Section 3(e)(i) of the Subdivision of Agricultural Land Act (the Act) provides that agricultural land shall not be sold or advertised unless the Minister has consented to it in writing. There are currently conflicting judgements as to whether this provision applies to an option to purchase agricultural land.
In Colchester Zoo SA Investments (Pty) Ltd v Weenen, the KZN High Court held that the definition of “sale” in the Act included options to purchase and consequently, unless the Minister’s consent was obtained, the option to purchase would be invalid.
This is wholly opposed to the decision given four years earlier by the Free State High Court in Westraad NO v Burger. The Court held that an option to purchase cannot be read into the definition of “sale” given by the Act and thus the Minister’s consent is not required when concluding an option to purchase.
It would therefore seem that in KZN the Minister’s consent is required to conclude an option to purchase agricultural land, while in the Free State, the Minister’s consent is not required. This is obviously an untenable situation since the Act is national legislation and should be applied to all provinces in the same way.
The most significant impact stemming from the two conflicting judgements is that it leaves those persons already party to an option to purchase agricultural land agreement without the Ministers consent, in doubt as to the validity of their option contracts. Clarity on this subject is important since it can take up to two years to obtain consent from the Minister and whether it is necessary to go through this timeous process will obviously impact the decision to enter into the option contract at the outset.
The question that naturally occurs when there are conflicting judgements is which judgement is correct and which one will be followed in the future?
The Free State High Court in deciding that the definition of the word “sale” does not include an option to purchase interpreted the provision using the literal and common meaning of the definition of “sale” found in the Act. It would seem that the KZN Court relied on the intention and objective of the Act in interpreting the definition of “sale.” Therefore two differing styles of interpretation resulted in the two opposing judgements. Not to mention that the Colchester decision, four years after the Free State Westraad decision, took no cognisance of the earlier Westraad decision.
The Supreme Court of Appeal (SCA) has since indicated which of the two forms of interpretation, the intention of the legislation or the literal common meaning of words in legislation, is more preferable. Natal Joint Municipal Pension Fund v Endumeni Municipality warned against using terms such as “intention of the legislature” when interpreting statutes. It held that looking at the intention of the legislature moves away from interpreting legislation and rather turns a court’s attention to enquiring into the mind of the legislature. The SCA rather urged judges to look at language and context when interpreting statues. This is in line with what has long been held as the “golden rule” of interpretation- adherence to the plain words of the statute unless it would result in absurdity.
The language used to define “sale” in the Act is brief, specific, to the point and free from mention of options to purchase. Further, it must be remembered that an option to purchase is not a conditional sale of land. The sale only comes about when an option to purchase is exercised. Until that option is exercised, there is no actual contract of sale and thus the section requiring the Minister’s consent should not be applicable.
It would seem that on the principles of interpretation laid down by the SCA, courts should follow the precedent set out by the Free State High Court in the Weenan decision, allowing for an option to purchase agricultural land without the Minister’s consent.
It should be kept in mind that although the Minister’s consent is required to register a servitude in respect of agricultural land, (subject to certain exceptions), the two conflicting judgements have no effect on the granting of options to acquire servitudes as servitudes may be granted (but not registered) without the consent of the Minister.