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Short notes on:
WHEN REALLY IS IT LEGALLY
IMPOSSIBLE TO PERFORM?
Introduction
According to the Oxford English Dictionary, the word “impossible” means “not able to
occur, exist, or be done” and “impossibility” means “the state or fact of being
impossible”.
In the recent judgment in the matter of King Sabata Dalindyebo Municipality v
Landmark Mthatha (Pty) Ltd & another (136/11) [2013] ZASCA that was delivered by
the Supreme Court of Appeal (“SCA”) on 31 May 2013 the Court considered the
meaning of (supervening) “impossibility” when used as a defence in legal
proceedings. In order to understand the issues, it is necessary to summarise the
relevant facts (for the purposes of this article), which were briefly as follows:
The King Sabata Dalindyebo Municipality in Mthatha, Eastern Cape (“the Municipality”)
took transfer of certain immovable property known as „The Remainder of Erf 912 Umtata‟,
(the Property), which had been donated to it by the Eastern Cape Provincial Government in
December 1997. In October 2006 the Municipality concluded a written lease agreement
with Landmark Mthatha (Pty) Ltd (“Landmark”) in terms of which the Municipality leased to
Landmark a portion of the Property for a period of 30 years.
In terms of the lease agreement Landmark would develop the Property on behalf of the
Municipality by providing infrastructure or services to the Property and market and sublet
the premises it was required to erect to third parties.
Having concluded the lease agreement, Landmark then, in May 2007, concluded a contract
with African Bulk Earthworks (Pty) Ltd (“ABE) in terms of which the latter was engaged by
the former to undertake bulk earthworks on the Property as part of, or in preparation for,
the development, which was referred to as the Mthatha Retail Development.
In terms of its agreement with Landmark, ABE commenced work and rendered invoices to
Landmark but the latter was not able to make payment as the bank, which was going to
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provide the development finances, could not advance the required finance because certain
conditions pertaining to the loan had not been fulfilled. One of those conditions was that
there should be no land claims over the Property. It had emerged that the Property was
indeed the subject of certain land claims from various communities, namely the KwaLindile
Community; the abaThembu Community and the Zimbane Community, which were all
lodged between September and December 1998.
In May 2007 the KwaLindile Community instituted motion proceedings against the
Municipality, Landmark and five other respondents seeking an order, amongst others,
interdicting the development. Landmark and ABE only became aware of the interdict
proceedings on 19 July 2007. The Land Claims Court granted an interim interdict on 2
October 2007 prohibiting the development pending the finalization of serious and
consultative negotiations with all parties concerned, all of which needed to happen before
30 November 2007. The consultative negotiations did take place, but were aborted on
21 January 2008, on which date the interim interdict lapsed.
It was not in dispute that no notice was published following lodgement of the three claims
before the conclusion of the lease agreement between Landmark and the Municipality in
respect of the Property. However, in May 2007 the commissioner advised the Municipality
of the KwaLindile land claim, which had apparently been investigated and found to be
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compliant and which was in the process of being gazetted . This claim was subsequently
gazetted on 25 May 2007. In August 2003 the commissioner also informed the Municipality
of the Zimbane Community claim.
In the meantime, when ABE did not receive payment, they immediately ceased operations,
cancelled the contract and instituted action against Landmark and other defendants (who
had signed suretyship agreements). Landmark defended the matter and, of relevance for
the purposes of this article, requested that judgment in ABE‟s claim be handed down
simultaneously with judgment in their separate claim which they had instituted against the
Municipality in terms of a procedure known as “Third Party Notice”.
In its claim against the Municipality, Landmark sought an order for specific performance of
the lease agreement (i.e. demanding that the Municipality provide it with the vacant
possession of the Property, in the sense that the development work could be conducted
and completed lawfully); together with payment of what was referred to as delay damages
in the sum of R290 496 953, plus costs and interest. In the alternative, Landmark sought
an order for payment of the sum of R220 397 556, as damages for breach of contract (the
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Section 11(7) of the Restitution of Land Rights Act 22 of 1994 (“the Act”) provides, inter alia, that once a
notice has been published in the Gazette in respect of any land which is the subject of a land claim, ‘no person
may sell . . . , lease, . . . or develop the land in question without having given the regional land claims
commissioner one month’s written notice of his or her intention to do so”
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allegation being that the Municipality breached the lease agreement by failing to give
Landmark vacant possession). In the further alternative, Landmark sough an order for
payment of the sum of R92 416 034, as damages suffered as a result of misrepresentation
(based on the Municipality‟s alleged failure to disclose that the Property was subject to a
land claim), plus interest and a further order was sought for payment of „an amount equal
to the judgment (if any) and costs (if any) which may be awarded in favour of ABE in its
claim against Landmark‟.
In its defence, the Municipality denied that it was aware of land claims relating to the
Property and argued further that Landmark was aware of the existence of the land claims,
alternatively Landmark „ought reasonably to have been aware of the existence of the land
claims‟. It admitted the allegation of the existence of an implied or tacit term of the lease
agreement, which is that it would give Landmark vacant possession of the property. The
Municipality argued, however, that in light of the gazetting of the KwaLindile Community
land claim and the commissioner‟s threat that she will interdict any development on the
subject land‟, it had become impossible for it to afford Landmark vacant possession of the
Property.
Given the fact that it was not in dispute that the Municipality had failed to give
Landmark vacant possession of the Property, the Court still had to consider whether
it was impossible for the Municipality to give Landmark such vacant possession.
In the Eastern Cape High Court, Mthatha (where the case started), the court
rejected the Municipality‟s defence of supervening impossibility on the basis that,
among other things, the Municipality had been aware of the land claims (prior to the
conclusion of the lease agreement) and could or should have clarified the situation
irrespective of whether it believed the claims to be valid or not; that it could have
brought an application in terms of Section 34 of the Act2 prior to developing the
Property; that if indeed there was a supervening impossibility, it had been created
by the Municipality‟s own conduct; and that in any event, the interdict was not an
absolute legal impediment but rather precluded development pending negotiations
and was for a limited period of time.
On appeal, it was argued on behalf of the Municipality that the supervening
impossibility set in when the Land Claims Court granted the interim interdict on
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Which provides that “any national, provincial or local government body may, in respect of land which is
owned by it or falls within its area of jurisdiction, make application to the Court for an order that the land in
question or any rights in it shall not be restored to any claimant or prospective claimant”
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2 October 2007. The SCA considered the legal position in South African law with
regards to supervening impossibility and quoted from its previous decision 3 where it
was said that: “as a general rule impossibility of performance brought about by vis
major or casus fortuitus will excuse performance of a contract. But it will not always
do so. In each case it is necessary to “look to the nature of the contract, the relation
of the parties, the circumstances of the case, and the nature of the impossibility
invoked by the defendant, to see whether the general rule ought, in the particular
circumstances of the case, to be applied”. The rule will not avail a defendant if the
impossibility is self-created; nor will it avail the defendant if the impossibility is due
to his or her fault. Save possibly in circumstances where a plaintiff seeks specific
performance, the onus of proving the impossibility will lie upon the defendant”.
Having considered the facts of the case, the SCA concluded that the impossibility of
performance raised by the Municipality as a defence was not permanent. It was
dependent on the Municipality taking, or failing to take, action. The Court found no
explanation why no notice was given to the Commissioner by the Municipality after
the KwaLindile Community‟s land claim was published on 25 May 2007, as set out
in the Act. There was also no explanation why the Municipality failed to act upon the
advice of the Land Claims Court (when it granted the interim interdict) and invoke
the provisions of s34 of the Act immediately after the negotiations the court had
ordered had been aborted in January 2008. It concluded that had the Municipality
taken that course timeously the impossibility would have been removed.
Accordingly, the supervening impossibility was indeed brought about by the
Municipality‟s own conduct /fault - it was self-created.
Accordingly, the general rule that impossibility of performance brought about by vis
major or casus fortuitous will excuse performance of a contract was not available to
the Municipality to use as a defence. In the result, the Municipality‟s appeal was
dismissed with costs and it was ordered to pay the amounts that were claimed by
Landmark.
3
In the matter of MV Snow Crystal: Transnet Ltd t/a National Ports Authority v Owner of MV Snow Crystal
2008 (4) SA 111 (SCA) at para 28
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CONCLUSION
This judgment reinforces the legal position that just because it is factually
impossible to perform an act in terms of an agreement (as per the ordinary
dictionary meaning) it does not necessarily follow that the party that was supposed
to perform will then be excused from such performance. In this case, amongst other
things that the Municipality could have done, it could have notified the Land
Commissioner that it indeed intended to lease the Property in question or,
alternatively, make application to the Court for an order that the Property in question
or any rights in it shall not be restored to any of the claimants or prospective
claimants. Having failed to do so, the Municipality now has been ordered to pay a
significant amount of money which could have been better utilised for much needed
service delivery.
© Mzo Tshaka – Schoeman Attorneys 2013