- May 26, 2023
- |Civil Law, Practice, And Procedure, Concise Law Reports (CLR)
The plaintiff filed a lawsuit against the first, second, and third defendants, seeking specific orders which included orders declaring the donation of a property between the first and second defendants as unlawful or fraudulent, setting aside the transfer and registration of the property to the second defendant, and ordering the first defendant to register the property in the name of the third defendant within 60 days.
The defendants raised several defences, including the claim being time-barred, disputing the existence of the alleged agreement, asserting that any agreement was for the benefit of the third defendant, and challenging the validity of the agreement under the Formalities in Respect of the Sale of Land Act, Act 71 of 1969.
The factual background revealed that the plaintiff held two pieces of land as a beneficial holder under communal land rights, which were later incorporated into the town lands of the Municipality of Ondangwa. The first defendant acquired ownership of the property (Erf 1784) through a transfer from the Municipality, and subsequently, through a deed of donation, transferred ownership to the second defendant.
The plaintiff’s main claim was based on a verbal agreement with the first defendant, intending to establish a close corporation where each would hold 50 percent membership. The first defendant allegedly agreed to transfer the property to the close corporation once acquired from the Municipality, allowing the corporation to conduct business on the property. The plaintiff asserted that the first defendant would inform them of the transfer, after which the property would be transferred to the close corporation. The fourth defendant was not involved in the proceedings.
The first defendant did not testify, and the second defendant was the only witness called on behalf of the defendants. The second defendant’s testimony was based on what he heard from his father, the first defendant. He confirmed that ownership of Erf 1784 was transferred to him, and he is currently the registered owner.
The court accepted the evidence of the plaintiff regarding the conclusion of the agreement, as it was not directly contradicted by the second defendant’s testimony. The evidence also supported the plaintiff’s claim that an agreement had been concluded between him and the first defendant, as various changes were made to establish the close corporation, which confirmed the existence of the agreement.
The court accepted the plaintiff’s evidence regarding the conclusion of the agreement, as it was not directly contradicted by the second defendant’s secondary evidence. The court found that the probabilities supported the existence of the agreement between the plaintiff and the first defendant. The evidence showed that the close corporation (CC) was quickly acquired and changed shortly after the alleged agreement, aligning with the plaintiff’s claims. However, the court was of the view that the agreement did not create any right on the part of the plaintiff to claim the transfer of Erf 1784. Instead, it sought to create a right to claim transfer in the CC.
The court decided to address only one issue raised by the defendants, which was the lack of the plaintiff’s locus standi (legal standing) to pursue the claims.
MILLER AJ:
‘[9] The agreement relied upon by the plaintiff did not create a right for the plaintiff to claim the transfer of Erf 1784 directly. Instead, it established a right to claim transfer in the CC (close corporation) they had in mind, which was intended to be the third defendant. In that sense, the agreement was a stipulatio alteri in favour of the third party, which was to be the close corporation the plaintiff and the first defendant had in mind.’
The court noted that the plaintiff sought specific performance of the agreement, but the agreement did not grant the plaintiff an enforceable right to claim the transfer of ownership directly to the third defendant. While the plaintiff would benefit as a member of the close corporation, that did not create a legal right to claim specific performance in the form of the property’s transfer to the third defendant.
It was therefore held that:
a.) The agreement is a stipulatio alteri in favor of the third party, which was to be the CC the plaintiff and the first defendant had in mind.
b.) A claim for the vindication of a contractual obligation pre-supposes that the agreement creates the right which requires vindication.
c.) Held further that, the plaintiff, through his membership in the close corporation, would receive some benefit from the transfer of the property from the first defendant to the third defendant, but it does not create an enforceable right to claim specific performance in the form of transfer of ownership to the third defendant.
As a result, the plaintiff’s claims were dismissed with costs of the first and second defendants, including the costs of one instructing and one instructed counsel.