Quinella Trading (Pty) Ltd and Others v Minister of Rural Development and Others

• Jurisdiction: South Africa
• Citation: 2010 (4) SA 308 (LCC)

Quinella Trading (Pty) Ltd and Others v Minister of Rural Development and Others
2010 (4) SA 308 (LCC)

2010 (4) SA p308

Citation	2010 (4) SA 308 (LCC)
Case No	03/2010
Court	Land Claims Court
Judge	Meer J
Heard	April 1, 2010
Judgment	May 18, 2010
Counsel	MG Roberts SC (with J Hattingh) for the applicants.; RBG Choudree SC (with CM Nqala) for the respondents.

Flynote : Sleutelwoorde B

Administrative law — Decision of functionary — Legitimate expectation doctrine — Nature — Legitimate expectation doctrine one aspect of duty to act fairly — Citizens having legitimate expectation that public officials will C honour their obligations.

Costs — Special order — When to be awarded — Conduct of State in delaying transfer of land in restitution claim — State disregarding its contractual and statutory obligations and resorting to unsubstantiated defence — Conduct vexatious and deserving of censure by means of special costs order on attorney and client scale.

D Contract — Performance — Impossibility — Self-created impossibility — By State — When State unable to honour contractual obligations for lack of funds — Foreseeability of causes giving rise to impossibility — Commercial circumstances complicating compliance with contractual obligations foreseeble in business world at time that contract is concluded.

E Land — Sale — Contract — Formalities — Non-compliance — What constitutes — Statutory requirement that contract to be in writing — Effect of subsequent unsigned agreement on validity of earlier signed agreement — When absence of signatures to later deeds of sale fatal to validity of earlier signed agreement — Where unsigned agreements containing terms which F were intended to be included as material terms in earlier signed agreement, then earlier agreement invalid.

Land — Sale — Contract — Formalities — Non-compliance — What constitutes — Failure to indicate signing sale agreement as delegate — Delegated authority distinguishable from contractual agency G — Decentralization concept — Delegation of public statutory power — Where signing of documents by functionary of State with delegated authority, functionary not agent, but acts in his own name — No contravention of s 2(1) of Alienation of Land Act 68 of 1981 if capacity in which functionary with delegated authority signs contract is not reflected.

H Interest — Claim for interest — Unpaid purchase price — Undue delay in transfer — Where payment due in sale of land, but seller in possession — Where seller continuing to enjoy advantages of property, then no basis for seller holding purchaser liable for interest.

Constitutional practice — Costs — Proper approach — Where State sued by I private party for failure to fulfil constitutional and statutory obligations — Court should in awarding costs against opponent, take into account constitutional character of litigation and conduct of parties — Restitution of land claims in nature of constitutional litigation — Particularly powerful reasons must exist for costs not to be awarded to private litigant who achieves substantial success in proceedings asserting a constitutional J right.

2010 (4) SA p309

Headnote : Kopnota

Negotiations in settlement of fourth respondent's land claim culminated in A second respondent making written offers to the applicants for the purchase of their properties under powers delegated to it in terms of s 42D(3) of the Restitution of Land Rights Act 22 of 1994 (the Act). The applicants accepted both offers on 10 October 2007. Despite a plethora of correspondence, telephonic communications and meetings between the parties, no B movement was made on transfer of the properties since second respondent's legal representative, the State Attorney, was waiting for the first respondent to approve the agreements under the Act. When such approval was eventually obtained in October 2008, applicants were faced with a new source of delay in that despite their consistent attempts to have the proposed new sale agreements signed (and second respondent's undertakings C to do so), it did not happen. When, in November 2009, the first respondent advised applicants that it would only have funds to purchase the properties in the next financial year, the applicants approached the Land Claims Court for an order that transfer of the properties proceed in terms of the original acceptance of the offers. The respondents opposed the application, firstly, on the basis that s 2(1) of the Alienation of Land Act 68 of 1981 D (the Alienation Act) had not been complied with since the deeds of sale drawn up pursuant to first respondent's approval of the original offers to purchase, remained unsigned, and secondly on the basis of impossibility of performance on their part due to lack of funds. In addition the respondents contended that no funds had been appropriated for the purchase of the properties, and that the orders sought would therefore be E contrary to ss 38 and 86 of the Public Finance Management Act. During the hearing the presiding judge requested the parties address her on whether the fact that the offers were signed under delegated powers had any effect on their validity, and also, by way of written submissions, whether applicants had a legitimate expectation that respondents would abide by the original agreements. F

Held, that for the absence of signatures on the later draft deeds of sale to have been fatal to the validity of the prior agreements between the parties, it would have to be shown that the parties had agreed that there were further terms contained in the draft deeds of sale that were to be included as material terms of the original agreements. The evidence did not bear this G out, nor did respondents contend as much. (Paragraph [10] at 315C - E.)

Held, further, that an agreement for the sale of land signed by an agent, but failing to identify the agent's principal, was invalid for non-compliance with s 2(1) of the Alienation Act because the identity of the seller, an essential term of the sale, would not appear ex facie the deed of sale. Statutory delegation is however distinguishable from contractual agency. In signing H the agreements under delegated authority the second respondent had acted not as first respondent's agent, but as a functionary of the State with conferred statutory authority to bind the State in her own name. The peremptory provisions of s 2(1) of the Alienation of Land Act were therefore not contravened. (Paragraphs [12] - [16] at 315H - 317C.)

Held, further, that first and second respondents had through their conduct I caused applicants to entertain a legitimate expectation that the agreements would be honoured. (Paragraph [23] at 318G - 319A.)

Held, further, that the doctrine of legitimate expectation was one aspect of the duty to act fairly, which duty created a legitimate expectation on the part of citizens that public officials with whom they contracted would honour their obligations. The first and second respondents had, by falling foul of their J

2010 (4) SA p310

A duty to act fairly, failed to fulfil the applicants' legitimate expectation, and were bound to fulfil their obligations under the 2007 agreement. (Paragraph [24] at 319B - C.)

Held, further, that the respondents failed to show that performance had been objectively impossible either at the time of the conclusion of the contract or any time thereafter. (Paragraph [27] at 320E.)

B Held, further, that it had to be assumed that respondents utilised the funding which was earmarked for the agreements to purchase applicants' properties during the 2007/2008 financial year, thereby creating any alleged impossibility themselves. Self-created impossibility did not discharge the obligations of the respondents under the contracts. (Paragraphs [28] - [29] at 320F - I.)

C Held, further, that the respondents could not rely on a defence that their resources were depleted because this had been foreseeable. The respondents had neglected to channel the available funds to enable them to perform under the contract, and this precluded them from claiming a supervening impossibility. (Paragraph [30] at 320I - 321D.)

D Held, further, that the contention that the orders sought would be contrary to s 38(2) of the Public Finance Management Act 1 of 1999, which prohibited an accounting officer from committing a department to 'any liability for which money has not been appropriated', had to be rejected since there was no evidence that, when the contracts had been concluded or approved, funds had not been appropriated to give effect to sale. In addition, the department was not committed financially by an accounting officer, but by E the responsible Minister. It should be safe to assume that a Minister would not commit a department financially without first verifying that the funds were available. (Paragraph [31] at 321F - H.)

Held, further, that respondents had conducted their case in a manner deserving of censure by means of a special order for costs to be taxed as between F attorney and client. Conduct of such ilk on the part of State officials flew in the face of fair contractual practice, and furthers the aims neither of land restitution nor the right thereto as embodied respectively in the Act and the Constitution (Paragraph [34] at 322E - 323A.)

Held, further, that litigation concerning the constitutional right to restitution of rights in land was in the nature of constitutional litigation; and in litigation G between the State and private parties in which it was sought to assert constitutional rights, the State ordinarily had to pay the costs if it loses. (Paragraph [35] at 323B - D.)

Held, further, that constitutional principles were basic values for achieving a public service envisaged by the Constitution, which required the State to lead by example. It...