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In Mendo v Rustenburg Local Municipality & Others, the North West Division of the High Court, Mahikeng (“Mahikeng High Court”), reiterated the established principle that absent exceptional circumstances, the first validly concluded sale will take precedence over a subsequent sale of the same property.
Background
In April 2017, the Rustenburg Local Municipality resolved to dispose of residential stands and advertised them in the Platinum Weekly on a “first come, first served” basis, with preference given to first-time home owners. One of the properties advertised was Portion 14 of Erf 2, Rustenburg Extension 7.
Ms Motlisi paid a ZAR 10 000 deposit on 5 July 2018 and concluded a written deed of sale with the Municipality on 5 September 2018. She paid the ZAR 90 000 balance on 31 October 2018, slightly outside the stipulated 30-day period. However, the Municipality accepted the late payment without cancelling the agreement. Separately, a Mr Mendo signed a deed of sale for the same property (counter-signed by the Municipality on 5 October 2018), paid two deposits of ZAR 10 000 each and the ZAR 80 000 balance by 3 October 2018, took possession and erected structures on the property, including a borehole.
Only when Mr Mendo sought transfer did the double sale come to light. The Municipality advised that the duplication was the result of an administrative error. Mr Mendo then approached the Mahikeng High Court and sought a declarator that his deed of sale was valid and enforceable, together with an order compelling transfer into his name. Ms Motlisi was joined as an interested party to the proceedings
The court was called upon to determine which sale is the valid one.
Court’s findings
The court held that Ms Motlisi’s agreement was valid and enforceable. It was in writing, signed by both parties and complied with section 2(1) of the Alienation of Land Act, 1981. Although her late payment of the balance of the purchase price constituted a technical breach, the Municipality’s acceptance of the payment, without exercising any right of cancellation, meant that the agreement remained intact.
The court was prepared to assume in Mr Mendo’s favour that contractual rights may have arisen between him and the Municipality. However, it applied the long-standing rule applicable to competing sales of immovable property: qui prior est tempore potior est jure (the first valid sale in time prevails). Ms Motlisi’s written agreement was concluded on 5 September 2018, whereas Mr Mendo’s agreement was only counter-signed on 5 October 2018. Ms Motlisi’s sale was therefore first in time and her rights prevailed.
Conclusion
The court declined to grant Mr Mendo a declarator, reasoning that it would have no practical effect where transfer could not follow. Specific performance was likewise refused because the Municipality could not lawfully transfer the same property to two different purchasers. Instead, the court ordered the Municipality to refund Mr Mendo’s full purchase price of ZAR 100 000 with interest at the prescribed rate from 5 October 2022, payable within 30 days. The Municipality was further ordered to pay the costs of Mr Mendo, his attorneys and Ms Motlisi, inclusive of counsel’s costs, taxable on Scale B.
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