Nuance Investments (Pty) Ltd v Maghilda Investments (Pty) Ltd and Others

Nuance Investments (Pty) Ltd entered into a sale agreement, an incidental development agreement, and a long-term lease with Maghilda Investments (Pty) Ltd and the trustees of the Sanjont Trust in November 2007 and January 2008 for the development of portions of the farm Elandsdrift 527 JQ, which was agricultural land. Nuance paid R60 million pursuant to these agreements, and three already-subdivided portions were transferred and registered in its name in May 2008, subject to mortgage bonds. It later emerged that the required written ministerial consent under s 3(d) and (e) of the Subdivision of Agricultural Land Act 70 of 1970 had not been obtained prior to conclusion of the agreements, rendering them void. In June 2009 Nuance asserted the invalidity of the agreements and tendered re-transfer. In March 2012 it instituted action for restitution. Maghilda and the trustees raised a special plea of prescription and counterclaimed for rectification of the deeds register on the basis that ownership had not passed.

The appeal was upheld with costs. The order of the High Court was set aside and replaced with an order declaring the sale, incidental development and lease agreements null and void ab initio; dismissing the special plea of prescription; ordering restitution to Nuance of amounts paid in respect of the transferred properties with interest; and dismissing the counterclaim with costs.

The case provides authoritative guidance on the application of s 12(3) of the Prescription Act, clarifying that prescription based on illegality only begins when the creditor has knowledge of the specific factual non-compliance giving rise to invalidity. It also reaffirms the application of the abstract theory of transfer to immovable property in South African law and the distinction between invalid underlying contracts and valid real agreements.