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IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE LOCAL DIVISION, PORT ELIZABETH)

CASE NO: 478/2011

Date heard: 27 November 2014

Judgment delivered: 11 December 2014

In the matter between:

TERENCE MUNGUR..................................................................................................................Plaintiff

and

THE MINISTER OF RURAL DEVELOPEMENT

AND LAND REFORM.............................................................................................................Defendant

JUDGMENT

BROOKS AJ:

[1] The claim in this matter arises from a set of circumstances which prompted an exchange of correspondence during November 2008.  It is the contention of the plaintiff that when read together, the correspondence creates a deed of alienation in respect of certain immovable property with contractual consequences for the defendant.  The latter meets the claim with the argument that the content of the correspondence is insufficient to create a deed of alienation.  This argument is based upon the statutory requirements of s 2(1) as read with s (1) of the Alienation Land Act 68 of 1981 (the Act).

[2] At the commencement of the matter, the parties sought an order by agreement that in terms of the provisions of rule 33 (4) of the Uniform Rules of Court, the issue of the whether the correspondence constitutes a valid deed of alienation should be determined first, with costs to follow the result and with the determination of the remaining issues being postponed sine die.  An order was made in terms of the agreed draft.

[3] It is not necessary for present purposes to reproduce the content of the correspondence under consideration.  It is sufficient to record that the correspondence is made up of two letters, the first written on behalf of the purchaser (the defendant) on 18 November 2008 and the second written in reply on behalf of the seller (the plaintiff) on 23 November 2008.  It became common cause during argument that, read together, the correspondence indentified with sufficient accuracy the identity of the purchaser and the seller, the identification of the immovable property and the purchase price, i.e the essentialia of a contract for the sale of land.

[4] What remains is dispute is the sufficiency of the correspondence in its treatment of the manner in which the purchase price is to be paid.  With reference to authority, Mr Gajjar, who appeared on behalf of the defendant, argued that the method of payment of the purchase price was a material term of the contract which needed to have been included in the correspondence in order for the correspondence to create a deed of alienation.  He argued further that the method of payment of the purchase price still had to be negotiated.

[5] Mr Dyke, who appeared on behalf of the plaintiff, submitted that all that was required for the creation of a valid deed of alienation was a recordal of the essentialia and that the content of the correspondence was sufficient in this regard.

[6] In order to determine the correct approach in this matter it is necessary to give consideration to relevant authority on the point.  That authority spans a number of years both since the promulgation of the Act and prior thereto, where the position was governed by the predecessor to the Act.  For the sake of convenience, and in order to understand it fully, chronological consideration is given to the relevant authority.

[7] In Du Plessis v Van Deventer[1] it was held that one of the terms of a contract of sale of land which has to be in writing is the manner of payment of the purchase price.  In that matter, the parties had concluded a written agreement which included a term recording part payment of the purchase price and regulating the payment of the balance.  In his claim, the plaintiff placed reliance on an oral agreement alleged to have the effect of varying or replacing the written term.  The court held that this was inadmissible because it was not possible to vary a term of the agreement other than by concluding a further written agreement.  Accordingly, that matter does not support the argument that in order to be valid, every deed of alienation of land must include a term regulating the manner of payment of the purchase price.  Simply, where there is such a written term, it cannot be varied but in writing.

[8] In Patel v Adam[2] it was held that one of the terms of a contract of sale of land which has to be in writing is the manner of payment of the purchase price.  In the agreement in issue, clause 3 provided for payment of the purchase price in monthly instalments free of interest.  Neither the amount of the monthly payments nor the number of monthly payments were specified.  It was held that the agreement was void and of no force and effect.  Here too, the authority does not state that in every deed of alienation there must be a clause specifying the manner in which the purchase price is to be paid.  It prescribes that where there is such a clause, it must be complete and sensible in the result.

[9] In Johnston v Leal[3] Corbett JA, as he then was,  held that what is required is that the whole contract of sale, or at any rate all the material terms thereof, be reduced to writing.  The material terms are not confined to the essentialia, but include, in addition, all other material terms. 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 the other material terms of the contract, to be ascertained without reference to evidence of an oral consensus between the parties.  In my view, what is to be noted is that the method of payment of the purchase price is not considered to be one of the essentialia.  In other words, a complete absence of a written term relating to the method of payment of the purchase price does not render a contract invalid per se.  It has no bearing on the essentialia.  This is because, in such cases, the position at common law will govern the position inter partes.  This will only not be the case if the parties agree to deviate from the common law position.  If that be the agreement, the resultant term is undoubtedly a material term.  The terms of the departure from the common law position must be set out in writing.  A failure to do so will render the contract invalid for want of compliance with s 2(1) as read with s 1 of the Act.

[10] More recent consideration of issues relating the compliance with the provisions of the Act demonstrates consistency in the approach adopted by the Supreme Court of Appeal, as it now known.  In Fraser and Another v Viljoen[4] the document under scrutiny was incomplete in that it contained neither the names of the parties nor a description of the property.  The purchase price was recorded as R185 000,00.  It was held that the document was not a valid agreement for want of compliance with the Act.  Although not raised pertinently as an issue in the appeal, it is noteworthy that in his consideration of the deficiencies in the document Combrink JA, delivering the judgement of the full court, made no adverse observation in respect either of the manner in which the purchase price was recorded or the absence of a term setting out the manner in which it was to be paid.

[11] In Chretien and Another v Bell[5], relied upon by both Mr Dyke and Mr Gajjar but with differing interpretations, the agreement contained details of the parties and a description of the property.  It set out the purchase price.  In addition, it contained a clause devoted to the method of payment of the purchase price.  That, in turn, referred to certain special conditions.  They specified that agreement would be reached in writing by the parties by a nominated date.  In these circumstances, the court held that there is no doubt that the time within which payment is to be made was a material term of the agreement.  That the parties thought so too was apparent from the form and wording of the agreement.  The court held that it was an express term of the agreement that the purchase price was required to be paid before the obligation to pass transfer arose.  Agreement still had to be reached in respect of the time of the payment.  In the circumstances, the agreement did not comply with the provisions of s 2(1) of the Act and was enforceable.

[12] Importantly, in Chretien and Another v Bell [6] the court considered that there was no room for the argument that because the parties stipulated that the payment will be a cash payment, in the absence of a further agreement the sellers could not have expected anything better than cash against transfer of the property into the name of the purchaser.  The reason was because of the finding on the nature of the express term.  It was not on the basis that the argument could never be raised in the light of the provisions of s 2(1) of the Act.

[13] The position at common law is that cash payment of the agreed purchase price is payable against transfer of the property into the name of the purchaser.[7]  In absence of any terms which exclude the position at common law inter partes, the common law position will prevail.

[14] In my view, it is follows that it is not necessary to reflect the position at common law in a written term in an agreement of sale in respect of the immovable property.  It is only where the parties have agreed that the position at common law shall not apply that the terms of their agreement on that aspect become material and must be reduced to writing.

[15] Accordingly, in circumstances such as the present, an absence of a written recordal of the position at common law cannot invalidate the agreement.  There is no evidence of any agreement inter partes to deviate from the position at common law regarding the manner of payment of the purchase price.  In such circumstances it cannot be said that the manner of payment of the purchase price is a material term of the agreement.  The essentialia of the agreement of sale being present and clear in the correspondence, in my view a valid agreement of sale was concluded.  Read as whole, the correspondence creates a valid deed of alienation.

[16] The following order will issue:

1. The letters exchanged between the parties on 18 November 2008 and 23 November 2008, copies of which form annexure A and B respectively to the document entitled “Agreed set of Facts” dated 26 November 2014, are hereby declared to constitute a valid deed of alienation as provided for in S 2(1) as read with s 1 of the Alienation of Land Act 68 of 1981;

2. The defendant is hereby directed to pay the plaintiff’s costs of suit, together with interest thereon to be calculated at the prescribed rate of 9% per annum from a date fourteen days after date of allocatur to date of payment.

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RWN BROOKS

JUDGE OF THE HIGH COURT (ACTING)

Appearances

Plaintiff : Adv B Dyke instructed by Masiza Harker Inc.

Defendant : Adv G J Gajjar instructed by the Office of the State Attorney

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