Ownership battle in court

Lessee’s right to buy versus sale to third party

A LEGAL battle for ownership of rights to land leased to a major petrol station has ended up in the Constitutional Court.

Shell South Africa had in 1991 built a petrol station in Nelspruit (now Mbombela) in Mpumalanga, on land it leased from HL Hall & Sons and, according to court papers, Hall had undertaken that, if ever it wished to sell the land, it would first offer it to Shell.

The energy giant would then have 30 days to exercise its right.

But 23 years later to October 28, 2014, Tiekiedraai Properties had sent an e-mail to Hall in which it had indicated that it wanted to purchase the land for R17 million.

On October 30, 2014, Hall had forwarded a copy of Tiekiedraai’s e-mail to Shell, and attached a cover letter referring to Shell’s right of preemption, or right to purchase.

Shell had responded saying it would revert to Hall and on December 1, 2014, Shell confirmed it had been close to getting its board’s approval for its own offer.

By then, 30 days had passed since Hall’s e-mail to Shell and on December 4, Hall and Tiekiedraai concluded an agreement of sale.

Shell then lodged an application in the North Gauteng High Court against the sale, arguing even if it had accepted the offer, no contract of sale would have eventuated as the parties would still have had to reach an agreement on the further terms and conditions.

“The fact Shell was considering the offer did not mean Hall complied.

“Shell was at pains to point out that a written agreement including the terms should be drawn up,” reads Shell’s heads of argument.

The high court had found Shell had the right to be aware of all clauses of the proposed sale to any potential purchaser, not just the fact of sale and the price.

The high court had also ordered Hall to ensure the property was transferred to Shell.

Tiekiedraai then took the matter to the Supreme Court of Appeal (SCA) and lost.

Yesterday, the Constitutional Court heard its application for leave to appeal against the SCA’s judgment. According to the Concourt, Tiekiedraai had three points to argue before it.

The first was on the limits of the court’s remedial powers.

The second was the parties’ intention to contract, and the third related to the rules which courts needed to interpret contractual terms that created a right of preemption.

“The first point of law engages an important question: What remedy, if any, may a court grant against a third-party purchaser where the grantor of a right of pre-emption alienates the merx in question in defiance of that right?

“This question has long been unsettled,” Tiekiedraai argued.