28 August 2008 by

Greater controversy arises regarding the status of agricultural land

The recent decision of Stalwo (Pty) Ltd vs Wary Holdings (Pty) Ltd [2006] JOL17455 (SE) (Stalwo) has caused more controversy in an already uncertain area of law. The whole of the Subdivision of Agricultural Land Act (the Act) which comprises the foundation upon which this decision is based, has been repealed by section 1 of the Subdivision of Agricultural Land Act Repeal (Repeal Act), which has yet to come into operation despite the Repeal Act having been tabled in 1998.

The decision affects the legal status of agricultural land.This effect becomes clear when analysing the objective of the Act. The Act was introduced in order to control the subdivision of agricultural land and thus prevent the fragmentation of farming land into small uneconomic units. Subdivision of agricultural land now requires express written Ministerial permission.

The Act defines agricultural land as any land, except land situated in the area of jurisdiction of certain erstwhile local authorities. The difficulty arises as a consequence of section 151 of the Constitution of the Republic of South Africa, which incorporates all land into the jurisdiction of present local authorities. In view of the above it is no longer clear that agricultural land as defined in section 1 of the Act still exists.

Our courts previously held that the Act had to be interpreted to mean what it meant when it was promulgated. Accordingly, agricultural land still existed for the purposes of the Act and consisted of all land except that situated within the jurisdiction of the structures named in section 1 of the Act at the last moment when those structures actually still existed. Therefore, for so long as the Act was not repealed, the written consent of the Minister was still required for the subdivision of such land.

Stalwo has moved away from the proviso that agricultural land is determined by looking at whether the land qualified as such at a particular point in time, notwithstanding any changes to local government structures and their boundaries. Stalwo accepted the argument that, should the present interpretation remain, agricultural land would be perpetually frozen in its present state and consequently would not be determined by whether or not the land is situated within the areas of jurisdiction of the named structures as envisaged by the Act. Therefore, according to Stalwo, the concept of agricultural land must now be interpreted to be "fluid rather than static and thus changing with the expansion of local authorities and the creation of new ones."

Stalwo noted that "the Minister, in terms of the very definition of agricultural land, retains the power to exclude any land from the exceptions imposed by it, and declare it agricultural land for the purposes of the Act…" Therefore, the objective for which the Act was promulgated would not be frustrated by the new interpretation.

It was concluded in Stalwo that "the disputed land, which is in fact no longer used as agricultural land, is not agricultural land. The provisions of section 3 of the Act have no application to the parties' agreement and the Minister's consent is not required as a prerequisite for its validity."

The court's position in Stalwo seems untenable and further litigation seems inevitable. Any person concluding a contract of sale involving the sub-division of land deemed to be agricultural land in accordance with the previous interpretation would best be advised to obtain the Ministerial consent until such time as the position is clarified by our courts or the Repeal Act finally becomes operational.

Lucia Erasmus, Director and Eric Meyer, candidate attorney, Cliffe Dekker Inc.

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