By Giles Freebody (Associate) and Ntobeko Maphanga (Candidate Attorney)
This article examines the recent case of Van Wyk and Others v Topaz Sky Trading 146 (Pty) Ltd and Others 2017 ZAGPPHC, a matter heard in the High Court of South Africa, Gauteng Local Division.
The First and Second Applicants had been farming and breeding Arabian horses for over 30 years on their farmland property, located in the district of Klerksdorp (the “Property”). The First and Second Applicant entered into a partnership in respect of such farming activities, specifically with regard to the newly established Arabian Horse Show and a Breeding Stud known as the “Johrhemar Arabian Stud” (the Third “Applicant”).
The above matter concerned an agreement concluded between the First Applicant and the First Respondent (the “Agreement”) in which it had been agreed that the First Applicant would sell an undivided portion of the Property to the First Respondent, subject to a suspensive condition that required the Minister of Agriculture’s consent, in terms of section 3(e)(i) of the of the Agricultural Land Act 70 of 1970 (the “Act”), for the sale itself as well as the subdivision of the Property.
In terms of the Agreement, the First Respondent paid a non-refundable deposit of R1 million towards the purchase price of R20 million and a further amount of R2.5 million against registration of the transfer of the Property into the its name, in terms of the Agreement. The First Respondent, however, failed to pay the balance of the purchase price and as such repudiated its remaining obligations. The First Applicant, therefore, sought to cancel the Agreement.
The First and Second Applicants neglected to make an application for ministerial consent in terms of Section 3 of the Act. The Applicants’ primary contention was that the Property did not comprise of agricultural land since it had been excluded from the provisions of the Act by a prior agreement between the National Department of Agriculture, the Department of Development, Local Government and Housing, the North West Province and the Municipality.
The First and Third Respondents contended that the sale of Property, as well as its subdivision, were invalid and void ab initio for lack of compliance with provisions of Section 3 of the Act relating to the required ministerial consent.
The Court’s Findings
The Court found that the approval for the sale of the Property, and the written approval for its subdivision, had not been obtained from the Minister prior to the Agreement being concluded and before its subdivision was registered.
The Court further found that the requirements of the Act are peremptory and that the sale of the Property and the subdivision thereof, without the requisite Ministerial consent was, therefore, contrary to the provisions of the Act.
In light of the aforegoing, the Court found that the Agreement was void ab initio and that it was unenforceable and incapable of being breached and/or cancelled.
Why This Case is Important
This case makes it clear that an agreement to sell agricultural land without the Minister of Agriculture’s consent shall be void ab initio. Accordingly, a transfer of agricultural land, effected in terms of such agreement, will be invalid. Similarly, subdivision of agricultural land in the absence of ministerial consent will cause the registration of the subdivided portions of agricultural land to be invalid.
Furthermore, one cannot contract out of Section 3 of the Act. The requirement of ministerial consent cannot be circumvented by prior agreements concluded between different spheres of government and/or various government departments.