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[2015] ZAGPJHC 83
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Spar Group Limited v Capstone 359 (Pty) Limited and Others (41791 / 2013) [2015] ZAGPJHC 83 (20 May 2015)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
CASE NO: 41791 / 2013
DATE: 20 MAY 2015
In the matter between:
THE SPAR GROUP
LIMITED
...............................................................................................
Applicant
And
CAPSTONE 359 (PTY)
LIMITED
.............................................................................
First
Respondent
VASSILIOS
LOIZOU
..............................................................................................
Second
Respondent
APOSTOLOS ANDREW
MINA
...............................................................................
Third
Respondent
SYDNEY DONALD RUSSELL
SEARLE
..............................................................
Fourth
Respondent
J U D G M E N T
MASHILE, J:
[1] The Applicant launched this
application against the Respondents jointly and severally the one
paying the other to be absolved
for an amount of R519 943.52
subsequent to the First Respondent’s alleged failure to meet
its obligations arising in terms
of a sub-lease agreement between it
and the First Respondent.
[2] The Second to Fourth Respondents
are sureties having bound themselves on 20 October 2006 as sureties
and co-principal debtors
in solidum with the First Respondent for the
due and punctual fulfilment and performance by the First Respondent
of all its obligations
to the Applicant however arising and for
payment of all amounts which may become owing by the First Respondent
to the Applicant.
[3] The facts that gave rise to the
claim are largely common cause and they are that on 5 April 2005, the
Applicant concluded a
lease agreement (hereinafter “the
head-lease”) with Express Model Trading 455 (Pty) Ltd
(hereinafter “Express
Model”). The latter let to the
Applicant certain commercial premises situate in Rivonia Road
described as Shop 10 of the
shopping centre known as 90 Degrees on
Rivonia, Morningside, Sandton (hereinafter “the premises”).
The premises were
to be developed as a shopping centre.
[4] The head-lease was to endure for a
period of 10 years reckoned from the date of commencement of the
lease being 5 April 2005.
After concluding the head-lease with
Express Model, the Applicant in turn entered into a sub-lease
agreement (hereinafter “the
sub-lease”) on 10 October
2006 with the First Respondent in respect of the same premises.
[5] In Clause 7.1 of the sub-lease, the
First Respondent acknowledges that the Applicant holds the premises
in terms of and subject
to the provisions of the head-lease with
which the First Respondent acknowledges itself to be fully acquainted
and in Clause 7.2
it further acknowledges that the Applicant’s
rights of occupation and therefore its own are subject to and limited
by the
terms and conditions of the head-lease.
[6] Clause 14.2 of the head-lease
provides that in the event of the rates and taxes payable in respect
of the properties and buildings
containing the PREMISES being
increased above the amount thereof payable in respect of the rates
year which ends during the first
year of this lease, the TENANT shall
on demand refund to Express Model its PRO RATA SHARE of such
increase. A certificate issued
by the LANDLORD’S auditors as
to the amount payable by the TENANT in terms of this clause shall be
conclusive and binding
proof of the amount so payable.
[7] Clause 9.2 of the sub-lease
provides that the First Respondent is obligated to pay to the
Applicant any amount which does not
constitute rental but which the
Applicant is in any event obliged to pay to Express Model pursuant to
the head-lease… any
VAT or RSC levies or any like impost that
might become payable by the Applicant.
[8] In 2008 amendments to the local
Government Municipal Property Rates Act No. 6 of 2004 (“hereinafter
“the Property
Rates Act”) were published which
effectively caused properties to be valued according to their
market/land value as published
in the valuation role. This had the
universal effect of the entire property market being affected by the
changed rates through
increases to the value of properties.
[9] Oblivious of the effect of the
aforesaid amendments to the Property Rates Act, Express Model
continued to pay rates to the municipality
as though no changes had
been introduced by the Property Rates Act. In terms of the
head-lease, Express Model in turn levied amounts
against the
Applicant and the latter in turn levied these against the First
Respondent.
[10] In consequence of the short
payment by Express Model to the municipality, a shortfall ensued.
The shortfall was the difference
between what Express Model paid to
the municipality and what it was suppose to have paid in terms of the
amendment to the Property
Rates Act. In accordance with Clause 14.2
of the head-lease, the Applicant was obliged to pay the pro-rata
share of the shortfall,
which in turn meant that the First Respondent
had to do the same, paying its pro-rata share of the difference to
the Applicant.
The Applicant calculated the pro-rata share of the
shortfall of the First Respondent and arrived at the amount that it
is currently
claiming from the First Respondent, R519 943.52.
[11] The sole issue that falls for
determination is whether or not the First Respondent is liable to pay
the amount of R519 943.52
to the Applicant. Needless to state that
establishment of liability to the Applicant by the First Respondent
will automatically
extend to the Second to Fourth Respondents by
virtue of the suretyship agreement that they concluded with the
Applicant. Similarly,
a finding to the contrary will necessarily
discharge the sureties from any obligation to pay the Applicant.
[12] The First Respondent has fervently
asserted that having regard to Clauses 9.2 of the sublease agreement
and Clauses 1.1.10,
14.1 and 14.2 of the head lease agreement, the
Applicant’s obligation to refund to Express Model and the First
Respondent’s
obligation to make payment to the Applicant of the
amount paid by the Applicant to the Landlord, arises only in the
event of an
increase of the rates above the amount thereof payable in
respect of the rates year which ends during the first year of the
head
lease agreement.
[13] The First Respondent argues that
it follows from the aforesaid that the Applicant must establish that
the rates payable by
Express Model have in fact increased above the
amount thereof payable in respect of the rates year which ends during
the first
year of the head lease agreement. It is not sufficient for
the Applicant merely to show that it has made a payment to the
Landlord.
[14] According to the First Respondent,
the Applicant has failed to show that the rates payable by the
Landlord have in fact increased
above the amount thereof payable in
respect of the rates year which ended during the first year of the
head lease agreement. The
First Respondent attacks Annexures CC3 and
CC4 being alleged calculations of the amount that the First
Respondent should pay to
the Applicant as its pro-rata share of the
shortfall to which I have alluded earlier in this judgment.
[15] The attack on Annexures CC3 and
CC4 is firstly that the deponent to the founding affidavit is not the
author of both Annexures
CC3 and CC4. Both annexures in the
circumstances constitute hearsay evidence and should not be admitted
into evidence unless the
court has considered their admissibility and
resolved that they should be admitted in terms of
Section 3
of the
Law of Evidence Amendment Act No. 45 of 1988
.
[16] Secondly, even if there admission
was not an issue, to the extent that there is no calculation of the
amount claimed by the
Applicant on Annexure CC3 and that there is no
explanation of how the amount was computed anywhere in the founding
affidavit, they
would be rendered inadmissible and the founding
affidavit, ineludibly inadequate to sustain the Applicant’s
claim. An explanation
of the annexures is critical because without
it neither it nor the court can make sense of them.
[17] Furthermore, while it is
acknowledged that CC3 has an author, such author is not necessarily
the author of CC4. To add to
all this, there is no confirmatory
affidavit to create a link between the annexures and the founding
affidavit.
[18] The parties asked the court to
make a ruling on the admissibility or inadmissibility of both
annexures before the matter could
proceed any further. Guided by
what was held in Howard & Decker Witkoppen Agencies and Fourways
Estates (Pty) Ltd v De Sousa
1971 (3) SA 937
TPD at 940 F-H, this
court ruled that Annexures CC3 and CC4 were inadmissible. In this
regard the passage of Human J quoted below
could be instructive:
“The law in relation to proof of
private documents is that the document must be identified by a
witness who is either (i)
the writer or signatory thereof…
There was no admission by Plaintiff’s
attorney in regard to the authenticity of the document nor an
admission that the contents
thereof were correct. Its contents could
therefore not be used either as evidence or for purpose of
cross-examination.”
See also the unreported judgment of
Sutherland J in Thomas v BD Sarens (Pty) Ltd 2007/6636 [2012] ZA
GPJHC 161 (12 September 2012).
[19] Since the outcome of this judgment
will not rely or be anchored on the admissibility or inadmissibility
of the annexures, it
should suffice to state that the court
considered the matter and pronounced that both annexures constituted
hearsay. The pronouncement
of course meant that the Applicant could
not rely on them anymore to advance its case.
[20] The parties are agreed that a
connection between the head-lease and the sub-lease exists because of
Clause 7.2 of the sub-lease.
It is in that clause that the First
Respondent acknowledges that the Applicant’s rights of
occupation and therefore its
own are subject to and limited by the
terms and conditions of the head-lease.
[22] Once the First Respondent has
acknowledged the link between the two leases, the Applicant should be
at liberty to invoke Clause
14.2 of the head-lease and 9.2 of the
sub-lease to which I have referred above. Clause 14.2 of the
head-lease permits Express
Model to recover a pro rata share of the
increase from Applicant. The Applicant is by operation of the same
clause also entitled
to recover a pro rata share of the increase from
the First respondent.
[23] Clause 9.2of the sub-lease
envisages that the First Respondent is, apart from the payment of
rentals, obliged to pay to the
Applicant any amount which the
Applicant is in turn required to pay to Express Model pursuant to the
head-lease… any VAT
or RSC levies or any like impost that
might become payable by the Applicant. The obvious question that
arises is how must that
amount be computed?
[24] To answer the question in the
preceding paragraph one must look at the provisions of Clause 14.2 of
the head-lease in particular,
the last sentence which stipulates
that A certificate issued by Express Model’s auditors as to the
amount payable by the
Applicant in terms of this clause shall be
conclusive and binding proof of the amount so payable.
[25] The provisions of Clause 14.2 of
the head-lease clearly do not envision the production of a document
setting out how the amount
claimed has been computed. The
certificate prepared by Express Model’s auditors, on mere
production and in the absence of
manifest errors, should serve as
sufficient proof of the amount owed.
[26] In the circumstances, the
irrelevance of Annexures CC3 and CC4 notwithstanding their production
would have been superfluous
in any event if one has regard to Clause
14.2 of the head-lease. Thus, all the cases to which the First
Respondent referred this
court more specifically those dealing with
inadequacy of papers in motion proceedings do not find application in
this case. Accordingly,
I do not attach any significance to them in
view of that conclusion.
[27] On perusal of both leases, I found
nothing supporting the First Respondent’s contention that the
Applicant ought to demonstrate
that there has been an increase in the
amount of the rates and that a mere exhibition of the amount that the
Applicant has paid
to Express Model is insufficient. The amount that
the Applicant is claiming is ‘any amount which does not
constitute rental
but which the Applicant is in any event obliged to
pay to Express Model’ and therefore falls squarely under Clause
9.2 of
the sub-lease.
[28] The amount of R519 943.52 having
been calculated and produced by Express Model’s auditors and
there being no manifest
error in the calculation of that amount. It
should be accepted as correct. It is the finding of this court that:
28.1 The founding affidavit of the
Applicant is sufficient in that it defines the issues and the facts
upon which it relies.
28.2 Clause 14.2 of the head-lease
especially the part dealing with the production of a certificate
produced by Express Model’s
auditors renders Annexures CC3 and
CC4 unnecessary.
28.3 In view of the provisions of
Clause 9.2 of the sub-lease, there is no support for the contention
that the Applicant ought to
have shown that there was increase in the
property rates in order to succeed with its claim.
[29] In the result, the application
succeeds and I make the following order:
1. The Respondents are to pay to the
Applicant, jointly and severally the one paying the others to be
absolved, the amount of R519
943.52 ;
2. Interest on the aforesaid sum of
R519 943.52 at the rate of 9% per annum from date hereof to date of
payment;
3. Costs of suit on an attorney and
client scale.
B A MASHILE
JUDGE OF THE HIGH COURT OF SOUTH
AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
DATE HEARD: 04 MAY 2015
DATE OF JUDGMENT: 20 MAY 2015
COUNSEL FOR THE PLAINTIFF: Adv. A
BISHOP
INSTRUCTED BY: GARLICKE &
BOUSFIELD INC
Counsel for the defendant: Adv. L
HOLLANDER
Instructed by: PHILLIP SILVER &
ASSOCIATES INC.