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IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE LOCAL DIVISION,  EAST LONDON

CASE NO:  EL 848/2017

ECD 2148/2017

REPORTABLE

In the matter between:

BW BRIGHT WATER WAY PROPS (PTY) LTD                              Applicant

and

EASTERN CAPE DEVELOPMENT CORPORATION                     Respondent

Summary: Constitutional law - legality review - unreasonable delay - overlooking delay - sections 172 and 217 of the Constitution - application and effect of Gijima and Asla - costs

JUDGMENT

STRETCH J.:

[1]            On 20 December 2016 the applicant and the respondent entered into a lease agreement providing for the applicant to lease portions A and B of the remainder of farm 31, Coffee Bay, Mqanduli (“the property” where the Ocean View Hotel is situated) for the period 1 November 2016 to 31 October 2036.

[2]            The applicant alleges that the respondent has failed to provide it with vacant and undisturbed possession of the property, a portion of which is unlawfully occupied by one Leon Botha as the sole director and shareholder of Nenga River Lodge (Pty) Ltd, and who is competing with the Ocean View Hotel.^[1]

[3]            The respondent not only contends that the applicant has failed to comply with its obligations in terms of the lease, but has also launched a counter application calling upon this court to review and set aside its decision to conclude the agreement (which application the applicant argues is out of time).^[2]  The respondent furthermore alleges that the applicant ought to have joined the Bothas as a party to this application.

The history

[4]         The property^[3] was previously leased by the Transkei Development Corporation to the South African College of Tourism who in turn (according to the applicant), was sub-letting the property to Wild Coast Holiday Holdings. It is common cause that during November 2011 Wild Coast Holdings attempted to evict the Bothas who were at that time occupying a portion of the property and operating a hospitality industry in competition with the hotel.

[5]         The Transkei Development Corporation was subsequently dissolved by the Premier of the Eastern Cape, with all its powers and functions devolving upon the respondent. According to the applicant, its director, who is also the deponent to its founding affidavit (Ian Crawford) acquired the Wild Coast Holiday Holdings share portfolio during 2012. This allowed him to operate the hotel on the property.^[4]  During 2013 the College of Tourism (and all persons occupying through or under it), was evicted from the property by the respondent in its capacity as successor in title to the Transkei Development Corporation, and as custodian of the property on behalf of the South African Government.  The College of Tourism complied with the order.  The Bothas did not. Instead, they managed to obtain an order restoring their possession of a portion of the property, and are claiming R2 million in damages from the respondent for unlawful eviction and the sequelae thereto.  This dispute between the Bothas and the respondent is allegedly lis pendens, with the respondent still maintaining the view that the Bothas are in unlawful occupation, but claiming to have been temporarily hamstrung in taking further action against the Bothas. The respondent’s reasons for not having taken action against the Bothas are set forth in its affidavit as follows:

‘The Respondent holds the view that Nenga River Lodge/Botha are not entitled to occupy the property and that their contention that they occupy the property by virtue of permission obtained from the Chief and Traditional Authority of the Lower Nenga Administrative Area is without foundation.

It has at all times been the Respondent’s intention to institute the necessary action against Nenga River Lodge/Botha but unfortunately, this can only be done on the instruction and concurrence of the State Attorney inasmuch as the property is not registered in the name of the Respondent but the Government.

The Respondent has been liaising with the relevant State Attorney for some months but as at the date hereof, no satisfactory resolution has been forthcoming nor has the State Attorney expressly authorized the institution of legal action.

There have been various meetings with the State Attorney, more particularly the State Attorney representative Mr S Tshitshi and Mr Mandla Mpikashe, the Respondent’s Executive Manager Legal Compliance and Governance.

To illustrate the aforegoing, I annex hereto marked “ECDC7” a letter authored by myself and addressed to the State Attorney Mthatha dated 3^rd July 2017. The contents of such letter are self-explanatory and set out the logistical difficulty encountered by the Respondent to institute action.

The State Attorney’s response is to say the least ambivalent. It relies on the provisions of Section 3(3) of the State Attorneys Act of 1957 and asserts that they have to represent the Respondent in any proceedings.

As attorneys instructed by the Respondent and counsel have been seized with this matter for a long time, permission was sought, as is apparent from Respondent’s letter of the 3^rd July 2017 addressed to the State Attorney, to litigate.

Besides receiving certain queries from the State Attorney, no consent has at yet been forthcoming.

It is hoped that the necessary consent will be forthcoming shortly.’

[6]            There is not much detail regarding what transpired between 2013 and 2016. On the papers, the narrative continues when the applicant and the respondent concluded a lease agreement in respect of the property, which agreement was sealed on 20 December 2016.

The lease agreement

[7]            Ex facie the document the agreement was signed by one S. Sentwa (Sandile Sentwa) in his capacity as the respondent’s chief financial officer and “acting property head” on the one side, and by Crawford representing the lessee when the lease was entered into between the parties, on the other.

[8]            The respondent alleges that Sentwa had no authority to enter into the agreement and to sign the lease, and in so doing, he acted contrary to a resolution taken by the respondent’s executive management committee.^[5] It is accordingly the respondent’s contention that the lease agreement falls to be set aside as being both unlawful and invalid, not only for lack of authority but also due to non-compliance with certain statutory provisions.

The main application

[9]            The applicant claims specific performance in terms of the contract. It is accordingly incumbent on the applicant to allege and prove the terms of the contract as well as compliance with any antecedent or reciprocal obligation to tender to perform it fully. It must also allege non-performance by the respondent.^[6]

[10]         The respondent contends that the applicant is in breach of clauses 3.3 (improvements in terms of the project), 6.1 (non-payment of rent), 6.4 (further non-payment), 6.5 (non-payment for utilities) and 7.1 (non-payment of the deposit) of the agreement, and as such, is barred from claiming specific performance in any event. I will deal with each of these clauses seriatim:

Clause 3.3     The Lessee shall, at its cost, alter or improve the premises in accordance with the agreed project.

The respondent’s deponent has averred that the applicant has not complied with this clause relating to improvements in accordance with the agreed project. That is the sum total of its submissions on this point. The applicant has replied that the agreed project was the addition of a conference facility together with a general upgrade of various components of the hotel facilities, and that this agreed project is complete.

Clause 6.1     The rental payable by the Lessee to the Lessor for the entire period of this Agreement of Lease shall be R32 000.00 (thirty two thousand rand) per month plus VAT, escalating annually by 10%.

The respondent avers that the applicant is not paying this rental, but that it has been paying a lower sum amounting to R8 000,00 per month which (even if one assumes a valid agreement and a default on the respondent’s part to provide the applicant with vacant occupation of portion B and because of the fact that portion B is far smaller than portion A), is no justification for the drastic reduction in rent which the applicant has unilaterally imposed.

According to the applicant, it has been paying monthly rental in the sum of R8 870,00 as “originally agreed” with the respondent. It contends that it has been withholding the balance in terms of the agreement, and will continue to do so, until the respondent complies with its contractual obligation to grant it vacant and undisturbed occupation and possession of the entire premises. It further contends that this much was made abundantly clear to the respondent by virtue of the debit order authorisation form which Crawford signed on the applicant’s behalf on 30 November 2016, which purports to reflect that payment of the sum of R36 480,00 monthly would commence once the applicant had received vacant and undisturbed occupation and possession of the entire premises.

Clause 6.4     The Lessee undertakes to pay to the Lessor all outstanding rental arrears totalling to R337 075.67 pertaining to the current lease immediately after signing the lease agreement.

The respondent avers that the applicant has remained in breach of this clause and that this amount has not been paid. The applicant does not dispute this. Instead, Crawford has stated in his affidavit that he has been advised, as a matter of law, that the applicant is entitled to a remission of its rental obligation; alternatively, to withhold performance under the lease agreement altogether pending the eviction of the Bothas. Crawford has furthermore tendered full compliance with the lease agreement immediately upon the eviction of the Bothas.

Clause 6.5     The Lessee shall pay or amicably settle O.R. Tambo District Municipality’s outstanding (sic) which includes, but (sic) not limited to rates, water, and electricity account in respect of the leased premises immediately after signing the lease agreement.

The respondent avers that the applicant is also in breach of this clause. According to the applicant this clause deals with its obligation to pay rates and consumption charges to the district municipality. It is averred that the applicant has been paying the municipality in accordance with an agreement between it and the municipality. This being the position, it is contended that the applicant is not in breach of this clause. By way of example, the applicant recalls that at some point the respondent “caused” the municipality to discontinue the applicant’s water supply. The applicant brought an application against both the municipality and the respondent for its water supply to be reconnected. The application succeeded (with costs) on the basis that the applicant had complied with its agreement with the municipality.

Clause 7.1     The Lessee shall pay a lease deposit amount of R200 000.00 to the Lessor’s bank account.

It is the respondent’s contention that the applicant has not paid this deposit. This too, is not in dispute, with the applicant having repeated its contention that it is entitled to withhold performance altogether pending the eviction of the Bothas, and tendering immediate and full compliance with the agreement once the Bothas have been evicted.

[11]         The respondent, in raising the above contentions in answer to the applicant’s claim against it, appears to seek reliance on the exceptio non adempleti contractus.^[7]  The respondent has claimed that because the applicant is in breach of certain obligations in terms of the contract, it cannot claim performance, and further, that the respondent is entitled to an order setting aside the ‘decision’ to lease the property to the applicant.  Simultaneously, the respondent has also launched a counter application for that very ‘decision’ to be reviewed and set aside.

[12]         On 13 March 2017 the applicant’s attorneys reminded the respondent that it was still in breach of its obligation to give the applicant vacant possession of the premises in terms of clause 5.3 of the lease agreement.  The respondent’s response was that this was a suspensive condition, the performance of which was impossible and that the agreement was accordingly void.  No reference was made in this communication to the respondent’s present contentions, which are that the applicant has not complied with the aforesaid terms of the agreement, and that the lease is unlawful in any event.

[13]         The contention, that the agreement contains a suspensive condition which remains unfulfilled, appears however to have been abandoned; alternatively, is not seriously pursued by the respondent in its answering affidavit where the following is stated:

‘Whether or not in law the clause is a suspensive condition or not is not relevant to these proceedings as the agreement stands to be set aside.’^[8]

[14]         The exceptio defence can only apply where the applicant’s performance has to precede that of the defendant or where both parties have to perform simultaneously.^[9]  When a contract imposes reciprocal obligations on the parties, performance and counter performance should generally take place at the same time.^[10]  Certain types of contracts form an exception to the rule.  A lessor of property for example (as in the case at hand), must usually perform before rental may be demanded.^[11]

[15]         To this end the applicant contends that the lease agreement entrenches the residual position by making the payment of rent subject to the respondent’s compliance with clause 5.3 read with clause 6.3 of the lease agreement. The relevant clauses state the following:

‘3.3 The Lessee shall, at its cost alter or improve the premises in accordance with the agreed project.

5.3 Subject to clause 3.3 above, the Lessor shall give the Lessee vacant and undisturbed occupation and possession of the entire premises, on the commencement date which shall be subject to the eviction of any illegal Occupant, from which date the premises shall be at the sole risk and profit of the Lessee.

6.3 Upon fulfilment of clause 5.3 by Lessor rental shall be payable directly into the bank account of the Lessor as advised by Lessor from time to time, the details of which will be provided to the Lessee in writing. The Lessee shall

STRICTLY complete and sign Lessor’s Debit Order form for payment obligation in respect of this lease agreement.’

[16]         As I have said, the applicant contends that the agreement entrenches the residual position by making the payment of rent subject to clause 5.3 thereof.^[12] Indeed the debit order authorisation form which accompanied the agreement stipulates the commencement of the debit order as being the date on which clause 5.3 has been fulfilled. The applicant has, in any event, tendered a willingness and an ability to perform its side of the bargain upon the respondent’s compliance with clause 5.3. To my mind, a further aspect which militates in the applicant’s favour is that the respondent has, up until the institution of these proceedings, condoned performance on the applicant’s part which it now, for the first time, claims to have been defective.^[13]

[17]         Finally, the applicant in any event claims that it has indeed complied with clause 3.3 of the agreement and has, at its own cost, improved the property in accordance with the “agreed project”, which it alleges to have involved the addition of a conference facility and a general upgrade. It is not in dispute that the applicant has undertaken and completed these projects. In the absence of any suggestion from the respondent that the “agreed project” involved something more than this, the applicant’s version must be preferred, when the respondent, in alleging non performance, has not furnished this court with any information setting forth the nature and extent of the non performance.^[14] In my view the applicant is entitled in any event, to withhold counter performance under the lease agreement in response to the respondent’s failure to discharge its antecedent obligation provided for in clause 5.3.

Concurrence of the State Attorney and joinder of the Bothas

[18]         The respondent’s opposition to the main application is also founded in part in averments that when the respondent (as successor in title to the Transkei Development Corporation) previously obtained an eviction order by way of default judgment  in the Mthatha High Court on 23 May 2013 (evicting the South African College of Tourism and persons claiming through it from the portion of the property described as the Ocean View Hotel), the Bothas launched an urgent application for a stay in execution and rescission of the judgment. On 12 June 2014 the Bothas withdrew this application, the respondent having undertaken not to evict the Bothas pursuant to the eviction order granted on 23 May 2013 against the South African College of Tourism in respect Ocean View Hotel.  In spite of this undertaking not to execute against the Bothas in terms of the Mthatha order (relating to Ocean View Hotel), the parties before me are still ad idem that the Bothas remain in unlawful occupation of another portion of the property (where Nenga River Lodge is situated).

[19]         The respondent’s deponent has alleged on oath that due to difficulties such as the respondent’s locus standi “at that point in time” and “more importantly” that the Bothas were not occupying this portion of the property through or under the South African College of Tourism, the Mthatha High Court granted an order setting aside the eviction and directing the respondent to restore possession to Nenga River Lodge and the Bothas.

[20]         This is not a correct summation of what transpired. Indeed, according to the papers the eviction order and the default judgment stand. All that was recorded on 12 June 2014 was the respondent’s undertaking (having successfully evicted the College of Tourism from one portion of the property), to not also evict the Bothas (from another portion of the property) in execution of the same order.  I think it goes without saying that failure to have joined the Nenga River Lodge and Botha who seem not to have been enjoying occupation under the College of Tourism, presented an insurmountable obstacle for the respondent at the time.  The respondent has expressed the manifest intention however to institute the necessary action against the Bothas, but avers that it can only do so on the “instruction and concurrence of the State Attorney” inasmuch as the property is not registered in the respondent’s name but in the name of the Government of the Republic of South Africa.  Not much turns on this averment for the purposes of this application.  It suffices to say that the respondent’s locus standi did not present a problem when it secured default judgment against the College of Tourism, nor did it get in the way of the respondent not only opposing the present application before me, but also of delivering a counter application in its own right (apparently sans instructions from the State Attorney).  Indeed, the affidavits deposed to by the respondent’s chief executive officer pertinently state that he is authorised not only to oppose this application but also to initiate litigation on the respondent’s behalf.  This is borne out by a general and exceptionally wide power of attorney which the Minister of Rural Development and Land Reform deemed prudent to bestow on the respondent’s chief executive officer, to inter alia manage the property in the broader sense and to take all and any lawful and necessary measures and steps with respect to the property in question, including entering into lease agreements and instituting and defending legal actions in relation to the property.

[21]         As I have said, the parties are ad idem that the Bothas remain in unlawful occupation of the property, notwithstanding their previous apparent contention that they are lawfully entitled to do so.  This being the de facto position, the respondent contends that the failure of the applicant to have joined the Bothas as materially interested parties is fatal to the applicant’s application, and that the application ought to be dismissed with costs without further ado, on this point alone.

[22]         Crawford, in his affidavit under reply, has expressed the view that this is an ill-conceived attempt by the respondent to escape liability.  He adds that he has also been advised that non-joinder is a matter for argument, but nevertheless mentions that the Bothas have no legally recognised interest in the applicant’s attempt to enforce a bilateral agreement between the parties.  It is further mentioned that insofar as the Bothas do have an interest in any proceedings “aimed at their eviction from the property”, such “proceedings do not yet exist”. Differently put, it is contended on the applicant’s behalf that eviction of the Bothas is, in any event, not sought by way of these proceedings and that success in this application will not automatically result in an order for the eviction of the Bothas and accordingly will not prejudice them in their rights.

[23]         The question as to whether all necessary parties have been joined does not depend on the nature of the subject matter of the suit, but upon the manner in which, and the extent to which this court’s order may affect the interests of third parties.^[15]  The test is whether or not a party has a ‘direct and substantial interest’ in the subject matter of the litigation, that is, a legal interest which may be prejudicially affected by this court’s judgment.^[16]

[24]         In determining whether the Bothas ought to have been joined, it is necessary to scrutinise the relief which the applicant seeks, which is set forth as follows:

1.  Declaring that the lease agreement concluded by the applicant and the respondent on 20 December 2016 is valid, and of force and effect;

2.    Directing the respondent to provide the applicant with vacant possession of portions A and B of the remainder of farm 31 Coffee Bay, Mqanduli by inter alia evicting from the property any unlawful occupiers;

3.    Directing the respondent to take all steps necessary to assist the applicant in causing the lease agreement to be embodied in a notarial deed and registered against the title deeds of the property within seven days of being called upon by the applicant to do so;

4.    Directing the respondent to pay the costs of this application.

[25]         The applicant contends that the aforesaid relief does not make provision for the eviction of the Bothas but simply seeks to enforce its common law and contractual rights against the respondent. To state it differently, it is contended that execution in terms of a successful application does not entail the eviction of the Bothas, and accordingly does not prejudice them, nor do they have a direct or substantial interest in the outcome of this litigation.

[26]         I am inclined to agree with the applicant.  There is a distinction to be drawn between the application before me, and that which the respondent brought in the Mthatha High Court. In that matter, the respondent before me sought to evict the South African College of Tourism, being an institution which was, at the time, in occupation of the Ocean View Hotel (being portion A of the property described as parcel 31).  According to the papers the College voluntarily vacated the Hotel, whereafter the respondent sought to execute against the Bothas who were occupying portion B of parcel 31 (the Nenga River Lodge).  As pointed out by Mr Leon Botha in his affidavit in support of an interdict preventing the respondent from evicting him, he was not joined as a party to those proceedings wherein an actual eviction order was granted, nor did he derive his occupation of portion B of the property from those occupying portion A.  Significantly,  the default judgment refers to the Ocean View Hotel only, and not the entire parcel 31.  It accordingly does not surprise me that the respondent was constrained to give the Bothas an undertaking not to evict them in response to the Mthatha order.

[27]         In the matter before me however, the applicant seeks to enforce the terms and conditions of a contract between itself and the respondent, and has not, in these proceedings, attempted to seek consequential relief directly or indirectly implicating the Bothas.

[28]         In the premises I am satisfied that the applicant’s failure to join the Bothas in these proceedings is not fatal to the main application.  Nor, for that matter is the problem which the respondent alleges it is experiencing with the State Attorney.  On its own version, and at best for it, the respondent seems in these instances to be relying on temporary impossibility. Temporary impossibility does not automatically bring the contract to an end. Such termination depends on factors such as the materiality of the term involved and whether final impossibility is inevitable.^[17]  This is not the respondent’s case. Its deponent says otherwise.  I repeat the last two lines of the previously quoted passage from its affidavit^[18]:

‘Besides receiving certain queries from the State Attorney, no consent has as yet (my emphasis) been forthcoming.

It is hoped that the necessary consent will be forthcoming shortly (my emphasis).’^[19]

[29]         I now turn to the claim in reconvention.

The counter application: delay and prospects of success

[30]      The respondent has applied for the review and the setting aside of its own decision to conclude the lease agreement on two grounds.  Firstly, that Sentwa was not authorised to sign the agreement amounting to failure to comply with internal prescripts^[20], and secondly, that the agreement was entered into in disregard of the statutory framework applicable in terms of the Constitution, in that the lease was not put out to tender, and the agreed rental was out of sync with a market related price.

[31]      It is common cause that the review which forms the subject matter of the claim in reconvention deals with the question of legality, and accordingly the 180-day period within which a review application must be brought in terms of PAJA^[21] does not apply to it.^[22]  It must nevertheless be brought within a reasonable period of time.

[32]      The test enunciated by the Supreme Court of Appeal in Gqwetha^[23] for assessing undue delay in bringing a legality review application was endorsed by the Constitutional Court in Khumalo v Member of the Executive Council for Education, KwaZulu Natal^[24] (hereinafter referred to as the Khumalo test). Firstly, the court must determine whether the delay is undue or unreasonable. Secondly, if the delay is found to have been unreasonable, the court nevertheless has the discretion to overlook the delay and to entertain the application.

[33]      The agreement was concluded on 20 December 2016.  The application to have it set aside was launched eight months later, on 28 August 2017, by way of a counter application to the applicant’s claim. It is contended on the respondent’s behalf that the respondent was only alerted to fully investigate the circumstances leading up to the conclusion of the agreement when the applicant launched the present proceedings in June 2017.  Thereafter it obtained legal assistance and the opinion of senior counsel who advised the respondent that the decision to conclude the lease agreement fell to be set aside, and that the respondent should seek an order declaring the lease to have been unauthorised and unlawful.  This was on 10 August 2017. Apparently the respondent had also, during this time, embarked upon an investigation into Sentwa’s conduct which culminated in the decision to institute disciplinary proceedings against him, and which required the formulation of an appropriate charge sheet.

[34]      It is contended on the respondent’s behalf that at the time it deposed to its joint answering affidavit in the main application and founding affidavit in support of the counter application, the Constitutional Court had not yet handed down the judgment in Gijima which confirms that although organs of state are entitled to bring self-reviews, these reviews do not fall within the purview of PAJA.  It is nevertheless contended before me that the 180 day cut-off period remains a useful guideline as to what may be considered a reasonable delay, and that if the delay had been measured in terms of PAJA, the 180 day period would have expired on 20 June, just short of two months before the counter application was delivered, and just over two weeks after counsel’s advices were obtained.

[35]      I am not sure if I agree with the reasoning behind this argument. Nor does it assist the respondent. As pointed out by Theron J in Buffalo City Metropolitan Municipality v Asla Construction (Pty) Limited^[25], there is a distinction between a legality review and a PAJA review. This distinction was described by the Supreme Court of Appeal in Opposition to Urban Tolling Alliance v South African National Roads Agency^[26], which found that s 7 of PAJA creates a presumption that a delay of longer than 180 days is “per se unreasonable”:

‘At common law application of the undue delay rule required a two stage enquiry. First, whether there was an unreasonable delay and, second, if so, whether the delay should in all the circumstances be condoned … Up to a point, I think, section 7(1) of PAJA requires the same two stage approach. The difference lies, as I see it, in the legislature’s determination of a delay exceeding 180 days as per se unreasonable. Before the effluxion of 180 days, the first enquiry in applying section 7(1) is still whether the delay (if any) was unreasonable. But after the 180 day period the issue of unreasonableness is pre-determined by the legislature; it is unreasonable per se. It follows that a court is only empowered to entertain a review application if the interest of justice dictates an extension in terms of section 9. Absent such extension the court has no authority to entertain the review application at all. Whether the decision was unlawful no longer matters. The decision has been ‘validated’ by the delay.’

[36]         This being the position, it seems that the 180 day bar in PAJA (whilst having been referred to as a guideline) does not play a determinative or even a persuasive role in legality matters. Reverting to the common law, the first hurdle with respect to delay is one of reasonableness; the second, whether it is in the interests of justice to overlook an unreasonable day.  This also means that whilst a substantive application for condonation is not required, the delay must be fully explained for the court’s consideration and application of the two-step Khumalo test.

[37]         In deciding whether the delay was reasonable, I am constrained to consider the explanation offered therefor.^[27] If there is an explanation, it must cover the entire period of the delay.^[28]

[38]         I now return to the facts and circumstances of this matter. To my mind the respondent has lost sight of the fact that Sentwa’s notice of the disciplinary enquiry (dated 4 August 2017) sets forth a charge of gross insubordination, in that as far back as 20 March 2017 he was given two weeks to remedy his alleged unauthorised signing of the lease during December 2016.  Having failed to do so by 7 May 2017 (some seven weeks later), he was given a further reminder which he also ignored. I am of the view that the initial dilatoriness on Sentwa’s part, ought to have been sufficient cause for the respondent, of its own volition, to have taken the first steps to have the agreement reviewed, say by no later than 7 May 2017. It made no attempt whatsoever to do so. It has not explained why no such attempt was made. To my mind, its failure to do so at that point or at least forthwith thereafter, is per se unreasonable in circumstances such as these.  A delay does not have to be particularly long for it to be undue or unreasonable. Whether it is depends on the facts and the circumstances of each case.

[39]         The respondent has also not explained the lengthy delay between 7 May 2017 and 28 August 2017, when it sought what has been termed “reactive self-review” for the first time, by all accounts, to avoid the applicant’s claim. In my view, the delay was unreasonable.

[40]         This raises the second question whether this court should not, in any event, in the exercise of its discretion and having due regard to the interests of justice, overlook the delay. There must however be a basis for a court to exercise its discretion to overlook the delay. That basis must be gleaned from the facts or from objectively available factors.^[29] Courts have in general exercised a more flexible approach to overlooking delay in self-review proceedings.  The approach entails a legal evaluation taking into account factors such as potential prejudice and the consequences of setting aside the impugned decision.  These factors may, in certain circumstances, be ameliorated by the court’s power to grant a just and equitable remedy. Whilst a court must declare conduct which it finds to be unconstitutional invalid, it need not necessarily set the conduct aside.^[30]

[41]          A further factor relevant to overlooking the delay is the nature of the impugned decision. As stated in Khumalo, this, in essence, requires a consideration of the merits of the legal challenge to that decision.^[31]

[42]          Another factor to consider is the conduct of the party claiming self-review, particularly when that party is a government organisation wholly-owned by provincial government, as in the matter before me. As Cameron J so aptly commented in Kirland:

‘[T]here is a higher duty on the state to respect the law, to fulfil procedural requirements and to tread respectfully when dealing with rights. Government is not an indigent or bewildered litigant, adrift on a sea of litigious uncertainty, to whom the courts must extend a procedure circumventing lifeline. It is the Constitution’s primary agent. It must do right and it must do it properly.’^[32]

[43]          The applicant has opposed the granting of condonation, or to put it more correctly, it has contended that this court should not overlook the delay. In support of such opposition, counsel has referred me to the matter of Aurecon South Africa (Pty) Ltd v City of Cape Town^[33] where the general approach to condonation is restated as follows:

‘Whether it is in the interests of justice to condone a delay depends entirely on the facts and circumstances of each case. The relevant factors in that enquiry generally include the nature of the relief sought, the extent and cause of the delay, its effect on the administration of justice and other litigants, the reasonableness of the explanation for the delay which must cover the whole period of the delay, the importance of the issues to be raised and the prospects of success.’

[44]         Taking this background into account, the respondent’s explanation (that it only became aware of Sentwa’s conduct in June 2017 when this application was brought) is in my view disingenuous and does not encourage this court to readily and reasonably come to its assistance. Neither does it cover the entire period of the delay. It seems to me, on a conspectus of the respondent’s version alone, that the only thing which materially prompted it to launch the counter application was because it had been compelled and propelled by the applicant’s institution of these proceedings, to explain its conduct, furnish answers to the applicant’s claims and make an attempt to put its house in order.

[45]          It is also not in dispute that at the latest from March 2017 onwards, the applicant had made concerted efforts to enforce the provisions of the lease agreement. Indeed, the content of the attorney’s letter written on the applicant’s behalf on 13 March 2017 (addressed to the respondent’s chief executive officer who is also the deponent to its affidavit) is instructive.  It reads as follows:

‘Dear Sir

AGREEMENT OF LEASE EASTERN CAPE DEVELOPMENT CORPORATION / BW BRIGHTWATER PROPS (PTY) LTD

PORTION A & PORTION B OF THE REMAINDER OF FARM 31, COFFEE BAY, MQANDULI

The ECDC and our client concluded an Agreement of Lease in respect of the above property on the 20^th December 2016.

One of the material terms of the Lease Agreement contained in Clause 5.3 is: “the Lessor was to give the Lessee vacant and undisturbed occupation and possession of the entire premises, on the commencement date which shall be subject to the eviction of any illegal occupant, from which date the premises shall be at the sole risk and profit of the Lessee.” Our office has addressed correspondence to your offices regarding its obligation to evict the “illegal occupant” from a portion of the premises. We attach herewith copies of our emails dated 17^th February 2017 and 7^th March 2017 which were addressed to Advocate Kunene offices. We have not had a response from Advocate Kunene nor has the “illegal occupant” been evicted from the portion of the premises.

Our letter is addressed to you in terms of Clause 27 of the Lease Agreement which deals with “Dispute Resolution”. You will note from Clause 27.2 that the “dispute” is to be referred to the Chief Executive Officer of the ECDC who is to act as mediator. This letter serves as a referral in terms of Clause 27.2 of the Lease Agreement requesting you to mediate this matter.

You will note further that in terms of Clause 27.4 you are required to resolve the dispute within  7 (seven) days of receipt of this referral.

In the circumstances kindly acknowledge receipt of this referral and confirm that you will address the dispute with the relevant urgency.’

[46]          Receipt of the letter was acknowledged the following day.  It appears that it was in reaction to this letter that Sentwa was instructed by the CEO on 20 March 2017 to remedy his conduct relating to the lease agreement, but when he failed to do so, the respondent likewise failed to take appropriate legal steps to set aside his conduct. Instead, it adopted what counsel refers to as the typically ‘supine attitude’ which the Supreme Court of Appeal warned against in Associated Institutions  Pension Fund v Van Zyl^[34] where Brand JA said the following:

[51] In my view there is indeed a duty on applicants not to take an indifferent attitude but rather to take all reasonable steps available to them to investigate the reviewability of administrative decisions adversely affecting them as soon as they are aware of the decision.  These considerations are, in my view, also reflected in both s 7(1) of PAJA  and in the provisions of s 12(3) of the Prescription Act 68 of 1969.  Whether the applicants in a particular case have taken all reasonable steps available to them in compliance with this duty, will depend on the facts and circumstances of each case. (Compare Drennan Maud & Partners v Pennington Town Board [1998] ZASCA 29; 1998 (3) SA 200 (SCA).)

[47]         Of relative significance is the importance of the claim in reconvention to the respondent. It is not in dispute that the applicant’s Ian Crawford has been operating the hotel on the property since 1 March 2012.  There is nothing on the papers to suggest that he was ever wilfully in, or suspected or accused of having been in unlawful occupation.  Indeed, it appears from the papers that it is only the Bothas’ occupation that is described throughout as unlawful. The respondent’s response to the applicant’s first letter complaining about the Bothas (having averred that it had called upon Sentwa to remedy the unauthorised signing of the lease before it responded to this letter), was not to draw the alleged unlawfulness of the lease to the applicant’s attention.  On the contrary, for all intents and purposes, the letter, drafted by the respondent’s attorneys, relied upon a valid lease containing a suspensive condition, which had lapsed due to the purported non-fulfillment of this condition.

[48]         When the applicant took issue with this response and the interpretation of the lease some two weeks later, the respondent again made no reference to the unlawfulness of the lease and the pending disciplinary enquiry against its officer for signing it.  According to the respondent, it simply “chose” not to respond to this letter.  Indeed, the applicant heard for the first time that the lease was ostensibly signed by an employee who was not authorised to do so, by virtue of the respondent’s claim in reconvention to the legal proceedings which the applicant was constrained to institute to enforce compliance with certain terms of what, by all accounts, purported to be a bona fide lease agreement.

[49]         The respondent’s intransigent conduct, in the circumstances, does not strike me as being demonstrative of a state organ which is particularly perturbed by the status quo and which is trying its best to get its house in order.  Nor does it appear to have viewed the alleged unlawfulness as having been demonstrably serious. How it intended to rely upon Sentwa to correct the position is anybody’s guess.  If, what Sentwa had done smacked of manifest unlawfulness in gross contravention of the Constitution, this to me, would have been a perfect opportunity for seeking early redress in the form of self-review:

‘The delay rule should not be viewed solely through the ancestor lens of common law review, but through our constitutional lens in which legality review serves to promote open, responsive and accountable government.’^[35]

[50]         Applicant’s counsel has argued that the potential prejudice to the applicant if this agreement is set aside at this stage is of dynamic proportions. Crawford has been managing the Ocean View Hotel since 2012.  He has built it up and refurbished it with the concurrence of the respondent, who has, for all intents and purposes, regarded and treated him as a legal tenant.  He discharged his obligation to complete the conference centre project (at a cost of some R2 million) in terms of the lease agreement.  Despite him having been advised (wrongly by all accounts on the respondent’s current version), that the respondent had failed to perform in terms of the contract due to a suspensive condition therein that had not been fulfilled, the respondent also made no efforts to have the contract set aside at its earliest opportunity, as it now seeks to do.  It is contended that the consequences of now setting aside the impugned decision, to satisfy the respondent’s knee-jerk reaction to the applicant having innocently drawn attention to the agreement in the course of attempting to enforce one of its conditions, would be manifestly unfair and prejudicial to the applicant.

[51]         On the other hand the respondent’s deponent has submitted that:

‘… the interest of justice requires that the unlawful agreement be set aside, more particularly where prime land and structures belonging to the State and which are utilized for hotel and tourism purposes be set aside, more particularly having regard to the inordinate period granted in terms of the agreement of lease and the far below market rental recorded in the purported agreement of lease.

Such a valuable hotel site on the Eastern Coast of South Africa should be utilized for the benefit of all and in particular, the State should, in consideration for granting a private entity the right to conduct a lucrative business from such valuable properties, receive market related and adequate compensation for the right to occupy and run the business.’

[52]         As I have said, the potential prejudice to affected parties and the consequences of declaring conduct unlawful may in certain circumstances be ameliorated by the court’s power to grant a just and equitable remedy, and this should also be taken into account:

‘Under the Constitution, however, the requirement to consider the consequences of declaring the decision unlawful is mediated by a court’s remedial powers to grant a ‘just and equitable’ order in terms of section 172(1)(b) of the Constitution. A court has greater powers under the Constitution to regulate any possible unjust consequences by granting an appropriate order. While a court must declare conduct that it finds to be unconstitutional invalid, it need not set the conduct aside.’^[36]

[53]          Another important factor to consider is the nature of the decision made by the respondent to enter into a lease agreement with the applicant, without invoking the prescripts of section 217 of the Constitution.  I hasten to mention that the applicant has not conceded that the respondent’s conduct in entering into the lease agreement in the manner in which it was done, was in any way unlawful or egregious.

[54]         The upshot of all of this then, is that even if there is no basis for a court to overlook an unreasonable delay, the court may nevertheless be constitutionally compelled to consider whether the impugned decision is so clearly and indisputably unlawful that it attracts a declaration of invalidity. Once again, this will depend on the circumstances of the case. This is so because section 172(1)(a) of the Constitution enjoins a court to declare invalid, without hesitation, any law or conduct that it finds to be inconsistent with the Constitution.^[37]

The effect of the Asla judgment

[55]         Before the Asla judgment, the court enjoyed a discretion, albeit limited, whether to pronounce administrative action invalid. Indeed, this view still pertains in the Asla dissenting minority view.^[38]

[56]         The majority in Asla concluded that the delay had been unreasonable and that there was no basis upon which it could be overlooked. In this regard Theron J said the following:

‘The Municipality’s conduct in this matter, particularly following the hearing, verges on bad faith. Had the Municipality acted in a manner that indicated a sincere effort to clean house and rectify past wrongs and unlawfulness, this Court may have had a basis to overlook the delay. The important principle at play in this matter is how this Court manages complex institutional settings of corruption and maladministration, particularly at local government level and where the organ of state has not taken the Court into its confidence.’^[39]

[57]         Despite having reached this conclusion, the Court nevertheless found that on the authority of Gijima, it must, having established that the contract in question was clearly unlawful on undisputed facts (emphasis added), declare it invalid in terms of the provisions of section 172(1)(a) of the Constitution and set it aside.^[40] To motivate this decision, the Court held that “justice and equity dictate that the Municipality should not benefit from its own undue delay and in allowing the respondent to proceed to perform in terms of the contract.”  It accordingly made an order declaring the contract in question invalid, but not setting it aside so as to preserve the rights to which the respondent might have been entitled.  In so doing the Court said the following:

‘It should be noted that such an award preserves rights which have already accrued but does not permit a party to obtain further rights under the invalid agreement.’^[41]

[58]          Writing for the minority, Cameron J and Froneman J suggested an alternative route. The route suggested was, that in the absence of adequate explanation for unreasonable delay, courts should not intervene to “inquire into a final and determinative holding into unlawfulness”, unless the seriousness of the unlawfulness at issue warrants overlooking the manifest deficiencies in the state actor’s case.

[59]          In certain respects pertaining to issues of legality, I am inclined to agree with the ends which are sought to be achieved as expressed in the majority judgment.  In interpreting and applying the various principles which I have made reference to, the purpose ought to be to balance the objectives of the rules or principles relating to delay with the constitutional objectives of declaring unlawful conduct to be exactly that.  In Khumalo, Skweyiya J expressed the principle to be applied, as follows:

‘In the previous section it was explained that the rule of law is a founding value of the Constitution, and that state functionaries are enjoined to uphold and protect it, inter alia, by seeking the redress of their departments’ unlawful decisions. Because of these fundamental commitments, a court should be slow to allow procedural obstacles to prevent it from looking into a challenge to the lawfulness of an exercise of public power.’^[42]

[60]         In Department of Transport v Tasima (Pty) Limited^[43], the Constitutional Court reaffirmed the principle that a court should be slow to allow procedural obstacles to prevent a scrutiny of a challenge to the exercise of public power, but nevertheless went on to emphasise that it is a principle of the rule of law that undue delay should not be tolerated:

‘Delay can prejudice the respondent, weaken the ability of a court to consider the merits of a review, and undermine the public interest in bringing certainty and finality to administrative action. A court should therefore exhibit vigilance, consideration and propriety before overlooking a late review, reactive or otherwise.’

[61]         It is the respondent’s case that the lease agreement ought to be set aside because the peremptory public participation and a competitive system in line with the principle of legality provided for in s 217(1) of the Constitution was not applied. Section 217 reads as follows:

‘217. Procurement – (1) When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competent and cost-effective.’

[62]         The respondent contends that it can never be said in the present instance that a competitive system was employed in that the contract was not put out to tender, so to speak, and that there has accordingly not been compliance with legislative prescripts such as section 217 of the Constitution, the Preferential Procurement Policy Framework Act 5 of 2000 (“the PPPFA), The Public Finance Management Act 1 of 1999 (“the PFMA”) , Treasury Regulations published in terms of the PFMA, and the respondent’s very own Property Policy and Procedure Manual.

[63]          The authors Penfold and Reyburn^[44] are of the view that the word “contracts” in s 217 would probably exclude contracts where the State is providing (as opposed to procuring) the goods or services or other forms of benefit (as in the matter at hand).  Thus, according to the authors, where the State wishes to lease out its property, s 217 probably does not apply. The authors contend that this interpretation is consistent with the heading of s 217  viz “procurement”. The writers also refer to article 2 of the UNCITRAL Model Law on Procurement of Goods, Construction and Services, 1994, which defines “procurement” as the acquisition of goods, construction or services.

[64]          Dr Phoebe Bolton^[45] on the other hand, submits that the word “contracts” in s 217 refers to those instances where an organ of state contracts for the acquisition of goods or services and when it contracts for the sale and letting of assets (as in the matter before me).  Dr Bolton contends that the non application of principles of fairness, equity, transparency, competitiveness and cost-effectiveness to the letting of government assets would not be warranted by logic. The whole rationale for prescribing a system that complies with these principles would be defeated if the principles were to apply only to instances where organs of state contract for the acquisition of goods and services, and that the non application of these principles to letting and sale would be an unfortunate exclusion. The public, as taxpayers, have a right to procurement procedures that comply with the principles in s 217 whenever the state contracts, whether it is acquiring goods and services or whether it is selling or letting assets.  This is particularly so because the disposal of state property or the letting out thereof has been held to constitute administrative action within the meaning of s 33 of the Constitution, and must accordingly be executed in a manner which is just, lawful, reasonable and procedurally fair.^[46]

[65]         According to Bolton, even though s 217 is headed “procurement”, the term should be given a wide interpretation and should be read as referring to both instances when an organ of state contracts to spend funds and when it contracts to receive funds.^[47]

[66]         Section 217 deals specifically with the procurement of goods and service by way of contract. It specifies that such procurement must be in accordance with a system which is fair, equitable, transparent, competitive and cost-effective. No doubt, these systems should allow for a certain degree of flexibility provided the aforesaid five ingredients are present.

[67]          In applying a literal or grammatical interpretation to the section, and having regard to the ordinary or dictionary meaning of the words therein, I have some difficulty in accepting that the clear and simple wording in section 217 standing alone also incorporates the letting, selling and disposal of state assets. Although I tend to agree with Bolton that “contracts” is intended to be a verb, I fail to see why the section would not have extended the verb from its present frame of reference (which is the expenditure and the outputof public funds at a level which serves the best interests of the tax payer) to the opposite frame of reference (which needs be must give effect to the respondent’s policy of letting out property to which it has legal title, at a market related value in order to contribute to the respondent’s income and profitability).^[48]  I do not suggest that the one is not as important as the other.  On the contrary, they are both equally important and to that extent, equal and relevant legislative recognition must be sought (elsewhere if necessary).  Only if none can be found would it be incumbent for the purposes of interpreting section 217 to not only “read-down” but to also “read-in”, using tools such as purposive, historical and contextual interpretation in conjunction with literal interpretation.  According to the learned authors Currie and others, reading-down is a method of statutory interpretation which s 39(2) of the Constitution demands of every court and other tribunal or forum.  The purpose is to avoid inconsistency between the law and the Constitution.  The technique is limited to what the text is reasonably capable of meaning.  Reading-in on the other hand, is a remedy which is usually granted by a court after concluding that a portion or portions of a Statute are constitutionally invalid.  The Constitutional Court has stamped its approval upon giving the green light to the reading of words into a statute, which it considers to be a corollary to the remedy of severance.^[49]

[68]          In Chief Executive Officer, SA Social Security Agency NO & others v Cash Paymaster Services (Pty) Ltd^[50], the SCA held that it is implicit in the provisions of section 217(1) of the Constitution that “a system” with the attributes contemplated therein “ has to be put in place by means of legislation or other regulation. Once such a system is in place and the system complies with the constitutional demands of section 217(1) the question whether any procurement is ‘valid’ must be answered with reference to the mentioned legislation or regulation.”

[69]          Counsel for the applicant contends that the relevant system is to be found at regulation 16A7 of the Treasury Regulations which is specifically entitled ‘Disposal and letting of state assets’ in no uncertain terms. As I understand it, counsel contends that it is accordingly not necessary to apply reading-in to section 217, because the principles which provide for disposal and letting (as opposed to procurement) are already clearly set forth in the Treasury Regulations.  This, being the only regulation which deals specifically with the letting of state assets, reads as follows:

‘The letting of immovable state property (excluding state housing for officials and political office bearers) must be at market-related tariffs, unless the relevant treasury approves otherwise. No state property may be let free of charge without the prior approval of the relevant treasury.’

[70]         As a corollary,  the argument is developed to suggest that it is plain that the only requirement imposed by Treasury as constituting a system for the letting out of state-owned assets is market related rental. I am inclined to think that the argument would seem to suggest that once it is agreed that the rental is market related, it follows that the use of a system which is fair, equitable, transparent, competitive and cost-effective has been invoked.  Rental which is market related would no doubt go some way towards supporting the type of governing system which s 217(1) envisages for procurement, only with the government in the position of creditor as opposed to debtor.

[71]          Clearly interpreting s 217 as applying to procurement only in the literal sense, does not mean that public bodies are entitled to throw caution to the wind when dealing with other public funds, particularly income.  That could never have been the intention of the drafters of chapters 2 and 13 of the Constitution and subordinate legislation and regulations. That is why the Treasury Regulations make a point of traversing the sale and letting of state assets in no uncertain terms. Having said that, I agree with the view that the most emphatic manner in which an organ of state can demonstrate the application of the five principles set forth in s 217, is through a public, transparent tender process in which all tenderers are treated fairly and equitably. A public tender is undoubtedly the preferred means of engaging in public procurement and facilitating public participation and competition, although it does not mean that the use of a tender process is always required in order to comply with s 217.^[51]

[72]          Both the Treasury Regulations and the PFMA regulate the management of finances in provincial government.  They set out the procedures for efficient and effective management of both revenue and expenditure, and both assets and liabilities.  The PFMA in particular establishes the duties and responsibilities of government officials in charge of finances.  The Act is clearly aimed, as is the procurement policy set forth in s 217, to secure transparency, accountability and sound financial management in government and public institutions. The National Treasury is the main body that oversees the implementation of the NFMA. In this regard it prescribes norms and standards to promote transparency and accountability.

[73]          The respondent’s own Property Policy and Procedure Manual also states that the purpose of letting out its property is to contribute to its income and profitability. The rider is that property will be rented out at a market related value. It goes without saying that in letting out its property at nothing less than market related rental, the respondent must be transparent and allow as many market related tenders as possible, in order, at the end of the day, to take advantage of the highest market related bid.

[74]          It is common cause that in the matter before me, despite protracted and intense negotiations between the parties before the lease was entered into, this was undoubtedly an exclusive deal. These were closed and private negotiations. The applicant had a sole mandate.

[75]          The applicant contends that it has gone to great lengths to show that the rental in question is market related, when the onus is on the respondent to prove that it is not. This may well be the case. It is also undoubtedly so that negotiations between the parties were lengthy and protracted and involved participation at various levels of functioning. The respondent’s case that the agreed upon rental is not market related as contemplated in Treasury Regulation 16A.7.4,  is yet another bald averment which stands totally unsubstantiated. Indeed, the respondent has made little effort to comprehensively illustrate what a market related price was or presently is.  On the other hand the applicant went to some lengths to put up the results of valuations, in particular after Crawford had improved the property, and to place on record the respondent’s own version with respect to market related rental after improvements had been effected. It appears from the applicant’s papers that on 10 March 2016 the respondent adopted a resolution that monthly rental would be no less than R30 000,00 based on a valuator’s report that fair rental would be in the region of R44 000,00 for the property (taking into account that the applicant had already effected substantial improvements). The rental was furthermore to escalate by ten per cent per annum, which according to the applicant, was two to three per cent above the norm.

[76]          Despite all of this, I am constrained to agree with the argument advanced on behalf of the respondent. It is simply this. The relevant Treasury Regulations are those published in GNR225 of 15 March 2005. Regulation 16A deals definitively with supply chain management. In terms of regulation 16A.2 these provisions are of application to the respondent. In terms of regulation 16.A.3.2 the supply chain management system must be fair, equitable, transparent, competitive and cost effective (a duplicate of what is set forth in section 217 of the Constitution).

[77]          Whilst counsel for the applicant’s argument (that market related rental is the only requirement) is compelling, it falls short of being persuasive, particularly in the light of a liberal interpretation of the Constitutional imperatives pertaining to public funds.

[78]          Having come to this conclusion, it is not necessary for me to make a finding with respect to the argument that the respondent’s signatory is estopped from now relying on lack of authority.  On the facts which are common cause or not hotly disputed, the argument against estoppel would not have availed the respondent if I were to find that the agreement was a valid one.  The doctrine of estoppel may not however be used to make legal what would otherwise be illegal and cannot replace statutory requirements for the validity of contracts.^[52] Once it is found that the agreement entered into between the parties lacked the makings of being at the very least transparent and competitive (even if the rental was market related), the agreement falls foul of being constitutionally valid.

[79]          Sadly for the applicant, the probabilities favour such a finding. That being the case, this court is bound by the majority decision in Asla.  It does not have the discretion to dismiss the respondent’s counter application on the question of delay only, even when it is clear that the application for self-review is purely a reactive one.

[80]          I am mindful however that in Asla it was pointed out that a refusal to set aside the impugned contract would curiously have had the unsavoury result of allowing the errant organ of state to benefit from its own delay. This is not the position in the case before me.  On the other hand, the application of justice and equity to the circumstances before me, does not dictate both invalidating and entirely setting aside the impugned lease agreement.  I have sympathy for the fact that the applicant was, in a manner, misled into believing that the respondent had the power to enter into an agreement with it, without any transparent and open recourse to public participation at the very least. This is most regrettable. The applicant’s indignation at the 11^th hour reactive stance adopted by the respondent is understandable.

[81]         According to s 172 of the Constitution I have limited choices in making an appropriate order. The section reads as follows:

‘When deciding a constitutional matter within its power, a court –

(a)  Must declare that any law or conduct that is inconsistent with the Constitution is invalid to the extent of its inconsistency;

And

(b)  May make any order that is just and equitable, including –

(i)    An order limiting the retrospective effect of the declaration of invalidity; and

(ii)     An order suspending the declaration of invalidity for any period and on any conditions, to allow the competent authority to correct the defect.’

[82]         With this in mind, I intend making an order that is just and equitable, insofar as the particular circumstances of this case and the Constitution permit me.  It is evident that I am constrained to declare the conduct embarked upon by the respondent, (in concluding a lease agreement with the applicant without setting a reserve price of market related rental, and/or without referring to market related rental, and without following a transparent procedure of public and competitive participation in agreeing on the terms, conditions and price of the lease) invalid. However, I have a discretion not to set the agreement aside in an attempt to preserve the rights which have accrued to the applicant in terms of the lease.  As stated in Asla, such an award is intended to preserve rights which have already accrued to the applicant in terms of the agreement, but do not permit the applicant to obtain further rights under the invalid agreement.

Costs

[83]         Had the respondent not delivered a reactive self-review counter application, I would have given serious consideration to entering judgment in the applicant’s favour. Further, if the respondent’s counter application had relied solely on the signatory’s lack of authority, I would also, in all likelihood (and by virtue of the application of the principles of estoppel and the Turquand rule) have found in the applicant’s favour.  In my view this is relevant to the order I intend making.  It is for this reason that I devoted a portion of this judgment to traversing the merits of the main application, despite the fact that this court cannot, to my mind, grant the application specific performance in the furtherance of a constitutionally invalid contract. To do so would be to make a mockery of the rule of law and the democratic values enshrined in the Constitution.

[84]         Having said this, I am nevertheless of the view that the applicant should not be mulcted with the costs of an application which it brought in good faith and in the absence of any indication that the respondent would invoke reactive relief under the principle of legality. The applicant should also not be mulcted in costs for relying, inter alia, on the ground of undue delay for resisting the counter application. I have no reason to believe that this ground of opposition was not well founded and reasonable, particularly in that it was prosecuted before the Asla judgment was handed down. Ironically, the respondent has only the applicant to thank for the intervention of this court on the question of the validity of the agreement. The respondent itself has made the barest of efforts to cure its position in this regard. Notwithstanding the invalidity of the agreement, the respondent should not be seen to benefit from having given the applicant false assurances around the legality of the agreement, and for sitting idly by until the applicant took legal action.

[85]       The fact that the respondent will achieve nominal success to the extent that a declaration of constitutional invalidity is bound to follow, should not affect the question of costs. Substantially, and not unlike the position in Gijima, it is the applicant that succeeds. I say so because it is obvious that the respondent’s belated efforts were directed at avoiding an otherwise binding agreement, whereas the applicant, on the other hand, in good faith took legal action in seeking to enforce it. For what it is worth at the end of the day, and to the extent that the applicant at the very least is not to be divested of its accrued benefits of the contract, the applicant has been successful.

[86]        I make the following order:

(a)   The main application is dismissed.

(b)   The counter application succeeds only to the extent that the lease agreement concluded between the parties on 20 December 2016 with respect to portions A and B of the remainder of farm 31 Coffee Bay, Mqanduli, is declared constitutionally invalid.

(c)  The order of constitutional invalidity in paragraph (b) above does not have the effect of divesting the applicant of any rights to which it is entitled under the lease contract, but for the declaration of invalidity.

(d)   The respondent is directed to pay the costs of both the main application and the counter application.

__________________

I.T. STRETCH

JUDGE OF THE HIGH COURT

Counsel for the applicant:

R. Quinn SC instructed by Russel Linde Attorneys

Counsel for the respondent:

A.  Beyleveld SC instructed by BNI Attorneys, care of Gravett Schoeman Inc.

Date heard: 17 April 2019

Judgment handed down:  26 July 2019

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