‘IMPROPER MOTIVES’ MAY COST FARMERS DEARLY
Constitutional Court dismisses application to prevent the sale of wine farm
THE Constitutional Court has given the trustees of the Goede Hoop Trust a tongue-lashing for having “improper motives” and using farmworkers as a means to frustrate the execution of sale of a wine estate to recover money owed to Nedbank.
The application concerned the interpretation and applicability of rule 46A of the Uniform Rules of Court.
The rule applies whenever a creditor who is owed money wants to take away or sell the house or land of the person who owes them money, and sets out the conditions or steps in this regard. In this case, it related to the rights of people living on the property, including the farmworkers.
The property in question is owned by the trust. It conducts business on the property as a wine farm, wine cellar, wine merchant and restaurateur. The trust also owns equipment, machinery and stock in trade amounting to about R5 million.
Petrus Johannes Bestbier and Hanlie Bestbier, who are trustees, reside in the main house on the property and Carel Brink Bestbier occupies a cottage on the property. A number of permanent trust employees, the farmworkers, also live, together with their families, in 12 cottages on the property. Many have occupied the property as their only or principal home since the 1990s.
According to court papers, the trust had received substantial financial assistance from Nedbank in the form of an overdraft and a loan, secured by nine mortgage bonds over the property, totalling R9.2 million.
The trust failed to comply with its repayment obligations and Nedbank issued summons against the trust and Petrus Johannes Bestbier in his personal capacity, for the amounts of R5 529 477.36 together with interest at a rate of 12.5% a year on the facility agreement, and R3 034 966.88 together with interest at a rate of 11% a year on the loan agreement, together with costs.
Nedbank also sought an order that the property be declared specially executable.
On February 21, 2019, the applicants and Nedbank reached a settlement agreement, which was reduced to writing and signed by the parties on March 29, 2019. In terms of the agreement, the applicants admitted their indebtedness to Nedbank, and agreed to pay an amount of R1 800 000 by May 17, 2019 and the balance by June 1, 2019.
They also agreed that in the event that they defaulted in paying the amount, Nedbank would be entitled to proceed with an application for payment, failing which, the private sale of the property. They also agreed to an order declaring the property executable and further agreed on a reserve price of R21 million.
The trust, however, failed to adhere to the terms of the settlement agreement in that it did not pay Nedbank, failed to sell the property privately and refused to honour the consent for the immovable property to be declared executable.
Several court cases followed, one in which the high court found in favour of Nedbank for payment of the debt and declared Goede Hoop Wine Estate between Stellenbosch and Kuilsriver specially executable.
The matter went to the Supreme Court of Appeal, and now the Concourt.
One of the key issues in the case during argument by counsel for the applicants, was “whether the farmworkers are affected persons in terms of rule 46A(3)(b) of the Uniform Rules” in that the farmworkers were not given notice of Nedbank’s application for the property to be declared specially executable.
Nedbank argued there would be no immediate prejudice to the farmworkers
as a result of the failure to give them notice in terms of rule 46A, because there is no allegation that any buyer of the property or successive owner will evict the farmworkers from the property. And that, in any event, any such buyer or successive owner will be obliged to comply with the law before any eviction may take place, specifically regarding those farmworkers who enjoy the protection by the Extension of Security of Tenure Act (Esta).
Ultimately, Judge Zukisa Tshiqi, in a unanimous judgment, found: “The property in this matter had mixed characteristics and use. The farm is a business enterprise but the residential premises are used as residential immovable property.
“The premises occupied by the trustees, the beneficiaries and the farmworkers are thus residential immovable property within the meaning of rule 46A(1). We know the applicants in this matter are not complaining they were not given notice as envisaged in rule 46A.
“We also know that the applicants had signed a settlement agreement in which they effectively consented to judgment being taken and an order that the property be declared specially executable.
“The reality is that after the sale of the property, there will be a surplus (on the assumption that at least the reserve price is achieved) and these trust beneficiaries, who are seemingly members of the family, may utilise the surplus to acquire alternative housing.
“I find that in this matter, the applicants had improper motives; that is, they used the farmworkers as a means to frustrate execution.”
A Nedbank spokesperson said: “On the specific facts of the matter, Nedbank is satisfied with the interpretation and outcome.”
Lawyers for the trustees did not respond to further requests for comment by deadline.