REPUBLIC OF
NAMIBIA
HIGH COURT OF
NAMIBIA MAIN DIVISION, WINDHOEK
JUDGMENT
Case
No: I 3905/2009
DATE:
14 NOVEMBER 2014
REPORTABLE
In the matter
between:
GUNCHAB FARMING
CC......................................................................FIRST
PLAINTIFF
HENDRIK
CHRISTOFFEL
BARNARD..............................................SECOND
PLAINTIFF
And
HENDRIK
CHRISTOFFEL
BARNARD..............................................FIRST
DEFENDANT
ELSIE RACHEL
OOSTHUIZEN BARNARD.................................SECOND
DEFENDANT
Neutral citation:
Gunchab Farming CC v Barnard (I 3905-09) [2014] NAHCMD 345 (14
November 2014)
Coram: VAN
NIEKERK J
Heard: 5 April
2012
Delivered: 14
November 2014
Flynote: Practice –
Pleadings – Exception to plea and counterclaim – Point in
limine that exception to plea delivered while plaintiff under
automatic bar to be struck out upheld – Argument rejected that
counterclaim not excipiable because parties put differing
interpretations on statutory provisions on which counterclaim is
based - Transaction whereby farm, being agricultural land, is donated
to close corporation to be incorporated and whereby donor’s
100% member’s interest in close corporation is sold to another
is not in contravention of Agricultural (Commercial) Land Reform Act,
1995 (Act 6 of 1995,) prior to its amendment by Agricultural
(Commercial) Land Reform Amendment Act, 2002 (Act 13 of 1995) –
Exception upheld to principal counterclaim based thereon that such
transaction illegal and therefore void and unenforceable.
ORDER
1. The plaintiffs’
exception to the defendants’ plea is struck out with costs,
such costs to include the costs of one instructing and one instructed
counsel.
2. The plaintiffs’
exception to the defendants’ principal counterclaim is upheld
with costs, such costs to include the costs of one instructing and
one instructed counsel.
3. The defendants
are given leave to amend their counterclaim, should they be so
advised, within 21 days of this order.
JUDGMENT
VAN NIEKERK J:
[1] The first
plaintiff is a close corporation of which the second plaintiff is the
sole member. The first plaintiff is the owner of the farm Gunchab
No. 125 (‘the farm’) in the Mariental district. It is
evident from the deed of transfer attached to the particulars of
claim as annexure “A” that the defendants donated the
farm to the first plaintiff on 2 May 2000.
The particulars of
claim
[2] The plaintiffs
instituted action against the defendants based on an oral agreement
dating from the year 2000. The following are alleged to be terms of
the agreement: (i) that the parties would enter into a joint venture
in terms of which they would conduct farming operations on the farm;
(ii) for such purposes the second plaintiff in his capacity as sole
member of the first plaintiff, granted the defendants the right of
habitatio on the farm for the duration of the joint venture; (iii)
the second plaintiff would provide all the cattle and half the sheep
as a contribution to the joint venture; (iv) the defendants would
provide half the sheep as a contribution to the joint venture; (v)
the defendants would be responsible for the day to day management and
running of the farming operations for the duration of the joint
venture; (vi) the defendants were responsible to report to the second
plaintiff on a regular basis regarding the business operations of the
joint venture; (vii) the second plaintiff and the de
fendants would share
the profits derived from the joint venture equally, i.e. on a 50/50
basis; (viii) the defendants were responsible for the full costs of
the joint venture.
[3] The plaintiffs
allege that the second plaintiff complied with all his obligations in
terms of the agreement, but that the defendants breached their
obligations in terms of the agreement by failing to conduct proper
farming operations which resulted in ‘substantial losses of the
livestock as well as the joint venture in general’ (paragraph
10 of the particulars of claim). The further allegations are that
the second plaintiff has called upon the defendants to agree to the
dissolution of the joint venture by 31 January 2009, but that they
refuse to do so; that the defendants are in possession of the farm,
alternatively that they occupy the farm; and that the defendants,
notwithstanding demand, refuse and/or neglect and/or fail to vacate
the farm.
[4] The plaintiffs
claim (i) confirmation of the dissolution of the joint venture; (ii)
the rendering and debatement of an account of all joint venture
transactions; (iii) payment of any amounts found owing; (iv) the
return of certain livestock; (v) ejectment of the defendants from the
farm; (vi) payment of N$15 000 per month in damages for unlawful
occupation of the farm from 1 February 2009 until date of vacation of
the farm; and (vii) costs of suit.
The defendants’
plea
[5] The defendants
filed a plea and provided further particulars in which they admit (i)
the identity of the parties and their standing; (ii) that they
donated the farm to the first plaintiff; (iii) that they concluded an
oral agreement with the second plaintiff in terms of which they
embarked upon a joint venture relating to farming operations on the
farm, although they rely on certain different terms than those
pleaded by the plaintiffs; and (iv) their occupation of the farm and
their refusal to vacate same.
[6] The defendants
deny that the first plaintiff is the lawful owner of the farm. In
this regard they plead inter alia as follows:
‘6.2 The
defendants plead that the sole purpose for the donation was to
dispose of the farm in selling the membership interest still to be
acquired by the first and second defendants in the first plaintiff to
second plaintiff as is evident from the sale of membership interest
agreement concluded between the second plaintiff and the first
defendant, annexed hereto marked annexure “B”.
6.3 The transaction
as constructed was and was intended by the parties to be an
alienation of agricultural land as described in the Agricultural
(Commercial) Land Reform Act, 1995, as the farm being agricultural
land was dispose (sic) of against valuable consideration received.
6.4 No certificate
of waiver has been obtained for the alienation of the farm to first
plaintiff.
6.5 As such, the
defendants plead that the donation of the farm by the first and
second defendants to first plaintiff, as well as the sale of
membership interest ultra virus (sic), the provisions of the
Agricultural (Commercial) Land Reform Act, Act No. 6 of 1995, and
therefore void, alternatively voidable and stands to be set aside.
In this regard the Honourable Court is respectfully referred to
defendants (sic) counterclaim, filed evenly herewith.’
(I pause to note
here that the use of the expression ‘ultra vires’ as is
done here and repeated in various parts of the pleadings to indicate
that the parties acted in contravention of a statute is not
appropriate in the context where the illegality does not concern the
illegal exercise or non-exercise of powers in an administrative law
context.)
[7] The defendants
also deny that the second plaintiff is the lawful sole member of the
first plaintiff. In this regard they state in the relevant part of
paragraph 1 of their further particulars:
‘AD PARAGRAPH
1 THEREOF
The defendants
allege that the second plaintiff is not the lawful sole member of the
first plaintiff as the transfer of membership interest agreement is
invalid and void as same, together with the donation of the farm into
the name of the first plaintiff are ultra virus (sic) the provisions
of the Agricultural (Commercial) Land Reform Act, 1995. ……..’
[8] The defendants
plead further that, while being under the bona fide, but mistaken,
belief that the aforesaid donation of the farm and the sale of the
membership were valid and enforceable, the parties during 2000
entered into an oral agreement, the material terms of which, for
purposes of this judgment were (i) that the first defendant acquired
the right to repurchase the second plaintiff’s membership
interest in the first plaintiff when the first defendant is in a
financial position and elects to do so; (ii) that the defendants have
the right of habitatio on the farm until their death; (iii) that the
first defendant would have the right to repurchase the second
plaintiff’s membership interest in the first plaintiff for the
same price as paid by the second plaintiff and on the same terms and
conditions; (iv) that the defendants were responsible for the
day-to-day management and running of the farming operations and for
all the costs of the farming operations and for the upkeep of the
farm; and (v) that the parties would enter into a joint venture with
certain terms in relation to the farming operations.
The defendants’
counterclaim
[9] The defendants
also filed a counterclaim in which they make, inter alia, the
following allegations in respect of their principal claim:
‘5.
On or about the 2nd
of May 2000 and at Windhoek, the first defendant sold his membership
interest, still to be acquired in first plaintiff, to second
plaintiff on the terms and conditions contained in the written
agreement of sale of membership interest, annexed to defendants’
plea as annexure “B”.
6.
To give effect to
the sale of the membership interest and to receive a valuable
consideration for the disposal of the farm Gunchab No 125 ……,
the first and second defendants, as agreed, donated the farm to the
first plaintiff as is evident from annexure “A”, annexed
to plaintiffs’ claim in convention.
7.
The said farm, at
all relevant times hereto, was and still is agricultural land, as
defined in the Agricultural (Commercial) Land Reform Act, 1995.
8.
The farm was
alienated (disposed of) against valuable consideration received.
9.
No certificate of
waiver has been obtained for the alienation of the farm to first
plaintiff as is required in terms of the relevant provisions of the
Agricultural (Commercial) Land Reform Act, 1995.
10.
As such, the
defendants plead that the donation of the farm by first and second
defendants to first plaintiff, as well as the sale of membership
interest an (sic) ultra vires the provisions of the Agricultural
(Commercial) Land Reform Act, Act No. 6 of 1995 and therefore void,
alternatively voidable and stands to be set aside.
11.
The defendants
herewith tender the return to second plaintiff in the amount of N$620
000.00 being the purchase price paid by the second plaintiff to first
defendant for and in respect of the disposal of the farm to first
plaintiff and for the transfer of second defendant’s membership
interest in first plaintiff to second plaintiff.’
[10] In the
alternative and in the event that the Court should find that the
disposition of the farm is not in contravention of the Agricultural
(Commercial) Land Reform Act, 1995 (Act 6 of 1995) (‘the ACLR
Act’), the relevant part of the defendants’ counterclaim
alleges as follows (the insertion in square brackets is mine):
’12.
At all times prior
to and at the conclusion of the agreement of sale of membership
interest, the second plaintiff, orally represented to the first and
second defendants inter alia that first defendant will be entitled to
repurchase the membership interest from second plaintiff on the same
terms and conditions as contained in annexure “A” [it
should be annexure “B”], as well as for the same purchase
price when first defendant is in a financial position to do so and
that first and second defendants will have the right of habitatio on
the farm, until their death.
13.
…………………………………….
14.
The first defendant,
to the second plaintiff’s knowledge, is presently in a
financial position to repurchase the second plaintiff’s
membership interest held in first plaintiff against payment in the
amount of N$620,000.00, the payment of which is tendered herewith on
the same terms and conditions as same was sold by first defendant to
second defendant.’
[11] Against tender
of the amount of N$620,000.00 the defendants in their main claim seek
an order declaring the disposition by way of donation of the farm to
be ‘ultra vires’ the provisions of the ACLR Act and
therefore void ab initio and authorisation for the Deputy Sheriff to
sign all documents necessary to give effect to the re-registration of
the farm in the names of the defendants. In the alternative they
pray inter alia for an order against the second plaintiff only that
he transfers his 100% membership interest in the first plaintiff to
the second defendant within fourteen days after all statutory
requirements, including the obtaining of a waiver insofar as it may
be required for the transfer have been fulfilled.
The exceptions
(i) The exception to
the plea
[12] Although the
notice of exception and the grounds refer almost throughout to the
plaintiff singular, I take it that it is the plaintiffs who except.
The exception to the plea as amplified by the further particulars
thereto is based on the assertion that it is bad in law in that it
does not disclose a proper defence. The grounds are set out as
follows:
‘1. The
defendants admit that they donated the farm Gunchab No 125 to the
first plaintiff.
2. In their plea,
the defendants further aver that the donation was done with the sole
purpose of disposing of the said farm through the sale of the
membership interest of the first and second defendants to the second
plaintiff and in that regard referred to a written sale of membership
interest annexed to the defendants’ plea marked “B”.
3. The defendants
then further aver that the aforesaid sale of member’s interest
constitutes an alienation of agricultural land as contemplated in the
Agricultural (Commercial) Land Reform Act, 1995 (‘the Act”).
4. Further the
defendants aver that no waiver as prescribed in the Act was obtained
to sanction such alienation as contemplated in the Act.
5. In and as a
result of the aforesaid the defendants aver that the donation as
aforesaid as well as the sale of the member’s interest is ultra
virus (sic) the provisions of the Act and therefore void,
alternatively voidable and therefore stands to be set aside.
6. It is submitted
that the defendant’s (sic) grounds of defence in this respect
is premised on the aforesaid reliance of (sic) the provisions of the
Act pertaining to the plaintiffs’ cause of action with regard
to the relief in order to have the defendants evicted from the farm
Gunchab.
7. At the onset it
is respectfully submitted that the provisions of section 17 of the
Act does not carry with it a provision in terms of which the
alienation of commercial land is void, alternatively voidable in the
absence of a waiver as contemplated in the said section, where it
expressly deals with the transfer of members’ interest in
respect of which the relevant close corporation is the owner of
commercial land as contemplated in the Act.
8. It is further
respectfully submitted that at the time of the conclusion of the
agreement of donation by the first and second defendants to the first
plaintiff and which occurred prior to 21st of June 2000, the
provisions of section 17 of the Act did not at the time apply to
donations conducted in this fashion.
9. Likewise it is
submitted that the Act and specifically section 17 read with section
1 thereof, did not at the time apply to this scheme of transfer of
membership interests in and to a close corporation that has as its
asset commercial land and to that end did not prohibit the sale of
membership interest (sic) as such.
10. It is further
respectfully submitted that the legislator only introduced a
restriction to such donations and sales by virtue of the provisions
of the Agricultural (Commercial) Land Reform Amendment Act, 2002 Act
13 of 2002, which Amendment Act only took effect on 31 March 2003.
11. The defendants’
(sic) further allege that they attained a lifelong right of habitatio
in respect of the farm, Gunchab which right was purportedly given to
them by the plaintiffs on the basis of an oral agreement.
12. In light of the
aforesaid it is respectfully submitted that a right of habitatio in
respect of an immovable property constitutes a disposal of a right
attached to an immovable property as contemplated in the Alienation
of Land Act which Act expressly provides that such right can only be
obtained by way of a written agreement signed by all parties
concerned.
13. In casu the
defendants do not rely on any written agreement which accords to them
the right of habitation they contend to have.
14. Further it is
submitted that the first defendant’s purported right to
repurchase the second plaintiff’s 100% membership in the first
plaintiff is completely unrelated to the relief being sought and as
such does not constitute any defence to same.
15. In the premises
the defendants’ plea lacks averments necessary which could
sustain a defence against the plaintiff’s particulars of
claim.’
(ii) The exception
to the principal counterclaim
[13] In respect of
the counterclaim the plaintiffs’ exception is based thereon
that it is bad in law as it does not disclose a cause of action. The
grounds as set out in paragraphs 1 – 11 of exception is
identical as grounds 1 – 11 in respect of the exception to the
plea.
(iii) The exception
to the alternative counterclaim
[14] The grounds are
set out in paragraphs 12 – 17:
’12. In the
alternative the defendants allege that they, by virtue of an oral
agreement is (sic) entitled to repurchase the second plaintiff’s
membership interest in and to the first plaintiff once the first
defendant is in a financial position to do so which the latter
alleged he is now.
13. Pursuant to such
allegations the first defendant herewith tenders payment of the
purchase price in the sum of N$620 000-00 in lieu for the second
plaintiff’s membership interest in and to the first plaintiff.
14. On the basis of
the averments set out in paragraph 7, 8, and 9 of the defendants’
claim in reconvention it is respectfully submitted that by virtue of
the promulgation and implementation of the Agricultural (Commercial)
Land Reform Amendment Act, 2002, Act 13 of 2002 which Amendment Act
took effect on 31st March 2003, any disposal and/or alienation of
commercial land as defined in the Act can only be done on the basis
of section 17 of the Act which requires the Minister to grant a
waiver before such sale and/or alienation could have any legal force
and effect.
15. It follows that
the first defendant’s purported right to repurchase the second
plaintiff’s 100% membership interest in the first plaintiff is
completely is (sic) dependent as a precondition upon obtaining of
such waiver from the Minister concerned before it could have any
legal force and effect.
16. It is apparent
that in their alternative claim no reliance is placed whatsoever on a
waiver as a condition precedent implied by law by the defendants.
17. In the premises
the defendant’s (sic) claim in reconvention both in respect of
their main claim as well as their alternative claim lacks averments
necessary which could sustain a cause of action against the
plaintiffs.’
The defendants’
point in limine
[15] Mr Obbes on
behalf of the defendants moved a point in limine in respect of the
exception taken to the plea. He pointed out that the exception was
filed about 18 months after the defendants had delivered further
particulars as requested by the plaintiff. He submitted that an
exception is a pleading and, with reliance on rule 26, read with rule
25(1), of the rules of this Court, that the plaintiffs had become
(and remained) ipso facto barred from delivering any further pleading
long before the exception was delivered. He applied for the
exception to be struck out, alternatively that it be dismissed with
costs.
[16] Rule 25(1)
provides that a plaintiff shall within 15 days after service upon him
or her of a plea, deliver a replication where necessary. If a party
does not deliver such replication or subsequent pleading within this
time period, rule 26 provides that the party shall be ipso facto
barred.
[17] Counsel for the
defendants referred me to Stockdale Motors Ltd v Mostert 1958 (1) SA
270 (O) in which the court dealt with the same situation where a
plaintiff had filed an exception to the plea and counterclaim out of
time, albeit that the rules applicable were those of the Orange Free
State Provincial Division. The court held that the pleadings in the
main action had closed by the time the exception was filed and that
exceptions could not be taken after litis contestatio (at 271H). The
court struck the exception out with costs.
[18] I note that the
court in the Stockdale Motors case (supra) did not mention whether
the plaintiff had been barred from pleading to the counterclaim. In
the matter before me Mr Obbes confined the point in limine to the
exception against the plea. This stance seems to me to be correct,
as the plaintiffs had not been served with a notice of bar requiring
of them to plead to the counterclaim. In this regard it is also
relevant that the two exceptions before me are not identical in all
respects.
[19] Mr Strydom, who
appears for the defendants, submitted that the defendants should have
taken issue with the lateness of the exception to the plea by way of
a rule 30 application, failing which the defendants must be taken to
have condoned the irregular step. However, as Mr Obbes pointed out,
a similar argument was rejected in Stockdale Motors Ltd v Mostert
(supra). I agree with counsel for the defendants that it was not
peremptory for the defendants to follow the rule 30 route, but that
they were entitled to raise the matter by way of a point in limine at
the hearing of the proceedings.
[20] Counsel for the
plaintiffs further contended that the point taken is dilatory only
and not in the interests of moving the matter along. He submitted
that the plaintiffs would be able to bring an application for removal
of the bar at some future stage or to bring an application in terms
of rule 33(4) to decide the questions of law raised in the exception.
He further submitted that the points of law could also be separately
dealt with in future in terms of the case management rules.
Emphasising that the same points of law would in any event be
considered when the exception to the counterclaim is heard, counsel
submitted that the Court should follow a pragmatic approach and if
need be rely on its inherent powers to condone the delay, remove the
bar and hear the exception.
[21] There are some
attractive aspects to these submissions, but ultimately I am not
persuaded that they are decisive. The most compelling reason is the
complete disregard for the rules displayed by the plaintiffs and the
lack of effort to do anything about it. The plaintiffs were
forewarned by the defendants’ heads of argument that the point
in limine would be taken. They did not lodge an application for
condonation and removal of the bar without delay as they should have
done. There is no explanation, even from the bar, before me for the
delay in filing the exception. While the prospects of success on the
point relating to the alleged contravention of the ACLR Act are good,
the same cannot be said about the point on the right of habitatio in
the absence of any averment in the plea that the right was sold.
Moreover, the chances of an application for removal of bar succeeding
at some point in future are slim indeed.
[22] The exception
against the plea and the exception against the counterclaim are not
on all fours. It therefore does not assist to argue that all the
points will be argued anyway. To the extent that the same point is
raised in both exceptions, any ruling on the matter will effectively
dispose of the issue in the plea. This should afford the plaintiffs
some consolation. Should the plaintiffs be advised to raise in some
other way any points of law left undecided, so be it. In the face of
the defendants’ firm opposition to the granting of any
indulgence at this stage, the combined force of the abovementioned
considerations is such that the so-called pragmatic approach loses
its appeal. The result is that the exception against the plea must
be struck out with an appropriate order as to costs.
The merits of the
exception to the counterclaim
(i) Should the
exception be entertained because it involves conflicting
interpretations of statutory provisions?
[23] As a precursor
to the argument on the merits of the exception, Mr Obbes submitted
that the main counterclaim is not excipiable as the parties are
merely differing in their interpretation of the provisions of the
ACLR Act. In this regard he relied on the following passage in July
v Motor Vehicle Accident Fund 2010 (1) NR 368 (HC) (at 371G-I) where
the following was said:
‘…[T]he
fact that a plaintiff puts a particular interpretation on a statutory
provision that is different from the interpretation that the
defendant puts on that statutory provision, and the plaintiff makes a
claim based on his or her interpretation of the said provision,
cannot render the plaintiff's claim excipiable. In this regard, I do
not see on what ground the plaintiff's pleading can be declared bad
in law. It has been said that exception may be taken when the defect
in the pleadings appears ex facie the pleadings. (Van Winsen et al
The Civil Practice of the Supreme Court of South Africa (Cape Town,
Juta 1997) at 492, and the cases there cited.)’
[24] The Court
continued to state (at 371I-372A):
‘[12] In the
instant case, I do not find any defect - ex facie or otherwise - in
the plaintiff's pleadings, as claimed by the defendant in its
exception (1). It would have been a different matter if the
defendant's objection was that there is no provision in the MVA Fund
Act on which the plaintiff could possibly base his claim, or that the
plaintiff's claim is based on a provision of a statute other than the
MVA Fund Act.’
[25] These
statements were made in the following context. The plaintiff had
issued summons for payment to him of a certain amount based on a
settlement agreement in terms of which the defendant had undertaken
to pay for certain of the plaintiff’s medical expenses. The
defendant excepted to the claim, inter alia, on the grounds that the
claim by the plaintiff for payment to himself of a sum in respect of
medical expenses undertaken by the defendant to be paid in terms of
section 10(5)(a) of the Motor Vehicle Accidents Fund Act, 2001, was
bad in law as the legislation only allows the defendant to undertake
to make such a payment to the provider for the goods supplied or the
services rendered. The Court noted that the exception is undoubtedly
based on the interpretation and application of the relevant
provisions of section 10 of the MVA Fund Act and rejected the
exception as being without merit, inter alia because of the reason as
set out in the quotation above.
[26] Mr Strydom
strenuously argued that the approach taken in July v Motor Vehicle
Accident Fund (supra) should not be followed and submitted that, as
the exception is concerned with a legal issue and not dependent on
any evidence to be given in future, the matter must be decided at
this stage.
[27] Erasmus,
Superior Court Practice, B1-157, in the commentary on rule relating
to exceptions is of the view that where a plaintiff relies for his
claim on a particular provision of a statute it is necessary for the
plaintiff to allege all the facts necessary to bring his claim within
the statute. The author does so with reliance on McKay v Stein 1950
(4) SA 692 (W); Van der Merwe v Santam 1947 (2) SA 440 (C); and Botha
v Guardian Assurance Co. Ltd 1949 (2) SA 223 (GW). In all these
cases the exceptions were based thereon that the plaintiff’s
claim lacked certain averments ex facie the pleadings to bring the
claim within the requirements of the statutory provision. In my
respectful view it follows that in order to determine whether the
facts alleged are sufficient to sustain the claim, it is necessary to
interpret the statute. Should the defendant’s interpretation
differ from that of the plaintiff’s with the effect that it can
be argued that the facts alleged do not make out a claim and that
this goes to
the root of the
claim or part of the claim, it must, in my respectful view, mean that
an exception may be brought.
[28] In
Lampert-Zakiewicz v Marine & Trade Insurance Co Ltd 1975 (4) SA
597 (C) (at 599C-600B) the court stated as follows (the underlining
is mine):
‘The plaintiff
has now filed a notice of exception which reads as follows:
"Plaintiff
hereby excepts to sub-paras. (a), (b), (c), (d), (e) and (f) of para.
3 of defendant's plea as being bad in law in that no defence is
disclosed inasmuch as upon a true construction of Act 29 of 1942 and
Act 56 of 1972 and in the circumstances pleaded, plaintiff was not
precluded from including in his particulars of claim the item for
estimated future loss of earnings."
Before I proceed to
consider the question raised by the exception it is necessary to deal
briefly with two other matters. Counsel for defendant submitted in
limine that under the Uniform Rules of Court an exception can now
only be taken to the whole of a pleading and not to a part thereof.
Inasmuch therefore as the plaintiff’s exception in the present
case relates only to certain paragraphs of the plea the exception
should be dismissed with costs. I was referred to cases such as
Dharumpal Transport (Pty.) Ltd. v Dharumpal, 1956 (1) SA 700 (AD) at
p. 706; Saffer Clothing Industries (Pty.) Ltd. v Worcester Textiles
(Pty.) Ltd., 1965 (2) SA 424 (C) at pp. 429 - 430, and Santos and
Others v Standard General Insurance Co. Ltd. and Another, 1971 (3) SA
434 (O). The argument is not without substance but despite that I
have decided not to uphold it. The remedy of an exception, it has
often been stated, is available where the exception goes to the root
of the opponent's claim or defence. If, for example, there is a point
of law to be decided which will dispose of the case, in whole or in
part, the proper course is to proceed by way of exception. I would
with respect refer to and adopt the following word of INNES, C.J., in
Barrett v Rewi Bulawayo Development Syndicate, 1922 A.D. 457:
"Exception
should not be taken to particular sections of a pleading unless they
are self-contained and amount in themselves to a separate claim or a
separate defence, as the case may be."
The paragraphs in
the defendant's plea to which exception has been taken in the present
matter are, if I understand them correctly, self-contained and amount
in themselves to a separate defence. It is the validity of that
defence which is the subject-matter of the exception as I shall try
to explain later in this judgment. A further consideration which has
influenced me in coming to the conclusion not to dismiss the
exception is that, as was pointed out in the Dharumpal case, supra,
the main purpose of an exception that a declaration discloses no
cause of action (and similarly, I take it, that a plea or a distinct
part of a plea does not disclose a defence) is to avoid the leading
of unnecessary evidence. It seems to me that, depending on which way
the exception goes in the case, evidence as to future loss of
earnings will or will not be necessary at the trial. To that extent
the issue is a separate and distinct one which should, if possible,
be decided at this stage. It is true that other machinery exists,
such as Rule 33, by means of which the question can be decided but in
my judgment that is not a sufficient reason why the matter should not
be determined by way of exception.’
(See also Van Lochen
v Associated Office Contracts (Pty) Ltd 2004 (3) SA 247 (W) at 252F
–H; Denker v Cosack 2006 (1) NR 370 (HC) at 375E-G; Hangula v
Motor Vehicle Accident Fund 2013 (2) NR 358 (HC) at 363G.)
[29] Erasmus,
(supra) at B1-158 states that a pleading lacks averments which are
necessary to sustain a defence where the pleading does not justify
the conclusions drawn therein (with reliance on Miller v Muller 1965
(4) SA 458 (C) 467H); or (ii) where the defence raised, though
adequately pleaded, does not in law constitute as defence to the
claim (relying on Lampert-Zakiewicz (supra)). I see no reason why
the same should not apply mutatis mutandis to a pleading dealing with
a cause of action.
[30] In the premises
I regrettably find myself unable to agree with the approach taken by
the learned judge in July v Motor Vehicle Accident Fund as set out
supra. I think I should respectfully add here that the requirement
on which emphasis was placed in that case, namely that the defect
should appear ex facie the pleadings means only this, namely that ‘….
in deciding whether a particular averment in a pleading should be
struck out the Court must have regard only to the pleadings filed and
cannot consider any fresh matter introduced either by way of evidence
on affidavit or in any other manner.’ (Viljoen v Federated
Trust Ltd 1971 (1) SA 750 (O) at 754F-G).
(ii) The relevant
provisions under the ACLR Act and their subsequent amendment in 2003
[31] At the time
when the farm was donated and the agreement in terms of annexure “B”
was concluded section 17(1) and (2) of the ACLR Act read as follows:
‘17 Vesting in
State of preferent right to purchase agricultural land
(1) Subject to
subsection (3), the State shall have a preferent right to purchase
agricultural land whenever any owner of such land intends to alienate
such land.
(2) Subject to
subsection (3), no agreement of alienation of agricultural land
entered into by the owner of such land after the date of commencement
of this Part shall be of any force and effect until the owner of such
land-
(a) has first
offered such land for sale to the State; and
(b) has been
furnished with a certificate of waiver in respect of such land.’
[32] The definition
of ‘alienate’ in relation to agricultural land meant
‘sell, exchange or otherwise dispose of against any valuable
consideration of whatever nature’ and ‘alienation’
had a corresponding meaning.
[33] The
Agricultural (Commercial) Land Reform Amendment Act, 2002 (Act 13 of
2002) (‘the ACLR Amendment Act’), introduced certain
changes. The expression ‘alienate’ was amended to read:
“‘alienate’,
in relation to agricultural land, means sell, exchange, donate or
otherwise dispose of, whether for any valuable consideration or
otherwise, and includes, in the case where such land is registered in
the name of –
(a) a company, the
sale or transfer of shares of the company which results in the
controlling interest in the company being passed to another person;
or
(b) a close
corporation, the sale or transfer of an member’s interest in
the close corporation, or any portion of such interest, which results
in the controlling interest in the close corporation being passed to
another person,
and ‘alienation’
has a corresponding meaning.”
[34] After amendment
by the ACLR Amendment Act the relevant parts of section 17 read as
follows:
‘17 Vesting in
State of preferent right to purchase agricultural land
(1) Subject to
subsection (3), the State shall have a preferent right to purchase
agricultural land whenever any owner of such land intends to alienate
such land.
(1A)Whenever one or
more members of a company or close corporation which is the owner of
agricultural land intends to sell or transfer –
(a) in the case of a
company, any shares of the company which would have the effect of
passing the controlling interest in the company to another person; or
(b) in the case of a
close corporation, any interest or interests in the close
corporation, or any portion of such interest, which would have the
effect of passing the controlling interest in the close corporation
to another person,
it shall, for
purposes of subsection (1) of this section and section 17A(3), be
deemed that the company or close corporation in its capacity as owner
of the agricultural land held by it, intends to alienate such land.
(2)Notwithstanding
anything to the contrary in any law contained but subject to
subsection (3), no agreement or alienation of agricultural land
entered into by the owner of such land, or, in the case where such
land is alienated by a company or close corporation in the
circumstances contemplated in paragraphs (a) and (b), respectively,
of the definition of ‘alienate’, no agreement of sale or
instrument of transfer or transfer otherwise of any shares of the
company or of any member’s interest in the close corporation or
of any portion of such interest which, but for this subsection, would
have passed the controlling interest in the company or close
corporation to another person, shall be of any force and effect until
the owner of such land –
(a) has first
offered such land for sale to the State; and
(b) has been
furnished with a certificate of waiver in respect of such land.’
(iii) The merits of
the exception to the principal counterclaim
[35] Mr Strydom
submitted on behalf of the plaintiffs that the provisions of the ACLR
Act prior to the amendments contained no provision prohibiting a
donation of agricultural land. Likewise, he submitted, there was no
provision prior to the amendments which restricted the sale of a
member’s interest in a close corporation which was the owner of
agricultural land, except in cases where the purchaser of the
interest was a foreign national as provided for by section 58(2) of
the ACLR Act at the time.
[36] Mr Obbes, on
the other hand, submitted on behalf of the defendants, in summary,
that the composite scheme whereby the first defendant sold his
member’s interest in the close corporation (i.e. the first
plaintiff) to the plaintiff for the sum of N$620 000.00, while
donating the farm to the close corporation, constituted a disposition
of the farm for valuable consideration; that this constituted an
‘alienation’ within the meaning of the ACLR Act prior to
amendment; and, as the farm had not been offered to the State and a
certificate of waiver obtained, such alienation was in contravention
of section 17 as it then read.
[37] In spite of an
initial inclination to the contrary view, it seems to me upon proper
consideration that Mr Strydom is indeed correct. When the terms of
annexure “B” are considered, it is clear that what is
being sold is the 100% member’s interest which was to vest at a
future date in the first plaintiff upon its incorporation. The
parties acknowledge in the preamble that the first defendant as
seller has applied for the registration of a close corporation (first
plaintiff); that the first defendant is about to become the
registered and beneficial holder of the total member’s interest
in the close corporation; that the close corporation, once
incorporated will become the registered owner of the farm; that the
second plaintiff as purchaser is desirous of acquiring the benefits
to be derived from the farm to be registered in the name of the close
corporation and that it has been agreed that the method of the
purchaser so doing shall be by means of the purchaser buying from the
seller the member’s interest.
The terms of the
agreement are further all in accordance with the agreed purpose set
out in the preamble. Of particular significance is clause 4 of the
agreement in which the parties agree that the ‘purchase
consideration’ of the subject matter, i.e. the member’s
interest, payable by the purchaser to the seller shall be the sum of
N$620 000.00. Clause 5 determines that the full payment shall be made
on the ‘effective date’, which is defined as inter alia,
the date of registration of the farm in the name of the close
corporation and registration of the amended founding statement in
favour of the purchaser. Clearly the valuable consideration given is
for the member’s interest and not for the farm.
[38] Mr Obbes
referred to certain paragraphs in the defendants’ plea which
allege what the sole purpose and intention of the second plaintiff
and the first defendant were in constructing the transaction as they
did and emphasised that the intention was that the transaction should
be an ‘alienation’ of agricultural land as described in
the ACLR Act applicable at the time. He submitted that these
allegations of fact must be taken to be correct at the exception
stage and that evidence should first be led during the trial to
establish these allegations.
[39] Mr Obbes made
these submissions when he addressed argument on the exception to the
plea, but indicated later in general that the same arguments apply in
relation to the exception to the counterclaim. However, the
particular allegations of fact made in the plea are not repeated in
the counterclaim and therefore counsel’s submissions do not
apply.
[40] Furthermore, as
Mr Strydom pointed out, the purpose and intention of the parties
should be determined with reference to the written agreement and in
the agreement, even when considered in conjunction with the fact of
the donation of the farm to the first plaintiff, there is no
intention expressed or implied, that the transaction was intended to
be an ‘alienation’ as contemplated in the ACLR Act.
Indeed, it seems to me, the very purpose of the parties was to avoid
the provisions of the Act, and this they were entitled to do, as long
as the transaction is not simulated and therefore in fraudem legis
(Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 at
548; Strauss and another v Labuschagne 2012 (2) NR 460 (SC) at para
[44]). I further agree with Mr Strydom that the counterclaim does
not make out any case that the transaction was in fraudem legis.
[41] Counsel for the
plaintiffs submitted that one can infer from the amendments brought
about by the ACLR Amendment Act that the legislature intended to
render transactions like the one under discussion illegal precisely
because they were not so before the amendments. I agree with this
submission, which is strengthened by the fact that section 31(2) of
the ACLR Amendment Act specifically provided that the amendments to
the definition of the expression ‘alienate’ and
‘alienation’ and the amendments to section 17 shall come
into operation 60 days after the date of commencement of that Act.
It is clear that the legislature thought it wise to provide persons
with an opportunity to regulate their affairs in accordance with the
new statutory provisions. It is very unlikely that this opportunity
would have been provided if transactions of the kind under discussion
were in contravention of the ACLR Act prior to amendment.
[42] To sum up thus
far, the exception to the defendants’ principal claim is good.
(iv) The merits of
the exception to the defendants’ alternative counterclaim
[43] The plaintiffs’
submission in summary is that as a result of the amendments brought
about by the ACLR Amendment Act, the re-purchase of the membership
interest, should such an agreement be proved in evidence, will be
subject to the provisions of the ACLR Act as amended. The effect is
that any agreement to purchase the second plaintiff’s 100%
membership interest is dependent for its legal force and effect upon
compliance with section 17(2) as amended, i.e. the farm must first
have been offered for sale to the State; and the Minister must have
furnished a certificate of waiver in respect of the farm. The
alternative counterclaim does not, however, make any averments
regarding any condition precedent of this nature implied by law.
[44] On behalf of
the defendants it was submitted that it is arguable that, because the
agreement to re-purchase was already concluded during 2000 and prior
to the amendments brought about by the ACLR Amendment Act, this Act
would not apply to this agreement. This argument is based on the
further particulars provided in response to the plaintiffs’
question in paragraph 4.1 of their request for further particulars,
which reads as follows:
‘4.1 On what
basis in law, with specific reference to the provisions of the
Agricultural (Commercial) Land Reform Act no 6 of 1995 as amended
would the defendants be entitled to repurchase a majority share of
the second plaintiff?’
In response the
defendants stated:
‘4.1 No
reference is made in paragraph 12 as to the provisions of the
Agricultural (Commercial) Land Reform Act, Act No. 6 of 1995.
The defendants,
insofar it may be necessary, however states (sic) that the
defendants, in terms of the provisions of the Agricultural
(Commercial) Land Reform Act, Act No. 6 of 1995 applicable at the
stage when the agreement was entered into would have been and indeed
still are entitled to repurchase a majority share of the second
plaintiff as the amendment which prohibits such a repurchase of a
majority share of the second plaintiff was promulgated a substantial
period after the parties entered into the agreement entitling the
defendant to repurchase same.’
[45] The submission
on behalf of the defendants was made almost in passing with no
reference to authority and was not addressed at all by the
plaintiffs, although the issue was very briefly mentioned in the
defendants’ heads of argument. The focus of the argument during
the hearing was mainly on the exception to the plea and perhaps
because both counsel merely referred to the same arguments raised in
respect to the plea when they addressed the counterclaim, this issue
did not receive the attention it deserves. Unfortunately the Court
also did not notice it at the time. In the premises I prefer not to
express any opinion about it. Should it be necessary or expedient,
the point might be addressed at some stage in the future.
[46] The defendants’
case on the pleadings, read with the further particulars to the
alternative counterclaim, is that a waiver is not required, but in
the event that it is required, the prayer in respect of the
alternative counterclaim is adequately worded as it prays for an
order of retransfer of the second plaintiff’s member’s
interest ‘after all statutory requirements, including the
obtaining of a waiver insofar as it may be required to the transfer
had been fulfilled by second defendant.’ (I pause to note here
that section 17, as amended by the ACLR Amendment Act, places the
obligation to comply with the statutory requirements on the ‘owner’
of the agricultural land (in this case the first plaintiff) and not
on the purchaser (in this case the second defendant).) However, as
Mr Obbes submitted in the heads of argument, the Court could grant an
order in the properly worded by way of further or alternative relief.
[47] In all these
circumstances I am not inclined to uphold the exception in respect of
the alternative counterclaim. However, as the plaintiffs are
successful with respect to the principal claim, I think it would be
just to award them their costs.
Order
[48] In the result
the following order is made:
1. The plaintiffs’
exception to the defendants’ plea is struck out with costs,
such costs to include the costs of one instructing and one instructed
counsel.
2. The plaintiffs’
exception to the defendants’ principal counterclaim is upheld
with costs, such costs to include the costs of one instructing and
one instructed counsel.
3. The defendants
are given leave to amend their counterclaim, should they be so
advised, within 21 days of this order.
K van Niekerk
Judge
APPEARANCE
For the
plaintiffs/excipients: Adv J A N Strydom
Instr. by Van der
Merwe-Greeff Inc
For the
defendants/respondents: Adv D Obbes
Instr. by Dr
Weder, Kauta & Hoveka Inc.
Gunchab Farming CC and Another v Barnard and Another (I 3905/2009) [2014] NAHCMD 333 (14 November 2014);