In the matter between:
Delivered by the Hon. Mrs Justice A. M. Hlajoane on 23rd September, 2011.
The prayers as set out in the Notice of Motion are the following:
1. That Agreement of sublease No.20983 dated 9th September 1988 be declared null and void and of no force and effect.
2. That Deed of cession signed on the 26th April 1988 be declared null and void and of no force and effect.
3. That Agreement of further sub-letting No.23752 dated 31st October 1995 be declared null and void and of no force and effect.
4. That Addendum to Agreement of further sub-letting between C and S Properties (Pty) Ltd and Supreme Furnishers (Pty) Ltd dated 21st March 1994 be declared null and void and of no force and effect.
5. That the Deed of Hypothecation No.26469 entered into between 1st respondent and 6th respondent be declared null and void to the extent that it affects the rights of 2nd and 3rd applicant.
6. That the holding as security of lease No. 13283-446 by 6th respondent be declared null and void and of no force and effect.
7. That lease No.13283-446 be released to 1st applicant upon 1st applicant payment of outstanding debt owed by 2nd and 3rd applicants to 5th respondent.
8. That all other agreements and deeds entered into or in the cause of being entered into by 1st respondent with other parties in respect of land held under lease No.13283-446 be declared null and void and of no force and effect.
9. That 1st respondent desists forthwith from entering into and or negotiating agreements relating to lease No.13283-446.
10. Costs of suit.
11. Further and alternative relief as the Court may deem fit.
In her founding papers, 1st applicant has given a description of all the respondents and the applicants. She has described herself as a Mosotho female adult of Khubetsoana and the Executrix of the Estate of the late Bennett Makalo Khaketla (2nd applicant). That the second applicant is the Estate of the late Bennett Makalo Khaketla duly represented by 1st applicant in her capacity as the Executrix.
The 3rd applicant being a company duly registered by Law in Lesotho and a holder of title to Area at Cathedral Maseru under lease 13283-446 and currently under the management of 1st respondent and occupied by 2nd and 3rd respondents.
1st Respondent is C and S Properties (Pty) Ltd a company duly registered in Lesotho and whose majority of its shares and or all shares held by non-Basotho and with post residente at P.O. Box 40121 Cleveland 2022 Gauteng and physical address at: 7D Geldenhuis Road, Malvern East, 1041, Germiston South Africa and duly represented by Cosmos Cavaleros. 2nd and 3rd respondents being furniture shops at the said leased property with an interest in the outcome of the proceedings.
4th Respondent has been cited in their capacity as Attorneys and or agent / representatives of record of 1st respondent and at the same time representatives of 2nd and 3rd applicants while they were negotiating settlement for all outstanding debts owed by them to 5th respondent.
5th Respondent cited in its capacity as security holders pursuant to Deed of Hypothecation by 3rd applicant in favour of 5th respondent in respect of lease No.13283-446 and Deed of Hypothecation by the deceased Bennett Khaketla in favour of Lesotho Bank registration No.21866 in respect of lease No.12282-291.
6th Respondent has been cited in its capacity as a company duly incorporated in terms of the Laws of Republic of South Africa, an entity in whose favour Deed of Hypothecation by 1st respondent registration No.26469 was registered in the amount of nine million maluti (M9,000,000.00) in respect of lease No.13283-446.
The facts as gleaned from the affidavit by the 1st applicant are that 1st applicant’s father Bennett Makalo Khaketla, whose estate is 2nd applicant, died intestate on the 19th January, 2000. That the Khaketla family appointed 1st applicant as the Executrix of 2nd applicant and according to 1st applicant that appointment was confirmed by the Master of High Court on 11th June, 2009. The letter from the Master of High Court reads as follows:
“To whom it may concern;
Re: Estate Late Khaketla Makalo.
We confirm that Dr ‘Mamphono Khaketla the daughter of the above mentioned deceased has been appointed Executrix under Customary Law.
Since we have a dual system, estate devolve either under custom or under Administration of Estates Proclamation of 1935. The Chief and the District Administrator handle the former procedures, whereas under the Proclamation Estates are reported to the Master of the High Court.
Where an Estate is administered under custom there is no need for the Master to issue letters of administration since the letters issued by the two authorities mentioned are sufficient.
I would therefore, advice that the daughter of the deceased be assisted on the strength of this letter. I have satisfied myself that the family of Khaketla has appointed her executrix.”
It has been shown in the papers that the deceased, Khaketla was granted title to land in his own name of plot No.13283-446 Maseru Urban Area under lease No. 13283-446 on the 5th May, 1987 annexure “K²” to her founding papers. As correctly pointed out by the 1st applicant in her founding papers this case is mainly about the validity or invalidity of a number of agreements or transactions concluded by the deceased Makalo Khaketla in relation to the property held by him under lease No.13283-446.
It is not in dispute that such property was first registered in deceased’s name as shown above. The document reflected in it that title to land was so granted to the deceased Khaketla in terms of section 49 of the Land Act. The section reads as follows:
“Titles to land within a selected development area shall be granted by the Minister and shall be evidenced by a lease or licence which shall be prepared by the commissioner and executed in the manner prescribed.”
In granting such title to land there are some statutory conditions that go with the granting of such title.
To mention but one such condition as reflected in “K²” (m);
“The lesser shall not subdivide, sublease or otherwise part with the possession of the land comprised in the lease or any part thereof without the written approval of the Minister first hand obtained.”
Section 35 of the Land Act 1979gives rights to a lessee. The section stipulates that, a lessee shall be entitled to:
(i) Dispose of his interest,
(ii) Encumber the land leased by mortgage
(iii) Sublet the land leased but subject to obtaining consent of the Minister.
On the other hand section 16 (i) of the Deeds Registry Act 12 of 1967 when dealing with immovable property provides the following;
“Every deed or agreement transferring rights in or to immovable property shall be registered in the deeds registry.” (my own emphasis).
There is no dispute that on the 7th March, 1988 the deceased sub-let the property under lease to the 1st respondent. Also not in dispute is the fact that on the 26th April, 1988 the deceased further ceded the sublease with 1st respondent to the 3rd applicant. The explanation or reason was given as being because the deceased was about to transfer his rights in the lease to 3rd applicant. According to the 1st and 4th respondent the cession to 3rd applicant was not even necessary as upon transfer of the lease by the deceased to Mohlabani, 3rd applicant, at common law stepped into the shoes of the deceased.
It has also not been disputed that when the transactions between the deceased and 1st respondent on one hand and between deceased and 3rd applicant on the other hand took place there had been no prior consent by the Minister in terms of section 36 (5) of the Land Act 17 of 1979. Such consent was only given on the 13th June 1988.
Applicants have therefore asked this Court to declare such above mentioned transactions null and void and of no force and effect by reason first of non compliance with the mandatory provisions of section 36 (5) of the Land Act 17 of 1979 which is framed in mandatory terms as the word shall has been used. Secondly for non compliance with the mandatory provisions of section 16 (i) of the Deeds Registry Act 12 of 1967.
Applicants further argued that as a result of the non compliance with the provisions of the relevant legislations as shown above all transactions relating to the property and concluded by the 3rd applicant thereafter also became void and of no legal force and effect as the initiating transaction was legally void, despite subsequent registration.
The argument by applicants counsel finds support in the decision of our Court of Appeal in its judgment by Melunsky JA in Mothobi v Seboka C of A (CIV) No.3 of 2008 (unreported) at page 8 thereof where section 36 (5) of the Land Act was given its correct interpretation where in particular the word “conducted” which in turn was taken to mean “concluded”, was interpreted.
The Court of Appeal in interpreting the section clearly explained that what is said to be of no effect is the transaction and not the transfer.
Also in Sea Lake (Pty) Ltd v Chung Hwa Trading Enterprises Co (Pty) Ltd and Another (2000 – 2004) LAC 190 the Court observed at 193 that “prior ministerial consent in terms of section 35 of the Land Act is required. That without the prior consent of the Minister, a lessee is not entitled to dispose of his interest otherwise if he purports to do so all that follows is invalid.
1st and 4th Respondents on the other hand conceded that the transactions to sub-let and cede the rights took place before obtaining the Ministerial consent. But because the actual transfer took place after the Ministerial consent and the consent had stipulated that the transfer was to be at a later date, the transactions were valid and in terms of the law.
It has already been shown above that deceased sub-let the property to the 1st respondent on the 7th March 1988. He further ceded the sublease with 1st respondent on the 26th April, 1988. The consent by the Minister for both transactions was only given on the 13th June, 1988 which according to the authority of Mothobi v Sebotsa supra, rendered both transactions invalid and of legal force and effect. What matters is the transaction and not the transfer.
Coming now to the provisions of section 16 (i) of the Deeds Registry Act 1967. Applicants contended that the transfer by the deceased to 3rd applicant was invalid for non-compliance with the provisions of the above section as it was not registered. But my looking at annexure “K³”, Deed of Transfer of plot no. 13283-446 by the deceased to 3rd applicant it bears the Registrar of Deeds date impression stamp for the 9th September, 1988 after its registration No.20981. Same with Deed of cession by deceased to 1st respondent which according to “K5” Reg. No.20983 was also registered on the 9th September 1988. So that it cannot be true that there was non-compliance with the relevant section in the Deeds Registry Act.
Such registration could have satisfied the provisions of section 16 (3) which requires the registration to be within three months of the granting of the consent, had it not been because of having concluded the transaction prior to the consent by the Minister in terms of section 36 (5) of the Land Act, rendering the transaction invalid.
The respondents had posed a question as to what would be the legal effect should the Court find that on the facts there was in fact no compliance with section 36 (5) of the Land Act? But immediately came up with an answer based on the authority from Kennedy and Kennedy v Lanyon 1923 TPD 284.
As I saw it the Kennedy matter could not be relevant to our case as it concerned a section of the Transfer Duty Proclamation of 1902 outside our jurisdiction, dealing with inchoate contracts.
The above case is about plaintiff as purchaser having paid to the defendant money for the sale of land and failure by defendant to give transfer to plaintiff. The sale being rendered invalid under the statute, as the agreement of sale was signed by defendant’s agent without authorization. The argument being that the purchase price could only be claimed if has proved that the other party is unable or unwilling to perform.
But because the 3rd applicant in casu has performed by delivering the property to the 1st respondent there would be no need for the 3rd applicant to undo what the deceased did. Respondents had argued also that it would be unfair for 3rd applicant to seek return of the property before the expiry of the lease in 2019, as that would amount to unjust enrichment because 1st respondent has settled 3rd applicant’s indebtedness to 5th respondent and has financed the restoration of the building on the premises after the 1998 riots.
But in our case reliance is placed on the provisions of our statute to transfer of rights in a land, non compliance of same rendering such transaction invalid and of no legal force or effect.
It has also been argued that there is no explanation as to why the 4th respondent has been joined in these proceedings as no relief is being sought against it. That whatever was to be said about it could have been said in the affidavit without joining him. That it would be up to 1st respondent to obtain from 4th respondent whatever affidavits deemed necessary.
Looking at paragraph 18.5 of 1st applicant’s affidavit, she has deposed to the fact that 4th respondent drew the deed of cession between the deceased and 3rd applicant which was intended to enable 1st respondent to enter into sub-lease agreement with the 3rd applicant.
Looking further in the papers from the formation of the company, the 3rd applicant, it was the 4th respondent who acted for the deceased and there was a power of attorney in that regard. When transacting the Deed of Cession between the deceased and 1st respondent it was the 4th respondent who assisted the deceased, when the 1st respondent is said to have been represented by one Cosmos Cavaleros, per resolution of Board of Directors of 1st respondent. But when one looks at subsequent transactions, like the Deed of Hypothecation by 1st respondent page 142 of the record, 4th respondent’s office has been granted power of attorney by 1st respondent. See also p.151 of the record power of attorney to register mortgage by 1st respondent still by 4th respondent. Surely here there was a conflict of interest as 4th respondent had all along been acting for the deceased and 3rd applicant. This is confirmed even by the correspondence by 4th respondent to 1st applicant per its letter at p.129 of the record “K10”. And 1st respondent has not denied that fact even in its answering affidavit at paragraph 13 thereof. So that it could not have been far from the truth in saying when 4th respondent drew the Deed of Cession between deceased and 3rd applicant, the intention was to enable or benefit 1st respondent to enter into sub-lease agreement with the 3rd applicant.
It would seem therefore that when 4th respondent entered into transactions which affected lease No.13283-446 the intention had always been to benefit the 1st respondent not the 3rd applicant.
It was thus not surprising therefore when at page 165 of the record, on the consent by the Commissioner of Lands in terms of section 36 of the Land Act to the mortgage of the said lease to 6th respondent for an amount of M9,000,000.00 (nine million maluti) by 1st respondent, 1st respondent allowed itself to be referred to as owner of the property.
3rd Applicant has lost touch with the property but we see 4th respondent being the one on the steering wheel now acting for the 1st respondent. Mohlabani being a company formed by two shareholders, father and son. But father since passed away. We have heard nothing about the remaining shareholder but we see 1st respondent effecting monthly payments to the deceased’s wife termed ex gratia payment.
1st Applicant in her affidavit has shown at paragraph 4 thereof that though 1st respondent is a company duly registered in terms of the Laws of the Kingdom of Lesotho, majority of its shares if not all shares are held by non Basotho. Also that it has chosen its domicilium citanti et executandis at (physical address)
7D Geldenhuts Road
And Postal address as
P.O. Box 40121
In terms of section 6 (c) of the Land Act 1979 1st respondent is disqualified from holding any title to Land in Lesotho. But as correctly argued by applicants’ counsel the law in Lesotho is very clear when it comes to rights to Land. Section 6 (1) (a) and (c) of the Land Act is very clear on persons capable of holding land in Lesotho. Section 6 (1)
“No person shall (my own emphasis) be capable of holding title to land except-
(a) A citizen of Lesotho
(b) - - - - - - - - - - - - - - - -
(c) A company incorporated or registered under the Companies Act 1967 and carrying on business in Lesotho and a majority share holding of at least 51%, and remains, at all times in the hands of citizens of Lesotho.”
Though it is a company duly registered in Lesotho but majority of its share holding is not in the hands of Basotho.
There have been many other transactions that were concluded by the 3rd applicant thereafter. The 3rd applicant on the 18th April, 1988 sought to enter into a mortgage bond with the 5th respondent over the interest in lease No.13283-446 as security.
Later on the 23rd August, 1988 1st respondent concluded an agreement of sublease with Supreme Furnishers which was to run for 5 years but the Ministerial consent is dated the 4th March 1991 which was well after the transaction was concluded in clear violation of the provisions of section 36 (5) of the Land Act 1979.
On the 29th June, 1990 3rd applicant entered into an agreement of cession with a company called C and S Design Systems. With that transaction there has been no consent or date on which such cession was so registered. The transaction without Ministerial consent has to suffer the same fate as all others that came before it.
Again on the 21st March, 1994 1st respondent and Supreme made an addendum to the sub-lease that they had previously entered into on the 23rd March, 1989. The effect of this addendum is also questionable. Later on the 11th October 1995, a consent was signed by the Minister allowing the sublease to run for a further period of 15 years. That new sub-lease was registered in the Deeds Registry on the 31st October 1995 and the parties to it purported to have relied on the Ministerial consent of the 4th March 1991 which stated as follows:
“The sublease of lease No.13283-446)MASERU URBAN AREA) pursuant to section 36 to Supreme Furnishers (Pty) Ltd for a period of 5 years at a rental amount of M8,500.00 (eight thousand five hunderd maluti) per month escalating annually, with an option of renewal for a further period of 5 years to be mutually agreed between the parties by C & C Properties (Pty) Limited as owner thereof.”
Lastly 3rd applicant and 1st respondent entered into yet another addendum in which the sublease was extended to 31st October, 2019.
As already stated earlier on in this judgment, the validity or the invalidity of the other transactions that were concluded in respect of lease No.13283-446 after the deceased was granted title to the land will depend on the legality of the first two transactions between the deceased and 1st respondent on one hand and between the deceased and the 3rd applicant on the other hand.
The Court has therefore found out that both transactions which were concluded by the deceased in relation to the property held by him under lease No.13283-446 were concluded prior to obtaining Ministerial consent thus rendering them invalid and of no legal force and effect.
Such provisions have been couched in mandatory terms, thus rendering any non-compliance thereof resulting in invalidity. So that whatever transactions relating to the property concluded by the 3rd applicant thereafter also became void and of no legal force and effect.
Authorities cited above have shown that what is of paramount importance is the transaction and not the transfer.
Besides the subleases entered into there have been mortgage bonds, like the nine million bond and Deed of Hypothecation entered into affecting the property in question. Huge sums of monies have been involved in such transactions. The question then that follows would be who then is to be held answerable after the transactions have been held to be invalid?
The application succeeds and because the agreements by both 3rd applicant and 1st respondent as the originating transactions relating to the property have been declared invalid the property thus remains in the hands of 2nd applicant. Since the 3rd applicant has no stake or title to the property, it is for the Khaketla family to report the deceased’s estate to the Master of the High Court who will deal with such property in terms of the Law.
Costs will follow the event, so that costs are awarded to the 1st and 2nd applicants.
A. M. HLAJOANE
For Applicants: Ms Sello – Mafatle
For 1st and 4th Respondents: Adv. A.J. Horwitz SC
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