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BHAMJEE v. MAPOSA (No.2) [1988]Botswana Law Reports 268 High Court, Lobatse 27 July 1988 The defendant was the owner of two pieces of land in Extension 25 Gaborone, granted to him by the State, on condition that each plot could not be sold, except to the State, until the construction of a building on the plot had been completed within a specified period. On 27 May 1982, for the sum of P15 000, the defendant granted the plaintiff an option to purchase one of the plots within 90 days of completion of the construction on the site of a coffee lounge and outbuildings, to be built by the plaintiff at a cost of P60 000. In June 1983 the plaintiff was again granted an option by the defendant to purchase the second plot for P30 000:00 within 90 days of completion on the site of a restaurant and outbuildings to be built by the plaintiff at a cost of P120 000: 00. The construction of the buildings on the two plots was to be completed on or before 28 April 1984, or within such extended period as shall be granted by the relevant authorities. Such extension were indeed granted, the final extension being granted on was on 22 August 1987. The plaintiff was not able to commence any building on the plots immediately because he did not have sufficient funds. But he did have sufficient to commence building by August 1987, but he was prevented from doing so by the fact that the properties were attached in January 1987 by Barclays Bank Ltd the creditors of the defendant. The Bank sold the two plots in or about September 1987 and the plaintiff was repaid P45 000 out of the proceeds of the sale, representing the amount he .had paid to the .defendant for the two options. The plaintiff however instituted an action against the defendant claiming P21 377: 75 as damages. This was made up of interest on the price for two options, for the period between payment of the sums to the defendant and the repayment effected by the bank, and legal costs arising from the preparation f the relevant agreements and documents. The defendant contended the agreement between him and the plaintiff was illegal and unenforceable. The options were disguised sales of the properties, prior to compliance with the development covenants. If they were genuine options, they would also be illegal and contrary to public policy. The High Court held, applying Boyd v. Nel, 1922 A.D. 414, that the options were genuine options. There was no attempt by the parties to conceal the real nature of the transaction between them. It also held that since the State had not suffered in any from the contravention of the development conditions required in terms of the State Land Act (Cap. 32:01) (1973 Rev.), the defendant should not be able to take advantage of a situation to which he had been a knowing party from the outset. Even the option agreements were illegal or contrary to public policy they were still enforceable at the instance of the plaintiff HALLCHURCH J. [273] So much for my findings on the facts. I now turn to the defendant's legal objections. First of all, he complains that the agreements are illegal and should be declared null and void. The title deeds D2 and D3 provided that the respective properties shall not be sold other than to the State until the buildings have been completed thereon in accordance with the terms thereof. Now, it is common cause in this case that the parties were desirous of completing a sale of the said properties and the "option method" was invoked to achieve this aim without offending

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clause 13 (IV) of the respective Deed of Fixed Period State rant (see D2 and D3). However, the objective of the legislature, State Land Act (Cap. 32:01) (1973 Rev.) in regard to this clause is to encourage development of plots of land and not permit a landowner to create a land bank and .stifle development in an urban area. The option agreements herein do not offend that objective because the plaintiff steps into the defendant's shoes and assumes the same responsibilities as to development. In each case, the buildings were to be constructed within two years of the date of grant. However, the Department of Surveys and Land granted extensions of time to the defendant and the last extension is dated 22 August 1986 and the development period is extended from 22 August 1986 to 22 August 1987 (see P .6) Mr. Motswagole on behalf of the defendant cited a number of authorities in support of his submissions, namely: Zandberg v. VanZyI 1910 A.D. 302 at p. 310; Commissioner of Customs and Excise v. Randles, Brothers and Hudson Ltd. 1941 A.D. 369 at pp. 394-396; Union Government (Minister of Finance) v Slabbert and Others 1921 O.P.D. 187; Elliot on the South Africa] Notary (6th ed.); London, Chatham and Dover Railway v. South Eastern Railway [1893] A.C. 429, H.L, Mr. Ebrahim on behalf of the plaintiff also cited a number of authorities in support of his claim, namely: The Law of Contract in South Africa by [274 ] Joubert; Claasen v. African Batignolles Construction (Pty.) Ltd. 1954 (1) S.A. 552 at p. 557; Metro Western Cape (Pty.) Ltd. v. Ross 1986 (3) S.A. 181; Savage and Lovemore Mining (Pty) Ltd. v. International Shipping Co. (Pty) td. 1987 (2) S.A. 149. It is clear that an option is an offer made by the offeror to the offeree to keep open the offer for a certain period of time or for a reasonable time and if he, the offeror breaks this contract of option by disabling himself from performing it or by expressly or impliedly repudiating it he will be liable for breach of contract, see Boyd v. Nel 1922 A.D. 414. The defendant contends that the contract in this case is not what it purports to be but is a sale. I do not consider that there has been any attempt by the parties to conceal the rea1 nature of the transaction between them and I reject that argument in toto as in my judgment the option agreement is clear. The second principal objection which is alternative to the first objection is that if the agreements are held to be option agreements then they are illegal and contrary to public policy. Innes C.J. in Eastwood v. Shestone 1902 T.S. 294 at p. 302 said: Now this Court has the power to treat as void and to refuse in any way to recognise contracts and transactions which are against public policy or contrary to good morals. It is a power not to be hastily or rashly exercised; but when once it is clear that any arrangement is against public policy, the Court would be wanting in its duty if it hesitated to declare such an arrangement void. What we have to look at is the tendency of the proposed transaction, not its actually proved result. The Deeds of Fixed Period State Grant in this case stipulate that the plots could not be sold (except to the State) until the construction of the said building has been completed. The option agreements are to the effect that the plaintiff can only purchase the plots when the said buildings have been completed. I have regard to the wise aphorism of Sir George Jessel M.R. in Printing and Numerical Registering Company v. Sampson (1875) 19Eq. 462 at p. 465: It must not be forgotten that you are not to extend arbitrarily those rules which say that a given contract is void as being against public policy, because if there is

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more is one thing which more than another public policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of Justice, In my judgment, this case is far from coming into the category of a clear case and I have therefore come to the conclusion that the said option agreements are neither illegal nor against public policy, If I am wrong in my judgment on that point Mr. Ebrahim argues that even if the said agreements are illegal and/or against public policy the plaintiff should still succeed in this case. [275] In Claasen's case (supra) at p. 563c it was held inter alia: 'even though defendant may have committed a breach of the regulation by using the premises without the necessary certificate, plaintiff not being an offending party is not precluded from enforcing the contract, How ever, in this case it would seem that both parties are the offending parties so there is that important distinction. In Metro Western Cape's case (supra) it was decided as summarised in the head note that: As a general rule a contract impliedly prohibited by a statute is void and unenforceable, but this rule is not inflexible or inexorable. Although a contract is in violation of a statute it will not be declared void unless such was the intention of the legislature Also see Savage's case (supra) where it was held as summarised in the head note at p. 153F and G: further, since it appeared that the authorities responsible for the administration of export control were in no way inconvenienced or even perturbed by the infringement of the law which had taken place, that there appeared to be room for the conclusion .that neither the Legislature nor the Minister as delegated legislator had intended voidness to be the consequence of a contravention of the export regulations, and that they were content with the sanctions specifically provided for in the Act In the circumstances of this case, it seems to me that the State has not suffered in any way and the defendant should not be able to take advantage of a situation to which he has been a knowing party from the outset therefore I have come to the conclusion that even if these option agreements are illegal and/or contrary to public policy they are still enforceable at the instance of the plaintiff. Mr Motswagole's final objection was that as the plaintiff had not developed the said plots from 1982 to the date of attachment he should not be awarded interest because the situation was of his own making. I reject this argument outright because if he had been able to develop the plots he should have been able to recoup the equivalent of the interest in the value of the buildings when completed. I conclude, however, that the latter is speculative and that all sorts of misadventures may have befallen the plaintiff in carrying out the construction work. However, that is not the point at issue, the point is that the defendant has had the benefit of the plaintiff's money over a period of time and he should now repay him interest when the money is returned to him and it is the defendant's fault that the contract was frustrated and the plaintiff has been denied the opportunity of making a profit out of the transactions.

[276]In conclusion there will be judgment for the plaintiff for the sum of P21 377:75 plus interest at 10 per cent a tempora morae and costs on party and party scale. The counterclaim is dismissed and there will be judgment for the plaintiff on the counterclaim with costs on party and party scale. Judgment for the plaintiff