CIV/APN/432/2009

 

 

In the matter between:

 

 

 

JUDGMENT

Delivered by the Hon. Mrs Justice A. M. Hlajoane on 23^rd September, 2011.

 

The prayers as set out in the Notice of Motion are the following:

1.     That Agreement of sublease No.20983 dated 9^th September 1988 be declared null and void and of no force and effect.

2.     That Deed of cession signed on the 26^th April 1988 be declared null and void and of no force and effect.

3.     That Agreement of further sub-letting No.23752 dated 31^st 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 21^st March 1994 be declared null and void and of no force and effect.

5.     That the Deed of Hypothecation No.26469 entered into between 1^st respondent and 6^th respondent be declared null and void to the extent that it affects the rights of 2^nd and 3^rd applicant.

6.     That the holding as security of lease No. 13283-446 by 6^th respondent be declared null and void and of no force and effect.

7.     That lease No.13283-446 be released to 1^st applicant upon 1^st applicant payment of outstanding debt owed by 2^nd and 3^rd applicants to 5^th respondent.

8.     That all other agreements and deeds entered into or in the cause of being entered into by 1^st 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 1^st 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, 1^st 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 (2^nd applicant).  That the second applicant is the Estate of the late Bennett Makalo Khaketla duly represented by 1^st applicant in her capacity as the Executrix.

 

The 3^rd 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 1^st respondent and occupied by 2^nd and 3^rd respondents.

 

1^st 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.  2^nd and 3^rd respondents being furniture shops at the said leased property with an interest in the outcome of the proceedings.

 

4^th Respondent has been cited in their capacity as Attorneys and or agent / representatives of record of 1^st respondent and at the same time representatives of 2^nd and 3^rd applicants while they were negotiating settlement for all outstanding debts owed by them to 5^th respondent.

 

5^th Respondent cited in its capacity as security holders pursuant to Deed of Hypothecation by 3^rd applicant in favour of 5^th 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.

 

6^th 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 1^st 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 1^st applicant are that 1^st applicant’s father Bennett Makalo Khaketla, whose estate is 2^nd applicant, died intestate on the 19^th January, 2000.  That the Khaketla family appointed 1^st applicant as the Executrix of 2^nd applicant and according to 1^st applicant that appointment was confirmed by the Master of High Court on 11^th 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 5^th May, 1987 annexure “K²” to her founding papers.  As correctly pointed out by the 1^st 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 7^th March, 1988 the deceased sub-let the property under lease to the 1^st respondent.  Also not in dispute is the fact that on the 26^th April, 1988 the deceased further ceded the sublease with 1^st 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 3^rd applicant.  According to the 1^st and 4^th respondent the cession to 3^rd applicant was not even necessary as upon transfer of the lease by the deceased to Mohlabani, 3^rd 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 1^st respondent on one hand and between deceased and 3^rd 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 13^th 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 3^rd 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.

 

1^st and 4^th 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 1^st respondent on the 7^th March 1988.  He further ceded the sublease with 1^st respondent on the 26^th April, 1988.  The consent by the Minister for both transactions was only given on the 13^th 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 3^rd 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 3^rd applicant it bears the Registrar of Deeds date impression stamp for the 9^th September, 1988 after its registration No.20981.  Same with Deed of cession by deceased to 1^st respondent which according to “K5” Reg. No.20983 was also registered on the 9^th 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 3^rd applicant in casu has performed by delivering the property to the 1^st respondent there would be no need for the 3^rd applicant to undo what the deceased did.  Respondents had argued also that it would be unfair for 3^rd applicant to seek return of the property before the expiry of the lease in 2019, as that would amount to unjust enrichment because 1^st respondent has settled 3^rd applicant’s indebtedness to 5^th 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 4^th 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 1^st respondent to obtain from 4^th respondent whatever affidavits deemed necessary.

 

Looking at paragraph 18.5 of 1^st applicant’s affidavit, she has deposed to the fact that 4^th respondent drew the deed of cession between the deceased and 3^rd applicant which was intended to enable 1^st respondent to enter into sub-lease agreement with the 3^rd applicant.

 

Looking further in the papers from the formation of the company, the 3^rd applicant, it was the 4^th 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 1^st respondent it was the 4^th respondent who assisted the deceased, when the 1^st respondent is said to have been represented by one Cosmos Cavaleros, per resolution of Board of Directors of 1^st respondent.  But when one looks at subsequent transactions, like the Deed of Hypothecation by 1^st respondent page 142 of the record, 4^th respondent’s office has been granted power of attorney by 1^st respondent.  See also p.151 of the record power of attorney to register mortgage by 1^st respondent still by 4^th respondent.  Surely here there was a conflict of interest as 4^th respondent had all along been acting for the deceased and 3^rd applicant.  This is confirmed even by the correspondence by 4^th respondent to 1^st applicant per its letter at p.129 of the record “K10”.  And 1^st 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 4^th respondent drew the Deed of Cession between deceased and 3^rd applicant, the intention was to enable or benefit 1^st respondent to enter into sub-lease agreement with the 3^rd applicant.

 

It would seem therefore that when 4^th respondent entered into transactions which affected lease No.13283-446 the intention had always been to benefit the 1^st respondent not the 3^rd 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 6^th respondent for an amount of M9,000,000.00 (nine million maluti) by 1^st respondent, 1^st respondent allowed itself to be referred to as owner of the property.

 

3^rd Applicant has lost touch with the property but we see 4^th respondent being the one on the steering wheel now acting for the 1^st 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 1^st respondent effecting monthly payments to the deceased’s wife termed ex gratia payment.

 

1^st Applicant in her affidavit has shown at paragraph 4 thereof that though 1^st 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

          Malvern East

          Germiston

          1401

And Postal address as

          P.O. Box 40121

          Cleveland 2022

Gauteng

 

In terms of section 6 (c) of the Land Act 1979 1^st 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 3^rd applicant thereafter.  The 3^rd applicant on the 18^th April, 1988 sought to enter into a mortgage bond with the 5^th respondent over the interest in lease No.13283-446 as security.

 

Later on the 23^rd August, 1988 1^st respondent concluded an agreement of sublease with Supreme Furnishers which was to run for 5 years but the Ministerial consent is dated the 4^th 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 29^th June, 1990 3^rd 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 21^st March, 1994 1^st respondent and Supreme made an addendum to the sub-lease that they had previously entered into on the 23^rd March, 1989.  The effect of this addendum is also questionable.  Later on the 11^th 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 31^st October 1995 and the parties to it purported to have relied on the Ministerial consent of the 4^th 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 3^rd applicant and 1^st respondent entered into yet another addendum in which the sublease was extended to 31^st 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 1^st respondent on one hand and between the deceased and the 3^rd 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 3^rd 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 3^rd applicant and 1^st respondent as the originating transactions relating to the property have been declared invalid the property thus remains in the hands of 2^nd applicant.  Since the 3^rd 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 1^st and 2^nd applicants.

 

 

 

A.   M. HLAJOANE

JUDGE

 

For Applicants:                                 Ms Sello – Mafatle

For 1^st and 4^th Respondents:             Adv. A.J. Horwitz SC