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REPORTABLE

IN THE LAND CLAIMS COURT OF SOUTH AFRICA

LCC 82/2007

BEFORE SARDIWALLA AJ

In the matter between:

ROOYENDAL (PTY) LTD .......................................................................1^ST PLAINTIFF

MARK WILLIAM BOSHOFF ..................................................................2^ND PLAINTIFF

SENTA BOSHOFF .................................................................................3^RD PLAINTIFF

EDSEL HOHLS .......................................................................................4^TH PLAINTIFF

I.R. VOIGHTS (PTY) LTD .......................................................................5^TH PLAINTIFF

WALTER HERBERT REDINGER ..........................................................6^TH PLAINTIFF

HEINS FRIEDEL REDINGER .................................................................7^TH PLAINTIFF

DESMOND ROBERT PETER FOURIE N.O. ..........................................8^TH PLAINTIFF

KAREN ANN HEPBURN N.O. ...............................................................9^TH PLAINTIFF

WALTER HERBERT REDINGER N.O. ................................................10^TH PLAINTIFF

SENTA BOSHOFF N.O. .......................................................................11^TH PLAINTIFF

VERONA IDA REGINE REDINGER N.O. ............................................12^TH PLAINTIFF

DESMOND ROBERT PETER FOURIE N.O. ........................................13^TH PLAINTIFF

KAREN ANN HEPBURN N.O. .............................................................14^TH PLAINTIFF

MARK WILLIAM BOSHOFF N.O. ........................................................15^TH PLAINTIFF

SENTA BOSHOFF N.O. .......................................................................16^TH PLAINTIFF

MARK WILLIAM BOSHOFF N.O. ........................................................17^TH PLAINTIFF

DESMOND ROBERT PETER FOURIE N.O. ........................................18^TH PLAINTIFF

KAREN ANN HEPBURN N.O. .............................................................19^TH PLAINTIFF

EDSEL HOHLS N.O. ............................................................................20^TH PLAINTIFF

ANITA LENI HOHLS N.O. ....................................................................21^ST PLAINTIFF

DIETMAR MEYER N.O. ........................................................................22^ND PLAINTIFF

HERBERT HELMUT SCHULZ N.O. .....................................................23^RD PLAINTIFF

ANITA LENI HOHLS N.O. ....................................................................24^TH PLAINTIFF

IVAN RICHARD VOIGTS N.O. .............................................................25^TH PLAINTIFF

HERBERT HELMUT SCHULZ N.O. .....................................................26^TH PLAINTIFF

IVAN RICHARD VIOGTS N.O. .............................................................27^TH PLAINTIFF

WILLM WOUTER FOURIE N.O. ..........................................................28^TH PLAINTIFF

IVAN STEVENS COLENBRANDER N.O. ............................................29^TH PLAINTIFF

RALPH IVAN VIOGTS N.O. .................................................................30^TH PLAINTIFF

ANDRE MARK VIOGTS N.O. ...............................................................31^ST PLAINTIFF

DESMOND ROBERT PETER FOURIE N.O. .......................................32^ND PLAINTIFF

KAREN ANN HEPBURN N.O. ..............................................................33^RD PLAINTIFF

WALTER HERBERT REDINGER N.O. ................................................34^TH PLAINTIFF

VERONA IDA REGINE REDINGER N.O. ............................................35^TH PLAINTIFF

HEIDI SWANEPOEL N.O. ....................................................................36^TH PLAINTIFF

And

THE MINISTER OF LAND AFFAIRS ..................................................1^ST DEFENDANT

TABATHA AGATHA SHANGE ..........................................................2^ND DEFENDANT

Heard: 29 July 2011

3^rd – 7^th October 2011

29^th February – 2^nd March 2012

24^th October 2012

Delivered: 14^th May 2013

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JUDGEMENT

[1] The plaintiffs were farm owners and farmed in the names of juristic persons. They are suing the first and second defendants for payment of certain input and development costs based on an oral agreement.

FACTUAL BACKGROUND

[2] The claim is brought by way of action against the defendants alleging that agreement was reached in the course of several meetings pursuant to the settlement of a land claim.

[3] There are 36 plaintiffs in this matter, due to the fact that plaintiffs are acting in different capacities they are only 17 legal persons but in their different capacities they form 36 plaintiffs.

[4] The defendants are the Minister of Rural Development and Land Reform and Ms Tabatha Shange, the former Regional Land Claims Commissioner for KwaZulu Natal.

[5] Two communities lodged land claims for various properties in KZN. The claims were investigated by the office of the second defendant and in the process of negotiation the parties agreed to settle the matter. The settlement enabled the first defendant to purchase several portions of land for restoration to the claimants.

[6] The first to seventh plaintiffs are land owners and also farmed on their properties. The farming operations were not in their own names but in the names of different legal entities in which the owners are either directors or trustees. The legal entity in each case has entered into a lease agreement with the owner. Throughout the process of negotiations relating to the land claims the owners allege that they represented themselves as owners and also as duly authorised representatives of the lessee. It is evident from the pleadings and the evidence that a distinction was seldom if not at all drawn by the owners in the course of discussions and meetings as to their respective capacities at each meeting. The remainder of the plaintiffs are trustees of various trusts which are the owners of some of the land.

[7] The negotiation process for the settlement of the land claim was protracted due to the extent of the area and the value of the land.

[8] It is common cause that written agreements were concluded between the plaintiffs and the defendants in respect of various properties that were valued in May 2004. The claims were settled and the state purchased the farms for an amount in excess of 90 million rand from the plaintiffs for restitution to the claimants.

[9] The present claim by the plaintiffs is one for the enforcement of an alleged oral agreement that was concluded between the second defendant and the first to seventh plaintiff for the payment of input costs and development costs. In the alternative the plaintiffs are claiming that the properties were sold in an amount below their actual value and the difference is being claimed from the defendants. It was agreed by the parties that only the claim for the first to seventh plaintiffs would be argued and the alternative claims will be dealt with at a later stage if necessary.

PLAINTIFFS CASE

[10] The plaintiffs allege that during the period from 8 July 2004 to 6 September 2005 the first to seventh plaintiffs each concluded oral agreements with the Department of Rural Development and Land Reform (the Department). The second defendant was at all times authorised to represent the Department alternatively if she was not authorised, she misrepresented to the plaintiffs that she was.

[11] The material express terms of the said agreement were as follows:

[11.1] The department would compensate the first to seventh plaintiffs for the input costs incurred by them for the 2004/2005 season on the farms farmed by them.

[11.2] the department would compensate the second and third plaintiffs for certain development costs on the farms farmed by them.

[11.3] the basis of the compensation would be actual, alternatively, agreed, alternatively reasonable input costs approved by the Departments agent Crystal Holdings (Pty) Ltd.

[11.4] the amounts would be paid after the transfer of the property.

[12] The amounts being claimed for input and development costs are:

1. First plaintiff: R179 625.51 due on 11/10/2005

2. Second and third plaintiffs: R1 516 605.49 due on 12/09/2005

3. Fourth plaintiff: R 1 624 138.76 due on 12/09/2005

4. Fifth plaintiff: R1 624 138.76 due on 13/09/2005

5. Sixth plaintiff: R 660 915.29 due on 12/09/2005

6. Seventh plaintiff: R 600 628.26 due on 09/09/2005

A total amount of R 4 762 255.73 exclusive of interest calculated at 15.5% from the date that the debts became due.

DEFENDANTS CASE

[13] The defendants pleaded in limine that the plaintiffs were precluded from proceeding with the matter by virtue of their failure to comply with section 3 (2) (a) of the Institution of Legal Proceedings Against certain Organs of State Act, 40 of 2002. Their non-compliance was evidenced by their failure to comply with the 6 month time limit provided in this section.

[14] In response to the plaintiffs allegations relating to the second defendants authority, the defendants admitted that the second defendant was at all times authorised to represent the department by way of delegated authority to her by the first defendant. By virtue of this delegated authority the second defendant had the requisite statutory authority to enter into agreements in terms of the Restitution of Land Rights Act 22 of 1994. The defendants however, deny that they entered into any oral agreement with the first to seventh plaintiffs for the payment of input and development costs.

[15] Defendants version is that such costs were only discussed in relation to the overall contemplated post-transfer management plan. When it became apparent that the plans would not materialize the question of such costs became academic. In support of the defendants version they submit that the plaintiffs in any event harvested and profited from the crops for which input costs are being claimed suggesting that the plaintiffs would benefit from the profits of the inputs and receive compensation for the same inputs had this been agreed resulting in what the third plaintiff describes as “double dipping”.

PLAINTIFFS REPLY

[16] In reply to the point raised in limine the plaintiffs alleged that the Act did not apply because the plaintiffs claim was for specific performance and not damages as envisaged in the Act. The plaintiffs however opted to apply for condonation in terms of section 4 of the Act and their non-compliance was condoned by agreement and proceedings continued.

DEFENDANTS SPECIAL PLEA

[17] The defendants raised a special plea that the plaintiffs claims arose from the settlement of two land claims, and deeds of sale were entered into by the parties. The special plea was threefold and is set out below:

[17.1] each party was represented by duly authorised representatives

[17.2] each deed of sale contains a clause 8. This clause will be discussed below.

[17.3] any agreement would have to be reduced to writing in terms of the Alienation of Land Act 68 of 1981 (ALA) to be enforceable.

MAIN ISSUES FOR DETERMINATION

[18] By agreement between the parties, it was decided that the trial must be limited to three issues, namely;

[18.1] whether the oral agreements averred by the first to seventh plaintiffs had been concluded

[18.2] whether those agreements could validly have been concluded if regard is had to clause 8 read with the other agreements.

[18.3] whether the agreements had to comply with section 2 (1) of ALA.

[19] The oral agreements will be discussed first; the finding in this regard will determine whether it is necessary to make a ruling on the remaining two issues.

Whether the oral agreements averred by the plaintiffs had been concluded

[20] Input and development costs are pivotal to the plaintiffs claim and an understanding of what these costs entail will inform the basis of the purported agreements.

Input Costs

[21] Input costs relate to the costs incurred by farmers in a season to ensure that they produce a healthy crop, these include fertilisers, herbicides, pesticides, and wages; in essence these are all the costs incurred seasonally to maintain a farming operation. The actual items are described in the plaintiffs bundle and there is no need to analyse the inputs in determining the validity of the agreements.

[22] The input costs claimed by plaintiffs are for the farming season prior to date of signature of the agreements of sale of the properties, specifically the period September 2004 to January 2005. The agreements of sale were signed in June 2005 and the properties transferred around September 2005.

PLAINTIFFS EVIDENCE

[23] The trial proceeded and the plaintiffs called seven witnesses namely, Senta Boshoff (third plaintiff), Ivan Richard Voigts (twenty-fifth plaintiff), Edsel Hohls (fourth plaintiff), Pierre Redinger (director of Crystal Holdings (Pty) Ltd), Advocate AJ Rall SC (representative of plaintiffs during negotiations), Karen Hepburn (representative of parties and 9^th, 14^th and 19^th plaintiff) and Advocate Potgeiter SC (representative of plaintiffs during negotiations) To a large degree their evidence was common cause .

[24] Boshoff’s evidence¹was that throughout the negotiation process the farmers expressed their concern that input costs would be incurred after the valuations were finalised for the purposes of the sale and from that date onwards they would farm out of profit².The witness suggested that the costs would be incurred but the crops would not be harvested. It is common cause that the valuations were concluded in May 2004It is also common cause that Boshoff was present at most of the meetings that were held between the parties.

[25] Boshoff also informed the Court that had the farmers entered into an agreement to lease back the farms from the claimant communities; they would not require inputs as this would amount to double payment. She explained that sugar cane grows over a two year cycle and timber over 10 years. The inputs on their sugar cane field would be reaped two years later and on timber only in ten years however a tenth of the crop was harvested every season.

[26] Ralls evidence was that;

“the state would reimburse input on the production of invoices, both inputs in respect of which details already supplied and inputs since then”.

He however conceded that he was not present at all the meetings and could not assist the court on specific details around the input and development costs.

[27] Hepburn has a similar recollection to that of Boshoff on input costs. She testified that the question of input costs arose from the final valuations only taking place in May 2004. Hepburn like Boshoff insisted that the farms were not sold at full value and the parties therefore agreed that input costs will be reimbursed as a compromise³. Hepburn indicated that there was agreement with regard to input costs being reimbursed and the quantum was determinable as there was an agreed rate for such costs. When questioned about the audits Hepburn indicated that two audits were envisaged, one was to determine that the state received value for the properties they were buying and the second was to compute the input costs for the purpose of reimbursing the farmers⁴.

[28] Potgeiter was also called as a witness for the plaintiffs. He was present at certain meetings but only to advise on labour issues relating to the personnel employed at the farms. His recollection is that input costs would be reimbursed on proof of invoices⁵. When questioned about the particular costs that were being referred to, he admitted that he cannot be specific but could only make certain assumptions⁶

[29] Hohls evidence was that he has the same recollection as Hepburn and Boshoff. It is notable that Hohls was present at all meetings during the negotiation process in his capacity as a farmer, trustee of two trusts that owned farms and as the leader of the committee representing the land owners, was entrusted with dealing with the land claim on their behalf .

[30] Hohls evidence was that the State agreed to pay input costs as at 8 July 2004⁷. He testified that an agreement was reached that input costs will be paid by the State if the farms were not transferred by September 2004. When questioned about the audit he could not indicate the purpose of the audit and he conceded that he was unaware of the reason for the audit.

[31] When the initial transfer date (September 2004) was delayed, Hohls alleges he was contacted by the second defendant and instructed to inform all the farmers that they should maintain the farms and that input costs would be paid. The witness admitted that he harvested his crop in the season from September 2004-January 2005.

DEFENDANTS EVIDENCE

[32] The defendants called the following witnesses Brendan Patrick Boyce, Tabatha Shange (second defendant), Mqinseni Protus Zuma, Yolisa Nolubabano Ndia and Kitile Mlotswa. All the defendants witnesses had been employees of the Land Claims Commission at the time when the agreement to settle the land claim was negotiated and concluded. Only one of them is still in the employ of the Commission. On the issue of input and development costs the witnesses for the defendants were at idem on the material aspects.

[33] The evidence of the defendants witnesses differs materially from that of the plaintiffs. Shange and Boyce represented the Sate at the negotiations for the purchase of the properties and the meetings that the plaintiffs witness referred to. They admit that reimbursement of input costs were discussed repeatedly,

[34] The defendants case in essence is that prior to August 2004 input costs were discussed but related to post-transfer management agreements, which could have been reached between the claimants and the farmers to ensure that the farms remained viable enterprises.

[35] After August 2004 it was apparent that there was no prospect of there being any participation of the plaintiffs in post transfer farming consequently no agreements were required for post transfer management, including input costs. The costs were discussed in the context of the audit to ensure that the plaintiffs were maintaining the farms as viable enterprises and that the State would receive value for money having purchased a going concern. Reimbursement was discussed in the context of the surplus of inputs that were bought in bulk by the farmers and not utilised on the date when defendants took possession of the transferred properties. The surplus of the bulk inputs would be paid for.

[36] In summary, there are two versions with regard to input costs in the evidence of the plaintiffs and defendants but there is some consensus that input costs and reimbursement were discussed at length.

[37] The version of the plaintiffs is that the final valuations were as at May 2004 and the deeds of sale were singed almost a year later and the parties agreed, as a compromise, that the input costs incurred would be paid by the State. The rationale behind this agreement was that plaintiffs were incurring expenses for crops that they would neither have reaped nor profited from. As a courtesy the plaintiffs decided to limit their claim for input costs for the period September 2004-January2005.

[38] The defendants version is premised on clause 2 of the deeds of sale which provides that:

“The SELLER hereby sells to the PURCHASER and the PURCHASER hereby purchases the PROPERTY, STANDING SUGAR CANE, and TIMBER as a going concern, subject to the terms and conditions set out in this agreement.:

The defendants argue that the State was negotiating a purchase of farms, farming operations and standing crops. The purchase price included the sugar cane, timber and the farming operation. It was necessary to ensure that the farming operation was maintained and the plaintiffs were thus required to continue farming. The inputs incurred were audited to ensure that usual farming practices were maintained and reimbursements were only discussed with view of post transfer management agreements and when that failed it was with regard to bulk purchases where there was surplus that remained on the properties.

Development Costs

PLAINTIFFS CASE

[39] The second and third plaintiffs are the partners of Biltmore Estates and claiming development costs as well as input costs. The development costs being claimed are with regard to the farm Spekfontein. The property was purchased shortly before the land claim was published; at that stage it was not a farming operation. Biltmore Estates was in the process of developing this farm into a farming operation.

[40] After the publication of the land claim and during negotiations second plaintiff represented Biltmore Estates (incidentally she also acted as a trustee for the trust that owns the farm). She alleges in her evidence that she, with the assistance of her attorney made the position of Biltmore Estates clear.

[41] The second plaintiff indicated that after the valuations were finalised discussions were held with the second defendant on the extent of development that was envisaged, as they did not want to incur costs of developing the farm and be out of pocket. It is alleged after a meetings held with the second plaintiff, Hepburn and Shange on 17^th August 2004 and 19^th August 2004 and agreements were reached on what development costs would be incurred.

[42] These costs entailed the building of a shed to grow seedlings, a dam, and the extensions of the wattle and sugar cane crop⁸. The second plaintiff indicates that they did not proceed with construction of the dam on the instructions of the second defendant. It is alleged that the second defendant gave them the consent to effect the developments and assured them that they would be paid for the developments. The second plaintiff relies on the minutes of the meetings to support her evidence.

DEFENDANTS CASE

[43] The second defendant alleges that she does not recall holding any meetings with the second plaintiff and her legal representative alone. It was suggested to Shange in cross-examination that all the meetings relating to farm Spekfontein and the development costs were discussed between Hepburn, Boshoff and the second defendant. The second defendant alleges it is not in her nature to hold meetings without another member of the Commission being present. There is no agreement between the parties that development costs were even discussed let alone agreed upon.

[44] The second defendant also alleges that she would never commit money from other sources to pay for inputs and development costs as she does not have the authority to take such a decision. She explained that the money from grants that the plaintiffs refer to was for the claimant communities and not at the Commissions disposal.

Documentary evidence

[45] The plaintiffs bear the onus of proving that the oral agreements were concluded. Documentary evidence was provided in support of the plaintiffs claims; such evidence primarily consisted of the minutes of the meetings held between the plaintiff and various representatives of the Commission.

[46] The minutes of these meetings were drafted by Hepburn who represented the plaintiffs in the course of negotiations. Such minutes were sent to the offices of the second defendant and were never corrected; nor were they adopted.

[47] The minutes relied on were those of meetings held on the 8^th of July 2004, 17^th of August 2004, the 19^th of August 2004 and the 6^th of September 2005. A perusal of the minutes indicates as follows:

[47.1] 8^th of July 2004: Input costs were discussed and the position of the Commission was that proper farming practices had to be maintained as the Commission was purchasing going concerns and farms valued as running operations. It was recorded that agreement was reached that the correct inputs were being used and the verification of this will be done using invoices. If there was no leaseback or partnership agreement the Commission will reimburse farmers for inputs.

[47.2] 17^th of August 2004: The third plaintiff was asked to furnish the second defendant with the price of the shed⁹ and invoices in respect of inputs. It was stated that the Commission would purchase seedlings. The second defendant asked the third plaintiff how she would accept payment.

[47.3] 19^th of August 2005 at 10 AM: There was no discussion on input costs or development costs.

[47.4] 19^th of August 2005 at 12.15 pm: the second defendant stated that fertiliser, weedicides etc. can be claimed. The dam being constructed by the second plaintiff was put on hold and the second defendant stated she would get money from other sources to pay this.

[47.5] 6^th of September 2005: it was confirmed by the second defendant that inputs are reimbursable; payment will be made after transfer and on proof by invoices. The second defendant required a schedule of how many bags were bought, how much was used and if there was any remainder it should be left on the farm.

[48] The minutes must be analysed in context. While negotiations commenced around 2002, the deed of sale was only signed in July of 2005. At the initial stages of the negotiations Boyce was involved in his capacity as deputy-director for post settlements.

[49] The input costs being claimed by plaintiffs are those incurred from 1^st October 2004 to the 31^st of January 2005. The plaintiffs harvested this crop and profited, consequently they would have been reimbursed for the inputs.

[50] In the minutes of the meeting of July 2004 the discussion on inputs by Boyce was around ensuring that proper farming practices were maintained. This is consistent with the defendants position that the reason for the audit of the invoices was to ensure that the commission would receive value for money and that proper farming practices were maintained. This is inconsistent with the evidence of Hohls that an agreement was reached, despite his admission that post-transfer management agreements were still possible and this would amount to double dipping.

[51] The conclusion that input costs would be paid was reached by Hepburn who represented the plaintiffs and frankly it does not follow logically from what she recorded as being discussions with Boyce.

[52] In the minutes of the meeting held on the 17^th of August 2004 it is noteworthy that while development costs were discussed there is no express undertaking that such costs will be paid.

[53] There were two meetings held on the 19^th of August 2004, the first did not mention input costs and the second indicated that input costs can be claimed. The development with regard to the dam was put on hold.

[54] At the meeting on the 6^th of September 2005: it was confirmed by the second defendant that inputs are reimbursable; payment will be made after transfer and on proof of invoices. The interpretation of these minutes is disputed as the plaintiffs allege that this suggests payment for the input costs.

[55] The defendants version is consistent with their claim that the invoices were for purposes of an audit to ensure that the property had not deteriorated in value. Hohls also confirms in discussions that inputs bought in bulk would be reimbursed by the commission and left on the farm after transfer.

[56] There was extensive cross examination around the correspondence between Boyce for the Department and Redinger. Redinger is a director of Crystal Holdings (Pty) Ltd, the company that was employed by the defendants to compile the audit to verify the value of the property at the conclusion of the sale. A questionnaire was to be filled by the plaintiffs and it was alleged that Boyce added the following paragraph to a memo;

“and to determine to what extent the current landowner should be compensated for input costs incurred by him/her in terms of a further agreement. [my emphasis]”

[57] Plaintiffs argue that this indicates that an agreement was reached with regard to input costs. Boyce however could not recall adding the above paragraph and one can understand his explanation as he was requested to comment on a document that he may have dealt with almost a decade ago. Later in the evidence Redinger conceded that the role of Crystal Holdings was limited to conducting an audit for the Commission to verify the value of the property in terms of the agreement. If I was to accept that Boyce added that clause it does not assist the plaintiffs as the clause specifically refers to landowners and the first to seventh plaintiffs claimed not as landowners but as farmers.

[58] Analyses of the minutes of the meetings indicate that five meetings were held and in each of these meetings input costs were mentioned and discussed. None of the minutes indicate an agreement to reimburse the plaintiffs for input costs was ever reached. However it is significant that the extract from minutes of 8 July 2004 that in response to Boshoffs question on input costs the Commission replied as follows

“In reply, the RLCC indicated that they would re-imburse farmers for the high value crops i.e. if the farmers provided a plan was provided e.g. for the re-planting of the sugar cane, etc. further, this plan would be necessary and subject to approval of the RLCC, i.e. farmers dont have carte blanche to do as they please.”

[59] This statement is clearly in contrast to the plaintiffs version, as the Commission envisaged that if there was to be re-imbursement a “plan would be necessary” and being a government department any payment would be subject to approval of the Commission.

[60] This statement read with the notes of Hepburn recording Boshoff’s telephonic instructions of the 2^nd December 2004 at page 35 of the 1^st Bundle of documents which reads:

“WHAT ABOUT INPUTS?

Ivan said RLCC wont pay for inputs

Cant we include in P/Price for Land?

We already asked her and she said no.

BEC cash to pay comes from different sources.

Get RLCC to commit in writing to pay for inputs.

Spekfontein…

Senta says we need to get Thabatha to commit in writing”

[61] On the two above occasions it was categorically recorded that the Commission would not pay for input and development costs with the caveat that if such costs were to be paid the plaintiffs would be required to provide a plan subject to the approval of the commission.

[62] The probabilities are and as confirmed by the defendants that the parties had engaged in discussions around input costs during the various meetings but it would be far-fetched to conclude from these discussions that the parties minds had met and an agreement was concluded with the defendants to pay input and development costs.

LEGAL PRINCIPLES

[63] It is trite law that in actions of contract, proof of the contract, performance of conditions precedent, breach and damages is upon the plaintiff.¹⁰ The evidence adduced will be discussed in twofold first documentary evidence produced and following oral evidence.

[64] In order to prove an agreement the plaintiffs are required to prove that there was a meeting of minds; courts of law can only judge from external facts whether this has or has not occurred¹¹. The fifth plaintiff has through the minutes of the meetings and the questionnaire attempted to prove that an agreement was reached.

[65] An agreement would be concluded if on a balance of probabilities the version as stated in the statement of claim, the documents submitted and the oral evidence led ,is more probable than that of the defendants.

[66] What is pertinent from the evidence of the plaintiffs is that the deeds of sale would have not been signed had the defendants not undertaken to pay the input costs. The importance that the plaintiffs place on these costs is underscored by the alternative claim for an increased purchase price indicating that the plaintiffs felt that the purchase price paid was not sufficient. The Appellate Division in Johnston v Leal¹² that a material term is:

"not confined to those prescribing the essentialia of a contract of sale, viz the parties to the contract, the merx and the pretium, but include, in addition, all other material terms . . .".

[67] Holmes AJ suggested, in Gulston v Russell 1951 (1) SA 117 (N) at 118G, that

“This issue of materiality is one to be decided in the light of all the circumstances. Material term may be one which the parties regard as important enough to insert in their contract".

[68] It was held by De Wet J in Jammine v Lowrie 1958 (2) SA 430 (T) at 431B that:

“Whatever its definition, it is clear that a material term cannot simply be regarded as implied or be "left over for further negotiation"

[69] Van Zyl J held in Zalvest 20 (Pty) Ltd & others v Vestline 123 (Pty) Ltd & others [2007] JOL 19986 (C):

“From this it appears that a material term is one that is contractually relevant and sufficiently important to the parties that it should be incorporated as a consensual provision of their agreement”

[70] The evidence of the plaintiffs clearly suggests that input costs were material to the purchase and sale agreements. In fact both Boshoff and Hohls testify that had the agreement relating to input costs not been concluded they would not have signed the deeds of sale. Which begs the question why was the aspect of input costs not included in the written agreements.

APPROACH TO ORAL AGREEMENTS

[71] It was held in Stellenbosch Farmers Winery Group Ltd v Martell et Cie¹³ with regard to the technique generally employed by courts in resolving a factual dispute about the terms of an oral agreement:

“The technique generally employed by courts in resolving factual disputes of this nature may conveniently be summarised as follows. To come to a conclusion on the disputed issues a court must make findings on (a) the credibility of the various factual witnesses; (b) their reliability; and (c) the probabilities. As to (a), the courts finding on the credibility of a particular witness will depend on its impression about the veracity of the witness. That in turn will depend on a variety of subsidiary factors, not necessarily in order of importance, such as (i) the witness candour and demeanour in the witness-box, (ii) his bias, latent and blatant, (iii) internal contradictions in his evidence, (iv) external contradictions with what was pleaded or put on his behalf, or with established fact or with his own extracurial statements or actions, (v) the probability or improbability of particular aspects of his version, (vi) the calibre and cogency of his performance compared to that of other witnesses testifying about the same incident or events. As to (b), a witness reliability will depend, apart from the factors mentioned under (a)(ii), (iv) and (v) above, on (i) the opportunities he had to experience or observe the event in question and (ii) the quality, integrity and independence of his recall thereof. As to (c), this necessitates an analysis and evaluation of the probability or improbability of each partys version on each of the disputed issues. In the light of its assessment of (a), (b) and (c) the court will then, as a final step, determine whether the party burdened with the onus of proof has succeeded in discharging it. The hard case, which will doubtless be the rare one, occurs when a courts credibility findings compel it in one direction and its evaluation of the general probabilities in another. The more convincing the former, the less convincing will be the latter. But when all factors are equipoised probabilities prevail.”

[72] The plaintiffs attacked the credibility of the defendants witnesses suggesting that they fabricated the evidence. Whilst I may agree that the second defendant postulated in answering questions and often could not remember specific details and therefore was not a good witness, a conclusion cannot be drawn that she was lying.

[73] The Court has to recognise that the negotiation process took place almost a decade ago, only one of the witnesses for the defendants is still an employee of the first defendant and regard must be had that all the witnesses were probably tasked with hundreds of other restitution matters and a perfect recollection of each one would be impossible.

[74] The evidence of all the witnesses for the defendants was consistent in that they are at idem on the pivotal issue that no agreement was reached to pay for input costs. In fact the position held by all the witnesses is that they are precluded by the Restitution Act from concluding oral agreements.

[75] This evidence has to be considered in the context of the Restitution Act and specifically section 42D which prescribes that all agreements must be signed by the first defendant or any party he/she delegates. The second defendant was only authorised to act in terms of a power delegated to her by the first defendant.

[76] The plaintiffs suggested that the second defendant was evading the truth, that is possible, however what is also probable is that while the plaintiffs may have assumed an agreement was reached but the defendants never intended to conclude a contract.

[77] It is highly improbable as the plaintiffs allege that the second defendant stated that they did not want to reduce the agreement to writing because the money was to come from another source; the second defendants and all the witnesses for the defendants unequivocally state that they do not have any direct access to the budgets of other ministries. It is equally improbable that the second defendant would commit to an amount of almost five million rand of tax payers money on the basis of an oral agreement.

[78] On the other hand the defendants did not challenge the evidence given by plaintiff save for the credibility of Hepburn. What was raised with regard to oral evidence by plaintiff is that none of the plaintiffs could conclusively indicate a date on which the alleged oral agreements were reached. The statement of the plaintiffs claim alleges that such agreements were entered into between 8 July 2004 and the 6^th of September 2005. There is no evidence as to which agreement was entered into and on what date.

[79] The second and fourth plaintiffs purported to give dates but that could not be concluded with certainty. What is also inconclusive is the lack of clarity regarding these agreements; whether separate agreements were reached or was it one agreement with multiple parties. If it is contended that separate agreements were reached on what date and the terms of each of these agreements has not been set out conclusively.

[80] It has already been indicated above that the minutes are not conclusive proof of an agreement they are at best proof of a negotiations, nor does the oral evidence provide conclusive terms.

[81] The credibility of the evidence of Hepburn was attacked by the defendants; It is noteworthy that Hepburn has been practising as an attorney for 22 years (12 years at the time of negotiation), she is a conveyancer and is also a trustee of a number of the trusts owning the property. She has a direct and vested interest in the matter she represented the parties throughout the negotiation process and drafted the deeds of sale on behalf the plaintiffs and the defendants which contained the non-variation clauses and signed them on behalf of the landowners. She drafted the minutes, the interpretation thereof is in dispute, drafted the sale agreements to protect both parties interests and now adduces evidence for the plaintiffs which is questionable and certainly displays a conflict of interest.

[82] It is improbable that a person who has been a legal practitioner for over two decades would have advised her clients to conclude oral agreements that would amount to almost five million rand. She was present at all meetings, was aware that negotiations were taking place and Shange’s refusal to record the input and development costs in writing .Despite this knowledge she failed in her duty as attorney to record the terms and conditions of payment of input costs ;how the amounts were to be calculated; for what specific period; in respect of each plaintiff the items for which different plaintiffs claimed reimbursement; who was liable for the payment; when and how was payment to be made; and conditions relating to default.

[83] In the face of this uncertainty she ought to be aware of the risk to her clients and the consequences of clauses in the sale agreements that make reference to the property being sold as a “going concern” and includes non-variation clauses. These restrictive clauses in the face of an oral agreement underscored the importance of recording the terms and conditions of the oral agreement the plaintiffs alleged to have concluded with the defendants.

[84] The plaintiffs version that a seasoned practitioner and conveyancer took the advice of a government official not to record an agreement that was pertinent to a negotiation process is highly improbable.

[85] The dicta cited by the plaintiffs indicates that the court should consider the credibility of witnesses, their reliability and balance that against the probability or improbability of different aspects of their version.

[86] It was observed that Shange did not make a good witness; her memory of the events was scant however balanced against the probabilities her version still seems more probable. The other witnesses for the defendants seemed reliable with due consideration given to lapse of memories because of the passage of time.

[87] For the plaintiffs the credibility of Hepburn was called into question, balanced against the probability of certain aspects of her and plaintiffs versions which were discussed above a finding is made that her version is improbable. For the remainder of the witnesses of the plaintiffs, while they did seem reliable and were very frank on certain aspects the probabilities are against them.

[88] Plaintiffs argue that the only reason they agreed to sign the agreements based on out-dated valuation was the promise of payment for input costs This argument does not in any way aid the first to seventh plaintiffs as it contradicts their own version that the input costs are separate from the sale of the property..

[89] It is apparent to me from a perusal of the minutes of the meetings and the agreements of sale that the input and development costs are intrinsically linked to the sale of the properties that were sold with the farming operations.

[90] This strongly highlights the challenges that arise when parties to negotiations fail to identify their respective capacities .It is trite law that a party to agreements arising from such discussions have an obligation to record upfront the entity they represent if they are not acting in their personal capacity. The obligation goes further and compels a party discussing different agreements at negotiations to record his/her capacity in respect of each agreement being discussed. This obligation was not adhered to by the plaintiffs.

[91] With regard to the evidence of Advocates Rall and Potgeiter nothing turns on their evidence. On their own admission they both indicated that while input costs were to be reimbursed they were not aware what input costs were being discussed.

[92] Boshoff while being a reliable witness could not point out a particular date or time when the minds met and there was agreement with regard to input costs or development costs.

[93] Hohls evidence is questionable in that on 8 July 2004 it was common cause that the possibility of a post transfer management agreement still existed. Hohls stance that an agreement was reached on such a date is contrary to that of the plaintiffs. The State would not pay input costs if there was a post-transfer management agreement and as at 8 July this was still possible as discussions continued.

[94] Had the plaintiffs discharged the onus of proving the conclusion of an oral agreement it would have been necessary to determine the content of the agreement. It is trite law that the essential elements of a contract are those without which such contract cannot subsist.¹⁴

[95] The plaintiffs contend that an agreement was entered into for the payment of input costs. The essentiallia of such an agreement as evidenced by their statement of claim is that the parties agree that payment will be made for input costs incurred over the 2004/2005 farming season. The essentiallia would thus comprise on agreement on the parties, the merx (thing) and the pertium (consideration).

[96] There is no agreement on what the merx actually is, input costs consists of various elements and I am not persuaded that the State agreed to pay all input costs without determining precisely what input costs actually entailed.

[97] There is no agreement with regard to pertium. Plaintiffs argued that the proposed audit was a tool to determine what consideration was to be paid for input costs .The lack of essential terms and conditions compels me to reject their version and accept the defendants evidence which is more probable.

[98] It is clear that that there was no express oral or written agreement, certainly insofar as the payment of input and development costs.

[99] It seems to me on a balance of probabilities that the cumulative effect of these factors is that the plaintiffs have failed to discharge the burden of proof with regard to the conclusion of oral agreements.

[100] The Court in National Employers General Insurance CO Ltd v Jagers¹⁵ held that:

“...where there are two mutually destructive stories, he can only succeed if he satisfies the Court on a preponderance of probabilities that his version is true and accurate and therefore acceptable, and that the other version advanced by the defendant is therefore false or mistaken and falls to be rejected. In deciding whether that evidence is true or not the Court will weigh up and test the plaintiffs allegations against the general probabilities...”

[101] The versions of the parties are mutually destructive; the plaintiffs alleged an agreement while defendants denied its existence and only one version could exist. The plaintiffs have however, failed to satisfy this Court that their version is true on a balance of probabilities and have therefore failed to discharge their onus, accordingly their claim fails.

[102] It is therefore not necessary to discuss the remaining two issues in respect of the special plea before me.

I make the following order:

1. The oral agreements averred by the first to seventh plaintiffs have not been concluded.

2. The plaintiffs claim is dismissed with costs.

3. First to seventh plaintiffs are ordered to pay first and second defendants costs.

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SARDIWALLA AJ

LAND CLAIMS COURT

FOR PLAINTIFFS

Advocate M. G Roberts SC instructed by Hendry Merton & Hepburn Incorporated

FOR DEFENDANTS

Advocate A. A Gabriel SC instructed by The State Attorney Durban

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