FILTERS:

Basfour

17 April 2014

THE DISPUTE
At the heart of the matter was a rejection note made by an examiner at the Bloemfontein Deeds Registry on transfer documents lodged for registration It reads as follows:

“The Township was proclaimed on 6/9/2013. The erf cannot be sold before date of proclamation. Comply with the Ordinance or lodge court order-
RCR45/2012. Redraft all docs.”

The effect of the rejection note was that the respondent refused to approve the transfer documents in order for the transfer of the particular property to be registered in the Deeds Registry. This rejection of the documents was based on the Registrar of Deeds’ viewpoint that the underlying deed of sale was null and void due to the provisions of the Free State Townships Ordinance 9 of 1969.

Mr Rossouw responded as follows to the rejection note prior to lodging this application:

“RCR 45/2012 provides as follows where the purchase date of a first transfer (is) before the proclamation date of the township:

The question posed was:

‘In terms of the various Provincial Ordinances land in a township cannot be sold, exchanged, leased or disposed of in any manner before the proclamation date. Can the owner based on the Huntrex 148 (Pty) Ltd v J A van Jaarsveld, case 217/2010 sell property before the townships is proclamated (sic)?’”

The Conference resolved:

“The Ordinances must be adhered to alternatively a court order is required.”

Notwithstanding Mr Rossouw’s detailed written and oral presentations to the Registrar of Deeds and other officials with reference to most of the authorities referred to herein, whilst pointing out important differences in the wording between the Free State and Transvaal (now Gauteng) Ordinances, the Registrar of Deeds was not prepared to accept the legal position as advanced by him.

The transferor in respect of the particular transaction, Basfour 2994 (Pty) Ltd, a land developer and township establisher, decided to lodge an application to obtain a court order as advised by the Registrar of Deeds.

According to the undisputed evidence of Mr Rossouw it was the practice in the Free State Province over many years until the end of December 2013 to allow township developers to enter into contracts with proposed purchasers of erven in a township to be established, subject to a suspensive condition that they shall not come into being until such time as the MEC shall have declared the township as an approved township and satisfied himself that the services and amenities, which have to be provided in connection with the relevant land in terms of the conditions subject to which the establishment of the said township, was approved, are available and shall have issued a certificate to that effect.

Applicant, the owner of immovable property just outside Bloemfontein applied in 2011 for permission to establish a township. Initially and particularly in respect of this land the Registrar of Deeds was prepared to register deeds of transfer in respect of the erven sold subject to the aforesaid suspensive conditions. Approximately ten such erven had been transferred prior to the event on 10 January 2014 when one deed of transfer pertaining to an erf in the township was rejected as mentioned supra.

Prior to the establishment of the township, applicant entered into several contracts with interested purchasers of erven within the township to be established. In all these contracts the sales and thus the rights and obligations of the parties thereto were made subject to certain suspensive conditions which made it clear that the sale shall not come into being until such time as (i) the MEC shall have declared the township in which the property is situated as an approved township and (ii) the MEC shall have satisfied himself that the services and amenities which have to be provided in connection with the relevant land are available and shall have issued a certificate to that effect.

HISTORY OF EVENTS RELATING TO SECTIONS 8(5) READ WITH SECTION 8(7) OF THE FREE STATE TOWNSHIPS ORDINANCE (“THE ORDINANCE”)
It was emphasized that as a result of the decision of the then Appeal Court in Soja (Pty) Ltd v Tuckers Land & Development Corporation (Pty) Ltd 1981 (3) SA 314 (A), section 57A(1) of Ordinance 25 of 1965 (T) that because no reference was made to suspensive conditions, an amendment was effected by section 3 of Ordinance 19 of 1982 (T) to provide that “a contract” for purposes of section 57A(1) of Ordinance 25 of 1965 (T), includes any contract subject to any condition including a suspensive condition.

The English version of sections 8(5) and 8(7) read as follows:

“8. (5) After an owner of land has taken steps to establish a township thereon, no person shall –

(a) enter into any contract whereby any land in such township is sold, exchanged, leased or disposed of in any other manner;

(b) erect a building on such land,

except with the approval of the responsible member or otherwise than in accordance with the conditions imposed by the responsible member when granting such approval, until –

(i) ……..; or

(ii) ……...;

(iii) ……...; or

(iv) the responsible member shall have declared the township an approved township and, in the case of such an owner who is not a local authority, the responsible member shall have satisfied himself that the services and amenities which have to be provided in connection with such land in terms of the conditions subject to which the establishment of such township was approved, are available and shall have issued a certificate to that effect.

(6) …..

(7) Any contract entered into in conflict with the provisions of subsection (5) shall be of no force or effect.”

Because section 8(5) of the Free State Ordinance 9 of 1969 has not been amended notwithstanding Soja and several judgments thereafter accordingly the only reasonable conclusion to be drawn from this is that the Free State legislature is satisfied with the state of affairs mentioned supra by Mr Rossouw in his undisputed evidence.

Turning to case law, authority has been established that a contract of sale subject to a condition precedent that has not been fulfilled is not a sale as borne out by the often quoted judgment of Corondimas v Badat 1946 AD 548 where Watermeyer CJ expressed himself as follows at 551:

“Such an agreement is clearly subject to a true suspensive condition. It is an agreement to buy and sell if the Minister grants a permit to the parties to enter into it. According to the decision of this Court in the case of Provident Land Trust v Union Government (1911, AD 615), when a contract of sale is subject to a true suspensive condition, there exists no contract of sale unless and until the condition is fulfilled. In other words, the prohibited contract (e.g., a contract of sale), which is declared null and void by sec 5(2) of the Act unless the Minister consents to it, cannot come into existence unless and until that condition is fulfilled. Until that moment, in the case of a sale subject to a true suspensive condition, such as this is, it is entirely uncertain whether or not a contract of sale will come into existence at some future time. Until that moment there is certainly a legal relationship, contractual may be… existing between the parties, which may ripen into a contract of sale, but, in the particular case in which the coming into existence of a contract of sale is made, by agreement between the parties, to depend upon consent to it having been given by the Minister, that relationship is not one which is forbidden by the Act or declared by it to be of no force and effect.”

While in Tuckers Land and Development Corporation v Strydom 1984 (1) SA 1 (A) the court found that the sale of erven in a township yet to be proclaimed in terms of Ordinance 25 of 1965 (T) subject to a suspensive condition that the township be duly proclaimed was not hit by the prohibition in s 57A(1) of the Ordinance. The court found that the agreement in casu became a valid sale on fulfilment of the suspensive condition and that the amendment of Ordinance 25 of 1965, referred to supra, did not apply to contracts entered into before the amendment on 13 October 1982.

In Huntrex 145 (Pty) Ltd v Van Jaarsveld and Another, Case No 217/2010, Free State, a judgment delivered on 1 July 2010. Rampai J considered several of the authorities mentioned herein and based on these authorities, rejected a submission that a contract subject to a suspensive condition was in casu invalid and held it to be good in law. In that case the deed of sale was also subject to a similar suspensive condition which had eventually been fulfilled. This judgment led to the discussion and eventual decision reflected in RCR45/2012.

In 1981, probably in reaction to the Soja judgment, the legislature amended the definition of “sale” in the Subdivision of Land Act 70 of 1970 to include a sale subject to a suspensive condition. The legislature also extended the definition of “alienate” in the Alienation of Land Act 68 of 1981 to read as follows:

“’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…”

Prior to the amendment of Act 70 of 1970 our courts accepted the validity of sales subject to a suspensive condition that ministerial consent be given for the subdivision of the land which was the subject of the sale.

Through the decades and notwithstanding the amendment of the Transvaal Ordinance 25 of 1965, the Subdivision of Land Act 70 of 1970 and the introduction of the Alienation of Land Act 68 of 1981 in 1981, as well as the authorities referred to above, the Free State Provincial legislature has refrained from amending the Free State Townships Ordinance 9 of 1969 to be in line with any of the aforesaid legislation.

CONCLUSION
Daffue, J endorsed the judgment of Rampai J in Huntrex 148. Insofar as respondent and her advisors are of the view that the judgment in Huntrex 148 does not have to be followed. He found that the Free State Townships Ordinance 9 of 1969 must be interpreted as the Appeal Court did in respect of the Transvaal Ordinance 25 of 1965 and the Subdivision of Land Act 70 of 1970 prior to their amendments. He found further that the resolution adopted at the Registrar’s conference of 2012, RCR 45/2012, is based on an erroneous understanding of the legal position, is wrong and cannot be endorsed. It has clearly been shown that the Free State and Transvaal Ordinances differ comprehensively, in that the Transvaal Ordinance was amended since the judgment of Soja, but that the Free State Provincial legislature failed to do likewise. Therefore the legal position pertaining to the Free State Townships Ordinance 9 of 1969 is exactly as set out in Soja and Strydom supra in which judgments it was found that a contract pertaining to the sale of land in a township to be established, subject to a suspensive condition similar to the one in casu, is valid. Therefore the respondent may not refuse to register deeds of transfer based on underlying deeds of sale subject to suspensive conditions as in casu, once these conditions have been fulfilled.

Full Judgment

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