Gazebo Ranch (Pty) Ltd v The Minister of Land Affairs and Others

Gazebo Ranch (Pty) Ltd sold land that was subject to a restitution claim under the Restitution of Land Rights Act 22 of 1994 to the National Department of Land Affairs. In terms of the agreement of sale, the Department was required to pay a deposit of R3 873 794,50 into the seller’s conveyancer’s trust account within 30 days of signature, where it would accrue interest for the purchaser. The deposit was due on 11 June 2009 but was only paid on 9 March 2010. The applicant sought payment of interest at 15,5% per annum for the period of late payment, relying on a contractual clause providing for interest on amounts not paid when due.

The First Respondent was ordered to pay interest on R3 873 794,50 at 15,5% per annum from 11 June 2009 to 9 March 2010, and to pay the costs of the application.

The case confirms that contractual interest clauses for late payment can constitute enforceable penalties under the Conventional Penalties Act, even where actual damages are difficult to quantify. It illustrates the Land Claims Court’s application of general contract and penalty principles in the context of land restitution transactions involving the state.