Lombaard v Droprop CC and Others

• Jurisdiction: South Africa
• Judge: Ndlovu J
• Judgment Date: 23 February 2009
• Docket Number: 5895/08
• Hearing Date: 18 September 2008
• Counsel: GG van der Walt for the applicant. L Pillay SC for the respondents.
• Court: Natal Provincial Division

Ndlovu J:

Introduction E

[1] The applicant in this matter, a lessee of certain immovable property in terms of a written contract of lease, sought to exercise the option to purchase the leased property by virtue of a clause in the lease agreement. The lessor and lawful owner of the property, being the first respondent, duly represented by its members, the second, third and fourth respondents, opposed the application and raised two defences, both of which F involved legal questions.

[2] In his notice of motion the applicant sought final relief in the following terms:

'1.

That the First to the Fourth Respondents be and are hereby G interdicted and restrained from further dealing with the property more fully described as Portion 526 (of 432) of the Farm Melk Houte Kraal No 789, Registration Division FT in the Durban entity, Province of KwaZulu-Natal, in extent 2,0797 (TWO COMMA ZERO SEVEN NINE SEVEN) hectares as more fully appearing on FT diagram number 782/1998.

2.

That the Second, Third and Fourth Respondents be and are H hereby directed to sign all documents necessary to cause transfer of the property described in (1) above from the name of the First Respondent to the Applicant.

3.

That failing compliance by the said Respondents with the order set out in paragraph (2) above, within 5 (FIVE) days of the date of I service of this order on the Respondents, that the Sheriff of this Honourable Court be and is hereby authorised to sign all documents necessary and required on behalf of the First Respondent to effect said transfer to the Applicant.'

I think prayer 2 should have been qualified by words to the effect that the transfer should be made against payment of the purchase price, since this J

Ndlovu J

A was not yet paid. However, this aspect was not raised and, in any event, is not relevant for the present purpose.

Factual background

[3] The first respondent is a close corporation established in terms of the B Close Corporations Act 69 of 1984 (the CC Act) and the second, third and fourth respondents are its only registered members. The second respondent is the wife of the third respondent who deposed to the answering affidavit on behalf of all the respondents. As stated, the first respondent is the lawful owner of the immovable property in question by virtue of the deed of transfer No 24990/98 dated 16 September 1998 (a C copy of which was included in the applicant's founding papers and marked as JAL1 - hereinafter referred to as 'the title deed'), in terms of which the property was described as follows:

'PORTION 526 (OF 432) OF THE FARM MELK HOUTE KRAAL NO. 789, Registration Division FT in the Durban Entity, Province of D KwaZulu-Natal

In Extent 2,0797 (TWO COMMA ZERO SEVEN NINE SEVEN) hectares.

As will appear from SG diagram No 782/1998 annexed hereto (the diagram) and held by certificate of consolidated title No T32971/91.'

E Hereinafter referred to as 'the property'.

[4] Indeed, the diagram (which was marked as annexure 'JAL3' to the applicant's founding papers) was in fact a professional surveyor's drawing, according to which the property was shown as being the area within figures marked 'ABCDEFGHJKLMNPQRS' and representing F some 2,0797 hectares of land.

[5] On or about 26 January 2005, the applicant (as lessee) concluded a lease agreement (referred to in the lease document as 'the head lease' and shall be referred to as such hereinafter) with the first respondent (as lessor) over a certain property which formed the subject-matter of this G dispute. The head lease was duly signed by the third respondent on behalf of the first respondent and by the applicant personally.

[6] In the head lease the property leased to the applicant was described as: 'Certain portion 526 of Lot 432 (of the farm Melk Houte Kraal No. 789)'.

H Clause 5 of the head lease provided:

'The TENANT has an option to purchase the property in the second year of occupation for a sum of R3 000 000 with a yearly escalation of 12%, if the option to purchase is not exercised within the specified period. This option to purchase is valid for a period of FIVE years only.'

I [7] On 12 November 2007 the applicant sought to exercise the option to purchase the property in a letter addressed to 'The Members' of the first respondent which read as follows:

'Dear Sirs,

RE:

OPTION - AGREEMENT OF LEASE dated 26 January 2005: PORTION 536 (OF 432) OF THE FARM MELK HOUTE KRAAL No. 789

Ndlovu J

The above matter refers. A

Kindly take note that as of date hereof I hereby give notice to you of my exercise of the Option to acquire the above property as contained in Clause 5 of the attached Head Lease.

I confirm that the purchase price will be the sum of B R3 360 000 (THREE MILLION THREE HUNDRED AND SIXTY THOUSAND RAND) as the Option is now in the second year of operation.

I hereby tender payment of the purchase price against registration of transfer of the above property into my name.

Kindly take note that as there are no specific conditions of sale contained in C the said Lease that the appropriate conditions of the Lease will be deemed to be the conditions of sale.

In terms of KwaZulu-Natal conveyancing practice regarding the nomination of a Conveyancer where the same is not contained in the sale document, the purchaser is entitled in terms of a High Court ruling D to nominate such party and I hereby nominate J Leslie Smith & Co of Pietermaritzburg to be the Conveyancers appointed to handle the registration of transfer of the above property into my name.

I confirm that I am married in Community of Property and accordingly the property is to be transferred into both my and my wife's names. E

The above Conveyancers will shortly furnish you with the necessary transfer documents for signature.

Yours faithfully,

(signed) JA LOMBAARD'

[8] According to the applicant the letter referred to in the preceding F paragraph was only delivered to the respondents' attorneys of record on 30 November 2007 together with a covering letter of the same date from the applicant's attorneys of record, confirming the applicant's intention to exercise the option in terms of clause 5 of the head lease. There was some apparent controversy as to when exactly the two letters were G received by the respondents' attorneys. But nothing turned on this. The fact of the matter was that it was common cause that the respondents' attorneys received both letters during November 2007. It was therefore the applicant's case that by his letter (of 12 November 2007), which constituted his written acceptance of the first respondent's offer, the H contract of sale of the property was thereby concluded.

[9] In response the respondents delivered, through their attorneys, a letter dated 18 December 2007 to the applicant's attorneys, which conveyed the following message: I

'Your letter to our client dated 13 December 2007 has been handed to our offices for attention and reply.

Kindly be advised that our client had previously indicated to your client that he would not be selling.

You are invited to proceed as you deem fit.' J

Ndlovu J

A [10] Indeed, it was remarkable that the description of the property in the head lease included the prefixed word 'certain', contrary to the description in the title deed. To my mind, this was the crux of the substantive dispute between the parties. Strangely, however, the property description in the applicant's letter of 12 November 2007 was the same as in the title B deed. Therefore, the dispute was about whether the leased property in terms of the head lease was the same as the property in terms of the title deed or was only part of it. The applicant contended that the head lease referred to the entire property, as described in the title deed, whilst the respondents submitted it was not so. There was a further defence raised by the respondents which related to the third respondent having acted as C agent of the first respondent, but without proper written authority to do so. The respondents' defences can be summarised as follows -

[10.1]

The envisaged contract, arising from the accepted option to purchase, did not comply with the requirements set out in s 2(1) of the Alienation of Land Act 68 of 1981 (the Act) because it D was not in writing containing all the material terms thereof. The inclusion of the word 'certain' prefixing the description of the property in the head lease was imprecise and an inadequate description, in that it did not clearly identify the property with reasonable certainty.

[10.2]

When he signed the agreement, the third respondent would have E acted as agent for the first respondent, in terms of s 2(1) of the Act, and therefore required written authorisation from the first respondent to do so. This did not happen.

The respondents submitted that for the abovementioned reasons the contract of sale of the property was null and void and of no legal force or F effect by virtue of non-compliance with s 2(1) of the Act.

The parties' submissions

[11] Mr Van der Walt, counsel for the applicant, pointed out that the applicant had complied with all the terms of the head lease, including the G fact of being up to date with his rental payments. (Indeed this aspect was common cause.) Hence the applicant had a right to exercise the option to purchase the property in terms of clause 5 of the head lease, and the purchase price of R3 360 000 which the applicant was tendering was the correct amount envisaged in terms of the agreement.

H [12] In his replying affidavit the applicant submitted that the inclusion of the word 'certain' before the words 'Portion 526 of Lot 432 was only an archaic reference to portions of land and in title deeds, leases and sale agreements', and that the word 'certain' here was in fact 'a reference to the fact that the portion of...