THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case No: 429/2015

In the matter between:

THE MINISTER OF HUMAN SETTLEMENTS, WESTERN
CAPE PROVINCIAL GOVERNMENT                                                      APPELLANT

and

THE PENHILL RESIDENTS SMALL FARMERS
CO-OPERATIVE LTD                                                             FIRST   RESPONDENT

GRAHAM ADA                                                                    SECOND RESPONDENT

IVAN CLOETE                                                                          THIRD RESPONDENT

Neutral Citation: Minister of Human Settlements, Western Cape v Penhill Residents
Small Farmers Co-operative (429/2015) [2016] ZASCA 99 (3 June 2016)
Coram:
Lewis, Cachalia, Saldulker and Mathopo JJA and Tsoka AJA
Heard:
24 May 2016
Delivered:   3 June 2016
Summary:  Land: unlawful occupation of land owned by provincial government:
occupiers of farm land interdicted from taking further occupation of additional land
and erecting new structures: did not have consent of owner to settle on additional
land and were not deprived of any right unlawfully.

___________________________________________________________________

ORDER

On appeal from: Western Cape Division of the High Court, Cape Town (Saldanha J,
Cloete J and Nyman AJ concurring, sitting as full court of appeal)
1 The appeal is upheld with the costs of two counsel where so employed.
2 The order of the full court is set aside and replaced with the following:
„(a) The first respondent is interdicted and restrained from-
(i)
Settling on any of the portions of the properties listed in annexure A to
the notice of motion and which are demarcated in red on the plan
attached hereto (the unoccupied areas);
(ii)
Erecting structures on any portion of the unoccupied areas;
(iii)
Claiming rights over any portion of the unoccupied areas by cordoning
off such portion;
(iv)
Inciting or encouraging other persons to settle on any portion of the
unoccupied areas, or to erect structures on such portions.
(b)The first respondent is directed to pay the costs of the application.‟
___________________________________________________________________
JUDGMENT

Lewis JA (Cachalia, Saldulker and Mathopo JJA and Tsoka AJA concurring)
[1] The Western Cape Provincial Government owns a tract of land close to
Stellenbosch known as the Penhill Farms. The land consists of several registered
farms and is very close to the N2 highway running between Cape Town and
Somerset West. It is thus land of considerable value. I shall refer to it either as
Penhill Farms or the property. Until 1994 it was not occupied and not farmed. In that

year indigent small scale farmers started to occupy Penhill Farms and to establish
farming operations – mostly pig and livestock farming.

[2] The number of people occupying the land and the extent of Penhill Farms
used for farming increased significantly over time. The Provincial Government was
aware of the occupation, and indeed over many years gave assistance to the
farmers and tried to regularize their occupation through proposed leases at a
nominal rental. In 2000 the farmers began to organize as a group and eventually
formed the Penhill Residents Small Farmers Co-Operative Ltd, which is the first
respondent in this appeal. I shall refer to it as the Penhill Farmers.

[3] However, in early 2011 the Provincial Government wished to settle another
group of farmers – the Ithemba farmers – for whom it was obliged to find land for
occupation in terms of a settlement made an order of court, on the unoccupied
portions of Penhill Farms. The Penhill Farmers were advised before then that the
unoccupied land was needed for other people. Nonetheless, the Penhill Farmers and
others continued to take occupation of portions of the property previously
unoccupied and to erect structures without consent. In February 2011 they were
given notice by the Department of Human Settlements that they should demolish the
structures illegally erected. The notice was ignored and people continued to erect
structures and to fence off previously unoccupied portions of Penhill Farms.

[4] The Minister of Human Settlements, Western Cape Provincial Government
(actually the Member of the Executive Council (MEC) of the Provincial Council, but
referred to in the application as a Minister, and I will refer to him as such accordingly)
accordingly brought an urgent application in May 2011, which was heard on 14 June
2011, for an interdict preventing further settlement and the erection of new structures
on Penhill Farms. The respondents cited were, in addition to Penhill Farmers, two
members, Mr G Ada and Mr I Cloete. Mr Ada has subsequently died and Mr Cloete
no longer occupies a portion of Penhill Farms: the only respondent now is Penhill
Farmers. The Minister also sought orders prohibiting the incitement of others to

occupy and to erect structures on unoccupied portions of Penhill Farms. These were
identified in an annexure to the notice of motion.

[5] The Provincial Government did not attempt to interfere with the occupation of
the property by existing occupiers: it did not seek to evict any of the Penhill Farmers
or other occupiers. It sought to prevent future unlawful occupation. Its ownership of
the property was not disputed by the respondents. The court of first instance (Allie J
in the Western Cape High Court) dismissed the application some six months after it
was heard, despite the urgency. It refused an application for leave to appeal in
February 2012. This court gave leave to appeal against Allie J‟s order to the full court
of the Western Cape High Court.

[6] The full court (per Saldanha J, Cloete J and Nyman AJ concurring) heard the
appeal in July 2013, and refused it in November of the following year. This court
gave special leave to appeal against the order of the full court. It directed the
Provincial Government to file, together with the record of appeal, a plan depicting
precisely the portion of the properties in respect of which it claimed an interdict,
together with a description of the area. This court also requested the parties to make
good faith efforts to agree on the current number of occupiers, the portions of Penhill
Farms occupied, and the extent not occupied.

[7] No agreement was reached. The Provincial Government attempted to get
clarity, and on its own inspection concluded that 52.2473 hectares (26.1 per cent) of
the property were occupied, whereas Penhill Farms was 200.0844 hectares in
extent. Thus 73.9 per cent was not occupied. It also established that there were 269
people occupying Penhill Farms. The areas not occupied were described as empty
farm land. The State Attorney advised the court of this on 26 March 2015.

[8] In August 2015 professional land surveyors provided a comprehensive survey
at the request of the Provincial Government. The statistics were somewhat different.
The surveyors advised that 69.8154 hectares (36.4 per cent of the Penhill Farms)

were actively occupied; 86.4374 hectares (45.08 per cent) have been fenced off for
grazing; and 35.4937 hectares (18.51 per cent) were unoccupied. One of the
inferences to be drawn from the difference is that there had been further settlement
between March and August of 2015.  Indeed, the surveyor observed in his report that
„The situation on the ground is dynamic and changing frequently. New
settlement/occupation and “subletting” are happening continuously.‟

[9] It is possible, however, that the first inspection following the court‟s request
was less accurate than the surveyor‟s observations. Whatever the reason for the
discrepancy, there are at least 35.4937 hectares of land unoccupied and on which
the Provincial Government wishes to develop housing and settle the Ithemba
farmers.

[10] What is more startling is the significant difference between the occupation
alleged when the application was first moved and the position established by the
land surveyor some four years after the interdict was sought. In June 2011 only
some 90 hectares were occupied, including fields used for grazing. About 110
hectares was thus available for settlement of the Ithemba farmers and for other
developments proposed by the Provincial Government.

[11] The interdict sought would have protected the clear right of ownership that
vests in the Provincial Government. But Allie J refused it, finding that the Penhill
Farmers had a „legitimate expectation‟ to use the entire property, exceeding 200
hectares, and had thus to have been given „lawful notice‟ before seeking the
interdict. She also held that the Provincial Government had given „actual authority‟ to
occupy and use the entire land for farming purposes. The full court confirmed that
finding.

[12] Before traversing the development of the settlement and the history of
negotiations between the parties, I should observe that these findings are mutually
destructive. If the Penhill Farmers had actual consent, then the question of legitimate

expectation would not have arisen. The question is one of fact, and mutually
exclusive facts cannot be pleaded in the alternative, as the courts below failed to
appreciate. The Penhill Farmers could not rely on consent, and then, if that was not
established, rely in the alternative on the right to a hearing before they are prevented
from unlawfully occupying land that they had not occupied before.  In any event, a
legitimate expectation to a hearing arises only where there is a decision taken by an
administrative body: the launch of proceedings to protect a right can hardly be said
to be administrative or executive action.

The history of occupation and of negotiations between the Provincial
Government and the Penhill Farmers
[13] I have indicated already that the first farmer settled on Penhill Farms in 1994,
and that further settlement occurred thereafter. The entire farm was never occupied,
which Mr Ada and Mr Cloete confirmed in their answering affidavits in the
application. Mr Ada said:
„The portion of the farm occupied by [the Penhill Farmers] and currently used for farming
purposes is only a small portion of the total size of the farm and will not adversely affect any
housing project implemented on the farm.‟
They also did not deny that the vacant land was designated for imminent use by the
Provincial Government.

[14] In response to the allegations that they were responsible for new structures
being erected, the Penhill Farmers pointed out that the property was very large and
was occupied by „a substantial number of persons who are not members of the
[Penhill Farmers]. Any one of these persons could have erected the structure.‟
Penhill Farmers do not thus claim that they occupy all of the property, and they deny
that they are responsible for settlement by other people.

[15] The question that then arises is whether the Provincial Government ever gave
them consent to occupy the entire property, as the courts below found. Such consent
is essentially argued to have arisen from negotiations between the parties over the

years. There were a number of meetings held from 2004 onwards to regularize their
existing use of portions of Penhill Farms. Minutes of these meetings, and draft
documents put up by the Penhill Farmers, show various attempts to structure their
arrangements formally. On 9 December 2004, a meeting was held between the
Penhill Farmers, the Provincial Government and the City of Cape Town. They
agreed to „give attention to the zoning of the land for agricultural purposes, the
provision of services to the small scale farmers on the land and the conclusion of a
formal lease agreement with [the Penhill Farmers] to regularize its members
occupation of the land‟. Members of Penhill Farmers then drew up an action plan to
deal with services.

[16] In May 2005 the Provincial Minister of Agriculture (also in fact an MEC) wrote
to the Provincial Minister of Human Settlements requesting him to submit a project
plan and information about the nature of the farming to be conducted so that a lease
agreement could be drafted for each farmer. In October 2005 the former recorded in
a letter to Mr Cloete that a meeting had been held at which it was agreed that the
conclusion of lease agreements between the individual farmers and the Department
of Human Settlements was a priority.

[17] In August 2006, a firm of consultants engaged by the Provincial Department
of Agriculture provided it with a „project plan‟ for the development of the small-scale
farming on Penhill Farms. The Department of Agriculture confirmed in a letter to Mr
Cloete on 6 September 2006 that the Penhill Farmers could use the project plan as a
basis for concluding lawful lease agreements with the individual farmers.

[18] On 23 November 2006, the Provincial Government advised the Penhill
Farmers that property would be made available to individual farmers for leases for a
period of nine years and 11 months. The Department of Transport and Public Works
(Public Works) would take over all risk, and profit and loss, but should any of the
properties not be used for farming they would have to be handed back to the
Department of Local Government and Housing.  Public Works would manage the
leases while Agriculture would facilitate farming and mentor the farmers. However,

no leases were actually concluded, and it was clearly the understanding of the
Provincial Government that the leases would be with the individual farmers in
respect of each portion of Penhill Farms farmed by them.

[19] On 27 February 2007, the Chief Director of Planning and Development in the
Provincial Department of Local Government and Housing wrote to Mr Cloete
advising that, while the department was committed to making land available for the
farming project on Penhill Farms, there was increasing pressure to provide housing
in the area and some of the land might be required for housing. This was followed by
a meeting on 19 July 2007 between City of Cape Town representatives, the
Provincial Department of Agriculture and the Penhill Farmers where the proposed
development was discussed. The following year, on 9 April 2008, another meeting
was held with the same representatives where the City advised all present that it
proposed a holistic development of the Blue Downs area, into which Penhill Farms
fell, with the financial assistance of the Development Bank. The minutes recorded
that:
„It was agreed that a User Agreement will be entered into with two parties. The definition of
User Agreement and Lease Agreement in legal terms is the same thing. The proposed ten
(10) year period cannot be acceded to due the greater Bluedowns development plan and the
proposed plan has now been submitted to the City of Cape Town for comments. The agreed
term for the User Agreement will be for three (3) years with a condition for renewal for a
longer period subject to the finalization of a study for greater Bluedowns development and a
rental will be at market related (sic).‟

[20] A draft lease agreement was prepared by the Provincial Government (Local
Government and Housing). The Penhill Farmers were said to be the lessee. A plan
was attached. It is not clear whether the plan was in respect of the entire property or
only portions. The Penhill Farmers maintain that it was in respect of the entire
property but it is not apparent from the plan. They attach significance to this. Indeed
it is the high watermark of their case based on actual consent to occupy the entire
property.

[21] At a meeting on 30 April 2008, the Penhill Farmers were advised that the draft
lease had been prepared and had been sent to the legal services department for
input. They presented their own draft lease to the chairman. The Provincial
Government engaged a property valuator to prepare a property valuation in order to
determine a market related rental for possible letting to „small farmers‟. The date of
the valuation was 2 June 2008. The valuation related to Penhill Farms but also to
other properties – some 248 hectares in all.

[22] The next meeting was on 9 October 2008. There was a discussion of the term
of the draft lease that prohibited the erection of any permanent structure: the Penhill
Farmers pointed out that there were already permanent structures on the property.
There was also disagreement over the rental to be paid. The valuator had
recommended that it be five per cent of the value, which was set at R1 000 per
hectare. The Penhill Farmers proposed one per cent of value.

[23] The parties met again on 19 November 2008. The same issues were
discussed. Several other meetings were held over the course of the following two
years but no agreement was reached. On 14 January 2011 another meeting was
held where the same issues were raised again. The Provincial Government‟s
representative confirmed again that it was willing to assist the Penhill Farmers but
that the property was situated along a major transport route and was needed for
urban development. The Penhill Farmers registered dissatisfaction at not being
included in the discussions about the relocation of the Ithemba farmers but stated
that „they are not against the Ithemba farmers also farming at Penhill, but that they
need to be part of future discussions‟. The notice to demolish structures was issued
shortly after this and the urgent application followed in May 2011.

Consent
[24] The courts below found that there was actual consent for the Penhill Farmers
to occupy the entire property, and that is what the Penhill Farmers argue again on
appeal. It can be seen, however, from the minutes of meetings and the content of

correspondence that there were negotiations over the occupation of the portions
already farmed. But there was nothing either express or implicit in any of the
discussions that approved the Penhill Farmers‟ taking occupation of the entire
property.

[25] As I have said, they place store on the plan attached to the draft lease
prepared by the Provincial Government and on the valuation done in respect of
Penhill Farms as well as on the negotiations to regularize their position over the
years. But does any of this indicate unequivocal conduct that justifies an inference
that there was consensus regarding the term of the contract they allege? In Standard
Bank of South Africa Ltd & another v Ocean Commodities Inc & others 1983 (1) SA
276 (A) this court said (at 292B-C):
„In order to establish a tacit contract it is necessary to show, by a preponderance of
probabilities, unequivocal conduct which is capable of no other reasonable interpretation
than that the parties intended to, and did in fact, contract on the terms alleged.‟

[26] In Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd 1984 (3) SA 155
(A) Corbett JA, after citing the test in Ocean Commodities, referred to a different and
less stringent formulation (at 165B-C): „a court may hold that a tacit contract has
been established where, by a process of inference, it concludes that the most
plausible probable conclusion from all the relevant proved facts and circumstances is
that a contract came into existence‟. He did not determine which test was preferable
as it was unnecessary for the determination of the case.  The requirement that
unequivocal conduct is required before a contract will be held to have come into
existence was also confirmed in McDonald v Young [2011] ZASCA 31; 2012 (3) SA
1 (SCA) para 19.

[27] Residents of Joe Slovo Community, Western Cape v Thubelisha Homes &
others (Centre on Housing Rights and Evictions & another, Amici Curiae) [2009]
ZACC 16; 2010 (3) SA 454 (CC) dealt with consent of an owner to occupy property
in determining whether there had been compliance with the Prevention of Illegal
Eviction from and Unlawful Occupation of Land Act 19 of 1998. The issue there was

whether eviction had been effected lawfully. There are five different judgments in the
matter but the result was agreed. The only relevance of Residents of Joe Slovo to
this matter is that the court made it clear that by „consent‟ is meant not simply
acquiescence, but voluntary agreement. Consent cannot be conferred unless it is
asked for and given (para 55). The court endorsed the test mooted by Corbett JA
(above at 165B-C) as to drawing an inference that all parties agreed on occupation:
consent must be the „most plausible probable conclusion from all the proved facts
and circumstances‟ (para 58).

[28] Where is the unequivocal conduct of both the Provincial Government and the
Penhill Farmers, showing that the Provincial Government had consented to the
occupation by the farmers of the entire property, to be found in any of their meetings
or other interaction? During the course of argument before us, counsel for the Penhill
Farmers accepted that the Provincial Government had not acted consistently or
unequivocally over the course of the discussions that took place over the years. All
the discussions related to regularizing the existing occupation by the Penhill Farmers
– not future conduct.  There is no evidence of unequivocal conduct that establishes,
as the most plausible probable inference, that the Provincial Government had
consented to the Penhill Farmers occupying the entire property. There was thus no
consent and the full court erred in finding that there was.

Legitimate expectation
[29] The full court held also that the decision by the Provincial Government to use
a portion of the property for the Ithemba farmers and for a housing development
constituted administrative action – „it had a direct effect on the rights and legitimate
expectations of the‟ Penhill Farmers. The consequence of the „decision‟ was that
there was less land available to be used when, throughout the negotiation period,
they „were brought under the impression that the entire property was available for
their beneficial occupation‟. Nothing in the factual matrix bears this out. (See Minister
of Environmental Affairs and Tourism & others v Phambili Fisheries (Pty) Ltd [2003]
ZASCA 46; 2003 (6) SA 407 (SCA) paras 64-69.) And a decision by an owner of

property to use it can hardly amount to administrative action that impacts adversely
on a person who has no right to use or occupy it.

[30] The finding that the Penhill Farmers had a right to be consulted about the
future use of property to which they had no right is quite astonishing. And equally
astonishing are the following two conclusions, which are at odds with each other:
„In the result I am satisfied that the respondents had authority to occupy the entire 200ha of
the property and that they enjoyed a legitimate expectation to proper notice and consultation
with regard to any restriction of such occupation, whether by way of a substantial housing
development on the property or the relocation of the Ithemba Farmers onto the property.‟
In Vanger v Thomson & Meyer 1915 CPD 752, Juta JP (Kotzé J concurring) said,
where inconsistent and mutually exclusive facts had been pleaded by a defendant:
„I do not think that a defendant can say, “I did not buy,” and “I paid.” Mr Upington has
cited cases in our Courts and in the High Court at Kimberley to the effect that it is nothing
unusual for a defendant to plead that he did not enter into a contract and that the contract
was cancelled, but he has cited no case which says that a defendant may plead that he did
not buy and that he paid. It would be very difficult to conceive of a defendant going into the
box and bona fide denying the purchase – especially in the present case in view of the
account showing that a large sum has been paid off – and also saying that he had paid.
Having eliminated the possibility of all special pleas, as I already said, I cannot believe that
this is a bona fide plea. The magistrate was therefore quite right in not allowing these two
pleas to stand.‟

[31] If there was actual consent, the Provincial Government would not have been
entitled to an interdict. How then can the Penhill Farmers honestly allege in the
alternative that promises had been made and  expectations arisen which gave rise to
a right to notice and consultation? The full court thus erred in finding both that there
was both consent and a legitimate expectation that the Penhill Farmers be heard.

[32] The effect of the full court‟s decision would be that when government,
provincial or local, attempts to negotiate with unlawful occupiers in order to

regularize their occupation, it will be precluded from asserting its right to use
unoccupied land. The consequences could be dire.

[33] The Provincial Government is entitled to the interdict that it seeks. It, and
people in the Western Cape, have been severely prejudiced by the delay in the court
system. It is also entitled to the costs in the courts below and on appeal. Although
the Penhill Farmers argued that they were asserting constitutional rights, that is not
in fact the case. They had no right at all to the whole property, and they are
commercial farmers. They were seeking to enhance their commercial positions and
they did so very successfully in the period between the launch of the application and
the set down of this appeal.

[34] Accordingly:
1 The appeal is upheld with the costs of two counsel where so employed.
2 The order of the full court is set aside and replaced with the following:
„(a) The first respondent is interdicted and restrained from-
(i)
Settling on any of the portions of the properties listed in annexure A to
the notice of motion and which are demarcated in red on the plan
attached hereto (the unoccupied areas);
(ii)
Erecting structures on any portion of the unoccupied areas;
(iii)
Claiming rights over any portion of the unoccupied areas by cordoning
off such portion;
(iv)
Inciting or encouraging other persons to settle on any portion of the
unoccupied areas, or to erect structures on such portions.
(b)The first respondent is directed to pay the costs of the application.‟

_______________________
C H Lewis
Judge of Appeal

APPEARANCES

For the Appellant:
P B J Farlam (with him K Pillay and T
Mayosi)
Instructed by:
State Attorney, Cape Town
State Attorney, Bloemfontein

For the First Respondent:

S Magardie (with him R Matsala)
Instructed by:
Legal Resources Centre, Cape Town
Webbers, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT
OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

3 June 2016

STATUS

Immediate

Minister of Human Settlements, Western Cape v Penhill Residents Small
Farmers Co-operative (429/2015) [2016] ZASCA 99

Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.

The Supreme Court of Appeal today upheld an appeal against the decision of
the Western Cape Division of the High Court, sitting as a full court on appeal
to it, which refused an interdict to prevent further unlawful occupation of
property owned by the Western Cape Provincial Government. The property,
known as the Penhill Farms, was until 1994 unoccupied and not farmed. It is a
huge tract of land, just over 200 hectares, near Stellenbosch, close to the N2
highway running between Cape Town and Somerset West.

In 1994 a small-scale farmer took occupation of a portion of the property and
started farming pigs on it. Other farmers followed suit. The farmers formed a
co-operative in 2000, the Penhill Residents Small Farmers Co-Operative Ltd
(the Penhill Farmers). The Provincial Government actively assisted them with
farming activities, and representatives of the Penhill Farmers, the Provincial
Government and the City of Cape Town met many times to discuss
regularizing the occupation by the Penhill Farmers. Draft leases were

discussed, but none was ever concluded. As early as 2007, the Provincial
Government advised the Penhill Farmers that the unoccupied portions of the
property were required for other farmers (the Ithemba farmers) and for urban
development.

By June 2011 some 90 hectares were being actively farmed. When this
appeal was set down for hearing, early in 2015, only 35 hectares were
unoccupied and available for other use. In early 2011, the Provincial
Government advised the Penhill Farmers to stop taking further occupation of
the property and sent notices requiring them to demolish new structures.
However, further occupation continued apace.

It accordingly brought an urgent application to restrain the Penhill Farmers
from taking occupation of additional land and erecting further structures. They
resisted the relief, claiming that they had consent to use the entire property, or
a legitimate expectation, as a result of promises made, to be consulted before
their rights were affected.

Six months after the application was heard the high court refused to grant an
interdict on the basis that the Penhill Farmers had both consent and a
legitimate expectation to be heard. It failed to take into account the principle
that parties cannot rely on alternative facts. They could not rely on consent or
a promise as to future conduct. Despite this, the full court on appeal refused
the appeal, also finding that there was actual consent to occupy the entire
property and a legitimate expectation that they would be heard before the
Provincial Government used the unoccupied property for other purposes. The
full court’s judgment was handed down some 18 months after the appeal was
heard. Part of the delay was caused by the parties negotiating settlement.

On a further appeal, with the SCA’s special leave, the decision of the full court
was reversed. The SCA found that an examination of the discussions at
meetings and of correspondence between the Provincial Government and the
Penhill Farmers showed that the Provincial Government had never agreed
that the Penhill Farmers could occupy and farm the entire property. On the

contrary, whatever had been discussed was in relation to each portion of the
property actually farmed; and the Penhill Farmers had been advised several
years before the interdict was sought that the unoccupied property was
needed for other purposes.

The SCA thus set aside the decision of the full court and replaced its order
with one restraining the Penhill Farmers from settling on or erecting structures
on demarcated portions of Penhill Farms.