Mokala Beleggins (Pty) Ltd and Another v Minister of Rural Development and Land Reform and Others

The first and second applicants entered into sale agreements with the first respondent (Minister of Rural Development and Land Reform) on 29 January 2009 for the sale of four adjacent farm properties in the Mafikeng/Molopo district of the North West Province. The properties were to be transferred to the ninth respondent (Barolong Ba Ga Mariba Community) as part of a land claim settlement. The agreements provided that 50% of the purchase price would be paid within 30 days of signature, and the balance within 10 working days after registration. Transfer was to be effected within 2 months of signature. An addendum was signed on 15 May 2009 to correct property descriptions. The fourth respondent issued instructions to delay lodging of transfer documents due to lack of funds, contrary to the agreement. The applicants launched an application to enforce the sale agreement. By the time of the hearing, the purchase price had been paid and authorization given for transfer to proceed. The remaining issues were whether interest was payable and whether costs should be awarded on a punitive scale.

• Whether the applicants were entitled to interest on the delayed purchase price payments and from what date such interest should run
• Whether the applicants were entitled to costs and if so, whether such costs should be awarded on an attorney and client (punitive) scale
• Interpretation of the sale agreement regarding payment obligations and transfer timelines
• Whether the clause requiring transfer within 2 months could be relied upon given that the Registrar of Deeds (not the attorney) effects transfer

The first to fourth respondents were ordered to pay the costs of the application on a party and party scale, jointly and severally. The claim for interest was dismissed (implicitly, as no order for interest was made).

A contractual clause requiring a conveyancing attorney to effect transfer within a specified period is treated as pro non scripto where the Registrar of Deeds, not the attorney, is the official legally responsible for effecting transfer. Where a sale agreement makes payment contingent on registration and transfer, and makes no provision for interest on late payment, a party claiming interest must prove when registration occurred and when payment was received to establish when interest should begin to run. In land restitution matters, costs will be awarded where applicants are compelled to approach the court to enforce valid sale agreements that state respondents have unilaterally failed to perform, even where the Land Claims Court generally disfavors costs orders. However, punitive (attorney and client) costs require proof of mala fides; mere lack of funds to perform contractual obligations does not constitute bad faith sufficient to warrant punitive costs.

The court noted with concern that a number of similar matters had come before the Land Claims Court with the same problem arising - lack of state funds to complete land purchases - and no satisfactory explanation had been tendered as to why there was such a lack of funds. The court cited the principle from Texas Co (SA) Ltd v Cape Town Municipality 1926 AD 467 at 488 that costs are awarded to indemnify a successful party for expenses incurred through being unjustly compelled to initiate or defend litigation, and that while taxation means such awards are seldom complete indemnities, this does not affect the underlying principle. The court observed that authorization for transfer was only given after the application was served, suggesting the litigation had a direct causal effect in securing performance.

This case illustrates the Land Claims Court's approach to enforcing sale agreements in land restitution matters where the state is the purchaser. It establishes that contractual clauses inconsistent with the legal reality of how transfer is effected will be treated as pro non scripto. The judgment confirms that while the Land Claims Court is generally reluctant to award costs, it will do so where applicants are unjustly compelled to litigate to enforce valid agreements, particularly where state respondents unilaterally breach agreements due to lack of funds. However, absent proof of mala fides, punitive costs will not be awarded. The case also demonstrates the strict approach to claiming interest - parties must prove when payment obligations crystallized under the agreement and when actual payment occurred.