Background
Section 3(e)(i) of the Subdivision of Agricultural Land Act, 70 of 1970, (hereinafter referred to as “the Act”), which prohibits the subdivision of agricultural land without the Minister’s consent has been a thorn in the flesh of many since its inception. What made matters even worse was the judgment handed down in Geue and Another v Van der Lith and Another 2004 (3) SA 333 (SCA) where it was held that a sale subject to a suspensive condition is void ab initio, given the definition of sale in the Act. Sale is defined in the Act as including “a sale subject to a suspensive condition”. It was also held that the clear intention of the legislature cannot be ignored merely because the particular consequences are regarded as harsh or even unwise, and therefore to sell property subject to a condition that the consent of the Minister must be obtained subsequent to sale agreement being signed is void.
As a possible circumvention of the provisions of section 3(e)(i) of the Act, read in conjunction with the definition of sale, the affording of an option to purchase, subject to the obtaining of the approval from the Minister was an option. However, in the unreported case of Colchester Zoo SA Investments (Pty) Ltd v Weenen Safaris CC (Case No. 2386/07) dated 16 October 2007, Moosa AJ held that a written option document is also covered by the definition of sale in the Act, and no sale agreement comes into existence. Once again, the option of affording an option was not an option.
Solution
In a recent case of Westraad NO v Burger (5226/06) [2007] ZAFSHC 34 (13 April 2007) handed down by Judge Van Zyl, the exercising of an option for the purchase of a portion of agricultural land, subject to the obtaining of the Minister’s consent, was again placed under the spotlight. From the said case it is evident that the solution to this thorny issue is that the seller should grant the purchaser an option to purchase the portion and to provide that the purchaser cannot exercise the option unless the Minister grants his/her consent to the proposed sale within the option period. This, then, is not a sale but merely an offer by the seller to sell the portion to the purchaser which becomes a sale only when the purchaser exercises his/her option.
Conclusion
The Westraad-case appears to be a sound judgment and from a deeds registry perspective, the Registrar will not be capable of deducing whether the contract was in contravention of section 3(e)(i) of the Act, as the date of sale would obviously be subsequent to the date of issue of the consent by the Minister. Should the restrictive approach in this case be followed, options to purchase, exchanges and donations may be entered into also, subject to the Minister’s consent being obtained subsequent to the sale agreement being entered into.
Whether the option falls within the ambit of “advertise” as provided for in the definition of sale in the Act is a question still remaining to be answered.
Please do not hesitate to contact me for further information.
Allen West
TONKIN CLACEY PRETORIA
012 346 1278
