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[2018] ZAWCHC 145
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Green NO and Others v Aquaride Entertainment CC t/a Vista Marina (11141; 15887/2018) [2018] ZAWCHC 145 (8 November 2018)
Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No.s: 11141 and 15887/2018
Before: The Hon. Mr Justice Binns-Ward
Hearing: 1 November 2018
Judgment:
8 November 2018
In
the matters between:
DAVID
SIMON GREEN
N.O.
First Applicant
LEON
NORBERT SASSE
N.O.
Second Applicant
GERALD
DIAMOND
N.O.
Third Applicant
JACOBUS
FREDERIK VAN DER MERWE
N.O.
Fourth Applicant
VUYANI
HAKO
N.O.
Fifth Applicant
PATRICK
ASHWORTH GARRATT
N.O.
Sixth Applicant
LINTON
FRANÇOIS BURGER
N.O.
Seventh Applicant
(in
their capacity as trustees of the
Two
Oceans Aquarium Trust)
and
AQUARIDES
ENTERTAINMENT CC
T/A
VISTA
MARINA
Respondent
JUDGMENT
BINNS-WARD
J:
[1]
Two applications by the applicants, who are
the trustees for the time being of the Two Oceans Aquarium Trust, for
relief against
the respondent close corporation came up for hearing
before me together. The first (in case no. 11141/2018) was
the
postponed return day of a provisional order for the perfection of
a general notarial bond registered in favour of the trust over
the
moveable property of the respondent. The other (in case
no. 15887/2018) was an application for the ejectment of
the
respondent from the premises at the Victoria & Alfred Waterfront
in Cape Town, in respect of which the parties had, on
13 September
2016, signed a deed of lease.
[2]
The respondent’s liability to the
trust in terms of the lease was the factor that was common to both
applications. For
reasons that it is unnecessary to describe,
the respondent had experienced some financial adversity at the outset
of the period
of lease. The applicants had been willing to
accommodate these difficulties by entering into an agreement with the
respondent
whereby the latter’s rental obligations in terms of
the lease were rescheduled. The terms of the accommodation
agreement
were integrated in a deed of acknowledgment of debt
executed by the respondent. The general notarial bond was
registered
primarily in order to provide the trust with security for
the performance of the respondent’s obligations in terms of the
acknowledgment of debt.
[3]
The application for the perfection of the
security furnished by the notarial bond was precipitated by the
respondent’s failure
to perform in terms of the acknowledgment
of debt and the application for ejectment has been brought because
the respondent is
in material breach of the lease, primarily by
reason of its default in the payment of rental. It is
undisputed that the respondent
has not paid any rental in respect of
the let premises since February 2018. It did tender payment of
the rental due in September,
but the payment was dishonoured.
[4]
The relief sought by the trust in respect
of the perfection its security under the notarial bond is limited to
seeking possession
of the movable property in question. The
trust does not seek leave at this stage to realise the property that
it seeks to
take into possession. The limited nature of the
relief sought by the trust in this respect is significant because
there is
a pending application by Bidvest Foodservice (Pty) Ltd t/a
Bidvest Foodservice Multi-Temp Western Cape (‘Bidvest’)
for the winding up of the respondent on the
grounds that the close corporation is unable to pay its debt.
The parties in the
winding up proceedings, which were launched on 10
January 2018, managed to persuade a judge to grant an order
postponing those
proceedings
sine die
pending the redemption by the respondent of its indebtedness to the
applicant in that matter by payment in instalments.
[5]
The movables subject to attachment under
the notarial bond have already been attached in terms of the
provisional order obtained
by the trust in
ex
parte
proceedings in June this year.
The attached property, which is in use in the operation of the
respondent’s restaurant
business at the leased premises, has
been left there pending the outcome of the proceedings on the return
date.
[6]
The trustees recognise that should a
winding up order ever be made in the pending proceedings instituted
by Bidvest, the winding
up will be deemed to have commenced prior to
any order that it has obtained in these proceedings,
[1]
and that any relief confirming the perfection of its security that it
might obtain in these proceedings would consequently be rendered
redundant.
[2]
It is for that reason that, advisedly, the trust does not seek leave
at this stage to realise the respondent’s moveable
property
that it has taken into possession.
[7]
The respondent has opposed both
applications. It has raised numerous grounds of opposition,
some of which are common to both
applications. For the reasons
set forth below, which I have tried to keep brief, I have not been
persuaded that there is
merit in any of them.
[8]
Amongst
its defences to the ejectment application, the respondent raised a
plea of
lis alibi pendens
.
The other pending proceedings upon which the dilatory plea was
founded were those in the perfection of security application.
As the respondent’s counsel wisely recognised, the fact that in
the end both matters came up for hearing and determination
together
effectively stripped the defence of substance, whatever merit there
might otherwise theoretically have been in it.
Had it been
necessary to determine the question, however, I would have rejected
the defence. The two applications are indeed
between the same
parties, but the relief sought in each application is materially
different from the other and it was predicated
on completely
different contracts. That there happens to be some overlap of
relevant fact in the two matters is entirely
incidental.
The determination of either one of them would in
no way effectively dispose of the other.
[9]
The
bases of the respondent’s opposition to the perfection of
security application were the following:
1.
That
the application was not urgent.
2.
That
the deponent to the founding affidavit had not been authorised to
make it or perform a number of other acts.
3.
That
the content of the notarial bond that was registered does not accord
with that which the respondent had authorised to be registered.
4.
That
the acknowledgment of debt arrangement gave rise to a credit
agreement subject to the
National Credit Act 34 of 2005
, and that the
trust had not proven that it was registered as a credit provider in
terms of the that Act, and accordingly in no
position to enforce the
agreement.
5.
That
the amount owing by the respondent to the trust was in dispute.
6.
That
the application has been motivated by bad faith.
I shall
deal with these grounds of opposition in turn.
[10]
Proceedings to perfect security are in
their very nature almost invariably urgent. The proceedings in
this case were initiated,
in the usual way, with an
ex
parte
application for a rule
nisi
operating provisionally as an effective order. It is axiomatic
why applications of this nature are entertained as a matter
of course
by the court on that basis. Prior notice to the debtor that the
creditor was about to perfect its security would
put the security
sought to be obtained at risk. If there were prior notice, the
property liable to attachment could be disposed
of or hidden before
any order that the creditor might obtain could be executed. In
the circumstances the respondent was ill
advised to have taken the
point of an absence of urgency.
[11]
As to the second of the aforementioned
defences, a deponent to an affidavit does not require authority from
anyone to give evidence.
As a witness in proceedings to which
he is not a party, he acts for himself when he gives evidence.
The current proceedings
were launched by the trustees acting through
their attorneys of record. If the respondent sought to
challenge the attorneys’
authority to have launched the
application, they were required to do so timeously under the auspices
of rule 7 of the Uniform Rules
of Court; see
Ganes
and Another v Telecom Namibia Lt
d
2004
(3) SA 615
(SCA), at para. 19. As they did not do so, the
lack of authority objection requires no further consideration.
[12]
As to the defence mentioned in paragraph
[9].3 above, the text of the registered bond does indeed differ in
certain respects from
the draft that was initialled by the
respondent’s representative. In my view the differences
are superficial and inconsequential.
It is noteworthy in this
regard that the respondent did not raise rectification of the bond
agreement, either affirmatively, or
as a defence on this account, nor
did it set forth any cogent basis upon which it might have been
entitled to have the registration
of the bond set aside on account of
the discrepancies. This, no doubt, was because it recognised
that the variations did
not derogate in any effective way from the
import of the wording in the draft to which it did agree. Their
character was
of the type contemplated by the provision in the
special power of attorney executed by the respondent’s
representative granting
the notary the power to ‘
amend
the said
[initialled copy of the]
bond
to correct clerical errors and errors of description and to comply
with the requirements of the Registrar of Deeds and of the
Notary for
the purposes of the notarial execution and registration of the
bond.
’ There is accordingly
no substance in the point taken by the respondent.
[13]
The defence raised with reliance on the
National Credit Act is
also devoid of merit. The
acknowledgement of debt is not an agreement to which the Act
applies. This, by virtue of
the fact that it is ‘
a
large agreement
’ as defined in
s 9(4)(b)
of the Act, and therefore excluded from the statute’s
application by
s 4(1)(b)
of the Act applied; alternatively, and
in any event, it is an agreement excluded from regulation in terms of
the Act by virtue
of
s 4(1)(a).
[3]
The obligation on credit providers in terms of
s 40
of the
National Credit Act to
register as credit advisers is dependant on
their status at the relevant time as creditors in terms of
‘
outstanding credit agreements,
other than incidental credit agreements
’
within the meaning of that phrase in
s 40(1).
[4]
It is clear, if regard is had to the provision within the context of
the statute read as a whole, that the ‘
outstanding
credit agreements
’ identified in
s 40(1)
must be credit agreements of the type subject to
regulation in terms of the Act, and not those that have been excluded
from its
application by
s 4.
In this regard I would
endorse the observation in Scholtz
et
al
,
Guide
to the
National Credit Act
(LexisNexis
)
at 5-8 that -
It
stands to reason that only credit agreements to which the Act applies
should be taken into
account
when
determining whether a person is required to register as a credit
provider. If this were not the case, even the South African
Reserve
Bank, whose credit agreements are all excluded from the application
of the Act, would have had to register as a credit
provider and
report to the National Credit Regulator on all its credit agreements.
[14]
As to the respondent’s reliance on
the existence of a dispute about the computation of the precise sum
in which it is indebted
to the trust, that is of no moment in my
view. It is not a prerequisite to the applicants’
exercise of a right to perfect
the trust’s security that the
quantum of the claim to be secured be finitely determined, or
undisputed. The position
might have been otherwise had the
applicant also sought leave at this stage to realise the respondent’s
property and to apply
the proceeds in settlement of its claim, but as
pointed out earlier, that is not the case. The respondent has
not only formally
acknowledged its substantial indebtedness to the
applicant in terms of the aforementioned acknowledgment of debt, its
indebtedness
is also vouched by the payment in respect of rental that
it sought to make in September, which, as mentioned, was
dishonoured.
As will appear presently, when I deal with the
application for ejectment, I am satisfied that the respondent was in
breach of the
agreement of lease when the applicants applied to
perfect the trust’s security. That afforded the
applicants the right
to make the application. The fact that the
respondent had entered into a debt scheduling agreement with Bidvest
in order
to stave off the winding up application brought by the
latter was a further event entitling the trust to perfect its
security in
terms of the notarial bond agreement.
[15]
There is nothing in the evidence to suggest
that the applicants have acted in bad faith in instituting the
proceedings for the perfection
of the trust’s security.
On the contrary, their action in doing so is entirely consistent with
what might be expected
of creditors in their circumstances. In
any event, a court that is called upon to enforce a contract is not
concerned with
the contracting party’s reasons for seeking
enforcement. It is concerned only with whether the terms of the
agreement,
and a proper basis for their enforcement, have been
established.
[16]
The respondent’s counsel, relying on
the approach adopted by Didcott J in
Barclays
National Bank Ltd and another v Natal Fire Extinguishers
Manufacturing Co (Pty) Ltd and others
1982 (4) SA 650
(D), nevertheless suggested that there was scope for
the court to exercise a discretion adversely to the applicant’s
claim
to perfect its security in terms of the notarial bond.
The weight of authority, however, is against the existence of any
discretionary power of the sort contended for. That much is
evident in the following passage in the Supreme Court of Appeal’s
judgment (per Harms JA) in
Contract
Forwarding (Pty) Ltd v Chesterfin (Pty) Ltd and Others
2003 (2) SA 253
(SCA) at para. 10:
The
rule can only be discharged on grounds that go to the root of the
creditor’s entitlement to possession. … I also
do not
understand the reference to the court’s discretion. Although
aware of dicta by Didcott J to the effect that there
is a discretion,
I cannot see how a court, in the exercise of its discretion, can
refuse an order to an applicant who has a right
to possession of a
pledged article to take possession.
The
principles relating to the limited discretion to refuse specific
performance apply only where the creditor has another remedy,
such as
a claim for damages, at its disposal. A claim for damages cannot
replace a claim for real security. In the absence of a
conflict with
the Bill of Rights or a rule to the contrary, a court may not under
the guise of the exercise of a discretion have
regard to what is fair
and equitable in that particular court’s view and so dispossess
someone of a substantive right.
(Footnotes
omitted.)
[17]
The respondent’s counsel argued that
Bidvest should have been joined as a party in the perfection
application. I do
not agree. Bidvest has no direct legal
interest in the relief sought by the applicants in terms of their
notarial bond.
It seems likely in any event that Bidvest has
knowledge of the proceedings as it appears from the evidence that
discussions have
taken place between their attorneys in the
winding-up application and the applicants’ attorneys in the
current proceedings.
[18]
I do consider, however, that it would be
prudent, having regard to the fact that the effect of the perfection
of the applicant’s
security would be rendered redundant if
Bidvest obtains a winding-up order, that the order in the perfection
application should
provide that any of the attached movables that the
applicants might take into possession in terms of any order that is
made perfecting
their security be held by the sheriff on their behalf
pending the making of any order authorising their realisation.
It appears
from the applicants’ heads of argument that such an
order would be acceptable to them.
[19]
Turning now to discuss the respondent’s
defences to the application for its ejectment from the leased
premises.
[20]
The ejectment application was brought in
September 2018, some months after the perfection of security
application. As mentioned,
the existence of the undetermined
perfection application led the respondent to plead
lis
alibi pendens
in the ejectment
application. I have already disposed of that objection.
[5]
[21]
The respondent also contended that the
lease-related dispute should be referred to arbitration in terms of
the arbitration agreement
incorporated in clause 16 of the deed of
the lease. That contention overlooked the effect of clause
16.7, which expressly
excluded proceedings for the eviction of the
lessee from the premises from the ambit of the arbitration clause.
The respondent’s
counsel sought to argue, however, that the
exclusion provision did not operate where there were underlying
disputes about matters
such as the interpretation and import of the
lease, being questions that were expressly made susceptible to
arbitration in terms
of some of the other sub-clauses in clause 16.
Necessarily implicit in counsel’s argument was the contention
that these
questions should first be determined by arbitration before
any court proceedings for an ejectment order might properly ensue.
This would connote that any dispute about the applicants’
entitlement to evict the respondent from the premises would first
have to be determined favourably to the applicants in arbitration
proceedings before they were entitled to approach a court in
separately instituted proceedings for an order of ejectment; an
obviously time-consuming process.
[22]
Accepting the argument would be to
attribute a singularly unbusinesslike meaning to the clause. It
is well established that
where the wording of a contract allows two
or more meanings to be contended for, courts should eschew an
interpretation that gives
an unbusinesslike or impractical effect,
for it is inherently unlikely that that would have been what the
contracting parties intended.
‘Sophisticated semantic
analysis’ should not be permitted to negate an evident
practical object that was clearly sought
to be achieved by the
provision which is being construed; see
Lloyds
of London Underwriting Syndicates 969, 48, 1183 and 2183 v Skilya
Property Investments (Pty) Ltd
[2004] 1
All SA 386
(SCA) at para. 14. The evident practical object
intended by the exclusion in issue here was that the arbitration
clause
should have no residual binding effect on the applicant if it
had terminated the lease and was consequently seeking the lessee’s
ejectment. Quite apart from the obvious cumbersomeness of a
duality of arbitration and court proceedings in such a situation,
direct court proceedings in such circumstances would allow the lessor
the benefit of the expeditious remedy of summary judgment,
a remedy
that would not be available in arbitration proceedings. Any
lessor seeking the ejectment of its erstwhile lessee
would have an
obvious interest in the matter being determined as expeditiously as
possible. The exclusion provision in issue
was directed at
serving that interest.
[23]
The dilatory defence based on the
arbitration clause must therefore fail.
[24]
The lease provided that the respondent
would be in material breach of the agreement in a number of
circumstances including failure
to pay the rent on time or
compromising or attempting to compromise with, or deferring or
attempting to defer payment of debts
owing by it to its creditors
generally. The evidence established that the respondent had
failed to pay any rental for the
premises since January 2018, and
that it had persisted in its default notwithstanding having been
given the prescribed period of
notice by the lessor to purge its
default. In the circumstances, the applicants were entitled to,
and did, terminate the
lease.
[25]
The respondent has not asserted any valid
basis upon which it might be entitled to remain in possession of the
premises after the
termination of the lease. It argued that in
postponing the return date of the perfection application, the
applicants had
impliedly agreed that the respondent could remain in
occupation of the premises. As the applicants’ counsel
pointed
out in his heads of argument, the relief sought in that
application was distinct and, however determined, would have no
bearing
on the respondent’s entitlement to remain in possession
of the premises. The respondent’s argument was
opportunistic
and baseless.
[26]
The respondent also raised a number of
arguments, the detail of which it is not necessary to burden this
judgment with, calling
the choateness or validity of the agreement of
lease into question. Suffice it to say, as the applicant’s
counsel pointed
out, these arguments were self-defeating; for if
there were no lease, then
a fortiori
,
the respondent had no basis to retain possession of the premises.
The respondent also claimed that the applicants had been
responsible,
for various reasons, for a delay in the respondent’s ability to
take effective possession of the premises at
the inception of the
lease. It is unnecessary for the purpose of deciding the
ejectment application to make any determination
of the validity of
these allegations. Suffice it to say, none of them afforded the
respondent the right to take and remain
in possession of the premises
in default of its obligation to pay rent under the lease. There
was certainly nothing in the
respondent’s answer in the
eviction proceedings that would have made out a case entitling the
respondent to the benefit of
any set-off against the rental.
[27]
It follows that the applicants are entitled
to an order for the respondent’s ejectment.
[28]
In the result the following orders will
issue:
In case no. 11141/2018:
1.
The
rule in terms of paragraph 1.1 of the order made by this Court on
26 June 2018 is hereby made final.
2.
The
sheriff is directed to retain any movable property removed from the
premises at the instance of the applicants in terms of this
order in
storage, for the account of the applicants, pending the first
occurring of the any of the following:
a)
further directions by the Court as to the
disposal of the property;
b)
the dismissal or withdrawal of the
application for the winding-up of the respondent instituted by
Bidvest Foodservice (Pty) Ltd
(‘Bidvest’) on 10 January
2018; or
c)
the submission to him of a written
agreement between the Two Oceans Aquarium Trust and Bidvest to
otherwise regulate the storage
of the attached property pending its
further disposal as directed by the court.
3. The respondent shall be liable to pay the applicants’
costs of suit on the scale as between attorney and client.
In case no. 15887/2018:
1.
The
respondent and all other persons or entities occupying the Vista
Marina premises at the Two Oceans Aquarium in the Victoria
&
Alfred Waterfront consisting of -
1.1
the restaurant premises both internal and
external;
1.2
the tuckshop in the Afrisam’s
Children’s Play Centre;
1.3
the Gelateria; and
1.4
the coffee shop.
(hereinafter collectively referred to as ‘the premises’)
under it, be ordered to vacate the premises within 10 days
of the
grant of this order.
2.
The
sheriff (or his/her deputy) is hereby authorised to evict the
respondent and/or all other persons or entities occupying the
premises under it should the respondent or such persons or entities
fail to comply with paragraph 1 of the order.
3.
The
South African Police Service is authorised to assist the sheriff in
executing paragraph 1 of this order if requested to do so
by the
sheriff or his/her deputy;
4.
The
respondent shall be liable for the applicants’ costs of suit on
the scale as between attorney and own client.
A.G. BINNS-WARD
Judge of the High Court
APPEARANCES
Applicants’
counsel: Deneys van Reenen
Applicants’
attorneys: Hayes Incorporated
Cape
Town
Respondent’s
counsel: Brendan Atkins
Respondent’s
attorneys: Tanya Nöckler Attorneys
Cape
Town
[1]
By virtue of the effect of s 348
of the Companies Act 61 of 1973, which provides that ‘
[a]
winding-up of a company by the Court shall be deemed to commence at
the time of the presentation to the Court of the application
for the
winding-up
’.
[2]
By virtue of s 359(1)(b) of the
Companies Act 61 of 1973, which provides: ‘
When
the Court has made an order for the winding-up of a company …
(a) …
(b) any attachment or execution
put in force against the estate or assets of the company after the
commencement of the winding-up
shall be void
’
.
[3]
Insofar as relevant,
sub-secs 4(1)(a) and (b) of the
National Credit Act provide
:
‘…
this Act applies
to every credit agreement between parties dealing at arm’s
length and made within, or having an effect
within, the Republic,
except
—
(a) a credit agreement in terms of which the
consumer is—
(i) a juristic person whose asset value or annual
turnover, together with the combined asset value or annual turnover
of all related
juristic persons, at the time the agreement is made,
equals or exceeds the threshold value determined by the Minister in
terms
of section 7 (1);
(ii) the state; or
(iii) an organ of state;
(b) a large agreement, as
described in section 9 (4), in terms of which the consumer is a
juristic person whose asset value or
annual turnover is, at the time
the agreement is made, below the threshold value determined by the
Minister in terms of section
7 (1)
’
.
(Underlining
supplied.)
[4]
Section 40(1) provides:
‘
A person must apply to be
registered as a credit provider if the total principal debt owed to
that credit provider
under
all outstanding credit agreements
,
other than incidental credit agreements, exceeds the threshold
prescribed in terms of section 42 (1)
’.
(Underlining
supplied.)
[5]
In paragraph [8].