended.
[38] This approach is not without some
support. In a dissent in the then Appellate Division Van
den Heever JA said that
“[i]n the absence of express
stipulation to the contrary in the renewal of a lease, its collateral
parts are also deemed
to have been renewed”.
[33]
In
Levy
this pronouncement is criticised on the basis that it
is not supported by the authority relied upon.
[34]
Further support is to be found outside of our shores. The
American case of
Tubbs
concerned the question whether a right
of first refusal to purchase the leased property endured alongside a
tacit relocation.
Holding that it did, the Court said:
“
The
long-standing general rule which has very recently been reaffirmed by
the Court of Appeals is that a holdover tenancy impliedly
continues
‘on the same terms and subject to
the
same covenants
as
those contained in the original instrument’ . . . . The logic
behind the rule is that since the parties have continued
in the
relationship of [lessor] and tenant it is implied that they intended
no change in the conditions of that relationship. Of
course,
the parties are free to prove ‘a changed condition of affairs
which would naturally or of necessity operate to modify
the relations
existing between the parties’.”
[35]
[39] The endorsement at issue here reads
“Extend till 31/5/2014 monthly rental R5 500”. Does
this change
anything? I think not. All it does is to
indicate the duration of the extended lease and the increased rental.
But
for that detail, I do not see this to be any different from
the example that says “the lease is extended” without
more,
on the basis of which I have been making my point.
[40] The common law is
well-established. And it is dead against the route that I seek
to follow. Is it open to me to
follow that route? Section
39(2) of the Constitution provides that “when developing the
common law or customary law,
every court, tribunal or forum must
promote the spirit, purport and objects of the Bill of Rights”.
It only becomes
necessary to develop the common law in this manner
“where the common law as it stands is deficient in promoting
the section
39(2) objectives”.
[36]
But there are instances where the common law may suffer from a
deficiency that is not at odds with the Bill of Rights.
If this
deficiency be of a nature that necessitates the development of the
common law, that cannot be done in terms of section
39(2).
[41] The Supreme Court of Appeal and
High Court have “always had an inherent jurisdiction to develop
the common law to meet
the needs of a changing society”.
[37]
If section 39(2) were to be read to have removed the power of courts
to develop the common law where its shortcomings do
not implicate the
Constitution, that would be a retrograde step and absurd. That
would mean, even if it were clamant that
the common law be developed
on a non-constitutional basis, courts would not be able to do
anything. That, despite the fact
that for centuries – in
the era before the advent of our constitutional democracy –
courts have always been able to
develop the common law. In
fact, section 173 of the Constitution stipulates that the
Constitutional Court, the Supreme Court
of Appeal and the High Court
have the inherent power to develop the common law, taking into
account the interests of justice. This
language is wide enough
to admit of the development of common law outside the ambit of
section 39(2).
[42] So, the answer to the question
whether it is open at all to the Court to develop the common law in
the circumstances in issue
here is yes.
[43] There is a matter of detail that I
must deal with. That is the fact that the intervening extension
before the one now
in issue resulted in an oral lease agreement.
Does this in any way detract from the view that I take on the
effect of the
manuscript endorsement extending the period of the
lease? I think not. The person representing the lessor
consciously
took the document embodying the original written lease
agreement and made the endorsement on it. If this was not of
some
significance, the endorsement could well have been made even on
a blank piece of paper. That it was made on the document
embodying the original lease can only mean it is the lease contained
in the document that they were extending. And, based
on what I
have said before, that was an extension of all the terms, including
the right of pre-emption.
Compliance with the Alienation of
Land Act
[44] Earlier I stated that the
manuscript endorsement extending the lease was signed only by the
representative of Tassos.
Blue Canyon argued that Ms Mokone’s
prosecution of the right of pre-emption would ultimately be stillborn
and that, therefore,
there was no point in upsetting the High Court’s
appeal decision in the eviction proceedings. The basis for this
argument
was that, because it was not signed by Ms Mokone, the
endorsement was invalid for lack of compliance with the provisions of
section
2(1) of the Alienation of Land Act. Blue Canyon placed
reliance on
Moolman
.
[38]
Section 2(1) provides:
“No
alienation of land after the commencement of this section
shall . . . be of any force or effect unless
it
is contained in a deed of alienation signed by the parties thereto or
by their agents acting on written authority.”
[45]
Moolman
concerned section
1(1) of the Formalities in Respect of Contracts of Sale of Land
Act
[39]
(Formalities Act), the predecessor to the Alienation of Land Act.
That section read:
“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.”
I deal with what
Moolman
held
later.
[46] In terms of section 2(1) of the
Alienation of Land Act, the formality on signature relates to
“alienation of land”.
The Alienation of Land Act
defines “alienate” thus—
“‘alienate’,
in relation to land, means sell, exchange or donate, irrespective of
whether such sale, exchange
or donation is subject to a suspensive or
resolutive condition, and ‘alienation’ has a
corresponding meaning”.
[47] In the case of a right of
pre-emption, an alienation – as defined – takes place
only when that right is exercised
and a sale comes into being.
Merely affording someone that right is not an alienation because that
is simply not a sale,
exchange or donation. In sum, I do not
see why section 2(1) of the Alienation of Land Act should apply to a
right of pre-emption.
[48] To the extent that it relates to a
“contract of sale”, section 1(1) of the Formalities
Act is comparable.
It applies to a sale of (a) land or (b) any
interest in land.
[40]
Although the Formalities Act does not define “sale”, I
see no basis on which it can be gainsaid that –
absent any
mishaps – a sale results in the alienation of land or interest
in land. To this extent, its meaning is similar
to that of
“alienate” in the Alienation of Land Act.
[49] By parity of reasoning then, when
section 1(1) of the Formalities Act was still in operation, it should
not have applied to
a right of pre-emption. In
Rogers
[41]
this is the exact approach Kannemeyer J adopted on this debate.
In that case it was not clear on the facts whether a right
of
pre-emption, if it had been granted at all,
[42]
had been granted before or after the Alienation of Land Act had come
into operation. The applicant was claiming that the
right had
been granted orally. The respondent was denying this. The
parties asked the Court to deal with the question
whether writing was
a prerequisite for the validity of a right of pre-emption. And
they asked that it be dealt with as a
preliminary issue. The
Court proceeded to deal with the question regardless of which Act was
applicable. This is how
it concluded:
“[N]either in
terms of section 1(1) of [the Formalities Act] nor in terms of
section 2(1) of [the Alienation of Land
Act] does a right of
pre-emption in respect of land have to be in writing in order to be
valid.”
[43]
[50] This is how the Court got there:
“[A] right of
pre-emption gives the pre-emptor no right to claim transfer of land;
it merely gives him a right to enter into
an agreement of sale with
the grantor should the latter wish to sell. When such an
agreement is completed then, and not before,
will he have a right to
claim transfer of land, so that it is the agreement which must be in
writing.”
[44]
So, according to
Rogers
there is
no need for compliance with the formalities at the time a right of
pre-emption is granted.
[51] Not according to Corbett JA.
His view to the contrary is expressed in
Moolman
.
[45]
According to him section 1(1) of the Formalities Act and section 2(1)
of the Alienation of Land Act require signature by
all parties to a
right of pre-emption.
[46]
He makes this point:
“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. . .”
[47]
[52] Crucially, that view is held
despite an apparent and, indeed, unavoidable acceptance that a right
of pre-emption itself is
neither a sale nor an alienation. On
what basis then must the formalities stipulated by the two Acts,
which apply to sales
or alienations, find application to non-sales or
non-alienations?
Moolman
explains thus:
“[I]n order
that the holder of a right of pre-emption over land should be
entitled, on his right maturing and on the grantor
failing to
recognise or honour his right, to claim specific performance against
the grantor (assuming that he has such 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 the land. This would be contrary to the intention and
objects of the Formalities Act.”
[48]
[53] Is it perhaps open to me to adopt
the stance that, because
Moolman
concerned section 1(1) of the
Formalities Act, what it held about section 2(1) of the Alienation of
Land Act was
obiter
? It is not. In fact, it would
be disingenuous to do so. This is because of the comparable
nature of the two sections.
That being the case, the reasoning
in
Moolman
must, indeed, apply to both sections.
[54] Now, let us have a close look at
that reasoning. The fundament of the reasoning is that
inexorably the holder of the
right of pre-emption can become a
purchaser in terms of the right only through means that fall foul of
the formalities. It
is this that gives rise to the anomaly to
which the Court is referring. I do not see why – upon
the occurrence
of the contingencies that trigger an entitlement to
exercise the right – the holder cannot exercise it in a manner
that complies
with the requisite formalities. The holder may
simply make a signed written offer to purchase. If the grantor
accepts
the offer in writing under signature, a sale that meets the
formalities will come into being. If she or he does not, the
holder of the right may seek a declarator by a court that she or he
is entitled to the exercise of the right and a mandamus requiring
the
grantor to accept the offer in writing. If the relief is
warranted,
[49]
it must be granted. That is nothing more than holding the
grantor to the parties’ agreement.
[55] It may happen that the sale by the
grantor to a third party may be in terms that do not correspond with
those in which the
right of pre-emption was granted. The
question arises as to whether the written offer by the grantee must
be in the terms
on which the grantor sold to the third party or in
those on which the right was granted. That question was not
argued before
us. I think it prudent not to decide it.
[56] In the event that the conduct of
the grantor of the right of pre-emption has culminated in the sale of
land to a third party,
it seems necessary to understand the import of
the so-called
Oryx
[50]
mechanism. This was expressed thus:
“In the event
that a seller concludes a contract of sale with a third party in
breach of a right of pre-emption, the [holder
of the right of
pre-emption] may, through a unilateral declaration of intent, step
into the position of the third party.
A contract of sale is
then deemed to have been between the seller and the holder of the
right of pre-emption.”
[51]
[57] I see no reason in principle why
the notion of the holder of the right “stepping into the
position of the third party”
[52]
cannot be achieved in a manner that does not bypass the requisite
formalities. That may be achieved either consensually or
through coercion by court. The idea of a “unilateral
declaration of intent” is understandable in the circumstances.
It is consonant with the notion that, subject to whatever the law may
be held to be on ordering or not ordering specific performance,
the
grantor of the right is liable to coercion.
[58] I am addressing myself only to
situations where coercion will be warranted. I consciously
eschew the debate whether,
in this context, there is room for the
exercise of discretion by courts whether to grant specific
performance. I avoid that
debate because the pertinent question
raised before us is whether the right of pre-emption is invalid for
lack of signature by
Ms Mokone on the extension. Whether
specific performance will be an appropriate remedy at all, and under
what circumstances,
is best left for decision by the High Court as
part of the issues left pending before that Court. That
question is, indeed,
part of those issues. What I am addressing
concerns only the existence or otherwise of the impediment or anomaly
that helped
inform the decision in
Moolman
.
[59] Court-coerced compliance by the
grantor will be doing nothing more than to require her or him to
honour what she or he had
bargained for. It will not be an
imposition. Ultimately, the holder of the right of pre-emption
may be able to purchase
on the exact terms on which the third party
purchased and thus “step into the position of the third
party”.
[53]
[60] To hold otherwise leads us to the
difficulty that, indeed, a sale of land may come about without the
formalities having been
complied with. It does not have to be
that way. Effectively,
Moolman
’s view of the
effect of the
Oryx
mechanism is the means by which the Court
itself in
Moolman
places hurdles in the path and then claims
that those hurdles cannot be cleared. Why place hurdles in the
path of travel
in the first place? Unsurprisingly, Lubbe opines
that
Oryx
presupposes an offer complying with the requisite
formalities.
[54]
[61] We must not give on a silver
platter and on formalistic, technical grounds an easy way out to a
grantor of a right of pre-emption
who wants to resile from a bargain
concluded with her or his eyes wide open. This is not making
light of what the Alienation
of Land Act seeks to achieve. It
is about averting abuse and injustice. After all, our
interpretation needs to be restrictive
on the reach of the
formalities required by the Act.
[55]
Of course, where an alienation of land must fail for
non-compliance with the formalities, so be it. The Act exists
for a reason.
[56]
[62] Addressing the passage
[57]
in which
Moolman
points out the anomaly referred to above,
Lubbe writes:
“This passage
is . . . not free from difficulty. It must, it seems, be read
as referring to the contract granting the
right of pre-emption, for a
right of pre-emption as such is not something that can be governed by
the formalities legislation.
An action for the specific
performance of a grant of pre-emption seeks an order on the grantor
to make a valid offer to the grantee.
In the present context
this means an offer complying with the prescribed formalities, which
if accepted by the grantee, in accordance
with the statutory
requirements, will result in a perfectly valid contract. It is
difficult to see how such a procedure can
undermine the legislative
object with regard to alienations of land.”
[58]
[63] Contrary to what
Moolman
suggests, I reach two related conclusions. First, regardless of
the stage to which a sale to a third party by the grantor
of a right
of pre emption may have progressed, generally the right is
capable of enforcement in a manner that complies with
the
formalities.
[59]
Second, the exercise of the right does not ineluctably lead to the
anomaly referred to in
Moolman
. In sum, I disagree with
the conclusion in that case.
A basis to resist eviction until
completion of the litigation
[64] In
Kent
Innes CJ said:
“[
The
appellant] also asked us to stay the proceedings on equitable
grounds, urging that we had an equitable jurisdiction under the
Insolvency Law. The Court has again and again had occasion to
point out that it does not administer a system of equity, as
distinct
from a system of law. Using the word ‘equity’ in
its broad sense, we are always desirous to administer
equity; but we
can only do so in accordance with the principles of the Roman-Dutch
law. If we cannot do so in accordance
with those principles, we
cannot do so at all.”
[60]
[65]
In similar vein, and placing reliance on
Kent
, the
Court in
Jorgensen
held that “[t]he Courts do not however act on abstract ideas of
justice and equity. They must act on principle”.
[61]
In
Clipsal
the Supreme Court of Appeal quoted both
Kent
and
Jorgensen
with approval.
[62]
[66]
This seems to stand in the way of Ms Mokone
getting the relief she is seeking. Must it? Section 173
of the Constitution
provides:
“
The
Constitutional Court, the Supreme Court of Appeal and the High Court
of South Africa each has the inherent power to protect
and
regulate their own process, and to develop the common law, taking
into account the interests of justice.”
[67]
Put simply, this says the mentioned Courts
may regulate their own process taking into account the interests of
justice. I
will say nothing about equity but, based on this, I
do not see why proceedings may not be stayed on grounds dictated by
the interests
of justice. Whatever the import of what was said
by courts previously may be, the Constitution lays down its own test;
and
it has everything to do with the interests of justice.
[68]
In this context, the idea of interests of
justice is quite wide. I will not attempt to delineate what it
encompasses.
Suffice it to say, what justice requires will
depend on the circumstances of each case.
[69]
Coming to the matter before us, at first
instance, it came before the Boksburg Magistrate’s Court.
That Court does
not have the section 173 power. But, rightly or
wrongly, that Court did hold the eviction proceedings in abeyance.
It took the view that, until the High Court had determined the
validity and enforceability of the right of pre-emption, it could
not
conclude that Ms Mokone was liable to be evicted. The matter
went on appeal to the High Court. The High Court does
have the
section 173 power. It was well within that Court’s power
to regulate its process by holding the determination
of the appeal in
abeyance pending the final determination of the litigation that is
pending before the High Court. This it
could do if it was in
the interests of justice so to do. It did not. Before us
Ms Mokone persisted in her quest for
a stay. May we grant her
this wish?
[70] In the litigation pending before
the High Court, Ms Mokone has pleaded that the purchaser, Blue
Canyon, knew of the existence
of the right of pre-emption before it
took transfer of the leased premises. If that is indeed so, the
purchaser’s ownership
obtained upon transfer to it may well be
assailable.
[63]
It seems unjust to require Ms Mokone to be uprooted and her
business brought to a halt or destroyed in circumstances
where the
purchaser might not have been an innocent player when it purchased or
took transfer of the leased premises. The
interests of justice
dictate that the eviction proceedings be held in abeyance pending
finalisation of the action in which Ms Mokone
is seeking to enforce
the right of pre-emption.
[71] It is not as though Ms Mokone is
entitled to remain on the leased premises free of charge. She
has to continue paying
rent and Blue Canyon is entitled to enforce
its rights in this regard. In the eviction application, Blue
Canyon alleges that
Ms Mokone has not paid rent for a number of
months and that arrear rental now amounts to tens of thousands of
rand. But,
as will be noted from my characterisation of the
cause of action, the eviction proceedings are not seeking to enforce
payment of
arrear rental, nor is the eviction grounded on failure to
pay rent.
[72] Blue Canyon argued that the power
to hold proceedings in abeyance involves the exercise of a discretion
and that there is no
basis for suggesting that here the discretion
was not exercised judicially. A major flaw in this argument is
that the High Court
upheld the appeal in the eviction
proceedings on the merits. It concluded that, as a matter of
law, there was no way Ms Mokone
could assail the purchaser’s
title. There was no question of an exercise of discretion
whether to stay the proceedings
or not. So, nothing stands in
our way to upset the High Court’s decision.
Remittal
[73] When the High Court ordered a
separation of issues in the action in which Ms Mokone is
pursuing her right of pre-emption,
it was plainly envisaged that a
number of issues would remain pending. So, holding for Ms
Mokone is not dispositive of the
action. The matter has to be
remitted
to the High Court for the
final determination of the outstanding issues.
Costs
[74] Ms Mokone’s counsel indicated
that, because they represent her
pro bono
, they do not ask for
costs. No costs order will be made.
Order
[75] The following order is made:
1.
Leave to appeal is granted in both applications.
2.
Both appeals are upheld.
3.
In both appeals, the orders of the High Court of South Africa,
Gauteng Local
Division, Johannesburg (High Court) are set aside.
4.
It is declared that the extension of the lease between Ms Ntswaki
Joyce Mokone
and Tassos Properties CC on 3 May 2006 resulted in the
extension of the right of pre-emption in favour of Ms Mokone.
5.
The action for the prosecution of the right of pre-emption referred
to in paragraph
4 is remitted to the High Court for the determination
of issues which, in accordance with the pleadings, remain
outstanding.
6.
The final determination of the appeal in respect of the proceedings
brought by
Blue Canyon Properties 125 CC in the Boksburg Magistrate’s
Court for the eviction of Ms Mokone is held in abeyance pending
finalisation of the action referred to in paragraph 5.
FRONEMAN J
[76] I have had the privilege of reading
the judgment of my brother Madlanga J (main judgment). It is an
important judgment
because it tackles and develops our existing law
on three different fronts. On two of those I agree, with a
comment here
and there to clarify its justification from my
perspective. On the third I am sympathetic, but in the end I
think this is
not the case to go as boldly as he does.
[77] Let me start with the first two.
[78] I agree that the question whether
the extension of an agreement that contains provisions relating to a
lease and other rights,
like a right of pre-emption, also extends
those other provisions, should, as a start, be interpreted without
baggage. To
start by calling it a lease agreement gives it
baggage. The baggage comes with the name, or characterisation.
Once
one calls it a lease then surely, all other provisions
superfluous to the necessaries of a lease are collateral to the
lease, not
incidents of it? Yes, put that way it does, but that
begs the question one wants to determine, namely what kind of
agreement
is it? A lease? Primarily a lease? Or a hybrid,
something that contains features of not only a lease, but also other
kinds of agreements? So, yes, let us start without lawyerly
blinkers and determine the meaning of the agreement as those
who
concluded it would have understood the ordinary meaning of words.
[79] The pre-constitutional case law in
relation to whether courts have an equitable discretion to stay
proceedings in one matter
until determination of a material legal
point in another was at pains to separate law from equity in denying
this wide equitable
competence to our courts.
[64]
If there is a broad theme of the Constitution, it is to unshackle our
law from this painful historical dichotomy and tension
between law
and fairness. The Constitution demands that they run together,
hand in hand. Ordinary folk assume that
is the purpose of law –
that it should be infused with fairness and justice. Lawyers
should no longer be embarrassed
to admit that there is nothing wrong
with that view.
[80] The main judgment does not seek to
locate the development of our law in relation to these two issues in
our new constitutional
ethos, but in the common law’s inherent
competence to do so. I would prefer to bring the two together.
Unarticulated
in the common law’s development were underlying
notions of fairness and justice. The Constitution unashamedly
tells
us that we should no longer hesitate to bring the law in accord
with constitutional notions of fairness and justice. Looking
at
agreements without baggage in favour of lessors brings equality in
bargaining and good faith in the enforcement of agreements
to the
fore. So does the suspension of proceedings seeking to enforce
rights that are subject to determination in another
court.
Those kinds of notions were not foreign to our common law.
[81] That, unfortunately, brings me to
the third development to our existing law in the main judgment:
bringing down
Moolman
.
[65]
I am not convinced that it is necessary to be so bold in deciding
this case. Let me explain.
[82] On my reading of
Moolman
it
deals only with “stepping into” rights of pre emption,
or what the main judgment calls an
Oryx
mechanism.
[66]
Moolman
accepted, on the authority of
Oryx
, that the
nature of a right of pre-emption allows the grantee to step into the
shoes of the third party “purchaser”
unilaterally and a
new independent contract then comes into being between them.
[67]
The right of pre-emption, as a species of a
pactum de contrahendo
,
is, in effect, a conditional sale of land and conditional sales of
land must also comply with the statutory formality of being
in
writing.
[68]
The implication of this is that if there is no written offer to step
into, the unilateral stepping in, even if in writing,
cannot
transform the resultant sale into a written sale. It is this
that underlies the statement that “[w]ere 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.”
[69]
[83] It may be that this “conception
of the preparatory pact as an inchoate, conditionally suspended
version of the substantive
contract”
[70]
is in conflict with the earlier Appellate Division case of
Birchholtz
.
[71]
It may also be that both the characterisation of the nature of this
kind of right of pre-emption, as entitling the grantee
to step into
the shoes of the third party “purchaser” unilaterally
with the result that a new independent contract
then comes into being
between the grantee and the grantor, as well as the requirement that
it must be in writing, are suspect and
need to be re examined.
But before getting there it must be clear that the pre-emption clause
here is of the “stepping
into” or
Oryx
variety.
If it is not, dumping
Moolman
is not yet called for.
[84] A right of pre-emption may take
many different forms. In
Bellairs
, the Court
distinguished the right of pre-emption, in that case a grant binding
the grantor to offer at “the price which
he is willing to
accept for such shares”,
[72]
from other forms:
“[T]he right
of pre-emption in clause 21 differs radically from the usual kind in
which the pre-emptive price is either specified
. . . or in which,
because of its wording or effect, it is the same price as the owner
is prepared to accept from the third person
. . . or in which the
price is otherwise objectively determinable”.
[73]
It seems to me that the “stepping
into” nature of a right to pre-emption upon which
Oryx
and
Moolman
rest may be restricted to those rights where
because of its wording or effect, it is the same price as the owner
is prepared to
accept from the third person.
[74]
In other cases, the rationale for
constructing
its nature as
one of unilaterally stepping in to create an independent contract of
sale, and hence liable to being in writing,
appears inapposite.
[85] The right of pre-emption granted in
this case is not a “stepping into on the same terms”
right. It reads:
“The [t]enant
shall have the [right of first refusal] to purchase the leased
premises when the [lessor wishes] to sell the
leased premises.
The purchase price shall be negotiated when the [lessor wishes] to
sell the leased premises
.”
(Emphasis
added.)
[86] This is much closer to the
terms of the right of refusal clause in
Soteriou,
which
provided for the extension of a lease “upon such terms and
conditions and at such rental as may be mutually agreed upon”.
[75]
With reference to the principle enunciated in
Oryx
that a
purchaser can step into the shoes of the third party by a unilateral
declaration of intent, Nicholas JA stated:
“There would
seem to be no reason in principle why the same should not apply where
a lessee of premises has a right of first
refusal of a new lease.
But the lease concluded with the third party must be such that the
grantee of the right can step into the third party’s shoes.
It
is not clear that he could do so in the present case
.”
[76]
(Emphasis added.)
[87] Before one can enter the realms of
whether
Moolman
was wrongly decided, one must first determine
whether the pre-emption clause here is of the “stepping into”
kind of
pre-emption clause that
Moolman
speaks to. To me
it seems not to be of that kind, which makes it unnecessary to leave
Moolman
on the ash-heap.
[88] I thus agree that the matter should
be remitted to the High Court for determination of the other issues.
These issues
include whether the clause leaving the purchase price to
further negotiation is valid
[77]
and, if so, whether specific performance in the form sought by the
applicant, or at all, is tenable. I also agree with the
rest of
the order issued in the main judgment.
For the
Applicant:
T Ngcukaitobi, F Hobden and I Kentridge instructed by Webber
Wentzel
For the First and Second
Respondents: G D Wickins and W G
Pretorius instructed by Brooks &
Braatvedt Inc. Attorneys
[1]
Nothing turns on the fact that this sounds like an instruction that
there be an extension. All concerned accepted that
this was an
extension of the lease.
[2]
On the face of it, this appears to gainsay an allegation by the
respondents that Ms Mokone did not pursue her right of pre-emption
for some two years after becoming aware of the sale to Blue Canyon.
But, for present purposes, nothing turns on this.90
[3]
The respondents suggest that the actual purchase price was
R950 000. Happily, in these two matters we do not have
to
untangle the mystery as to what the true purchase price was.
[4]
Mokone v Tassos Properties CC
[2015] ZAGPJHC 322 at para 15.
[5]
68 of 1981.
[6]
This section provides:
“The Constitutional Court—
. . .
(b)
may decide—
(ii) any
other matter, if the Constitutional Court grants leave to
appeal on
the grounds that the matter raises an arguable point of law of
general public importance which ought to be considered
by that
Court”.
[7]
SAJ v AOG & 2 Others
Supreme Court of Kenya Petition No.
1 of 2013; [2013] eKLR at para 31 (available online at
http://kenyalaw.org/caselaw/cases/view/84298/),
which was quoted with approval in
Paulsen v Slip Knot Investments
777 (Pty) Ltd
[2015] ZACC 5
;
2015 (3) SA 479
(CC);
2015 (5) BCLR
509
(CC) at para 25. See also
Hermanus Phillipus Steyn
v Giovanni Gnecchi-Ruscone
Supreme Court of Kenya Application
No. 4 of 2012; [2013] eKLR at para 58 (available online at
http://kenyalaw.org/caselaw/cases/view/88828
).
[8]
R (on the application of Compton) v Wiltshire Primary Care Trust
[2008] ECWA Civ 749;
[2009] 1 All ER 978
(
Wiltshire Primary Care
Trust
) at para 16, quoting with approval Holman J in
The
Queen on the Application of Val Compton v Wiltshire Primary Care
Trust
[2008] EWHC 880
(Admin) at paras 32 and 36.
Wiltshire Primary Care Trust
was quoted with approval in
Paulsen
above n 7 at para 26.
[9]
Id at para 16.
[10]
My rough translation should not be understood to suggest that it is
obligatory that the other contract to which the pact relates
be
concluded. Take an option, for example, the envisaged sale may
or may never take place.
[11]
Compare
Clipsal Australia (Pty) Ltd v Gap Distributors (Pty) Ltd
[2009] ZASCA 49
;
2010 (2) SA 289
(SCA) (
Clipsal
) at para 17.
[12]
Compare
Paulsen
above n 7 at paras 21-3.
[13]
Compare
Paulsen
above n 7 at paras 17-8.
[14]
See
Levy v Banket Holdings (Private) Ltd
1956 (3) SA 558
(FC)
at 563B-C.
[15]
See
Doll House Refreshments (Pty) Ltd v O’Shea
1957 (1)
SA 345
(
Doll House
) at 351E.
[16]
Lord Mackay
Halsbury’s Laws of England
(LexisNexis,
London 2012) 2 at 169-70.
[17]
Levy
above n 14 at 562F-G.
[18]
See
Webb v Hipkins
1944 AD 95
at 104;
Doll House
above
n 15 at 351E; and
Levy
above n 14 at 564E-F.
[19]
Pothier
Treatise on the Contract of Letting and Hiring
(translated by GA Mulligan) (Butterworth & Co, Durban 1953) at
138.
[20]
Batchelor v Murphy
[1926] AC 63
(HL) at 68.
[21]
Levy
above n 14.
[22]
That rendition is quoted above at [22].
[23]
Quoted more extensively at [23].
[24]
Sherwood v Tucker
[1924] 2 Ch 440.
[25]
Id at 443.
[26]
Id at 444.
[27]
Natal Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
2012 (4) SA 593
(SCA) at para 18.
[28]
Id at para 24.
[29]
Levy
above n 14 at 564F.
[30]
Id.
[31]
I need not pronounce definitively on this.
[32]
Halsbury’s
above n 16.
[33]
Shenker Bros v Bester
1952 (3) SA 655
(AD) at 677B–C.
[34]
Levy
above n 14 at 564B.
[35]
Tubbs v Hendrickson
88 Misc 2d 917
(NY Misc 1976) at 919.
[36]
Carmichele v Minister of Safety and Security
[2001] ZACC 22
;
2001 (4) SA 938
(CC);
2001 (10) BCLR 995
(CC) at para 39.
[37]
Amod v
Multilateral Motor Vehicle Accident Fund
[1998] ZACC 11
;
1998 (4) SA 753
(CC);
1998 (10) BCLR 1207
(CC) at
para 22.
[38]
Hirschowitz v Moolman
[1985] ZASCA 38
;
[1985] 3 SA 739
(A)
(
Moolman
).
[39]
71 of 1969.
[40]
Of course, with the exceptions specified in the section.
[41]
Rogers v Phillips
1985 (3) SA 183 (E).
[42]
The respondent was disputing that he had granted it.
[43]
Rogers
above n 41 at 188D-E.
[44]
Id at 188C-D.
[45]
Moolman
above n 38.
[46]
Id at 757E-F, 766D, and 767F-H.
[47]
Id at 766D.
[48]
Id at 767F-H.
[49]
See what I say shortly about this.
[50]
Associated South African Bakeries (Pty) Ltd v Oryx &
Vereinigte Bäckereien (Pty) Ltd
[1982] ZASCA 1
;
1982 (3) SA
893
(A) (
Oryx
).
[51]
Id at 907E-F. This is my translation of the original Afrikaans
text. Here is the original Afrikaans text:
“Indien ‘n
verkoper in stryd met ‘n voorkoopsreg ‘n koopkontrak met
'n derde aangaan, kan die koper deur
‘n eensydige
wilsverklaring in die plek van die derde tree. ‘n Koopkontrak
word dan geag aangegaan te gewees het
tussen die verkoper en die
houer van die voorkoopsreg.”
[52]
Oryx
above n 50.
[53]
Id.
[54]
Lubbe “Law of Purchase and Sale” (1985) Annual Survey
South Africa 133 at 140-1. See also Lubbe and Murray
Farlam
and Hathaway Contract: Cases Materials and Commentary
3 ed (Juta
& Co Ltd, Cape Town 1988) at 93.
[55]
See Van Rensburg “Formaliteitsvoorskrifte, Voorkoopregte en
Opsies”
(1986) 49
THRHR
208
at 214.
[56]
See
Moolman
above n 38 at 757I-758A, where the following
appears:
“The object
of the subsection [of the Formalities Act] 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.”
[57]
Quoted in [52] above.
[58]
Lubbe above n 54 at 140-1. See also Van Der Merwe et al
Contract: General Principles
4 ed (Juta & Co Ltd, Cape
Town 2012) at 70 who have this to say:
“In
principle, formalities prescribed for the substantive contract ought
not to apply to option agreements relating to such
a contract . . .
. It has been stated, however, that, as a general rule,
pacta
de contrahendo
have to conform to formalities prescribed for the
substantive contract envisaged by the parties and that therefore
option contracts
to purchase land must conform to the applicable
statutory formalities [citing
Moolman
]. This view may
be in keeping with a construction of preliminary agreements known to
continental systems of law, but quite
apart from whether its
application may be warranted in respect of other types of
pactum
de contrahendo
, it is doubtful whether there is any need to
apply the construction to option contracts in South African law.”
[59]
I say generally because issues that may come into the equation are,
for example, whether transfer that has already taken place
should be
undone or whether the right holder is entitled to specific
performance at all.
[60]
Kent v Transvaalsche Bank
1907
TS 765
at 774.
[61]
Fisheries Development Corporation of SA Ltd v
Jorgensen
;
Fisheries
Development Corporation of SA Ltd v AWJ Investments (Pty) Ltd
1979
(3) SA 1331
(W) (
Jorgensen
)
at 1340B-D
[62]
Clipsal
above n 11 at para 18.
[63]
See
Oryx
above n 50 at 907
F
.
[64]
Clipsal
above n 11 at para 17.
[65]
Moolman
above n 38.
[66]
Oryx
above n 50.
[67]
Moolman
above n 38 at 761B-C and H-I.
[68]
Id at 765G-767H.
[69]
Id at 767H.
[70]
Lubbe above n 54.
[71]
Venter v Birchholtz
1972 (1) SA 276 (A).
[72]
Bellairs v Hodnett
1978 (1) SA 1109
(A) at 1139A-B.
[73]
Id at 1139 D-F.
[74]
Soteriou v Retco Poyntons (Pty) Ltd
[1985] ZASCA 15
;
1985 (2)
SA 922
(A) at 933.
[75]
Id at 933.
[76]
Id.
[77]
Compare
Hattingh v Van Rensburg
1964 (1) SA 578
(T) and
Soteriou
above n 74 at 931.