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[2015] ZAGPJHC 253
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Franjeron (Pty) Ltd v Incredible Happenings and Another (40769/14) [2015] ZAGPJHC 253 (13 August 2015)
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REPUBLIC
OF SOUTH AFRICA
IN THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 40769/14
DATE:
13 AUGUST 2015
In the matter
between:
FRANJERON
(PTY)
LTD
........................................................................................................
Applicant
And
INCREDIBLE
HAPPENINGS
....................................................................................
First
Respondent
THE
OTHER OCCUPIERS OF ERVEN 7…., 7…,
7….,
.....................................
Second
Respondent
7…, 7…,
7… AND 7…. JUNCTION HILL EXTENSION
7 TOWNSHIP,
REGISTRATION DIVISION I.R HELD
UNDER DEED OF
TRANSFER NO. T6………..;
DESCRIBED AS:
GINSTRIN PLACE, JUNCTION HILL,
GERMISTON
Summary:
Application
for eviction – Commercial premises – Respondent alleging
it is owner of shares in Applicant by virtue of
sale of shares
agreement – Sale of shares agreement providing that “closing
date” would be third business day
after final date for
repayment – Full purchase price not yet paid – Respondent
not relying on lease/sub-lease for possession
– Applicant
alleging that closing date depended upon full payment –
Interpretation of agreement – Respondent
alleging Applicant
failed to prove ownership – Respondent conceding in related
proceedings that Applicant is owner
J
U D G M E N T
WEINER
J
:
[1]
The applicant applies for an order against the first and second
respondents evicting them from erven 7…., 7….,
7…,
7…., 7…., 7….. and 7….. J….. H……,
Extension 7 Township held under Deed
of Transfer No T6……..
described as D….. P……, Junction Hill, Germiston
(the premises) within
21 days alternatively within such other period
as stipulated by the court.
[2]
The applicant also seeks that if the respondents fail to vacate the
premises that the Sheriff be authorised to enter upon the
premises to
evict the respondents and all those who occupy the premises under and
by virtue of their occupancy.
Background
[3]
Various religious ministries conduct their business from the
premises. They are all associated with the first respondent
and
conduct their business from the premises through the first
respondent.
[4]
The applicant contends that the first and second respondents are in
unlawful occupation of the premises. The premises are not
utilised
for residential purposes and accordingly, the provisions of the
Prevention of Illegal Eviction from and Unlawful Occupation
of Land
Act No 19 of 1998 as amended (the PIE Act) are not applicable.
[5]
The premises were originally leased to the applicant by Metcash
Trading Ltd (Metcash) on 16 October 1993. The lease terminated
on 30
November 2013.
[6]
During or about 2012, the first respondent concluded a sale of shares
agreement with the shareholders of the applicant.
The first
respondent was at all material times represented by one Motsoeneng
(Motsoeneng).
[7]
In terms of the sale of shares agreement:-
7.1
The
shareholders identified as Eric Grusd, Francis Grusd, Rhona Steinfeld
and the Franjeron Trust agreed to sell and cede to the
first
respondent their respective shares and loan accounts in the
applicant;
7.2
There were certain suspensive conditions one of which was that the
first respondent conclude a sublease in terms of the premises
with
Metcash;
7.3
The purchase price payable by the first respondent for the shares
and loan accounts was R14 million which was payable in amounts
as
stipulated in clauses 6 and 7 of the sale of shares agreement;
7.4 the balance of the purchase price due from
time to time would bear interest at 16% per annum.
[8] The closing date was defined in the sale of shares agreement as
meaning:-
“
The
third business day after the earlier of:
1.2.4.1
the
last day set for payment in the repayment schedule attached as
annexure 2 or
1.2.4.2
the date on which the outstanding balance of the purchase price is
paid in full (including any interest that would have
accrued on it)
in terms of clause 7.5.
”
[9]
On the closing date, the sellers were obliged to hand to the first
respondent the duly completed signed share transfer forms
made out in
favour of the first respondent and a written and signed cession of
the loan accounts.
The
Metcash Litigation
[10]
The first respondent apparently concluded two sublease agreements
with Metcash the first being replaced by the second in and
during
September 2012. There are legal proceedings between Metcash and the
first respondent. Metcash launched an application in
September 2013
for the eviction of the first respondent on the grounds that it had
breached the terms of the second sublease agreement.
The matter has
been referred to trial.
Application
of PIE
[11]
The respondents raise certain points
in
limine
one of which is that the PIE Act
should have been applied. However, the Act does not apply to
the eviction of juristic persons.
The respondents attempt to show
that the property was no longer used for commercial purposes. There
was a bed and stove present
on the premises and people who might have
been staying there as security guards. However, this does not render
the property the
primary residence of anyone more particularly not
the primary residence of the first respondent which is a juristic
entity to which
the PIE Act does not apply. In the Metcash
application the respondents did not dispute Metcash’s
allegation that the
respondents used the property for purposes of a
church and that it was never used as living quarters for anyone.
Non
Joinder
[12]
The respondents contend in their second point
in
limine
that the shareholders of the
applicant should have been joined to the proceedings because the
first respondent has a counterclaim
against the shareholders. The
test to determine whether it is necessary to join parties to
proceedings is whether they have a direct
and substantial interest in
the subject-matter of the action, that is a legal interest which may
be affected prejudicially by the
judgment of the court. See
BOE
Trust Ltd and Others NNO
2013 (3) SA
236
(SCA) at 241H-I.
[13]
The applicant is the owner of the premises. Tthe shareholders do not
have any direct and substantial interest in the subject-matter
of
this action. In any event the shareholders were provided with a
copy of the application and declared that they had no
direct and
substantial interest in the application and waived their right to be
joined as parties. They recorded that they
would abide by the
decision of the court.
[14]
Accordingly both points
in limine
must fail.
Defences
Ownership
[15] In the proceedings before me, the basis of the defence of the
respondents is that the applicant has not specifically alleged
that
it is the owner of the premises and is thus not entitled to an
eviction order. Nowhere in the answering affidavit in these
proceedings do the respondents challenge that the applicant is the
owner of the premises. In his answering affidavit in the Metcah
litigation, Motsoeneng referred to the applicant herein as the owner
of the premises. The applicant points to this admission and
contends
that it therefore did not deal with the issue of ownership in any
detail, as, in its view, it was common cause and not
an issue in
dispute. In fact, the main defence relied upon by the
respondents is that the first respondent acquired all the
shares in
the applicant and is thus the owner of the premises.
Sublease
[16]
The first respondent denies that it concluded a sublease with Metcash
despite the admission that it did so when faced with
the allegation
in the founding affidavit. It relies on this denial while
stating, in its answering affidavit, that the rental
payments it made
would be partly allocated ro its obligations under the sublease and
in reduction of the purchase price paid for
the property under the
sale of shares agreement. It further states that it was during
the existence of the sublease that
payments were to be made as agreed
between the parties.
[17]
The sublease with Metcash is not material in the present proceedings
as the respondents do not rely for their right to occupation
of the
premises on any right that flowed from the sublease agreement.
In any event such sublease agreement had terminated
through the
effluxion of time.
Sale of
shares Agreement
[18]
The nub of the respondents’ defence is that the first
respondent on 3 March 2013 became the owner of the shares in the
applicant, the company that owned the property. The applicant sought
to cancel the sale of shares agreement when the first respondent
breached same by failing to make the requisite payments. The
first respondent contends that the sale of sales agreement could
not
be cancelled as “
closing had by
then already taken place
”.
[19]
It thus appears that the sole basis upon which the respondents
contend that they are entitled to remain in occupation of the
premises is that the sale of shares agreement closed and the first
respondent accordingly owns the shares in the applicant and
in so
doing owns the premises. The respondents base their submission that
closing took place on the provisions in the agreement
that closing
would take place after the earlier of the two events described
above. The first respondent contends that
closing took place in
terms of the first event because the last date set for payment in the
repayment schedule was 28 February
2013. The applicant contends that
the reading of this clause cannot be as submitted by the first
respondent. It is common
cause that the first respondent did
not make payment in accordance with the repayment schedule. It is
common cause that the first
respondent had not paid the full purchase
price by the 28 February 2013.
[20]
The applicant contends that the closing date of the sale of shares
agreement implied that the first respondent had, by that
date,
complied with its obligations under the sale of shares agreement and
had made payment of the purchase price in full.
[21]
The ambiguity according to the applicant is that the second of the
dates referred to in clause 1.2.4 of the agreement refers
to the
balance of the purchase price becoming payable in full as a result of
a breach. Accordingly the applicant contends
that, in order to
have business efficacy, the first date referred to (being the last
date for payment in terms of the repayment
schedule) must imply that
the repayment schedule was adhered to. Therefore the date
referred to in the repayment schedule
could only be the closing date
if the purchase price had been paid in accordance with such schedule.
In
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA)
Wallis
JA dealt with the approach in interpreting written agreements.
He stated at para [8]:
“
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must
be given to
the language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears;
the apparent
purpose to which it is directed and the material known to those
responsible for its production… A sensible
meaning is to be
preferred to one that leads to insensible or unbusinesslike results
or undermines the apparent purpose of the
document…”
[22] At para [26] Wallis JA held further:
“
In
resolving the problem the apparent purpose of the provision and the
context in which it occurs will be important guides to the
correct
interpretation. An interpretation will not be given that leads to
impractical, unbusinesslike or oppressive consequences
or that will
stultify the broader operation of the legislation or contract under
consideration.”
[23]
The applicant contends that the sale of shares agreement must be
viewed purposively in the manner proposed by Wallis JA.
Accordingly the terms of the agreement do not contemplate the closing
date arising prior to the payment of the purchase price.
This
seems to be the correct approach. It is an approach which makes
business sense. If one takes the literal meaning
of the words
“the last date set for payment in the repayment schedule”
it would lead to “
insensible
or unbusinesslike results”
if
that were to be the closing date. One only has to imagine that
the respondents made no payments and then claimed that
the closing
date was on 28 February 2013 because it was the date set out in the
repayment schedule. The respondents’ argument
that the
agreement provides in clear language for two possibilities for the
date of closing cannot be accepted. The interpretation
that the
respondent relies upon would be unbusinesslike and would not make
commercial sense.
[24]
In the unlikely event that the respondents’ interpretation
should be acceptable and that it is now the owner of the shares,
this
does not provide a defence for the respondents to remain
in occupation of the premises. Simply being owner
of the shares
does not entitle the first respondent to occupation and the first
respondent has denied that it is there in terms
of any lease or
sublease. It therefore raises no legitimate defence to the claim for
eviction.
[25]
In light of the decision to which I have come in regard to the
closing date, it is my view that the shares have not been transferred
to the first respondent and accordingly the applicant, as owner of
the property, is entitled to seek the eviction of the respondents.
Accordingly an order will be made in the following terms:
25.1.
First
and Second Respondents and all those who occupy the Premises
under and by virtue of the First and Second Respondents
( " the
respondents") are ordered to vacate Erven
7…..,7….,7….,7….,7…..,7….
and 7….. J…… H….. Extension 7 Township,
Registration Division I.R held under deed of transfer no. T6…….,
described as: G……. P….., J…… H….,
G….. (“the Premises”) by
30
August 2015
.
25.2.
In
the event that the Respondents fail or refuse to vacate the premises
by
30 August, 2015
, the
Sheriff for the district of Germiston is ordered to enter the
premises and evict the Respondents.
25.3.
The
costs of this application are to be paid by the Respondents jointly
and severally, the one paying the other to be absolved.
WEINER
J
Appearances
For
the Applicant: P Cirone
Instructed
by: Werksmans Attorneys
For
the Respondents: J Broodryk of BMH Incorporated Attorneys
Date
of Hearing: 18 June 2015
Date
of Judgment: 13 August 2015