Tsantsabane Municipality v Thabula Trade & Investemnt (Pty) Ltd and Another (1114/06) [2012] ZANCHC 5; [2012] 4 All SA 219 (NCK) (18 May 2012)

33

IN THE HIGH COURT OF SOUTH AFRICA

(Northern CapeHigh Court, Kimberley)

Case No: 1114/06

Heard: 19/03/2012

Delivered: 18/05/2012

In the matter between:

TSANTSABANE MUNICIPALITY ….........................................Appellant

v

THABULA TRADE& INVESTMENT (PTY) LTD ….............1st Respondent

THE REGISTRAR OF DEEDS, KIMBERLEY ….................2nd Respondent

Coram: Kgomo JP; Olivier J et PakatiAJ

JUDGMENT: FULL COURT

KGOMO JP

The appellant, Tsantsabane Municipality, isa legal persona established in terms of the provisions of s2 of theLocal Government: Municipal Systems Act, 32 of 2000, with its administrative municipal offices situated in Postmasburg, Northern Cape. The first respondent,Thabula Trade and Investments (Pty) Ltd (Thabula Trade), is a duly registered and incorporated private company with itsprincipal place of business at No 3 Blinkklip Street, Postmasburg. The second respondent, the Registrar of Deeds, abided the decision of the court a quo and is nominally before this court and will attract no further mention, order or costs.

The appellant municipality sought an order to thefollowing effect from Mabuse AJ (as he then was) in the Northern Cape High Court:

That the two agreements between Tsantsabane Municipality and Thabula Trade and Investments (Pty) Ltd dated 09 December 2005 and 15 December 2005 (ostensibly in respect of the same immovable property) be declared null and void and of no force and effect; with the costs to follow that result. Mabuse AJ dismissed the application with costs.

This appeal serves before us with the leave of the Supreme Court of Appeal on petition. The municipality raises five grounds of appeal (marked A-E) which I will paraphrase and deal with seriatim hereinafter. The translation throughout is mine. The appeal succeeds on all five grounds raised, each of which is dispositive of the case. However, I have elected to deal with all the grounds for the benefit of the parties to ascertain where and why they went wrong or acted inappropriately. It is also important for the appellant to know who amongst its functionaries committed what malfeasance and what corrective or punitive measures, if any, to institute.

A. FIRST GROUND OF APPEAL:

That the court a quo misdirected itself in not having found that the purchase agreement which reflects the purchaser as Thabula Trade Investment (Pty) Ltd was not the same persona or entity in respect of which the municipality took a resolution to sell the property to.

[4] On 28 April 2005 the appellant’s municipal council took the following resolutions:

“54.5 PROPOSAL FOR THE DEVELOPMENT OF THE GOLF COURSE: Postmasburg: resolved:

54.5.1 that an in-principle approval is granted to sell the golf course (golfgronde) to Ms M Mokgoro and Ms S De Bruin;

54.5.2 That the Technical Officer make a determination of the expenditure required for the restoration of the golf course. This must be carried out before the purchase price is fixed.

54.5.3 That in light thereof that vandalism of the golf course escalates by the day and due to lack of supervision that, in the interim, the golf course be leased to MsMokgoro and Ms De Bruin until the purchase price has been finalized;

54.5.4 That the rental for the lease be dealt with administratively.”

[5] Pursuant to the aforegoing the two purchase agreements were purportedlyentered into ostensibly in respect of the same property.1 What is immediately apparent is the discrepancy between the identity of the individuals whothe appellant resolved to sell the property to (MsMokgoro and Ms De Bruin) and the entity the municipality contracted with (first respondent /Thabula Trade and Investment (Pty) Ltd).

[6] Mabuse AJ dealt with this incongruity in these terms in rejecting the identity contention issue (the current ground of appeal) raised on behalf of the municipality:

“15. Another burning issue which was the straw that broke the camel’s back was the identity of the purchasers. According to the applicant’s counsel, this difference in the name of the purchasers is indicative of the fact that the identity of the purchasers is in dispute. According to the original resolution, the purchasers were Ms M Mokgoro and Mrs De Bruin. These are the people to whom the property would have been leased for the purposes of preventing vandalism. According to the advertisement in the Ghaap [newspaper], the property was sold to Pure Gholf and Country Resort. According to the minutes of December 2005 the name reflected is “Pure Gholf and Country Resort”. Both agreements reflect the purchasers’ names as Thabula Trade and Investment (PTY) Ltd.

16. Clearly there is a serious dearth of detail regarding the transition of the purchasers from one name to the other. Counsel for the applicant argued that De Bruin and Mokgoro, and not Thabula Trade and Investment (Pty) Ltd, should have signed the agreement as purchasers, simply so because the resolution mentioned their individual names. On the other hand, the first respondent’s counsel argued, and I agree fully with this argument, that there was no mistaken identity with regard to the identity of the purchaser.

17. It is correct that there was no mistake whatsoever with regard to the identity of the purchasers. The applicant’s counsel’s argument regarding the purchaser(s)’ identity seems to have no factual basis. The applicant knew at all material times the identity of the people it was dealing with. This point clearly finds support in the absence of any objection by the applicant, which, in my view, should have been raised before it signed the agreement, against the name of the purchasers as it appeared in the agreements. By signing the agreements with the name appearing clearly on them was an unequivocal acknowledgement of the correctness of the purchaser’s names. In signing the agreements in that form the applicant expressed, in no uncertain terms, the names of the purchaser it was prepared to deal with. After all, the agreements were prepared by the applicant’s then legal representatives at the behest of the applicant.

18. Furthermore, it is clear that the purchasers, no matter what they chose to call themselves, were at all material times the same people who were named in the initial resolution. The applicant had no control over the names that MsMokgoro and Mrs De Bruin chose to call their association. In my view, it was sufficient if the said people who had been named in the initial resolution were the constituent members of a concern that purchased the property from the applicant. In the papers, the first respondent is styled “THABULA TRADE AND INVESTMENT (PTY) LTD” (herein represented by Sophia Regina De Bruin she being duly authorized hereto). Accordingly there is no merit in the applicant’s counsel’s argument over the identity of the purchasers.”(Emphasis added).

[7] The court a quo’s approach and analysis are erroneous. It is trite that the identity of parties to a written contract of sale of immovable property is an essential term. Consequently, parole evidence is ordinarily not admissible to vary the provisions of a written agreement of the alienation of land. If there is no ambiguity in the terms of the agreement and no fraud or other impropriety is alleged then the interpretation has to be confined to the written instrument. In both contracts (of 09 December 2005 and 15 December 2005) the following clause is inserted:

“This Deed of Sale constitutes the entire Agreement between the parties and no modification, variation or alteration thereto shall be valid unless in writing and signed by both parties hereto.”

[8] If, therefore, parole evidence has to be excluded to give effect to the aforequoted clause then, in that event, the municipal council resolution identifying MsMokgoro and Ms De Bruinas the potential purchasers must be disregarded in favour of the substitution of Thabula Trade & Investment (Pty) Ltd in their place, particularly as the company is also the respondent in this matter. However, the court a quo overlooked the fact that it is the appellant municipality itself thatimpugns the contracts and contends that their signing was attended by illegality, irregularity or even fraud. The evidence on this aspect will be alluded to in the course of this judgment.

[9] The following (previously emphasized) statement by the court a quo is mistaken:

“It was sufficient if the said people who had been named in the initial resolution were constituent members of a concern that purchased the property from the applicant.”

A company, of course, is a legal persona and has a separate and distinct existence from its members or shareholders. MsMokgoro and Ms De Bruin may be directors of Thabula Trade but they are not Thabula Trade and vice versa. See Levin v Drieprok Properties (Pty) Ltd 1975(2) SA 397(A) at 397 – 398 where the headnote read in part and captures the essence of the principle:

“It is a cardinal principle of the law of contract that a simple contractual offer made to a specific person can be accepted only by that person. Where the offer is contained in an option to purchase granted for a specific time, however, or is made expressly assignable or is directed to the public generally, different considerations may apply. Even where the offer is made, and intended to be made, to a specific person, the identity of the offeree may be a matter of some controversy. The person to whom the offer is addressed need not always be the person to whom it was intended to be made. In this process of interpretation the aim is to ascertain the intention of the offeror, as reflected in the terms of the offer and any other admissible evidence. In cases where the offer is contained in a written document the extraneous evidence that may be taken into consideration will be circumscribed by the rules relating to the admissibility of parol evidence; and where the written offer relates to a sale of land to which the provisions of section 1 of Act 68 of 1957 (or, in the case of contracts concluded after 1 January 1970, the provisions of section 1 of Act 71 of 1969) apply, the requirement that the essential terms of the sale, including the identity of the parties, must appear ex facie the writing may also limit the admissible evidence ---.

In an appeal the main basis for his claim advanced by the appellant, as in the Court a quo, was (1) that the offer had been made to W personally; (2) that this offer had not been accepted by W in his personal capacity; (3) that neither D nor anyone else had authority to alter the offer and convert it into one made to the respondent company; (4) that the offer was not made to, and therefore not acceptable by, respondent; (5) that consequently respondent's purported acceptance of the offer had not brought a contract into existence; and (6) that, accordingly, no valid cause existed for the payment of the deposit or for its retention by respondent.

Held, that the offer, as originally subscribed by the appellant, had not been open for acceptance by the respondent company.

Held, further, that, on the evidence, the alteration made to the offer, which converted it into one apparently open for acceptance by respondent, could not be said to have been authorised by appellant; nor had appellant been shown to have subsequently ratified the alteration.”

On the First Ground (Ground A) I find that the contract was not entered into between the potential purchasers approved by the municipal council and the purported purchaser (Thabula trade & Investments (Pty) Ltd who signed the contract.This finding must not be viewed in isolation but with the rest of the findings that follow hereafter.

B. SECOND GROUND OF APPEAL:

That the court a quo misdirecteditself in not having found that the property proposed to be sold was not sufficiently or properly identified and that there was a material difference in the “golf course and the development onErf 1, Postmasburg”(“golfgronde en die ontwikkeling op Erf 1, Postmasburg”).

[10] It need to be borne in mind that in neither the contract of 09 December 2005 nor that of 15 December 2005 is any reference made to “Erf 1, Postmasburg”, or to any Erf, Plot or Stand number. In the first contract (of the 9thDecember) the property is identified as: “The Old Golf course and Horse Racing Facility (Perdebaan)”; whereas in the second contract (of the 15thDecember) the property is merely described as: “The Old Golf Course.”

It will be recalled that the municipal council resolution of 28 April 2005 (para 4 above) stipulated that onlythe golf course (golfgronde) be sold. There is no mention of the sale of theRace Course Facility (perdebaan) as well.

[11] What obfuscates matters is that ex facie either contract it cannot be determined what area (the size) the race course occupies and what the size or extent of the golf course is. In fact on the papers the first mention of “Erf 1, Postmasburg” comes to light on 19 July 2006, some eight months after the signature of the contract, when someone writes on behalf of the acting municipal manager to Nel Cross & Partners, Kuruman, as following:

“Council resolution Item RV 148/2005. You are hereby informed that the council approved that the golf course (golfgronde) be sold and for it to be surveyed and that the purchaser will be liable for the payment of the surveying.

You are accordingly appointed to conduct the surveying of a portion of Erf 1 (‘n gedeelte van Erf 1”) situate at Postmasburg, known as Postmasburg Golf Club.” In Vermeulen v Goose Valley Investments (Pty) Ltd 2001(3) SA 986 (SCA) at 996 I – 997(A) para 6 the Court held:

“[6] The principles to be applied in considering the first question raised by the exception are well settled. 'The test for compliance with the statute, in regard to the res vendita, is whether the land sold can be identified on the ground by reference to the provisions of the contract, without recourse to evidence from the parties as to their negotiations and consensus.' So said Holmes JA in 1971 in Clements v Simpson 1971 (3) SA 1 (A) at 7F - G and there has been no departure from that approach.

On the contrary, it has been reaffirmed on a number of occasions by this Court, most recently, in Kriel and Another v Le Roux 2000 (2) B All SA 65 (A) at 67i.”

[12] The court a quo dismissed the argument that the property or merx was not properly identified in these terms:

“[19] The applicant has created and developed a storm around the description of the property. According to the resolution of 28 April 2005, the property in question is “die golf grond”. According to the advertisement in the Ghaap newspaper, the property that was advertised for sale was “a portion of the Gholf Grounds”. Item Tk 104/2005 refers to “vervreemding van die gholfgronde”. The agreement that was signed on 9 December 2005 referred to the property as “the old golf course and horse racing facility (Perdebaan). The agreement signed on the 15 December 2005 refers to the property as “the old golf course”.

[20] According to counsel for the first respondent, the description or rather identity of the property that the applicant was selling and purchasers were purchasing was never an issue. The fact that, in the course leading to the signing of the agreements the property was, in various correspondence, called by many different names, does not necessarily mean that the parties were confused as to the identity of the property that constituted the subject matter of their agreement. It is important that the parties should agree as to what they were transacting about. It is equally important that the parties should have been in a position to identify the relevant property. It is, in my view, unreasonable to expect laymen to describe, in their correspondence, with any precision the immovable property as if they were trained minds. It must be recalled that the applicant was, at the council meeting that took the resolution, not drawing the papers for lodgment in the deeds office. Again, it makes no sense for the applicant to sign the agreement and thereafter complain that it did not know the property it was selling. The applicant itself furnished its then legal representatives with the relevant details who then drew up the agreement based on such details.”

[13] Based on the factors dealt with on this aspect I am of the view that the court a quo got it wrong oncemore. In Johnson v Leal 1980(3) SA 927(A) at 937 G the court per Corbett JA held:

“It has been held - and in my opinion correctly so - that what s 1 (1), or its predecessors, require is that the whole contract of sale, or at any rate all the material terms thereof, be reduced to writing (see Joubert v Steenkamp 1909 TS 169 at 171; Coronel v Kaufman 1920 TPD 207 at 209, 210; Veenstra v Collins 1938 TPD 458 at 460; King v Potgieter1950 (3) SA 7 (T) at 10 and 14 and the cases there cited; Jammine v Lowrie 1958 (2) SA 430 (T) at 431; Meyer v Kirner1974 (4) SA 90 (N) at 97G - 98D). It is not necessary that the terms of the contract be all contained in one document, but, if there are more than one document, these documents, read together, must fully record the contract (see Coronel v Kaufman (supra at 209); Meyer v Kirner (supra at 97E - F)). The material terms of the contract are not confined to those prescribing the essentialia of a contract of sale, viz the parties to the contract, the merx and the pretium, but include, in addition, all other material terms (see King v Potgieter (supra at 14C); Meyer v Kirner (supra at 97 - 9)). It is not easy to define what constitutes a material term ---. It is also not necessary in this case to consider at any length the degree of precision with which the writing must set forth the terms of the contract, particularly the essentialia, in order to comply with s 1 (1), since this is not an issue which arises here. Generally speaking these terms - and especially the essentialia - must be set forth with sufficient accuracy and particularity to enable the identity of the parties, the amount of the purchase price and the identity of the subject-matter of the contract, as also the force and effect of other material terms of the contract, to be ascertained without recourse to evidence of an oral consensus between the parties ”

In the result I am satisfied that the property that formed the subject-matter of the sale was not sufficiently identified.

C. THE THIRD GROUND OF APPEAL:

That the court a quo erred in not having found that the contract did not comply with the provisions of s2(1) of the Alienation of Land Act, 68 of 1981.

[14] In this regard I will focus principally on the price of the property proposed to be sold. In the first contract (of the 9th December) the “Old Golf Course and Horse Racing Facility (Perdebaan)” is sold for the amount of R100 000-00 (One Hundred Thousand Rand) but the admittedly reduced merx, “The Old Golf Course,” is sold as follows:

“2. PURCHASE PRICE

The purchase price in respect of the property is the amount of R350, 000.00 (three hundred and fifty thousand Rand) as follows:

2.1 See annexure A part of Deed of Sale which forms part of the conditions of sale of the said property and is therefore included in this document.

2.2 This is a cash ---------[illegible] will be submitted within 30 days of award.”

[15] We enquired from Mr Burger SC, for the first respondent (Thabula Trade), which of the two contracts his client relies on and why, in view of the many discrepancies ( the dates of signatures; the identity of the merx; the price of the merx; the absence of conditions of sale in the first contract and the incorporation of conditions via an annexure “A” in the second etc). After much ambivalence he settled for the second contract (of 15 of December 2005).

[16] The “why” Thabula Trade settles for the second contract was not easy for counsel to explain. One reason advanced by Mr Burger was that the municipal council resolved that only the Old Golf Course be sold and not the Old Golf Course and Horse Racing Facility as reflected in the first contract (of the 9th of December). The truth lies elsewhere.

[17] Mr James Mapanka, the acting municipal manager, who deposed to the founding affidavit on behalf of the appellant municipality explains and Mr Daniel Beukes (aforementioned) and the other deponents on behalf of the appellant confirm that:

17.1 MrThataetsileMotsoare, who purported to sign both contracts on behalf of the municipality, did not have the authority to sign these contracts because he was neither the municipal manager nor the acting municipal manager at that stage. Mr James Sadie was the municipal manager.

17.2 On 16 February 2006 MrMotsoare presented the first purchase agreement (of 09/12/2005) to MrBeukes, the municipal financial manager, and requested him to issue a clearance certificate (that all rates, taxes etc) have been paid and without which transfer of ownership would not be carried out). MrBeukes refused to issue the clearance certificate because he suspected foul play in the following respects:

(a) MrMotsoare was not the authorized person to have signed the first contract (of 09 December 2005);

(b) None of the conditions thatMrBeukes proposed were incorporated in this first contract;

(c) The price of R100 000-00 was ridiculously low because “the improvements on the golf course exceeded R3 million and the construction of the road caused about R2 million.” This is the first time it is made known that the golf course (now referred to as Erf 1) is 6273.8 hectare in size and that a conservative estimate of its marked value is R 9 million;

(d) The determined price has not been referred back to the municipal council for debate and approval. This point is particularly important if it is juxtaposed with the fact that the resolution by the municipal council merely authorized the “Technical Officer [to] make a determination of the expenditure required for the restoration of the golf course” and that “this must be carried out before the purchase price if fixed.” Only “the rental for the lease [had to] be dealt with administratively.”

(e) The agreement was not embodied in the standard contract used by the municipality. In addition the Postmasburg firm of attorneys that usually does this type of work (conveyancing) for the municipalitywere overlooked in favour of a firm outside the province. The opening clauses of the standard contract stipulate:

“GETUIG: Die Verkoperverklaarhiermeedathyaan die Koperverkoop, en die Koperverklaardathy van die Verkoperkoop;

SEKERE: gedeeltegrondsyndeerfnommer ………, geleë in die regsgebied van die Munisipaliteit, uitbreiding ………………………………………………………………………

GROOT: ……………………………………………………………………..

enwat die MunisipaliteitkragtensTransportakte/SertifikaatvanGeregistreerdeTitel Nr ……………….. hou, op die volgendeterme en voorwaardes:

1. Die Koper is gebinddeur die voorwaardes van voornoemdeTransportakte of Sertifikaat.

2. Betaling van die koopprys van R ……………. plus Belasting op ToegevoegedeWaarde teen standardkoerssal in kontantgeskiedvoor of teen registrasie van transport van die eiendom in die Koper se naam.”

This is followed by some 14 further conditions. The standard form is clearly designed for the municipality. At the end of the contract provision is made for the signature of: “MunisipaleBestuurder.” However in both contracts signed by Motsoare there is no provisions for the “MunisipaleBestuurder” to sign. They merely require the “seller” to sign. Whereas the utilization of this standard contract is not compulsory or a legal prerequisite the use thereof would certainly have eliminated most of the shortcomings that now call the validity of the contracts into question. For example the proforma made provision for “erfnommer”, “groot” (i.e. size), “voorwaardes” (conditions), “TransportakteTitel Nr” etc.

[18] The appellant’s case through its depondents or some of them is that it is in the main the hurdles listed in para 17 (above) that gave rise to the second contract (of 15 December 2005) and that MrMotsoare and Mr G GMakape were pursuing a frolic of their own for unstated motives. It must be noted that the second contract does not state that the first contract has been withdrawn, or cancelled or novated or rectified. Mr W Coetzee, for the appellant, contended, quite understandably, that it is by virtue of this unexplained two prongs adopted by Thabula Trade that the annulment of both contracts is sought.

[19] The appellant states that a day or so after MrBeukes refused to issue a clearance certificate (namely on 17 February 2006) MrMotsoare presented the second contract to MrBeukes with the purchase price now escalated from R100 000-00 to R350 000-00 and incorporated the so-called new conditions (set out in para 14 above).

[20] A municipal councilor, the saidMrMakape, who, it is common cause signed both contracts as a witness, apparently castigated MrBeukes on 24 February for his refusal to issue a clearance certificate. On the same day, it also common cause,Ms De Bruin paid in an amount of R11 000-00 outstanding in respect of municipal rates or levies. What is further common cause is that on this very date (24 February 2006) MrMotsoare issued a clearance certificate in his purported capacity as municipal manager. What is further common cause is that on the date in question the incumbent municipal manager, Mr Sadie, was back from leave and on duty.

[21] MrBeukes was aggrieved and concerned by the turn of events and reported the matter to the Provincial Auditor-General and copied bothMr Sadie, the municipal manager, and the MEC for Housing and Local Government. On 22 March 2006 the MEC (Mr Van Wyk) wrote to the Mayor of the appellant:

“INVESTIGATION: POSTMASBURG GOLF CLUB

I have decided to commission an investigation into the transaction that gave rise to the sale and transfer of the abovementioned property by your council during 2005.

Mr. Maponya and MsBogatsu from the Legal Services of this Department will be conducting the investigation.

You are accordingly required to ensure the availability of the Municipal Manager and all Senior Managers during the investigation, which will take place on the 26 March 2006.”

[22] The mooted investigation, regrettably, did not take place. The reasons are unknown. This stagnation gave rise to the court application in the Court a quo.

THE RESPONDENTS VERSION

[23] Ms De Bruin and MsMokgoro deposed to the opposing affidavits in their capacity as co-directors of Thabula Trade, the respondent. They expatiate at length concerning the lease agreement and the improvements they have effected on the golf course and/or race course. Those averments may probably only be relevant in the event of an annulment of these contracts. What the consequences are when a deed of alienation is void or terminated are set out in s28 of the Alienation of Land Act, 68 of 1981.

[24] What Thabula Trade states in connection with the lease does give a peek into the reason why the words “and the racing facility (perdebaan)” are omitted from the second contract. Its deponent, Ms De Bruin, states:

“After the lease agreement was already operational [from 01 April 2005] Mr Daniel Ross [a senior administrative officer with the municipality] unilaterally leased the portion known as the racing facility (perdebaan) to small scale farmers.”

Interestingly the lease is not concluded with Ms De Bruin and MsMokgoro or with Thabula Trade but with Pure Gold & Country Resort, an amorphous entity. More about the latter later.

[25] Ms De Bruin goes on to say in her statement:

25.1 “It is correct that deponent Motsoareapproached deponent Beukes at his offices on 07 December [2005] to give effect to the resolutions of the council decisions of the previous day (on 06 December 2005): Annexure “TT14” items RV147/2005 and RV 148/2005. --- A price was decided at this office for the sale of the golf course. Beukes suggested a price of R100 000-00. Motsoare attended in his capacity as the acting municipal manager.”

25.2 According toMs De Bruin after the Bloemfontein attorneys had prepared the first contract of 09 December 2005 for R100 000-00 and after its signature the following happened:

“Beukes reverted to Motsoare and informed him that he was not convinced that this first contract reflects correctly the resolution of 06 December 2005 relating to item RV 148/2005. Beukes suggested that the contract be amended to enable the Administration to invoke the BEE standard and pointed out that only the Old Golf Course (Clause 1.1.11) must be incorporated but the horse race course should be excluded to accord with the lease agreement.” And;

25.3 “The suggestion by Beukes included in its terms that clause 2 (the purchase price) be amended and escalated [from R100 000-00] to R350 000-00 and that a paragraph be added to read:

‘2.1 See Annexure A part of Deed of Sale, which forms part of the conditions of sale of the said property and is therefore included in this document.”’

This Annexure “A” is non-existent or was omitted from the papers of both parties. No explanation has been proffered.

[26] The respondent’s version does not accord with the objective and/or admitted facts, more particularly the documents at hand:

26.1 The letter by the respondent’s attorneys which dispatched the first contract(of 09 December 2005) to respondent is dated 16 February 2006. The respondent admits this occurrence and explains that the old or first contract which was dispatched under cover of the letter of 16 February 2006 “was blootvanweë die feitdatgesegdeprokureur (AJ Coetzee) van die prokureursfirmaverantwoordelik was virtransportering van die eiendom ---.” This date, however, corresponds with the date on which Beukes saysMotsoare presented this contract to him for a clearance certificate.

26.2 Beukes raised all the queries listed in para17.2 and elsewhere above. He complained forthwith to the Auditor-General andto the MEC of Housing and Local Government and to the municipal manager, Sadie. He refused to issue a clearance certificate which Motsoare arbitrarily issued when it was not his call to make. Beukes could therefore not have advised Motsoare as De Bruin claimed, least of all not in the terms she couched. She is patently trying to protect Motsoare, who acted grossly irregularly.

I have no hesitation in rejecting De Bruin’s claim out of hand as inconsistent with the objective and/or admitted facts regard been had to the approach and principles set out in Plascon Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd1984 (3) SA 623 (A) at 634E-635C. Neither party claimed that a dispute of fact not soluble on the papers existed.

D. FOURTH GROUND OF APPEAL

That the court a quo misdirected itself in having found that the manuscript notes (handwritten notes) which are not contained in the official [typed] notes of the appellant municipality and not approved or confirmed by the council are indeed a council resolution.

[27] The notes in question superimposed manually by Motsoare, this is common cause, read as follows:

“Resolved:

That the objectors be informed that the council took a resolution that the Golf Course be sold to Pure Golf and Country Resort and that the administration should determine the purchase price on the BEE standard and that Pure Golf should be notified that it will be responsible for the measurements (or the surveying) of the Golf Course and all other legal costs.”

[28] This manual postscript, on the version of Thabula Trade, was erroneously omitted from the minutes and was recorded by Motsoare at the tail-end of the council meeting during the temporary absence of Sadie, who allegedly excused himself as he had a commitment elsewhere. Inexplicably, this resolution is no longer that the Golf Course be sold to Thabula Trade & Investments (Pty) Ltd but to Pure Golf and Country Resort. It does not state either that the previous resolution which stated that the Golf Course was offered for sale to MsMokgoro and Ms De Bruin is recalled and that Pure Golf and Country Resort is instituted in their place. Further, in the Ghaap newspaper the public is informed that the council has resolved to sell the property to Pure Golf and Country Club and called for objections, if any, to this putative transaction. What I cannot fathom is that the purchaser with whom the municipality purportedly contracted was in the circumstances nevertheless retained as Thabula Trade & Investments (Pty) Ltd in both the impugned written agreements. In my view this bears testimony to the fact that the respondent was aided and abetted by Motsoare.

They fluffed their lines badly.

[29] Sight should not be lost of the fact that the resolution of 28 April 2005 (see para 4 above) nowhere authorizes that the purchase price be determined administratively. The current suspicious-looking resolution now also arrogates the fixing of the price to the municipal administrative functionaries, one of whom is Beukes. Ironically, Thabula Trade & Investments now portrays Beukes as being hostile to their causewho insists on whatever price is arrived at had to feature before the municipal council for approval. ThabulaTrade, per contra to Beukes’s stand, insists that the need for further council involvement was obviated by the mandate given to the administrative functionaries by the superimposed manual resolution.

[30] Even if an official was authorized to determine the price, the value of public property cannot be reduced to a thumbsuck carried out in an office even if the statutory provisions discussed in Ground of Appeal Eare thought away.Some useful guidance can be sourced by amunicipal council on property evaluation (in a different context) from Nel v Lubbe 1999(3) SA 109 (W) at 111B – 112B. I adapt the remarks made in this case as follows:

(a) The purpose of furnishing a sworn valuation of property is to establish the price that is likely to be realised from the sale of the property.

(b) A practice has grown up in the Northern Cape Division (and Gauteng) whereby a sworn valuation is furnished by an expert witness, usually, an estate agent. He expresses an opinion with respect to the price that the property will fetch. The opinion of an expert witness is admissible whenever, by virtue of the special skill and knowledge he possesses in his particular sphere of activity, he/she is better qualified to draw inferences from the proved facts than the municipal officer or the municipal council.

(c) The council will look to the guidance of an expert when it is satisfied that it is incapable of forming an opinion without it. But the council is not a rubber stamp for acceptance of the expert's opinion. Evidence by way of a report must be placed before the council of the facts relied upon by the expert for his/her opinion as well as the reasons upon which it is based. The council will not blindly accept the assertion of the expert without full explanation. If it does so its function will have been usurped.

In the Nel v Lubbe case the Court stated:

“Not a single reason is set out in the valuation as to why the sum of R290 000 is the value. In fact, the document is a bald assertion of value. The procedure adopted, in my opinion, is hopelessly inadequate. The proper approach is for the expert to furnish in evidence the detailed facts upon which the opinion is based and the reasons for forming the opinion expressed. Upon hearing the evidence the Court will come to its own conclusion, no doubt guided by the evidence.”

[31] In WaenhuiskransArniston Ratepayers Association & Another v VerreweideEiendomsontwikkeling (Edms) Bpk and Others 2011(3) SA 434 (WCC) at 461J (para 106) the Court found the following manner of value or price determination to be adequately reliable:

“[106] Verreweide and the municipality contended that the requirements of s 14 of the MFMA had been complied with, inasmuch as the municipality had followed an extended public process which culminated in the sale of the property. During the course of such process the municipality advertised its intention to develop the property on no less than three occasions. The only proposals received were those of the Arniston Bed & Breakfast & Coffee Shop, Smith Van Zyl& Kirby and Dream Fisheries. The best price that could be obtained was R426 000 (plus VAT), which is indicative of the fact that this was its market value. The municipality eventually decided to sell the land to Arniston Bay Consortium, advertised its intention to do so, and considered the objections which were received. Verreweide was then substituted for the Arniston Bay Consortium so as to reflect the correct details of the purchaser.”

[32] In a letter purported to have been written on 09 December 2005 and date-stamped 15 December 2005 with the “Tsantsabane Municipal Manager” official stamp Motsoare writes the following letter (translated) to Pure Golf Course and Country Club:

“PURCHASE OF THE GOLF COURSE: POSTMASBURG: COUNCIL RESOLUTION RV 148/2005.

Your letters dated 19 November 2004 and 29 December 2004 in re the above matter refer.

You are hereby notified that the Council has approved the sale of the Golf Course to you, subject to the following conditions:

That the development of the Park and Golf Course be effected within a period of 24 months.

That the area should not be utilized for farming purposes.

That the Council will be accorded the first option to purchase (or buy back) the property should you decide to sell it.

That the property will be utilized to attract tourists as envisaged in your proposed plan.

That the purchase price has been fixed at R350 000-00 and that an amount of R15 000-00 will be subsidized per person for 20 people.

That 20 employees will be appointed on a permanent basis.

That the 20 employees should be properly appointed within two years.

You are welcome to communicate with the author hereof in the event of any uncertainty. It is trusted that you find this [arrangement] in order.”

[33] This letter looks promising if not good. The only difference is that it is fraudulent.

33.1 It is common that the Municipality at no stage took such a decision;

33.2 It is also common cause that the contents of this letter were not referred by Motsoare to the municipal council for consideration or ratification. On the contrary Thabula Trade or is it Pure Golf Course and Country Resort or Ms De Bruin and MsMokgoro has/have stated that it was not a requirement to do so and there was no necessity for such a process.

33.3 The overwhelming objective facts are consistent with Motsoare’s fabrication having taken place after Beukes refused to issue a clearance certificate on or about 22 February 2006, henceMotsoare’s surreptitious issue thereof on 24 February 2006.

33.4 Beukes’s objection to what Motsoare and Makape as well as the purchasers did and his appeal in a three-page complaint to the provincial auditor-general, the relevant MEC and Sadie on 24 February 2006, and therefore within two or three days after this irregular conduct, militate very strongly against Beukes having advised Motsoare and his ilk or having been in cahoots with them.

[34] Having composed the fraudulent conditions of 09 December 2005 (para 31 above)it is evident that the manuscript resolution has been superimposed on the genuine typed resolution purporting to be a resolution of 08 December 2005 and is itself fictitious and evidently fabricated to dovetail with the fraudulent conditions in para 31 (above). The manuscript notes must have been, on the objective facts, composed contemporaneously with the aforementioned fraudulent conditions.

[35] Based on the analysis set out hereinbefore I am satisfied that the court a quo failed to discern that the manuscript notes which were paraded as a council resolution and, more importantly, the ex post facto conditions, which Mr Burger fairly conceded to be so, were contrived by Motsoare for illicit purposes.

On this ground only (or as well) the appeal should have succeeded.

E. THE FIFTH AND FINAL GROUNDS OF APPEAL.

That the court a quo erred in not having found that the provisions of s14(2) of the Local Government: Municipal Finance Management Act, No 56 of 2003 were peremptory and applicable to this matter.

[36] For proper comprehension the entire s14 is cited:

“14 Disposal of capital assets

(1) A municipality may not transfer ownership as a result of a sale or other transaction or otherwise permanently dispose of a capital asset needed to provide the minimum level of basic municipal services.

(2) A municipality may transfer ownership or otherwise dispose of a capital asset other than one contemplated in subsection (1), but only after the municipal council, in a meeting open to the public-

(a) has decided on reasonable grounds that the asset is not needed to provide the minimum level of basic municipal services; and

(b) has considered the fair market value of the asset and the economic and community value to be received in exchange for the asset.

(3) A decision by a municipal council that a specific capital asset is not needed to provide the minimum level of basic municipal services, may not be reversed by the municipality after that asset has been sold, transferred or otherwise disposed of.

(4) A municipal council may delegate to the accounting officer of the municipality its power to make the determinations referred to in subsection (2) (a) and (b) in respect of movable capital assets below a value determined by the council.

(5) Any transfer of ownership of a capital asset in terms of subsection (2) or (4) must be fair, equitable, transparent, competitive and consistent with the supply chain management policy which the municipality must have and maintain in terms of section 111.

(6) This section does not apply to the transfer of a capital asset to another municipality or to a municipal entity or to a national or provincial organ of state in circumstances and in respect of categories of assets approved by the National Treasury, provided that such transfers are in accordance with a prescribed framework.”

[37] It is prudent to commence with the argument of the respondent (Thabula Trade) on this aspect. Mr Burger has urged upon us to find that the operation of s14 of the aforesaid Act 56 of 2003 as reflected in Government Gazette 26511 dated 07 July 2004 had been suspended or delayed until 30 June 2007 by virtue of the provisions of ss111 and 112 of the LG: MFM Act. It will be noticed that specific mention is made of s111 in s14(5) of the Act.

[38] s111 of the Act provides that:

“111. Supply chain management policy.—Each municipality and each municipal entity must have and implement a supply chain management policy which gives effect to the provisions of this Part.”

The date of commencement is recorded as 01 December 2004, immediately below this section.

[39] The introductory part of s112 of this Act stipulates that:

“112. Supply chain management policy to comply with prescribed framework.—(1) The supply chain management policy of a municipality or municipal entity must be fair, equitable, transparent, competitive and cost-effective and comply with a prescribed regulatory framework for municipal supply chain management, which must cover at least the following:”2

Then follows clauses (a) to (q); in other words 17 of them. I highlight only one of those, viz (n) that enjoins:

“(n) the invalidation of recommendations or decisions that were unlawfully or improperly made, taken or influenced, including recommendations or decisions that were made, taken or in any way influenced by—

councillors in contravention of item 5 or 6 of the Code of Conduct for Councillors set out in Schedule 1 to the Municipal Systems Act; or

municipal officials in contravention of item 4 or 5 of the Code of Conduct for Municipal Staff Members set out in Schedule 2 to that Act;”

In essence clause (n) proscribes corrupt practices.

[40] Mr Burger contended that s14(2) was inoperative when the sale agreements were signed in December 2006, based on the strength of GG No 26511 dated 01 July 2004 through which the Minister of Finance has issued a Government Notice that provides in article 6(2) at p8 of its Schedule that:

“(2) The implementation of the following provisions of the Act are delayed for low capacity municipalities until 30 June 2007.”Amongst these sections are ss111, and 112.

It is common cause that Tsantsabane Municipality, the applicant, is a law capacity municipality.

[41] Section 14 is not mentioned at all in the entire Schedule. No authority is needed to bolster the principle or contention that if the Minister wanted s14 or some subsections thereof to be delayed or suspended he would have said so in so many words. Mr Burger’s submission that the lawgiver did not intend a piecemeal implementation of the provisions alluded to carry with it the fallacy that the implementation of the LG: MFM Act, 56 of 2003, would be largelyparalised if certain provisions are willy-nilly rendered nugatory, with devastating consequences for the sort of delivery contemplated in s112 of this Act, quoted in para 39 (above).

[42] The court a quo has not dealt with the aforementioned s14 of the Act. This, in my view, is a material omission or oversight. However that may be, I am satisfied that s14(2) is applicable to these proceedings. It is accordingly understandable that “Beukes was terstondongelukkigaangaande die ooreenskoms in die ligdaarvandatdaargeenraadsbesluit was wat die prysbepaal het nie.”The respondent has not claimed that it complied with s14(2) or s14(5) or any of the concomitant subsections. It claims the obverse - that these provisions were held in abeyance.

[43] In light of the aforegoing I associate myself with the following remarks by De Swardt AJ in WaenhuiskransArnistonRatepayers Association & Another v VerreweideEiendomsontwikkeling (Edms) Bpk and Otherssupraat 461 (para 105) whereat it is stated:

“[105] In terms of s14(2) , a municipality is constrained, before it may transfer a capital asset, to do at least three things: firstly, it must hold a meeting of its council which is open to the public; secondly, at such meeting the council must decide, on reasonable

grounds, that the asset is not required to provide the minimum level of municipal services; and thirdly, at the said meeting, the council must consider the fair market value of the asset, as well as the economic and community value which will be received in exchange for the asset. Section 14(5) imposes the additional requirement that the process which the municipality adopts in transferring a capital asset must be fair, equitable, transparent and competitive, and consistent with the supply chain management policy referred to in s111 of the MFMA.”

Compare para30 of this judgment and the guidelines espoused in Nel v Lubbe (above).

The lawgiver has specifically or by necessary implication declared the implementation of ss111 and 112 severable and therefore authorizes a staggered process. Their excise for the time being posed no bar to the operation of s14.

[44] The municipality has broken every conceivable provision in s14. For instance:

44.1 The process was not open and transparent. Ms De Bruin and MsMokgoro were or Thabula Trade was given preferential treatment.

44.2 The advertisement in the Ghaap newspaper calling for objections to the sale was misleading because it described the purchaser as Pure Golf & Country Resort whereas the contract refers to Thabula Trade & Investments (Pty) Ltd. Belatedly for that matter, because what good would an objectionhave served if a “valid” contract had already been entered into.

44.3 Objections were nevertheless received from three individuals and a non-governmental organization (NGO). The thrust of their objections were that the process was not open and transparent. A material objection also came from Mr P J Stafford. He made an offer long before the current so-called purchasers to purchase and develop the place into a “Healing Centre” in collaboration with the community and churches, to counsel those who required the service and those with broken homes, rape and abused victims etc. However, neither he nor his attorney were informed whether or not his offer had been accepted or why it was rejected dispite the lapse of more than a year.

44.4 A municipal council may only delegate to an accounting officer its power to make a determination in respect of movable capital assets below a value determined by the council. See s14(4) of the LG: MFM Act. If the council authorized Motsoare or anyone else to determine the value or price of the Golf course or the Golf Course and Horse Racing Facility, which I maintain it did not, this would have been ultravires in any event. See s14(2) of the Act.

[45] In concluding its judgment the court a quo states that:

“31. It is quite clear that the grounds on which the applicant relies for its application to set aside the said agreement are grounds which,in my view, are entirely attributed to the applicant’s conduct and to no conduct on the part of the first respondent. The applicant asks this court to declare the said agreement null and void and of no force and effect because, according to it, the agreement is vitiated by an error. See Introduction To South African Law And Legal Theory by W J Hosten et al at pp 386-391. I am of the view that the dictates of justice carry a clear and unequivocal conviction that injustice will be done to the first respondent if the applicant were allowed to benefit from its own mistakes.”

[46] This conclusion is misconceived. It must be borne in mind that Ms De Bruin and MsMokgoro knew and acknowledged that they and not Thabula Trade & Investment (Pty) Ltd or Pure Golf & Country Resort were identified as potential purchasers. It was they who, with the full knowledge of the council resolution, furnished the namesThabula Trade and Pure Golf to the council. They were aware that the council has not determined the price of the property and that Motsoare purported to do so. More importantly the immovable property in question had not been properly identified as late as 01 July 2006 whereas the contracts bore the dates 09 and 15 December 2005.

[47] Having regard to the above exposition as context the principles enunciated in City of Tshwane Metropolitan Municipality v RPM Bricks (Pty) Ltd 2008(3) SA 1 (SCA) are mutatis mutandis applicable where Ponnan JA writing for the unanimous court states from 5H-6H (paras 12-16):

“12. --- (P)ersons contracting in good faith with a statutory body or its agents are not bound, in the absence of knowledge to the contrary, to enquire whether the relevant internal arrangements or formalities have been satisfied, but are entitled to assume that all the necessary arrangements or formalities have indeed been complied with (see for example National and Overseas Distributors Corporation (Pty) Ltd v Patato Board 1958(2) SA 473 (A); Potchefstroom se Stadsraad v Kotze1960(3) SA 616 (A)). Such persons may then rely on estoppel if the defence raised is that the relevant internal arrangements or formalities were not complied with.

13. As to the first category: failure by a statutory body to comply with provisions which the legislature has prescribed for the validity of a specified transaction cannot be remedied by estoppel because that would give validity to a transaction which is unlawful and therefore ultra vires. (See for example Strydom v Die Land- en Landboubank van Suid-Afrika 1972 (1) SA 801 (A); Abrahamse v Connock’s Pension Fund 1963(2) SA 76 (W); and Hauptfleisch v Caledon Divisional Council1963(4) SA 53 (C)).

14. ---- . In the present case, the defendant’s legal capacity to amend the supply contract must be sought in the provisions of the statute. A resolution by the defendant’s council was prescribed by s38(1) as a necessary prerequisite for amending or varying the supply contract. Absent such a resolution, any purported amendment by employees of the defendant was plainly impermissible. Moreover, s38(5) specifically prohibited the defendant’s council from delegating or assigning those functions. ---. The statute expressly confers sole power upon a specified entity, to the exclusion of any other person or entity, to extend or vary an existing tender agreement. The linguistically plain meaning of the section severely restricts the power (vires) to enter into a transaction of that kind to the defendant’s council.

15. Section 217 of the Constitution requires contracts for services or goods by an organ of State such as the defendant to accord with a system that is fair, transparent, competitive and cost-effective. Against that backdrop, the mischief that s38 of the Act seeks to prevent is plain. It is to eliminate nepotism, patronage, or worse, and to entrust the council of the defendant with a sole power which is to be exercised independently by it to achieve those ends. If the conclusion of contracts were to be permitted without any reference to the defendant’s council and without any sanction of invalidity, the very mischief which the legislation seeks to combat could be perpetuated.

16. There are formidable obstacles to the plaintiff’s reliance upon the doctrinal device of estoppel. Assuming in the plaintiff’s

favour that all of the requirements for its successful invocation have been established, this is not a case in which it can be allowed to operate. It is settled law that a state of affairs prohibited by law in the public interest cannot be perpetuated by reliance upon the doctrine of estoppel (Trust Bank van Afrika Bpk v Eksteen 1964(3) SA 402 (A) at 411H-412B), for to do so would be to compel the defendant to do something that the statute does not allow it to do. In effect therefore it would be compelled to commit an illegality. (Hoisain v Town Clerk, Wynberg 1916 AD 236).”

F. RAISING THE PROVISIONS OF S14(2) FOR THE FIRST TIME ON APPEAL; IN THE HEADS OF ARGUMENT AND NOT IN THE FOUNDING PAPERS.

[48] The entitlement to raise s14(2) in argument was raised in preliminary proceedings before my sister Williams J on 30 November 2007. Pursuant thereto the learned Judge made the following order, which still stands:

“(4) That the respondents [Thabula Trade and the Registrar of Deeds] are granted leave to respectively file an affidavit on aspects alluded to in the Heads of Argument [of the applicant municipality] dated 26 November 2007 and also to deal with the statement of Mr Ross dated 24 October 2007.

(5) The opportunity afforded the respondent [singular] must be exercised not later than 31 January 2008.”

[49] In the Heads of Argument referred to in the order of Williams J counsel for the applicant (Adv W Coetzee who has been retained in this appeal) notified the respondents that:

“Applicant will invoke the provisions of s14(2) [and 14(5)] of the Municipal Finance Management Act, Act 56 of 2003” and proceeded to quote these two subsections of s14.Thabula Trade complied with the court order and contended that the provisions in question were not applicable to this matter for reasons already adverted to. A proper foundation has therefore been laid to debate this issue which has accordingly been well ventilated and is properly before us.

[50] In addition Beukes has sufficiently drawn attention to the fact that the council has not delegated authority to the administrative staff to determine the value of the property and insisted that the matter should have gone back to the council for this purpose. In his letter to the Provincial Auditor-General, copied to the said MEC, Beukes draws attention to the provisions of s32 of the LG: MFM Act concerning “unauthorized, irregular or fruitless and wasteful expenditure by a municipality” and states that he “informed MrMakape that there was legislation regulating the sale of land and that I was only performing my duty in terms of this legislation.” In Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others2004(4) SA 490 (CC) at 507 C-E (para 27) the Constitutional Court (perO’Regan J) held:

“27. The Minister and Chief Director argue that the applicant did not disclose its causes of action sufficiently clearly or precisely for the respondents to be able to respond to them. Where a litigant relies upon a statutory provision, it is not necessary to specify it, but it must be clear from the facts alleged by the litigant that the section is relevant and operative. I am prepared to assume, in favour of the applicant, for the purposes of this case,that its failure to identify with any precision the provisions of PAJA upon which it relied is not fatal to its cause of action. However, it must be emphasized that it is desirable for litigants who seek to review administrative action to identify clearly both the facts upon which they base their cause of action, and the legal basis of their cause of action.”

On this basis as well Mr Burger’s argument on this aspect cannot be sustained.

[51]The appeal is in the result upheld on all the grounds of appeal set out on the matters dealt with under sections A to E including F of this judgment.

[52] The following order is made:

1. The appeal by the appellant (Tsantsabane Municipality) is upheld.

2. The two agreements (Annexures “A” and “B” to the appellant’s Notice of Motion) between Tsantsabane Municipality and Thabula Trade and Investments (Pty) Ltd dated 09 December 2005 and 15 December 2005 in respect of the Postmasburg Golf Course (Golfgronde) and/or Golf Course and Horse Racing Facility (Perdebaan) are hereby declared null and void and are of no force and effect.

3. The First Respondent (Thabula Trade and Investments (Pty) Ltd) is ordered to pay the taxed costs on the party and party scale from the stage of the hearing before the court a quo throughout all the stages up to and including the costs of this appeal.

__________________________

F DIALE KGOMO

JUDGE-PRESIDENT

Northern Cape High Court, Kimberley

I concur

C J OLIVIER

JUDGE

B M PAKATI

ACTING JUDGE

On behalf of the Appellant: AdvW COETZEE

Instructed by: De Jager Attorneys

On behalf of the First Respondents: AdvA H BURGER SC

Instructed by: Haarhoffs Inc.

1The choice of the emphasized terms (above) will become evident in due course

2As will be seen later (in para 46 below) this section is essentially modelled on the provisions of s217 of the Constitution of the Republic of South Africa, 108 of 1996, dealing with Procurement of goods and services.