Glen Anil Finance (Pty) Ltd v Joint Liquidators, Glen Anil Development Corporation Ltd (In Liquidation)

• Jurisdiction: South Africa
• Judge: Wessels JA, Trollip JA, Diemont JA, Trengove JA and Botha AJA
• Judgment Date: 29 September 1980
• Citation: 1981 (1) SA 171 (A)
• Hearing Date: 26 August 1980
• Court: Appellate Division

Trengove JA:

This is an appeal from a judgment of NICHOLAS J, sitting in the Witwatersrand Local Division, on an application by the appellant for a G declaration of rights in a dispute about the proper interpretation of ss (3) of s 14 of the Sale of Land on Instalments Act 72 of 1971 as amended (hereinafter referred to as the Act). The appellant has appealed against the whole of the judgment and the order which reads as follows:

"A.

Declaring that, in respect of Glen Anil deeds of sale ceded by H len Anil Development Corporation Ltd to Glen Anil Finance (Pty) Ltd in pursuance of the agreement being annexure 'C' to the applicant's founding affidavit and the amendment thereto, the respondents are entitled as against the applicant, where the amount payable by a purchaser in terms of ss (3) of s 14 of the Sale of Land on Instalments Act 72 of 1971 (whether in the original or the amended form of the said sub-section) is of the outstanding balance under the deed of sale plus interest to the date of registration of transfer, to receive payment of such

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balance and apply the amount paid in the first instance to the payment of all such costs of sequestration and administration as A relate to the land concerned including endowment and to account to the applicant only for the balance.

B.

Directing the applicant to pay the respondents' costs on the basis of the employment of two counsel."

A cross-appeal by the respondents against para A of the order, in so far as it requires the respondents to account to the applicant for any monies received from a purchaser under a deed of sale, has been withdrawn.

B The dispute in question arose during April 1978. The appellant accordingly applied, on notice of motion, for a declaration of rights and, after the answering affidavit on behalf of the respondents had been filed, the parties prepared a stated case in which they set out all the agreed facts, C the questions of law to be decided and their respective contentions in regard thereto. These have been recounted in some detail by the lèarned Judge a quo in his judgment which has been fully reported (see Glen Anil Finance (Pty) Ltd v Joint Liquidators, Glen Anil Development Corporation D Ltd (in liquidation) 1979 (2) SA 803 (W)) and from which I propose to borrow freely. For convenience, and in order to facilitate the reading of this judgment, I shall summarise the facts material to the issues debated on appeal. They are the following:

(1) On 5 February 1974, a group of companies, referred to collectively as the Glen Anil Group, entered into a written agreement. One of these companies was Glen Anil Development Corporation Ltd (GA Development). In E terms of this agreement a company was to be formed with the name of Glen Anil Finance (Pty) Ltd (GA Finance). This company's main business would be to purchase from companies within the Glen Anil Group all the right, title and interest of any such company in and to "Glen Anil deeds of sale" owned by them. The other relevant provisions of the agreement were to the F following effect:

(a)

It was warranted that all "Glen Anil deeds of sale" sold to GA Finance would relate to land situate in a township which had either been declared an approved township or which would at some future time be declared an approved township.

(b)

G The consideration payable by GA Finance for the acquisition of the rights in any such deed of sale was to be the face value of the outstanding balance of the purchase price, payable in terms thereof, as at the date upon which the said rights were acquired by GA Finance; and it was payable against cession of such rights.

(c)

All members of the Glen Anil Group which had sold land to H purchasers in terms of "Glen Anil deeds of sale", acquired by GA Finance in terms of this agreement, would comply with all their obligations under such deeds of sale.

(d)

The owners of the townships referred to in sub-para (a) above would comply with all their obligations as township owners.

(2) GA Finance was duly incorporated as envisaged by the agreement. It is the present appellant and I shall henceforth refer to it as such.

(3) On 1 December 1976, pursuant to an application made by GA Development under the provisions of the Town Planning and Townships Ordinance 25 of 1965 (T), a township called Struisbult Extension 1 was

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declared to be an approved township, subject, inter alia, to the condition that:

"The township owner shall pay to the local authority as endowment sums of A money equal to 15 per cent of the land value of erven in the township, which amount shall be used by the local authority for the construction of streets and/or stormwater drainage in and for the township.

Such endowment shall be paid in accordance with the provisions of s 74 of the Town Planning and Townships Ordinance 1965."

This township includes residential erven which fall within the ambit of the Act.

B (4) GA Development sold a considerable number of residential erven in this township, the purchase price being payable, in each instance, by way of a deposit and monthly instalments over a period of years. Each of these deeds of sale was a "contract" as defined in s 1 of the Act and none of C the erven concerned was at any stage, relevant to these proceedings, encumbered by a mortgage bond.

(5) GA Development subsequently ceded all its rights in the aforementioned deeds of sale to the appellant and the latter duly paid the agreed purchase consideration therefor. As between the appellant and the D respondents, the cessions have been accepted as valid and effective and at the hearing of the appeal counsel requested this Court to assume, without deciding, that, in terms of the aforementioned deeds of sale, GA Development was entitled to cede all its rights thereunder to the appellant.

(6) On 2 February 1977, GA Development was placed in liquidation by order E of the Witwatersrand Local Division on the ground that it was insolvent. In consequence, the purchasers under the deeds of sale in question became entitled to exercise the rights granted to them by s 14 (2) read with s 14 (3) of the Act. Many of the purchasers then elected to take transfer of the erven in terms of the provisions of s 14 (3).

F (7) In order to expedite the winding-up of GA Development and to minimise the prejudice to purchasers who were entitled to transfer of erven by virtue of the provisions of s 14 (3), certain resolutions concerning the transfer of the erven were adopted at a general meeting of the creditors of GA Development on 15 March 1978. The respondents, as liquidators, were authorised to pass transfer to purchasers who had elected to take transfer, subject to their compliance with the provisions of s 14 (3) of G the Act. The respondents were, however, instructed to contend that no endowment was payable by GA Development (in liquidation) in respect of any of these transactions, whether as a cost of realisation, a cost of administration or on any other basis. They were, furthermore, authorised to enter into an agreement in terms whereof the appellant, as cessionary H of GA Development's rights under the deeds of sale, would pay the endowment in respect of the said erven, without prejudice and with reservation of the rights to contend that such endowment was, in fact and in law, payable by GA Development or the respondents, and not by the appellant.

(8) In April 1978, and in pursuance of these resolutions, the respondents and the appellant entered into an agreement in terms of which the appellant agreed to pay the endowment in respect of the erven concerned on the clear understanding that it would be entitled to recover such

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payments from the respondents in the event of a competent court finally deciding that G A Development (in liquidation), and not the appellant, was liable for the payment of endowment.

A (9) Pursuant to this agreement, the appellant provided the respondents with funds to pay endowment in respect of a considerable number of erven situate in Struisbult Extension 1. In these instances transfer was duly passed to the purchasers having the right to claim transfer under s 14 B (3). In each case the amount paid by the purchaser comprised the outstanding balance of the purchase price under the relevant deed of sale, plus interest to the date of the registration of transfer, and costs of transfer, and this amount exceeded the costs of liquidation and administration relating to such land, including the applicable endowment. C Except in one instance, the transfers were passed subsequent to 9 June 1978, the date upon which the amendment to s 14 (3) by s 1 (1) of Act 74 of 1978 became effective. So...