---

IN THE HIGH COURT OF SOUTH AFRICA

WESTERN CAPE HIGH COURT, CAPE TOWN

In the following matters between:

CASE NO: A264/2012

(Wynberg Case No. 2479/2009)

NDILEKA CONSTANCE KATSHWA                                                                 1st Appellant

LEON KATSHWA                                                                                             2nd Appellant

All adult males and females who unlawfully occupy

55 Dabula Crescent, Loyoloville, Gugulethu and

whose identities are to Applicant unknown                                                  3rd Appellant

and

CAPE TOWN COMMUNITY HOUSING COMPANY                                          Respondent

(PTY) LIMITED

 

CASE NO: A263/2012

(Wynberg Case No. 24889/2009)

XOLISWA CYNTHIA PETER                                                                             1st Appellant

ERMAN PETER                                                                                                2nd Appellant

All adult males and females who unlawfully occupy

5 Silimela Street, Luyoloville, Gugulethu and

whose identities are to Applicant unknown                                                  3rd Appellant

and

CAPE TOWN COMMUNITY HOUSING COMPANY                                          Respondent

(PTY) LIMITED

 

CASE NO: A261/2012

(Wynberg Case No. 21162/2009)

NOZIBELE JOYCE MGUGUSHA                                                                     1st Appellant

NCEBA ERNEST MGUGUSHA                                                                       2nd Appellant

All adult males and females who unlawfully occupy

11 Cathederal Peak Crescent, Heideveld, Athlone and

whose identities are to Applicant unknown                                                  3rd Appellant

and

CAPE TOWN COMMUNITY HOUSING COMPANY                                          Respondent

(PTY) LIMITED

 

CASE NO: A262/2912

(Wynberg Case No. 24888/2009)

CEROVA JOHANNES                                                                                       1st Appellant

MERVYN JOHN JOHANNES                                                                           2nd Appellant

All adult males and females who unlawfully occupy

18 Buffelshoek Road, Heideveld, Athlone and

whose identities are to Applicant unknown                                                  3rd Appellant

and

CAPE TOWN COMMUNITY HOUSING COMPANY                                          Respondent

(PTY) LIMITED

 

CASE NO: A265/2012

(Wynberg Case No. 24791/2009)

VERONICA SIZWE NGINDA                                                                             1st Appellant

MXOLISI FRANK NGINDA                                                                              2nd Appellant

All adult males and females who unlawfully occupy

28 Debeza Street, Luyoloville, Gugulethu and

whose identities are to Applicant unknown                                                  3rd Appellant

and

CAPE TOWN COMMUNITY HOUSING COMPANY (PTY) LIMITED                 Respondent

 

JUDGMENT: 3 SEPTEMBER 2013

 

STEYN, J:

1] These five appeals were consolidated for hearing in view of the applicability of similar facts and legal principles. The representatives of the parties prepared one argument relating to all the appeals.

2] The appeals originate from the Wynberg Magistrates Court where it was agreed that all relevant aspects related to the matters would be argued primarily on the papers in the matter of Ndileka Constance Katshwa and Leon Katshwa ('the Katshwa matter'). When the legal representatives referred to the record in their arguments reference was accordingly to the documentation filed in the Katshwa matter.

3] The background facts relating to these appeals, as set out by the representative of the appellants, were not disputed by the respondent's representative. I repeat the undisputed facts:

4] Each of the appellants concluded an Instalment Purchase Agreement ('the IPA') with the respondent for the purchase of an immovable property. The Katshwas concluded the IPA on or about the 21st June 2001.

5] The respondent alleges that the appellants fell into arrears in payment of the instalments due by them and accordingly the respondent issued letters of demand calling upon all the appellants to remedy their breach. There was a letter from the respondent's then attorneys, followed by a letter from the respondent itself. The appellants remained in default of payment and the respondent purported to cancel the IPA's. Action proceedings were instituted by the respondent against the appellants in the Wynberg Magistrates Court seeking the ejectment of the appellants from the immovable properties occupied by them.

6] The respondent thereafter instituted eviction proceedings by way of motion proceedings pursuant to ss 4(2) and (5) of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 ('The PIE Act'). This relief was opposed on behalf of the appellants and answering affidavits were filed.

7] On 9 March 2011 the Wynberg Magistrates Court found that all the appellants were unlawful occupiers in terms of s 1, read with s 4, of the PIE Act and ordered the City of Cape Town to file a report and requested submissions  in regard to ss 4(7) and (9) of the PlE Act.

8] On 30 September 2011 the Wynberg Magistrates Court issued an order that the appellants should vacate the respective immovable properties occupied by them on or before 13 December 2011, failing which the Sheriff was ordered to evict them on or after 15 December 2011.

9] Notices of Appeal to these orders were duly filed and the appellants now appeal against the said March and September judgments.

 

THE ALIENATION OF LAND ACT 68 OF 1981

10] The representatives of the parties agree that the provisions of the Alienation of Land Act 68 of 1981 ('the ALA') are relevant in this matter. It is not denied by the respondent that the IPA is a 'contract’ as defined in s 1 of the ALA Whether the provisions of ss 19, 20 and 26 of the ALA are applicable in the present matter, is however a subject of dispute.

11] Section 20(1) of the ALA relates to the recordal of the contract and provides in s (1)(a) that a seller, whether he is the owner of the land concerned or not, shall cause the contract to be recorded by the registrar (own emphasis  here  as elsewhere) concerned in the prescribed manner, with some exceptions that are not relevant at present. If a period of 90 days has expired without the seller having caused the contract to be recorded as prescribed, the purchaser may, inter alia, apply to the registrar concerned to record the contract in the prescribed manner.

12] Sections 19 and 20 of the ALA fall under Chapter 11 of the ALA We were referred to Merry Hill (Pty) Limited v Engelbrecht 2008(2) SA 544 (SCA) and the observations made by Brand JA in regard to the purpose of Chapter II of the ALA, as set out in par [13] of the judgment, at 549 D - G:

'Let me start with a proposition which appears to be beyond contention, namely that the purpose of ch 2 of the Act, which includes s 19, is to afford protection, in addition to what the contract may provide, to a particular type of purchaser - a purchaser who pays by instalments - of a particular type of land - land used or intended to be used mainly for residential purposes. In this sense, ch 2, like its predecessor, the Sale of Land on Instalments Act 72 of 1971, can be described as a typical piece of consumer protection legislation (see, for example, Gowar Investments (Pty) Ltd v Section 3, Dolphin Coast Medical Centre CC and Another 2007 (3) SA 100 (SCA) para 9). The reason why the legislature thought this additional statutory protection necessary is not difficult to perceive. It is because experience has shown this type of purchaser, generally, to be the vulnerable, uninformed small buyer of residential property who is no match for the large developer in a bargaining situation (cf Glen Anil Finance (Pty) Ltd v Joint Liquidators, Glen Anil Development Corporation Ltd (in Liquidation) 1981 (1) SA 171 (A) at 183F - H).'

13] It was argued on behalf of the appellants that these sentiments voiced by Brand JA in the quoted judgment are of application in the appeals before court, where the provisions of s 20 of the ALA were raised in the answering affidavits filed in the Magistrates Court and it was recorded that the applicant, (now the respondent) on its own admission, never complied with the requirement to procure the recording of the IPA contract in terms of the provisions of s 20 of the ALA. The respondent alleged that its failure to attend to the recordal of the IPA's did not excuse the appellants from paying the agreed instalments.

14] In her judgment dated 9 March 2011 the presiding magistrate, Ms Pangarker, commented, relating to the respondent's non-compliance with the requirements of s 20 of the ALA and the breach by the respondent of the provisions of clause 8 of the IPA's, that nothing prevented the appellants, (the respondents in the Magistrates Court) from themselves attending to the recordal of the contracts.

15] Clause 8.1 of the IPA reads as follows:

'The seller shall procure this contract to be recorded in accordance with the provisions of Section 20 of the Act. If the seller fails to do so the purchaser shall be entitled to procure such recording.'

16] Clause 9 of the IPA provides that the seller shall be liable for the costs related to the drafting of the contract and the recording of the contract in terms of s 20 of the ALA.

17] It is apparent from the provisions of s 20 of the ALA that there is no requirement as such on the part of a purchaser, such as the appellants, to ensure the recordal of the IPA with the registrar. The terms of this section clearly do not place any obligation on the purchaser to apply for the recordal of the contract following the failure by the seller to attend to this obligation.

18] The relevant provisions of s 26 of the ALA read as follows:

'26. Restriction on the receipt of consideration by virtue of certain deeds of alienation. - (1) No person shall by virtue of a deed of alienation relating to an erf or a unit receive any consideration until -

(a)  such erf or unit is registrable; and

(b)  in case the deed of alienation is a contract required to be recorded in terms of section 20,  such recording has  been effected.

(2) Any person who contravenes the provisions of subsection (1) shall be guilty of an offence and liable on conviction to a fine not exceeding R1 000 or to imprisonment for a period not exceeding one year or to both such fine and such imprisonment.'

19] The circumstances when the provisions of subsection 1 are not applicable, do not apply in this matter. In the premises it was submitted on behalf of the appellants that since there had been no recordal of the IPA's by the respondent, as contemplated by the terms of s 20 of the ALA, the respondent, in view of the provisions of s 26(1) of the ALA, is not entitled to receive any consideration from the appellants and further, in view of the provisions of s 26(2) of the ALA the receipt of any purchase consideration by the respondent would constitute an offence on the part of the respondent making it liable on conviction to a fine or even imprisonment.

20] Accordingly, it was argued, convincingly, on behalf of the appellants that the respondent, by virtue of the provisions of s 26 of the ALA has no right to the receipt of any payments from the appellants since the recordal of the contract, as contemplated in s 20 of the ALA, had not been effected. The appellants cannot be in arrears in the payment of instalments due under the IPA when there is no obligation in law for them to make payments and accordingly there was no basis for the respondent to have issued letters of demand upon which it relied when seeking an order in the Magistrates Court. In view of what has been stated above it was argued that respondent's purported cancellation of the relevant IPA's is invalid.

21] We were referred to Bouwer v Aurae (Pty) Limited, 1991(1) SA 622 (WLD), 624 F -H, where the provisions of s 20 of the ALA were considered and where it was noted, in essence, that in terms of these provisions an agreement of the sale of land intended to be used mainly for residential purposes must be recorded by the Registrar of Deeds, failing which the seller is precluded from receiving the purchase price payable in terms of the agreement and no valid cancellation of the agreement can be effected upon non-payment.

22] The respondent correctly noted in its heads of argument that the essence of the appellants' case was as set out above, namely that since the IPA's were not recorded as required by s 20 of the ALA and in view of the provisions of s 26 (1) (a), payment of instalments by the appellants were never due and no breach of contract occurred, with the result that the IPA's could not have been cancelled. Respondent agrees that Chapter II of the ALA deals with the sale of land on instalments which the IPA's, that formed the subject of these appeals, are. It submits though that in order for s 26(1)(a) to have any effect the IPA's must be contracts that can be referred to as contracts: 'required to be recorded in terms of s 20 ... ' Respondent argues that if s 20 does not apply in these instances, s 26(1)(a) will also have no effect.

23] The respondent submits that Chapter II, which includes s 20, is not applicable to the relevant IPA's due to the provisions of s 4 of the ALA, which reads as follows:

'4. Application of Chapter. -- this Chapter shall not apply in respect of a contract in terms of which the State, the Community Development Board established by s 2 of the Community Development Act, 1966 (Act no 3 of 1966), the National Housing Commission mentioned in s 5 of the Housing Act, 1966 (Act no 4 of 1966), or a local authority is the seller.'

24] It was submitted on behalf of the respondent that, on a proper interpretation of the wording of s 4 of the ALA, the Cape Town Community Housing Company (Proprietary) Limited ('Cape Town Community Housing Company') ostensibly a private company, must be regarded as 'a functionary of the State'. The respondent argued in essence, the first time in its heads of argument in the appeals, that the Cape Town Community Housing Company is an organ of state.

25] Section 239 of the Constitution, Act 108 of 1996, defines an organ of state as meaning, inter alia, any department of state or any other functionary exercising or performing a function in terms of the Constitution or a Provincial Constitution, or exercising a public power or performing a public function in terms of any legislation.

26] Appellants argue that a clear distinction needs to be drawn between the State and the organs of State and that the appellation 'State' cannot without more be interpreted to mean 'organ of State', since the concept of 'State' is wider than that of an organ of State and that the term 'State', which is referred to in s 4 of the ALA means the State as a persona contracting as the seller and not one of its functionaries.

27] In Directory Advertising Cost Cutters CC v Minister for Posts, Telecommunications and Broadcasting & Others  1996(2) ALL SA (T) at 91 b - c it was stated by Van Dijkhorst J that an organ of State :

'... must be part of the governmental apparatus. An agent or independent contractor performing some of the State's functions on its behalf will not be a functionary of the State.'

28] In Holeni v Land & Agricultural Development Bank of SA  2009(4) SA 437 (SCA) para 17 it was stated by Navsa JA that:

'[17] It should also be borne in mind that, when the Act was promulgated, the definition of "organ of State" in s 239 of the Constitution was more than two decades into the future. It can hardly be contended that the legislature, at that time, had in mind a broader meaning of "the State" to coincide with what is presently contained in that definition. In any event, the Constitution itself differentiates between the State and organs of State. The Constitution can therefore not be used as authority for the proposition that the "State" in the Act should be interpreted so as to include organ of State.'

29] The appellants submit that it does not appear from the record in these proceedings that the Cape Town Community Housing Company, a private company, is a State functionary. In fact, as can be noted from the affidavits filed in the lower court's proceedings, respondent's financial manager, Mr Jurgens, stated under oath that the respondent was not a State organ. Appellants contend, correctly in our view, that it is evident from the wording of s 4 of the ALA that a distinction must be drawn between the State and other possible organs of the State such as the Community Development Board and the National Housing Commission.

30] It was conceded by the appellants that the Cape Town Community Housing Company may have been established as a joint venture between the City of Cape Town and the National Housing Finance Corporation and it may be that it receives a housing subsidy. This state of affairs however should not lead to the conclusion that the Cape Town Community Housing Company should be regarded as 'the State' as contemplated in s 4 of the ALA, an aspect previously conceded by the respondent, when their financial manager stated categorically that it was not a State organ.

31] I agree with the appellants that the respondent's attempts to rely on Part 7 of a document titled 'Housing Subsidy Scheme', annexed to its heads of argument in the appeals are flawed and that this guideline should be ignored as the document appears to be no more than a guideline, was not proved in evidence, is not accepted by the appellants and cannot now be relied upon on appeal.

32] The respondent's view remains that on a proper interpretation of s 4 of the ALA the respondent should be regarded as a functionary of the State for the specific purposes of providing social housing. Accordingly, it is argued that the IPA's are exempt from the provisions of Chapter II of the ALA

33] With reference to the comments of the respondent's Financial Manager in its replying affidavits in the Magistrate's court, that the respondent is not a State organ and can only exist to provide houses if it receives payment for the houses that it provided, it is contended that the statement was made in a different context and only reflected the expression of an opinion, which was incorrect. It was argued that the respondent cannot now be precluded from relying on the provisions of s 4 of the ALA in these proceedings based on these incorrect comments.

34] Finally it was submitted on behalf of the respondent that the correct meaning of the phrase, 'the State', for the purposes of the disputed issue in these appeals, should be determined by considering the intention of the legislature, i.e. the context of the ALA in which it is found.

35] As noted previously, the argument relating to the applicability of s 4 was not raised during the hearing of the matter in the Magistrates Court. The appellants were brought under the impression by the respondent that it agreed that the provisions of s 4 applied.

36] The ALA prescribes in s 4 that Chapter 11 shall not apply in respect of a contract in terms of which 'the State' ... or a local authority is the seller. Save for recording that certain sections of the National Credit Act will prevail to the extent of any conflict with this section, no elaboration as to the meaning of the use of the word 'State' is provided. Section 1 of the ALA, setting out detailed definitions of the words and phrases contained in the act, is silent on the meaning and ambit of the use of the word 'State'.

37] Legislation usually does not unambiguously and specifically address all matters. Occasionally the meaning of words used in a statute or a contract or other document does not have a plain, straightforward meaning but may be ambiguous or vague, resulting in the judiciary having to resolve the ambiguities and pronounce on the perceived intended meaning of the words.

38] The Constitution of the Republic of South Africa, 1996, provides in s 39 (2) that when interpreting legislation every court must promote the spirit, purport and objects of the Bill of Rights. In general, the courts attempt to promote public interest when interpreting the wording of a statute.

39] There are numerous rules of statutory interpretation. It is trite that the words or language of a statute should be given its 'ordinary meaning' where possible and where such a construction will not lead to an absurdity, repugnancy or inconsistency with the rest of the statute. It is also common sense that the words used in a particular section or clause need to be interpreted in the context of the statute or document as a whole; as such an interpretation would usually reflect the true intention of the legislator or contracting parties, if a contract needs to be interpreted.

40] In Natal Joint Municipal Pension Fund v Endumeni Municipality, 2012 (4) SA 593 (SCA) the proper approach that the court should follow when  interpreting statutes, contracts or other documents is set out in detail. Wallis JA comments as follows:

'The present state of the law can be expressed as follows. Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective not subjective. A sensible meaning is to be preferred to one that leads or unbusinesslike results or undermines purpose the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in  to a statute or statutory instrument is to cross the divide between interpretation and legislation ... '

41] Wallis emphasised that context and language should be considered together, the one not dominating the other. The broad purpose of the relevant legislation is highly relevant to the process of interpretation, 'as is the mischief at which the legislation is aimed.' (par 22) Ultimately the courts give effect to legislative purpose within the constraints imposed by the language adopted by the legislature. In this process the interpreting judge must avoid the tendency to be driven by what that judge regards as a desirable result in a specific case.

'In resolving the problem the purpose of the provision and the in which it occurs will important ides to interpretation. An interpretation will not be given leads to impractical, unbusinesslike or oppressive consequences or that will stultify the operation of the legislation or under consideration.' (par 26)

42] I am of view that the purpose of the is clearly as stated in the preamble of the Act, to regulate the alienation of land in certain circumstances. Chapter I deals with the formalities required in respect of deeds of alienation. Chapter II with the provisions of land on instalments. Chapter Ill deals with general provisions.

43] The primary aspect for determination in these appeals has thus been distilled to be the ambit and meaning of the word ‘State’ in s 4 of the ALA, which section provides that Chapter II (containing s 20, relating to the recordal of the contract) shall not apply in respect of a contract in terms of which, inter alia, the State is the seller. No definition is given of the meaning intended to be attributed to the word ‘State’.

44] In the Directory Advertising judgment, supra, p 90 (h) Van Dijkhorst J comments that private companies incorporated under the Companies Act, can 'hardly be statutory bodies' as contemplated in the Constitution because in their day to day functioning they are not integrated into the State's structure or authority. On p 91, (b-j) he comments, inter alia, that an organ of State is not an agent of the State, it is part of government (at any of its levels). A functionary of the State is part of the 'governmental apparatus'. 'An agent or independent contractor performing some of the State's functions on its behalf will not be a functionary of the State’.

45] A private company is governed by its articles of association. In view of what is and stated hereinabove and viewing word 'State' in the context of the ALA, the purpose of the relevant sections, such as ss 20 and 26, is to protect vulnerable, financially disadvantaged and relatively unsophisticated purchasers from private companies, with or without state shareholders.

46] I am the view that the use of the word 'State' in s 4 refers to closed categories entities and that wording of ’State’ in this context cannot be widened to include organs of State and definitely not private companies, such as the respondent in this matter, regardless of the interest in it by certain organs of State and regardless of whether or not its purpose is to generate profit.

47] The respondent was an independent contractor performing certain governmental obligations, including provision of housing. There is no evidence before court that the respondent forms part of government at any level or is controlled by government or that it should be regarded as an organ of State. On the contrary the respondent's own factual averments lead to the conclusion that it is not an organ of State but is, in fact, a private company. The respondent not shown that there is any foundation in fact or in law why it should be regarded as the State.

48] Section 4 of the ALA does not assist the respondent. The respondent has not offered argument in answer to those advanced by the appellants in the Heads of Arguments filed on their behalf.

49] The court was advised that the counsel, senior and junior, and those instructing them, representing the appellants in these matters were acting pro bono. We are grateful to them for their invaluable assistance.

50] I am accordingly, for the reasons stated, of the view that it should be ordered that all the appeals before us, as detailed in the heading, should succeed and that the orders of the Magistrate in these appeals under the recorded case numbers, should be altered to read:

1. The applications are dismissed;

2. The applicant is ordered to pay the costs of the applications.

 

 

__________________

STEYN, J.

 

DLODLO, J.

 

I agree. It is so ordered.

 

__________________

DLODLO, J.

---