Lawyer’s farm deal judged to be fraud

By: WERNER MENGES

A FARM sale which a Gobabis lawyer put together in an attempt to circumvent the Agricultural (Commercial) Land Reform Act was in fraud of the law, the Supreme Court has ruled.

The set of contracts through which Gobabis area farm owner Jan Harm Labuschagne supposedly borrowed N$8,7 million from a South African national, Waldemar Strauss, leased his two farms to Strauss at a nominal monthly rental of N$1 000, and in his will bequeathed his farms to Strauss, were the components of a simulated transaction, meant to disguise the true nature of the agreement between Labuschagne and Strauss, the court found in a judgement handed down on Thursday last week.
The court dismissed an appeal which Strauss and Gobabis lawyer Bennie Venter, who drew up the contracts, had lodged against a High Court judgement in which the contracts were declared invalid and Strauss was evicted from Labuschagne’s farms.
Venter was also ordered to return a tractor, which he had received from Labuschagne as part payment of a commission of N$100 000 that he was set to be paid for having devised the scheme.
In the High Court, Judge Sylvester Mainga had ruled - and three judges of the Supreme Court have now agreed with that finding - that the contractual scheme between Labuschagne and Strauss was designed to disguise the underlying contract between them, which was that Strauss was buying Labuschagne’s farms, Haarlem and Sukses, north of Gobabis.
The contracts which they had signed were an attempt to avoid the obstacles presented by the Land Reform Act, which required that Labuschagne should first have offered his farms for sale to Government, Acting Judge of Appeal Kate O’Regan said in the Supreme Court’s judgement.
Because the contractual scheme was a disguised or simulated transaction, it was in fraud of the law, and as a result all of the contracts signed by Labuschagne and Strauss were void from the start, Judge O’Regan found.
Chief Justice Peter Shivute and Judge of Appeal Gerhard Maritz agreed with her judgement.
The court was informed that Labuschagne decided to sell his farms after he had retired in 2007. Towards the end of 2008 Venter approached Labuschagne and introduced Strauss to him as a potential buyer of the farms, Judge O’Regan recounted the events.
In terms of the law, the State has a first option to decide whether it wants to buy agricultural land when the owner of the land decides to sell it. The requirement that agricultural land must first be offered to the State however does not apply when ownership of the land is transferred in the administration of a deceased estate, the Land Reform Act says.
The law also requires a foreign buyer of agricultural land in Namibia to first obtain the permission of the Minister of Lands to do so.
When Labuschagne enquired from Venter whether such a sale to Strauss would be possible, given the provisions of the Land Reform Act, Venter told him that there was a way of avoiding the obstacles created by the law, the court was informed.
The scheme which Venter then put together has however now been proven to have been too clever for its own good.
The deal went off its tracks at the start of 2009 already, when Labuschagne realised that Strauss had failed to make a first agreed payment of N$3,1 million to him by January 1 2009. Labuschagne then went to see another lawyer, who advised him that the scheme was contrary to the provisions of the Land Reform Act.
Labuschagne promptly tried to cancel the agreements signed with Strauss, and launched an urgent case in the High Court to get that done.
Strauss and Venter however opposed the case.
Having lost the appeal, they have now been ordered to carry Labuschagne’s legal costs both in the appeal and in the proceedings in the High Court.
Labuschagne was represented by Albert Strydom and senior counsel Theo Frank. Venter and Strauss were represented by Reinhard Tötemeyer, SC.

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