PROPERTY LAW

 

n SUBDIVISION OF AGRICULTURAL LAND

“Our farmers round, well pleased with constant gain,

like other farmers, flourish and complain.”

– George Crabbe (1754 - 1832)

 

The Subdivision of Agricultural Land Act requires that owners of agricultural land obtain consent from the Minister of Agriculture to subdivide agricultural land.  Any sale of a proposed subdivision is invalid if it is entered into before ministerial consent is granted.

 

Lawyers, farmers and property developers were stirred up in 2007 by a decision of the Supreme Court of Appeal. The effect of the judgment was that land that was classified as agricultural land when the transitional local councils were elected lost its agricultural character when municipal councils replaced these transitional local councils. Did this mean that farmland could be subdivided and developed without reference to the Minister of Agriculture?

 

Wary Holdings had sold a proposed subdivision of agricultural land to Stalwo but had occasion to regret the agreed purchase price. Seeking to escape the deal, Wary Holdings argued that the sale was technically deficient as ministerial consent for the subdivision had not been obtained.

 

The Supreme Court of Appeal had to decide whether the land in question was “agricultural land”. If the land was not “agricultural land” for the purposes of the Subdivision of Agricultural Land Act, then the minister’s consent was not necessary and the sale agreement was binding.

The Act defines “agricultural land” as any land falling outside the area of jurisdiction of, amongst others, a “municipal council”. This made sense before the establishment of transitional councils in 1995, because municipalities then comprised limited pockets of jurisdiction. Vast areas falling outside local government jurisdiction qualified as “agricultural land”.

 

The Constitution introduced radical changes to South Africa’s institutional landscape. Not least of these was that post-1995 municipalities have “wall-to-wall” jurisdiction.  Today, no land falls outside the area of jurisdiction of a municipality.

 

The definition of “agricultural land” was amended in 1995 in response to the constitutional changes. The definition now states that land which is situated in the area of jurisdiction of a transitional council and which was classified as agricultural when the first members of that transitional council were elected, remains agricultural land.

 

The Supreme Court of Appeal decided that the amendment was intended only temporarily to preserve the status of agricultural land. Once transitional councils were replaced by municipal councils in 2000, the classified land lost its agricultural character, unless specifically declared by the minister to be “agricultural land”.

 

As a result, the Supreme Court of Appeal found that the land in question was not “agricultural land”, the sale agreement was valid and Wary Holdings could be held to its bargain.

 

This dispute has since reached the Constitutional Court which has reversed the ruling of the Supreme Court of Appeal. The Constitutional Court found that the ordinary meaning of the amended definition of “agricultural land” was that farmland retains its classification and that this classification is not tied to the life of the transitional councils.

 

The amendment simply pinpointed the stage from which land classified as “agricultural land” would retain that classification and the classification did not fall away with the development of new local government structures.

 

The result? The consent of the Minister of Agriculture is still required for the subdivision of agricultural land and the agreement between Wary Holdings and Stalwo was accordingly invalid. Wary Holdings could escape its unfavourable deal.

 

Wary Holdings (Pty) Ltd v. Stalwo (Pty) and Another [2008]

ZACC 12 (25 July 2008).

 

 

Source: Law Letter Nov. 2008

MacRobert Inc. Attorneys