Quinella Trading (Pty) Ltd and Others v Minister of Rural Development and Land Reform and Others (LCC 03/2010) [2010] ZALCC 14; 2010 (4) SA 308 (LCC) ; [2010] 4 All SA 331 (LCC) (18 May 2010)

IN THE LAND CLAIMS COURT OF SOUTH AFRICA

Held at DURBAN on 01 APRIL2010 CASE NO: LCC 03/2010

before MEER J

In the matter between:

QUINELLA TRADING (PTY)LTD FIRST APPLICANT

CHRISTOFFEL RUDOLPH DELPORT SECOND APPLICANT

P.M.PRICE (SA) (PTY) LTD THIRD APPLICANT

and

THE MINISTER OF RURAL DEVELOPMENT

AND LAND REFORM FIRST RESPONDENT

THE REGIONAL LAND CLAIMS COMMISSIONER,

KWAZULU-NATAL SECOND RESPONDENT

THE CHIEF LAND CLAIMS COMMISSIONER THIRD RESPONDENT

SAMSON MTHEMBISENI MBOKOZI N.O. FOURTH RESPONDENT

__________________________________________________________________________

JUDGMENT

Introduction

Meer J:

[1] Applicants seek an order declaring certain offers made by Second Respondent dated 5 September 2007 for the purchase of their immovable property and the acceptance thereof, to be valid and binding agreements in compliance with the provisions of Section 2 (1) of the Alienation of Land Act No 68 of 1981 (“the Alienation of Land Act”). They seek in addition an order that the First to Third Respondents sign all necessary documents and take all steps necessary to effect transfer of the immovable properties within ten days of being ordered to do so.

[2] Respondents oppose the application firstly, on the basis that no contract of purchase and sale was concluded, since, on their version, no written deed of alienation was signed by the parties, and secondly on the basis of impossibility of performance on their part, due to lack of funds. Respondents contend also that no funds were appropriated for the purchase of the properties and the orders sought would be contrary to Sections 38 and 86 of the Public Finance Management Act No 1 of 1999.

Background Facts

[3] On 9 August 1998 the Fourth Respondent lodged a claim for Restitution of Rights in land in respect of the following properties:

3.1 Portion 5 of the farm Grootdraai No 707, Registration Division HU, Province of Kwa Zulu –Natal, held by Deed of Transfer T00632/03; Portion 6 (of 1) of the farm Grootdraai No 707 Registration Division HU, Province of Kwa Zulu –Natal, held by Deed of Transfer T00632/03 and Portion 3 (of 1) of the farm Rondekop No 752, Registration division HU, Province of Kwa Zulu –Natal, held by Deed of Transfer T00633/03. All of these properties are owned by First Applicant;

3.2 Portion 2 of the farm Rondekop No 752, Registration division HU, Province of KwaZulu-Natal, in extent 96,1612 hectares, held by Deed of Transfer T14143/93, owned by the Second Applicant;

3.3 Remainder of the farm Rondekop No 752, Registration division HU, Province of Kwa - Zulu Natal, in extent 1136,3750 hectares, held by Deed of Transfer T12075/92 and Remainder of Portion 1 of the farm Rondekop No 752, Registration Division HU, Province of KwaZulu-Natal, in extent 1128,1910 hectares, held by Deed of Transfer T25178/84, both of which properties are owned by Third Applicant.

[4] The Second Respondent verified the land claim lodged in repect of Applicants’ properties, concluded it met the criteria required by Section 11 (1) of the Restitution of Land Rights Act No 22 of 1994, (‘the Act’), and that dispossession of rights in land had occurred as contemplated in the Act. Thereafter Second Respondent set about negotiating the purchase of the properties from Applicants in settlement of the land claim and for the restoration thereof to Fourth Respondent. Towards that end on 5 September 2007 the Second Respondent made written offers to each of the Applicants for the purchase of their properties. This was done under powers delegated in terms of Section 42 D (3) of the Act to Second Respondent by First Respondent on 28 September 2006. In terms of the delegation Second Respondent was authorised to enter into agreements in terms of Section 42 D (1)1 of the Act to purchase property for an award in land. The offer in respect of the First Applicant’s immovable property was for an amount of R2,755,800.00, the Second Applicant’s property for an amount of R4,548,950.00 and the Third Applicant’s property for R11,198,530.00. On 10 September 2007 each of the Applicants accepted the offers in writing.

[5] Thereafter there was no real movement from the offices of the state attorney, Respondents’ legal representative, for the purchase of the properties and Applicants’ attorneys entered into a series of communications with Second Respondent during the months which followed in order to pursue and expedite the purchase of the properties. On 9 June 2008 a letter was received by Applicants’ attorneys from the Second Respondent stating that sale agreements should be drafted once the First Respondent had approved the purchase agreements in terms of Section 42 D of the Act. Applicants were thereafter furnished with a copy of Second Respondent’s memorandum to the First Respondent for this purpose. The memorandum dated 30 June 2008 records the Second Respondent’s

recommendation and approval of a settlement award of R21 352 010.00, (being the purchase price offered for all the properties plus a restitution grant), and the signing of property transfer documents for lodgement with the deeds office. It is apparent from the

memorandum that the properties had been valued and on the basis thereof the Director : Quality Assurance had recommended approval of the claim in the amount of R21,352,010.00.

[6] There followed a plethora of correspondence and telephone communications between Applicants’ attorneys and the office of the Second Respondent concerning the progress of the matter. These dealt inter alia with draft deeds of sale drafted and furnished by Applicants’ attorneys at Second Respondent’s request and the registration of a community property association or trust to be formed, into which the properties would be transferred. In October 2008 Applicants were informed that First Respondent’s approval in terms of Section 42D of the Act had been obtained, and that the draft deeds of sale could be signed. For the next year the Applicants pursued the offices of the Second Respondent relentlessly in an attempt to finalise the deeds of sale but to no avail. Several meetings were held at which Applicants’ extreme dissatisfaction at the lack of progress was expressed, and threats made to withdraw from negotiations. In May 2009 Applicants were again informed that approval in terms of Section 42 D had been granted by First Respondent and the deeds of sale would be signed. However a meeting arranged for that purpose on 4 June 2009 was cancelled by the office of Second Respondent. Correspondence to and fro continued in the ensuing months, Applicants attempting to finalise the deeds of sale all the while, until 3 November 2009. On that date Applicants were informed for the first time, in a letter from the offices of Second Respondent, that the “Department has no funds” to purchase Applicants’ immovable properties and that funds would only be available in the next financial year. The letter once again confirmed that Section 42 D approval had been granted.

[7] The First Applicant had in the meantime been placed under severe pressure by a creditor, Impala Water Users’ Association to settle certain arrear water use charges. It became urgent to submit confirmation to the creditor that the transaction with Second Respondent was being finalised. A letter for that purpose was obtained from the offices of Second Respondent and despatched. The First Applicant contends that farming activities which require planning for the future cannot indefinitely be conducted under the current circumstances and if the matter is not finalised immediately the harm suffered would be immeasurable. The other Applicants too contend they are being disadvantaged financially and inconvenienced by the delay in finalising the agreements.

[8] Against this background I turn to consider the main issues, namely, whether valid and binding agreements were concluded and whether the Respondents are excused from performance on the grounds of impossibility of performance due to lack of funds.

Were valid and binding agreements concluded?

[9] Mr Choudhree for Respondents argued that no contracts of purchase and sale were concluded between the parties in respect of the immovable properties, since no written deed of alienation was signed by the parties or their agents. This is so because subsequent to the offers and acceptances, the deeds of sale prepared by Applicants’ attorneys, were not signed, and Section 2 (1) of the Alienation of Land Act , was thus not complied with.

[10] Mr Roberts for Applicants contended that the offers and acceptances of September 2007 constituted valid and binding agreements in compliance with Section 2 (1) of the Alienation of Land Act, as the essential terms of the sale, namely,the identities of purchaser and seller, the properties and the purchase price were recorded therein. For the absence of signatures to the deeds of sale to be fatal to the validity of the prior agreements between the parties as per the offers and acceptances, he argued, it would have to be shown that the parties agreed that there were further terms contained in the draft deeds of sale which were to be included as material terms of the agreements concluded in September 2007. The evidence does not bear this out. Moreover, so his argument continued, the latter agreements are not contracts where ex facie the writing a material term has been left inchoate and as such have no force or effect.

[11 ] I agree that the terms in the deeds of sale bar those incorporated from the offers and acceptances of September 2007 were hardly material. They flowed from the latter agreements and contained mechanisms for the transfer of ownership, these being inter alia payment of the purchase price, occupation, conveyancing and mora interest. Although the draft deeds of sale were discussed at a

meeting on 10 February 2009, there was no agreement that the terms thereof would be included as material terms to the September 2007 agreements, nor do Respondents contend as much. Respondents have elevated the terms of the deeds of sale drafted by Applicants’

attorney to a status which such documents simply did not enjoy.

[12] In considering whether the September 2007 agreements are valid and binding in compliance with the Alienation of Land Act, I take note that ex facie the offers to purchase it is not indicated that Second Respondent offers to purchase under powers delegated by First Respondent. In the recent decision of Mills v Hoosen 2010 (2) SA 316 WLD an omission by an agent signing an agreement, to indicate he was signing as agent of the seller was found to be contrary to Section 2 (1) of the Alienation of Land Act, as an essential term of the sale, the identity of the seller did not appear ex facie the deed of sale. Since evidence to establish the true seller was inadmissible the deed of sale was held to be invalid. See Paragraph 13. As Counsel had not addressed me on this aspect, which occurred to me during the preparation of this judgment, I invited them to make written submissions, which they did.

[13] Mr Choudree submitted that Second Respondent’s failure to indicate that he was signing the offers as a delegate of the First Respondent rendered the agreements invalid. He further contended that another basis for invalidity of the 2007 agreements was their failure to embody the right of the purchaser to revoke the offer or terminate the deed of alienation in terms of Section 29A of the Alienation of Land Act, as specified at Section 2 (2A) of that Act. As in terms of Section 29 A (1) read with Section 29 A (5), the right to revoke does not apply if the price offered exceeds R250 0002, (which is the case in respect of the offers, which were all in excess of R250 000), Section 29 (A) is not applicable. Mr Roberts submitted that the Second Respondent signed the offers not as agent of the First Respondent but as his substitute. The statutory power conferred upon the First Respondent, he argued was delegated to the Second Respondent who substituted the Minister as a competent organ or functionary in entering into an agreement of sale in her own name by virtue of the Act, thereby binding the state. The fact that this is not apparent from the offers to purchase of September 2007, he submitted, does not affect the validity of the agreements as contemplated in Section 2 (1) of the Alienation of Land Act, because Second Respondent acted entirely in her own name by virtue of her delegated powers. There is merit in this view.

[14] Section 42 D (3) provides for the statutory delegation of the powers conferred upon the First Respondent . The section states:

‘ The Minister may delegate any power conferred upon him or her by Section (1) or Section 42C to the Director –General of Land Affairs or any other officer of the State or to a Regional Land Claims Commissioner’

This is the delegation of a public statutory power. It is the type of delegation identified by Professor Wiechers as decentralisation. See Wiechers M Administrative Law, Butterworths 1985 at page 54. According to Wiechers decentralisation occurs where powers and functions are transferred to an independent body or organ, which carries out these powers and functions entirely in its own name, the delegate becoming fully responsible for the exercise of the power3.

[15] I accept that the delegation of the statutory power by the Minister, the First Respondent to the Regioanl Land Claims Commissioner, the Second Respondent in terms of Section 42D (3) of the Act constituted a decentralisation and a substitution of the Minister by his delegate, the Regional Land Claims Commissioner. The latter, empowered by the authority conferred upon her, acted in her own capacity to bind the State in making the offers to Applicants in September 2007. I am of the view that in providing for statutory delegation of this nature the legislature must have recognized it would be impractical for the Minister to be involved in each and every agreement as contemplated at Section 42 D.

[16] It must be noted that statutory delegation is distinguishable from contractual agency which the judgment in Mills was concerned with. The peremptory provisions of Section 2 (1) of the Alienation of Land Act is therefore not contravened in the instant case in that the Second Respondent in signing the agreements did not act as the First

Respondent’s agent, but as a functionary of the State who had statutory authority conferred upon her through delegation by the Minister to bind the State in her own name. It is also noted that Section 2 (1) of the Alienation of Land Act specifically provides for signature of agents acting on written authority because non disclosure would require extrinsic evidence to establish the identities of the true parties to the agreement, which would be inadmissable under the parol evidence rule.

[17] Having regard to the aforesaid I find that the offers and acceptances of September 2007 are valid and binding agreements in compliance with Section 2 (1) of the Alienation of Land Act No 68 of 1981.

[18] I pause here to emphasise, especially in view of the number of agreements to purchase land by Regional Land Claims Commissioners which this Court has of late been required to adjudicate upon, that in the absence of delegated authority to purchase under Section 42 D (3) of the Act, or approval of agreements by the Minister under Section 42 D (1) thereof, such agreements by Regional Land Claims Commissioners are not in accordance with Section 42 D, and do not lend themselves to settlement of land claims under Section 42. The powers of the Commission as set out at Section 6 of the Act do not include the power to enter into agreements for the purchase of land. This power, in terms of Section 42 E of the Act is the preserve of the Minister alone. As it is the state which effects restitution, so too it is the state through the Minister which purchases land for this purpose. The Commission being an organ of state does not have this authority. Any agreement of sale negotiated by the offices of the Commission or a Regional Land Claims Commissioner in settlement of a land claim is therefore not binding unless done so under delegated powers as in this case, or is entered into by the Minister under Section 42D of the Act.

Legitimate Expectation

[19] During the preparation of this judgment I invited Counsel to make written submissions also on the question whether Applicants had a legitimate expectation that Respondents would abide by the 2007 agreements, an aspect which was not raised before me at the hearing.

[20] Mr Choudree submitted that no conduct on the part of Respondents could induce an expectation that First Respondent would conclude contracts of purchase and sale where performance in terms of such contracts on the part of First Respondent would be impossible. The Respondents, he submitted never at any stage created an expectation that the funds for the purchase of the properties were available. Mr Roberts argued it was patently clear that a legitimate expectation by the Applicants that the sale of their properties would be given effect to, was created by the conduct of the Respondents.

[21] In Administrator, Transvaal, and Others v Traub and Others [1989] ZASCA 90; 1989 (4) SA 731(A) Corbett CJ said that a legitimate expectation must have a reasonable basis and in considering what conduct would give rise to a legitimate expectation, he quoted from the English case Council of Civil Service Unions and Others v Minister for the Civil Service [1985] AC 374 (HL) as follows4 :

“..but even where a person claiming some benefit or privilege has no legal right to it, as a matter of private law, he may have a legitimate expectation of receiving the benefit or privilege, and , if so, the Courts will protect his expectation by judicial review as a matter of public law… Legitimate, or reasonable , expectation may arise either from an express promise given on behalf of a public authority or from the existence of a regular practice which the claimant can reasonably expect to continue.”

[ 22 ] It has been held that for an expectation to be valid it must be a legitimate one in an objective sense. The question is not whether an expectation exists in the mind of the litigant but whether, viewed objectively, such expectation is in a legal sense legitimate. See President of the Republic of South Africa v South African Rugby Football Union 2000 (1) SA 1 CC paragraph 216 It has also been held that for an expectation to be legitimate it must be a reasonable expectation that was induced by the decision maker based on a clear, unambiguous representation which it was competent and lawful for the decision maker to make. See National Director of Public Prosecutions v Phillips and Others 2002 (4) SA 60 (W) paragraph 28; South African Veterinary Council v Szymanski 2003 (4) SA 42 (SCA) paragraph 20; Minister of Environmental Affairs and Tourism v Phambili Fisheries (Pty) Ltd 2003 (6) SA 407 (SCA) paragraph 65.

[23] From 5 September 2007 when the offers to purchase were made through to 30 June 2008, the date of Second Respondent’s memorandum approving the settlement and recommending the purchase of the properties at the agreed price, the notifications thereafter to Applicants of the approval of the agreements by First Respondent, through to the subsequent request for deeds of sale to be drafted by Applicants, right until 3 November 2009 and the arranging of a meeting for the signing of the deeds of sale, Respondents through their conduct caused Applicants to have a legitimate expectation that the state would purchase Applicant’s properties and indeed sign the deeds of sale. On the basis thereof First Applicant at least incurred financial commitments. Subjectively Applicants entertained their expectation which was reasonable, based on objective facts, namely the expressed undertaking on the part of First and Second Respondents that the agreements would be honoured5. Hoexter6 refers to “a substantive expectation, that is an expectation that a favourable decision will be made” as opposed to a procedural expectation of a hearing or other procedure before an unfavourable decision is made. Applicants’ legitimate

expectation was substantive.

[24] In Traub supra it was accepted that the doctrine of legitimate expectation was one aspect of the duty to act fairly7. A public official such as the Second Respondent and a Minister of State as is the First Respondent have a duty to act fairly and such duty creates a legitimate expectation on the part of citizens with whom they contract that they will honour their obligations. The First and Second Respondents fell foul of their duty, did not fulfill the legitimate expectation and are bound to fulfil their obligations under the 2007 agreement unless their defence of impossibility of performance succeeds.

Are Respondents excused from performance under the contracts on the grounds of impossibility of performance due to lack of funds?

[25] It is apparent from Respondents’ opposing papers that their case is based on a lack of funding in Respondents’ restitution programme budget for the 2009 financial year. However the 2009/2010 adjusted budget summary annexed to the answering affidavit of Mr Maake, a senior legal administrative officer in the employ of Second Respondent, does not reflect a shortage of funds. This is undisputed by Respondents. This budget also has no bearing on the 2007 financial year, when the agreements were concluded, or on the date when the Second Respondent signed the favourable recommendations, 30 June 2008. Mr Robert’s contention that the expenditure for 2008/2009 and preliminary expenditure for 2009/2010, (annexed to the affidavit of Maake ) reflects as at September 2009 a sum of R400,000,000.00 or 19 % available in the national restitution budget, was uncontested. Maake makes the unsubstantiated statement that this amount, if used to settle land claims would ‘cause the entire system to collapse’. It was also conceded on behalf of Respondents that the documents attached to the affidavit of Maake revealed that only 47.9% of the entire budget for 2008/2009 of R6,391,091,000.00 had been spent. The averment that Respondents’ resources are depleted consequently wears thin in the light of the above.

[26] Applicants contend that in any event had shortages arisen, virement could have taken place in particular, from the land reform programme. From the financial statements, it appears this indeed could have occurred. It is so also that precise figures pertaining to amounts allocated to Kwa –Zulu Natal for restitution and the amounts actually paid in respect of such claims are not provided, information which one would expect in the circumstances for the period in question.

[27] Applicants emphasise that what does appear from the national allocation, is that monies are being distributed to Provincial Departments and as such in the 2007/2008 year Kwa- Zulu Natal received at least 25 % of the Land Claims Commission’s budget which could have been used to pay Applicants. It is undisputed that the Respondents had the required funding when the agreements were concluded and would have been in a position to finalise the transactions had they reacted timeously to the queries from Applicants’ attorneys. A crucial time for performance under a contract is at the time when the contract is concluded. Van Rensburg: The Practitioners Guide to the Alienation of Land Act at p 38 summarises the legal position as follows:

“Every performance which each party undertakes to render must be objectively possible at the time when the contract is entered into”

Respondents have failed to show that at the time of offer and acceptance performance was objectively not possible. Respondents have similarly failed to show that at present they are unable to perform due to lack of funds.

[28] One must assume that Respondents utilised during the 2007/2008 financial year, the funding which was earmarked for the agreements to purchase Applicants’ properties, thereby creating any alleged impossibility themselves. Self created impossibility does not discharge the obligations of the Respondents under the contracts. See Wireohms (Pty ) Ltd v Greenblatt 1959 (3) SA 909 (C ) at 912 A-B; National Union of Textile Workers v Jaguar Shoes (Pty) Ltd 1987 (1) SA 39 (N) at 46 A; The Record Box v Santam Insurance Co Ltd 1984 (3) SA 735 (W ) at 747 C-H

[29] In Unibank Savings and Loans v Absa Bank 2000 (4) SA 191 (W) at 198 D, Flemming DJP

stated :

“Impossibility is furthermore not implicit in a change of financial strength or in commercial circumstances which cause compliance with the contractual obligations to be difficult, expensive or unaffordable. Deteriorations of that nature are foreseeable in the business world at the time when the contract is concluded.”

Respondents accordingly cannot rely on a defence that its resources are depleted as, if such is the case, it ought to have been foreseen.

[30] In Bischofberger v Vaneyk 1981 (2) SA 607 (W) at 611B-D Boshoff JP said :

“…when the Court has to decide on the effect of impossibility of performance on a contract, the Court should first have regard to the general rule that impossibility of performance does in general excuse the performance of a contract, but does not do so in all cases, and must then look to the nature of the contract, the relation of the parties, the circumstances of the case and the nature of the impossibility to see whether the general rule ought, in the particular circumstances of the case, to be applied. In this connection regard must be had not only to the nature of the contract, but also to the causes of the impossibility. If the causes were in contemplation of the parties they are generally speaking bound by the contract. If on the contrary they were such as no human foresight could have forseen, the obligations under the contract are extinguished.”

The causes of impossibility relied upon by Respondent, certainly are not such as no human foresight could have forseen. Nor does the nature of the contract, the relation of the parties and the circumstances, suggest that performance under the contract should be excused. The situation was brought about by the fault of Respondents given that as far back as 2007 the office of Second Respondent committed itself to an unconditional purchase and sale agreements for amounts that had been ascertained by a valuer. If Respondents thereafter neglected to channel the available funds for performance in terms of the agreement, such neglect must preclude the Respondents from claiming a supervening impossibility and their defence as such cannot succeed.

Respondents’ reliance on Section 38 (2) of the Public Finance Management Act , No 1 of 1999

[31] Section 38 (2) of the aforementioned Act provides:

“An accounting officer may not commit a department, trading entity or constitutional institution to any liability for which money has not been appropriated”

I do not accept Respondents’ contention that moneys not appropriated for the purchase agreements, were committed, as there is no evidence that when the contracts were concluded or approved, funds had not been appropriated to give effect thereto. Moreover, the department was not committed financially by an accounting officer, but by the responsible Minister, no less. The fact that Respondents caused the properties to be valued before the offers were made, that the offers were approved by Second Respondent, her director for quality assurance and ultimately the First Respondent, suggests that funds must have been available therefor. It is safe to assume that a Minister does not commit a Department financially without first verifying that funds are available. In fact one must assume funds were available when Second and then First Respondent approved the agreements, for if they were not, it would have to be concluded that these high ranking state officials acted in a reckless and dilatory manner, a scenario which does not bear contemplation.

[32] In the light of my findings, the Applicants, I believe, are entitled to an order directing Respondents to sign the necessary documents to effect transfer of the immovable properties to first Respondent.

Costs

[33] Applicants seek costs against Respondents on an attorney and own client scale. The conduct of Respondents, they contend was reckless, slack and lackadaisical. There is some disagreement between various Courts as to whether a distinction between attorney and own client costs as opposed to attorney and client costs exists or has legal basis. The points of departure and the reasons therefor have been comprehensively analysed by Stegmann J in Aircraft Completions Centre (Pty)Ltd v Rossouw and Others 2004 (1) SA 123(W)8. I am inclined to agree with the reasoning of Stegman J, based on the well known 1946 Appellate Division case of Nel v Waterberg Landbouwers Ko-operative Vereeniging 1946 AD 597 that an award of attorney and own client costs does not as a matter of law achieve anything more than an award of costs on the scale as between attorney and client, and his refutation that taxation on the attorney client scale, (dubbed in Nel as an intermediate9 scale), gives little more than taxation as between party and party. Stegman J’s hypothesis as summarised at 183 H – 187 D is that the law as authoritatively stated in Nel10, recognises that any client (such as costs creditor claiming costs from his costs debtor) may become bound to pay his own attorney

certain costs that cannot justly, and therefore cannot lawfully, be recovered from a costs debtor in any circumstances.

[34] Respondents have in my view conducted this case in a manner deserving of censure by means of a special order for costs to be taxed as between attorney and client. Respondents’ disregard for their financial obligations under the contracts, their attempts to escape same by disputing the validity of the agreements and their resort to spurious and unsubstantiated allegations of lack of funds, can be characterised as vexatious, reckless and reprehensible, and deserving of censure. The high ranking statutory approval of the agreements in terms of Section 42 D of the Act as aforementioned created expectations which were thwarted by unacceptable dilatoriness on the part of Respondents. Conduct of this ilk on the part of state officials flies 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.

[35] The state’s liability to pay costs enjoyed the attention of the Constitutional Court in some recent decisions. In Biowatch Trust v Registrar Genetic Resources and Others 2009 (6) SA 232 (CC) Sachs J held that in litigation between the state and private parties seeking to assert a constitutional right,the state should ordinarily pay the costs if it loses. Sachs J emphasised at 247B-C that –

“ …particularly powerful reasons must exist for a court not to award costs against the State in favour of a private litigant who achieves substantial success in proceedings brought against it.”

Litigation concerning the constitutional right to restitution of rights in land is in the genre of constitutional litigation. See the unpublished judgement of Gildenhuys J in Midland North Research Group and Others and Kusile Land Claims Committee and Others LCC 21/2007 paragraphs 16 to 22.

[36] Nyathi v MEC for Department of Health, Gauteng and Another 2008 (5) SA 94 (CC) reconfirmed the constitutional principles regarding the duty of government in respect of public administration. The same principles are applicable to the state’s duty to comply with its contractual and statutory obligations. In Van der Merwe & Another v Taylor N.O. & Others 2008 (1) SA 1 (CC) at 27 it was acknowledged that the constitutional principles are basic values for achieving a public service envisaged by the Constitution, which required the state to lead by example. As in that case the state has failed to lead in the present case. In the earlier case of Mohamed and Another v President of the RSA & Others [2001] ZACC 18; 2001 (3) SA 893 (CC) at [68] the Court endorsed the celebrated words of Justice Brandeis in Olmstead et al v United States11:

“In a government of laws, existence of the government will be imperilled if it fails to observe the law scrupulously….. Government is the potent, omnipresent teacher. For good or for ill, it teaches the whole people by its example…..If the government becomes a lawbreaker, it breeds contempt for the law, it invites every man to become a law unto himself; it invites anarchy,”

It should not be necessary to force the State through a court order to comply with its contractual obligations and an Applicant who is forced to seek such an order should not be out of pocket. I am satisfied that Respondents’ conduct attracts the punitive cost order sought.

Interest

[37] Applicants seek interest on the purchase price under the contracts as of September 2007. Respondents challenge this on the basis that Applicants have had the use and enjoyment of the properties. The payment of interest in a contract for the purchase of immovable property was considered in Applebee v Berkovitch 1951 (3) SA 236 (C ) at 240A to 246. The following principles which resonate in the instant case were formulated:

the delivery of the subject matter of the sale by the seller to the purchaser renders the purchase price, in the absence of special agreement, due and payable. Interest is payable when the purchase price is payable. Interest is due either by agreement or in consequence of default of payment. If the subject matter is transferred from seller to buyer and the buyer is in possession thereof, the purchase price is payable. As the buyer is enjoying the fruits of the subject matter, the seller is entitled to interest. The liability to pay interest is founded upon the fact that the purchaser is enjoying the fruits and at the same time is keeping the seller out of the enjoyment of something then due and payable, namely the purchase price12. On the other hand the seller, until he has given transfer of the property might still be enjoying an advantage by reason of the

continued registration in his name of the sold property, if for example the title deeds of the property had been pledged by him in order to obtain credit.13

[38] In the instant case there was no special agreement between the parties as to when the purchase price would be due and payable. Payment of the purchase price would thus have been due and payable on transfer. As transfer has not occurred and as Applicants continue to have the use of the properties albeit under circumstances which are not ideal to them, they are in my view not entitled to interest.

[39] I grant the following order:

1. The offers made by the Second Respondent dated 5 September 2007 to the First, Second and third applicants and the acceptances thereof are valid and binding agreements in compliance with the provisions of the Alienation of Land Act No 68 of 1981

2. The First, Second and Third Respondents are ordered and directed to sign all necessary documents and take all steps necessary to effect transfer of the immovable properties referred to hereunder to the State within a period of 10 (TEN) days of this order:

(a) Portion 5 of the farm Grootdraai No 707, Registration Division HU, Province of Kwa Zulu –Natal, held by Deed of Transfer T00632/03, Portion 6 (of 1)of the farm Grootdraai No 707, Registration Division HU, Province of Kwa Zulu –Natal, held by Deed of Transfer T00632/03 and Portion 3 (of 1) of the farm Rondekop No 752, Registration division HU, Province of Kwa Zulu –Natal, held by Deed of Transfer T00633/03 with the Frist Applicant;

(b) Portion 2 of the farm Rondekop No 752, Registration division HU, Province of KwaZulu-Natal, in extent 96,1612 hectares, held by Deed of Transfer T14143/93 with the Second Applicant;

(c) Remainder of the farm Rondekop No 752, Registration division HU, Province of Kwa - Zulu Natal, in extent 1136,3750 hectares, held by Deed of Transfer T12075/92 and Remainder of Portion 1 of the farm Rondekop No 752, Registration Division HU, Province of KwaZulu-Natal, in extent 1128,1910 hectares, held by Deed of Transfer T25178/84 with the Third Applicant.

3. The First, Second and Third Respondents shall pay the First, Second and Third Applicants’ costs on the scale as between attorney and client, such to include the costs of two Counsel and to include the costs in respect of the drafting of the application papers and the heads of Argument.

__________________

JUDGE Y.S.MEER

Heard on: 01/04/2010 Handed Down on: 18/05/2010

For Applicant: Advocate M.G. Roberts SC and Advocate Hattingh instructed by Weich & Kriel Incorporated, Pongola

For Respondents: Advocate R.B.G. Choudree SC and Advocate C.M Nqala instructed by Mrs. S. Naidoo,Deputy State Attorney KwaZulu Natal

1 Section 42 D (1) (a) provides: “Powers of Minister in case of certain agreements, - (1) If the Minister is satisfied that a claimant is entitled to restitution of a right in land in terms of section 2, and that the claim of such restitution was lodged not later than 31 December, 1998, he or she may enter into an agreement with the parties who are interested in the claim providing for one or more of the following: (a) the award to the claimant of land, a portion of land or any other right in land: Provided that the claimant shall not be awarded land, a portion of land or a right in land dispossessed from another claimant or the latter’s ascendant, unless –

1 Section 42 D (1) (a) provides: “Powers of Minister in case of certain agreements, - (1) If the Minister is satisfied that a claimant is entitled to restitution of a right in land in terms of section 2, and that the claim of such restitution was lodged not later than 31 December, 1998, he or she may enter into an agreement with the parties who are interested in the claim providing for one or more of the following:

(a) the award to the claimant of land, a portion of land or any other right in land: Provided that the claimant shall not be awarded land, a portion of land or a right in land dispossessed from another claimant or the latter’s ascendant, unless –

2 Section 29 (5) (a)

3 "> 3 As examples of decentralisation of activities Wiechers at 55 refers to the cases Fouche v Bessant NO and Others 1952(2) SA 294 (D) and Reddy and Another v Town Council for the Borough of Kloof and Others 1964 (3) SA 280 (D). See also New SA Freight Consolidators v National Transport Commission 1987 (4) SA 155 WLD at 167 E.

3 As examples of decentralisation of activities Wiechers at 55 refers to the cases Fouche v Bessant NO and Others 1952(2) SA 294 (D) and Reddy and Another v Town Council for the Borough of Kloof and Others 1964 (3) SA 280 (D). See also New SA Freight Consolidators v National Transport Commission 1987 (4) SA 155 WLD at 167 E.

4At 756 I. Discussed also in Premier, Mpumalanga, and another v Executive Committee, Association of State-Aided schools, Eastern Transvaal 1999 (2) SA 91 (CC) paragraphs 32 to 36

5 See SALJ 2000 , D M Pretorius page 521 “Ten Years after Traub: The Doctrine of Legitimate Expectation in South African Administrative Law”, at 524 to 527 where the requirement of both a subjective and an objective basis for the expectation is discussed. See also Hoexter ,The new Constitutional and Administrative law Volume 2, Juta 2002 at 210 refers to the English case, Council of Civil Service Unions v Minister for the Civil Service[1984] 3 All ER 935 (HL) at 943j-944a where a legitimate expectation was defined as arising ‘either from an express promise given on behalf of a public authority or from the existence of a regular practice which the claimant can reasonably expect to continue”

6 Hoexter supra p 217 to 218

7 at 755D-E

8 at paragraphs 2 to 15 and 53 to 115

9 Intermediate as regards strictness or generosity between taxation of a bill for payment of an attorney by his own client, and taxation thereof for payment of attorney and client costs by one party to another.

10 In Nel supra it was held that when an attorney and client order is made and the bill is taxed against the losing party the taxing master should apply a stricter taxation than he would when taxing a bill as between an attorney and his client. Tindall J said at 608 in relation to the taxation of attorney and client bills: and on this taxation charges in the nature of luxuries incurred with the approval of the client, who may happen to be a rich man, and may have authorized his attorney to pay exceptionally high fees to counsel, would not be allowed against the losing party. Where the attorney and client costs are to be paid by the opposite party, the taxation should be stricter than in a taxation as between attorney and client where the costs are to be paid by the client to his attorney…. We have no rule of court on the subject but it seems to me that here also when the bill is taxed against the losing party, it is essential to apply a stricter taxation to prevent injustice to the latter as the result of the award of attorney and client costs against him.”

11 Enunciated in Olmstead et al v United States [1928] USSC 133; 277 US 438 (1928) at 485

12 243 E- F

13 245 D-F