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[2015] ZASCA 32
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Monyetla Property Holdings v IMM Graduate School of Marketing (20023/2014) [2015] ZASCA 32; 2017 (2) SA 42 (SCA) (25 March 2015)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No:
20023/2014
In the matter between:
MONYETLA PROPERTY
HOLDINGS
(PTY)
LIMITED
APPELLANT
and
IMM GRADUATE SCHOOL OF
MARKETING
(PTY)
LIMITED
FIRST RESPONDENT
NIGEL COLIN
TATERSALL
SECOND RESPONDENT
Neutral citation:
Monyetla Property Holdings v IMM Graduate School
of
Marketing
(20023/2014)
[2015] ZASCA 32
(25 March
2015)
Coram:
Ponnan,
Shongwe and Leach JJA and Dambuza and Mayat AJJA
Heard:
26 February 2015
Delivered:
25
March 2015
Summary:
Lease
– cancellation by lessor due to lessee’s breach –
lessor’s claim for damages arising on cancellation
–
prescription running from cancellation despite lessor remaining in
occupation of the leased premises and continuing to
pay rental under
a clause in the lease that obliged it to do so if cancellation
disputed – lessor’s claim prescribed.
ORDER
On appeal from:
Gauteng
Division, Johannesburg (Wepener J sitting as court of first
instance):
The appeal is dismissed
with costs.
JUDGMENT
Leach
JA
(Ponnan and Shongwe JJA and Dambuza and Mayat AJJA concurring)
[1]
An
agreement of lease and its cancellation has proved to be fertile
ground
for litigation
between
the
parties
to
this appeal.
In
the
present
matter,
the
appellant instituted action against the two
respondents, claiming payment of an
amount
it alleged it had suffered as damages due to the first respondent
having
breached
the
lease
which
had
led
to
its
cancellation.
The
claim
against
the
second
respondent
was
based
on
his
being
bound
as
surety
and
co-principal
debtor for the damages claimed. In response, the
respondents raised two
‘special
pleas’: first, that the claim had prescribed and, second,
relying on the
so-called
‘once
and
for
all’
principle,
[1]
that
the
appellant
was
precluded
from
recovering
its
alleged
damages
as
such
loss
ought
to
have
been
claimed
in
previous
proceedings between the parties.
[2] When the matter came to
trial in the Gauteng Division, Johannesburg the court, acting under
the provisions of Uniform rule 33(4),
ordered that the two special
pleas be decided at the outset as separate issues. Thereafter, having
received certain documents and
heard counsel for both sides, it
upheld both special pleas and dismissed the appellant’s claim.
A subsequent application
for leave to appeal was also dismissed. The
appeal to this court lies with its leave.
[3] It is unnecessary to
spell out the precise details of the lease that lies at the heart of
the dispute. Suffice it to say that
it relates to certain immovable
property in Richmond known as Richmond Forum; that as at 31 July 2007
the appellant became the
registered owner of the property; that the
appellant leased office space and parking bays situated on the
property to the first
respondent under a written agreement of lease
and an addendum thereto that was due to expire on 30 September 2010;
and that the
second respondent had bound himself as surety and
co-principal debtor for the obligations of the first respondent
arising from
the lease.
[4] Clause 26.1 of the
lease provided that in the event of the first respondent having
failed to pay any amount due in terms of
the lease within seven days
of being obliged to do so, the appellant would be entitled to cancel
the lease on written notice and
to claim immediate repossession of
the leased premises. Clauses 26.2 and 26.3 further provided as
follows:
‘
26.2 While the
Lessee remains in occupation of the Premises and irrespective of any
dispute between the parties, including, but
not being restricted to a
dispute as to the Lessor’s right to terminate this lease the ─
26.2.1
Lessee shall continue to pay all amounts due to the Lessor in terms
of this lease on the due dates;
26.2.2
Lessor shall be entitled to recover and accept such payments;
26.2.3
Acceptance by the Lessor of such payments shall be without prejudice
to and shall not in any manner whatsoever
affect the Lessor’s
right to terminate this lease or to claim any damages whatsoever.
26.3 Should the dispute
between the Lessor and the Lessee be determined in favour of the
Lessor the payments made to the Lessor
in terms of this clause 26
shall be regarded as amounts paid by the Lessee in respect of any
loss and/or damages sustained by the
Lessor as a result of the
breach.’
[5] Although the first
respondent complied with its obligations under the lease until 31
October 2007, it thereafter proceeded to
fall into arrears and by 1
March 2009 had become indebted to the appellant in a sum in excess of
R2 million in respect of unpaid
rental and other charges.
Consequently, on 6 March 2009 the appellant exercised its right under
clause 26.1 to cancel the lease.
The first respondent, however,
disputed the validity of the cancellation and refused to vacate the
leased premises.
[6] As a result of
the first respondent’s attitude, the appellant instituted
motion proceedings in the high court
on 6 October 2009, seeking the
eviction of the first respondent from the leased premises. In
addition it sought payment by both
respondents not only of the sum of
R2 058 260,60 due at date of cancellation of the lease but of a
further amount of R750 298,04
due under the provisions of clause 26.2
of the lease in respect of the first respondent’s occupation of
the leased premises
from April 2009 to September 2009. For
convenience these proceedings will be referred to as ‘the first
application’.
[7] The respondents opposed
the first application, contending that the lease had been unlawfully
cancelled. However the court concluded
otherwise. On 24 March 2010,
it rejected the respondents’ defence and granted the appellant
the relief it sought. Despite
this setback, the respondents remained
obdurate; they sought leave to appeal and the first respondent
stubbornly continued to remain
in occupation of the leased premises
until their application for leave to appeal was dismissed on 29 April
2010.
[8] Faced with the
inevitable, the first respondent eventually vacated the premises a
few days later. But despite this, the respondents
brought further
applications for leave to appeal, firstly, to this court and,
thereafter, to the Constitutional Court. Their view
of the strength
of their case proved to be misplaced as both applications were
dismissed, on 24 June 2010 and 16 August 2010, respectively.
[9] In the meantime, the
appellant had on 20 April 2010 instituted further motion proceedings
in the high court (‘the second
application’) in which it
once more sought an order against the respondents for payment under
clause 26.2 of the lease. On
this occasion its claim related to the
period October 2009 to April 2010 (ie from immediately after the
period that was the subject
of the claim in the first application up
to the date the first respondent vacated the premises.)
[10] Although the
respondents initially opposed the proceedings, they subsequently
conceded liability. Accordingly, on 29 September
2010, the parties
entered into a written settlement of their dispute that was made an
order of court on 12 October 2010. In terms
of this agreement, the
respondents undertook to pay the appellant R1 741 302 together with
interest by way of agreed instalments.
[11] This still did not
bring an end to litigation between the parties. On 16 March 2012, the
appellant issued summons in the present
case in which it claimed
damages from the respondents in the sum of R1 192 493,81 allegedly
suffered due to the first respondent’s
breach of the lease and
its resultant cancellation. In its particulars of claim the
appellant alleged that after the lease
had been cancelled the first
respondent had remained in unlawful occupation of the leased premises
until the end of April 2010;
that the first respondent had made
payments of all amounts owing by it in terms of the lease until 15
April 2010, and that:
‘
As a result of the
(first respondent’s) breach of the lease agreement and the
resultant cancellation thereof, the (appellant)
has suffered damages
in the amount of R1 192 493,81 which damages represent the rental,
operating costs, rates, open parking, basement
parking, parking
(additional premises), water, refuse, sewerage and electricity which
the (appellant) would have received in respect
of the period 16 April
2010 to 30 September 2010 but for the (first respondent’s)
breach of the lease agreement.’
[12] It was in pleading to
this claim that the respondents raised the two special pleas
mentioned at the outset of this judgment
that were upheld by the
court a quo. But despite this success, the respondents have since
lost confidence in their second special
plea and, in this court,
abandoned any reliance on it. In doing so they conceded that the
first and second applications had not
involved claims for damages but
the enforcement of the provisions of clause 26 of the lease, and that
the ‘once and for all’
rule relating to claims for
damages had therefore been of no application. Accordingly the appeal
turns solely on whether the plea
of prescription was correctly upheld
in the court a quo.
[13] Turning to the issue
of prescription, the respondents admitted in their plea that the
lease had been cancelled on 6 March 2009
due to the first
respondent’s breach, that the first respondent had remained in
unlawful occupation until the end of April
2010, and that the first
respondent had made payment for all amounts owing under the lease
agreement until 15 April 2010 (those
payments of course having
included the payments made under clause 26.2 pursuant to its
enforcement by way of the first and second
applications). However the
respondents pleaded that the appellant’s claim had arisen on
the date of cancellation of the agreement
on 6 March 2009, that the
summons had been served more than three years later on 19 March 2012,
and that the claim for damages
flowing from that breach had therefore
prescribed under
s 11
of the
Prescription Act 68 of 1969
.
[14] It is common cause
that the prescriptive period applicable to the appellant’s
claim is three years. But the appellant,
in seeking to avoid the
contention that its claim had prescribed as more than three years had
elapsed after the lease was cancelled
before action was instituted,
argued both in this court and in the court below that although the
debt sued upon may have arisen
on date of cancellation;
(a)
the amounts that became payable from the date of cancellation while
the first respondent was in occupation
of the leased premises were
due under the provisions of clause 26.2.1 of the lease;
(b)
the damages claimed in the present action relate to the period after
the appellant had vacated
the premises;
(c)
at the earliest those damages only became ‘due’ as
contemplated in
s 12
of the
Prescription Act on
30 April 2010 when
the first respondent vacated the premises as, until then, the first
respondent was bound to pay for its occupation
under clause 26.2 of
the lease;
(d)
consequently all the
facta
probanda
necessary
for a complete cause of action were not present until the property
had been vacated;
(e) no
damages for breach of the lease were therefore due before 30 April
2010, and as action had been instituted
within three years of that
date, the claim had not prescribed.
[15]
I
accept that there is a difference between the concept of a debt
‘arising’
and
a debt ‘becoming due’ as envisaged by the
Prescription
Act, and
that a debt is
only
due,
owing
or
payable
‘when
the
entire
set
of
facts
which
the
creditor
must
prove
to
succeed
with
his
claim
against
the
debtor
is
in
place:
when
everything
has happened which would entitle the creditor to institute action and
to
obtain
judgment’.
[2]
But
the
argument
that
all
the
facta
probanda
necessary
for
a
complete
cause
of
action
were
not
present
until
the
first
respondent
had
vacated
the leased premises cannot be accepted.
[16] The
appellant’s
claim
is
founded
upon
a
breach
of
the
lease,
and
the
general rule is that where one party commits a
breach of a contract
the
other is
entitled to claim
damages to place
it in the
position it would
have been
in
had
the contract been properly and timeously
performed.
[3]
In the context of a
lease
cancelled by the lessor due to a breach by the
lessee, the prima facie measure of
damages
is
the
rental
that
would
have
been
paid
for
the
premises
over
the
remaining
period of the lease
[4]
less any amounts received which would not have
accrued had the lease not been cancelled –
and of course a lessor who cancels is
obliged
to
take
reasonable
steps,
such
as
re-letting
the
premises,
in
order
to
mitigate its loss.
[17]
It
must be remembered that a lease, once cancelled, comes to an end, and
there
is
thereafter
nothing
preventing
the
lessor
from
immediately
instituting
action to place
itself
in the position in which it would
have
been had
the
lease
not
been cancelled.
After all,
the
lessor’s
damages
amounts
to
the
diminution
of
its estate, its so-called interest or
interesse
,
[5]
caused by
the breach
and
cancellation.
Such
loss
will
have
been
suffered
whether
the
lessor
vacates
or
remains
in occupation,
and
constitutes
a
debt
‘immediately
claimable’.
[6]
Consequently I endorse the observations in
Hyprop
[7]
that ‘continued occupation
of the
premises
is
irrelevant
to
a
claim
for
damages
arising
from cancelling
a
lease due to the tenant’s breach’
[8]
and that the effect of the
lessee remaining
in
occupation
after
cancellation
is
to
preclude
it
from
alleging
that
the
lessor
should have mitigated its loss before it
vacated.
[9]
[18] I do not see how this
position can be said to be altered by the provisions of a clause such
as
s 26.2
that simply obliges the lessee to pay the amount that would
otherwise have been paid as rental should it remain in occupation and
dispute the cancellation. If it does so and the cancellation is held
to be valid, as was here the case, any amounts so paid under
the
clause must be taken into account (just as the rental from a
replacement tenant would be) to determine the lessor’s actual
loss. But that does not mean the loss has not been suffered or that
the claim to recover that loss has not accrued. In the present
case,
for example, the fact that the first respondent remained in
occupation did not mean that the loss the appellant claims in
these
proceedings had not been suffered on cancellation, even though it
relates to the period after the first respondent eventually
vacated.
To hold otherwise would confuse the right to claim loss that has been
suffered with what is required to prove the amount
thereof.
[19] Consequently, on
cancellation of the contract due to the respondent’s breach,
the appellant became entitled to claim
damages over the period from
the date of that breach to 30 September 2010 when the lease was due
to expire through the effluxion
of time. The measure of its damages
was the sum of the rentals that would have been due during that
period, less whatever amounts
it received in mitigation of such loss.
Those amounts included the sums paid by the respondents under clause
26 (albeit pursuant
to the orders made in the first and second
applications). The damages that are the subject of the present claim
were thus due and
payable as at the date of cancellation. On that
date everything had happened which would have entitled the appellant
to institute
action and to obtain judgment in respect of the period
for which the damages presently being claimed are calculated. The
debt sued
upon was therefore due.
[20] The appellant’s
argument that its claim only arose once the first respondent had
vacated the leased premises therefore
falls to be rejected. So, too,
does its further argument arising out of the rental for March 2009
having been included in the amount
claimed in the first application.
It was submitted on behalf of the appellant that as the rental for
that month had been included
in the amount in respect of which
judgment was given and paid pursuant to the high court’s order
in the first application,
its patrimony had been affected only with
effect from 1 April 2009 and that prescription could therefore only
run from that date.
As that was slightly less than three years before
the issue of summons, so it was argued, the claim therefore could not
have prescribed.
[21] Again this loses sight
of the fact that the claim arose when the contract was cancelled. It
was then that the loss was suffered,
and while any amount in respect
of rentals due thereafter recovered pursuant to the first and second
applications are to be taken
into account in calculating the actual
loss suffered, this does not mean that the claim had not risen or
that the loss suffered
by the breach could not be claimed on
cancellation.
[22] In the result, as
action was instituted more than three years after the debt sued upon
had become due, the special plea of
prescription was correctly upheld
in the court a quo. The appeal must therefore fail.
[23] The appeal is
dismissed with costs.
_
L E Leach Judge
of Appeal
Appearances:
For the
Appellant:
J Both SC Instructed by:
Kokinis Inc, Blairgowrie, Randburg Phatshoane Henney,
Bloemfontein
For the
Respondent:
D C Fischer SC Instructed by:
Blakes Maphanga Attorneys, Ferndale, Randburg
Symington & De Kok, Bloemfontein
[1]
As to which see eg
Custom Credit Corporation
(Pty) Ltd v Shembe
1972 (3) SA 462
(A) at
472A-E and
Janse
van
Rensburg &others NNO v Steenkamp and another;Janse van Rensburg
&others NNO v Myburgh & others
2010 (1) SA 649
(SCA) paras 27-30.
[2]
See Laubser
Extinctive Prescription
(1996)
at 51-2.
[3]
See eg
Mostert NO v Old Mutual Life Assurance
Company (SA) Ltd
2001 (4) SA 159
(SCA) at
187.
[4]
Hazis v Transvaal and Deladoa Bay Investment
Co Ltd
1939 AD372 at 387.
[5]
Van der Merwe
et al Contract General
Principles
4 ed (2012) para 11.5.2.
[6]
Deloitte Haskins
&
Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A) at 532H.
(B)
[7]
Hyprop Investments Ltd v NCS Carriers and
Forwarding CC
2013 (4) SA 607 (GSJ).
[8]
Para 36
[9]
Pars 38.