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[2016] ZAGPJHC 154
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Itokolle Clinix Hospital (Pty) Limited v Mngomezulu And Ministry Incorporation (41419/2015) [2016] ZAGPJHC 154 (10 June 2016)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE
NO. 41419/2015
DATE:
10 JUNE 2016
In
the matter between:
ITOKOLLE
CLINIX HOSPITAL (PTY)
LIMITED
............................................................
Applicant
And
MNGOMEZULU
AND MISTRY
INCORPORATED
.......................................................
Respondent
JUDGMENT
NOCHUMSOHN
(AJ)
1.
This is an application for the eviction of
the Respondent from the premises it occupies, located at the Victoria
Private Hospital,
Victoria Street, Mafikeng South, North West
Province, such premises measuring 215 square metres, located opposite
the theatre annexed
to the Male Ward on the passage leading to the
Paediatric Ward.
2.
On the Applicant's version, there is a
month-to-month lease in place between it and the Respondent, in
respect of such premises.
The Respondent avers that the Lease was for
an indefinite period of time, although it concedes the Applicant's
entitlement to give
notice of termination.
3.
The dispute central to the issues lies in
the duration of the period of the notice for termination.
4.
On 2 April 2015, the Applicant provided an
effective three months' notice of termination of the Lease.
5.
Such notice would be effective upon 30 June
2015.
6.
The Respondent contended for a notice
period of four years, advancing its argument on the basis that it is
not a conventional tenant
inasmuch as its Agreement of Lease was
inextricably linked to its agreement to provide radiology services at
the Applicant's hospital.
7.
The Applicant has attempted to narrow its
relationship with the Respondent to one purely of Landlord and
Tenant, when in fact and
in truth, this is not so.
8.
The facts are that the Respondent has been
in occupation of the premises for the past fifteen years, during
which time it has provided
radiology services at the hospital,
without a written agreement in respect of either.
9.
There was much wordplay by the Applicant as
to whether the radiology services are provided by the Respondent
at
the hospital or whether such services are provided
to
the hospital.
10.
To my mind, this is a question of
semantics.
11.
Unlike the usual commercial relationship
between landlord and tenant, where the owner of a building has no
particular interest in
the purpose for which a commercial tenant
leases a premises, this relationship is differentiated by the fact
that the landlord
operates the business of a hospital from the
building and requires the services of a radiologist, which the
Respondent has provided
throughout the fifteen year tenure of its
occupation of the premises.
12.
Without giving notice of termination for
the provision of radiology services, the Applicant, on 5 March 2015,
invited the Respondent,
and others, to tender for the provision of
radiology services to be supplied to the Applicant at the hospital.
The invitation
in itself constitutes a concession that radiology
services are provided to the Applicant at the hospital.
13.
By virtue of the Respondent's failure to
submit a tender in accordance with the invitation of 5 March 2015,
and on 27 March 2015,
the Applicant addressed a letter to the
Respondent informing it that arising out of its failure to have
responded to the invitation
to tender, the Applicant assumed that the
Respondent had no interest in participating in the tender and
requested that it be provided
with an undertaking to vacate the
premises by 1 May 2015. This letter, whilst not strictly
expressed as such, effectively
purports to serve as one month's
notice to the Respondent to vacate the premises.
14.
Subsequently, and on 2 April 2015, the
Applicant addressed a further letter to the Respondent, referring to
the aforesaid letter
of 27 March 2015 and stating that
notwithstanding the prior notice with effect from 1 May 2015, it
would be prepared to extend
the notice period to 30 June 2015. This
letter also purports to terminate the Agreement for the provision of
radiology services,
although it is somewhat inelegantly drafted and
was not delivered on 01 April 2015, as would have been required if a
period of
three months would have constituted a reasonable notice
period.
15.
On the Respondent's version, the issues
cannot be narrowed down to the mere conveying of notice of intention
to terminate a commercial
lease, as the considerations applicable to
the termination of the radiology services are far more complex and
deeper than the considerations
applicable to the mere termination of
a commercial lease. The Respondent avers that the termination
of the radiology service
results in retrenchment of staff, the
closing of a functional business and a substantial loss to the
Respondent on expensive amortised
capital assets. The
Respondent expended some R4 000 000.00 capital expenditure
in radiology equipment during March
2014, which its financed over a
period of five years, in anticipation of its continued occupation of
the premises and the continued
provision of the radiology services.
Moreover, the Respondent avers to have taken these steps with the
Applicant's knowledge
(which is not denied by the Applicant) and to
the Applicant's benefit inasmuch as the provision of such equipment
equated to the
provision of a better quality of radiology services to
be provided at the hospital. For these reasons the Respondent
submits
that four years would represent a reasonable notice period
for termination.
16.
Whilst one can sympathise with the
Respondent for its naivety in incurring R4 000 000.00
capital expenditure payable over
five years, against the backdrop of
a fifteen year oral history, without signed agreements in place, one
cannot create fixed term
contracts for the Respondent as a result of
its ineptitude in having failed to bed down a signed lease with the
Applicant, which
it could and should have done prior to the incurring
of such expenditure. Courts cannot create agreements for
parties, which
do not exist.
17.
Nevertheless, the consequences of such
financed expenditure, which can only be met through the continuation
of the contract, is
certainly highly relevant to the inquiry as to
whether the duration of the notice period was reasonable, per
Amalgamated Beverage Industries
Ltd v Rond Vista Wholesalers
2004 (1) SA 538
(SCA) at paragraph 23.
18.
In the normal course of events, if the
parties to a lease have not agreed upon the date upon which it will
terminate, then the lease
will endure for an indefinite period of
time and would be terminable by either party giving notice to the
other.
19.
If a notice period has not been agreed
upon, the notice period must then be reasonable, per :
19.1.
Pemberton N.O. vs Kessel 1905 TS
(174);
19.2.
Tiopaizi v Bulawayo Municipality
1923 (AD) 317;
19.3.
Tshabalala v van der Merwe (1926)
47(NLR) 75
20.
Generally, where the rent is paid weekly, a
week's notice would be considered to be reasonable. Where the
rent is paid monthly,
a month's notice would be considered to be
reasonable and in the case of a yearly lease, three months' notice
would be considered
to be reasonable.
21.
The parties are
ad
idem
that an effective three months'
notice was given and the only real issue in dispute is whether or not
such period of time was reasonable
at the time, in all of the
circumstances.
22.
In
Putco
Ltd v TV and Radio Guarantee Company (Pty) Ltd
1985 (4) SA 809
AD
,
the Court held that reasonable is a relative term and what is
reasonable depends on the circumstances of each case.
This contention was endorsed by the Supreme Court of Appeal by
Amalgamated Beverage Industries
Ltd
supra
.
23.
The Applicant submits that the Respondent
has conflated the provision of radiology services at the hospital
with its Lease Agreement
and thus illegitimately bargains for a
longer notice period. The Applicant submits it has not sought
to interfere with the
provision of radiology services by the
Respondent, which it is free to continue to provide, albeit not at
the Applicant's premises.
This submission falls to be rejected
out of hand. It is perfectly clear that without the
premises, there will not be
a radiology business of which to speak.
The hospital is the only private hospital in Mafikeng. On the
evidence, the
patients who are serviced at the radiology practice
come from the hospital and would not be in a position to be taken out
of the
hospital for radiology services.
24.
The Applicant also contends that the
Respondent does not and has never performed radiology services to the
Applicant but rather
at the Applicant's premises, for which it has
never paid any fee to the Respondent. For reasons mentioned above,
this is a question
of semantics and there is no merit in such
submission, in circumstances where the Applicant now issued a tender
for radiology services
to be provided to it at the hospital for no
fee.
25.
Thus there is no merit in the submission by
the Applicant that the true nature of the relationship between the
parties is purely
one of landlord and tenant. The Respondent
very clearly provides (and has provided for the past fifteen years) a
radiology
service, which was integral to the business of the
Applicant.
26.
For the above reasons, I find that the
Lease Agreement does morph into an agreement to provide radiology
services and that is the
true nature of the agreement to be analysed
in the context of the inquiry as to what would constitute a
reasonable notice period
for its termination.
27.
As I have already stated, the Applicant
cannot be visited with the prejudice occasioned by the Respondent's
failure to have cemented
down a fixed term lease prior to incurring
capital expenditure of some R4 000 000.00. This
in no way means
that the Applicant could expect the Respondent to
shut down a business of some fifteen years standing, with complex and
expensive
machinery, and large staff complement, upon the handing
down of a mere three months' notice.
28.
I would be more inclined to consider a
period of six months to represent reasonable notice, as was the case
in
Amalgamated Beverage Industries
Ltd
supra,
where too, there were some thirteen to
fifteen employees and a sales representative and a growing business
at stake. In the
present matter, regard must be had to the
position of employees, who would have to be retrenched in accordance
with the prevailing
labour law and many other aspects which may need
to be addressed in relation to the winding down of the business
activities. A
period of six months would seem to represent a far more
reasonable notice period, than the period of three months conveyed,
particularly
having regard to the fourteen months which have flowed
since the letter of notice dated 02 April 2015. During this
period,
the Respondent has had occupation of the premises and has had
the benefit of providing radiology services, well knowing of the
Applicant’s desire to terminate the relationship.
29.
The Respondent has conceded that it would
require a period of three months within which to take the necessary
logistical steps for
the decommissioning, transport and storage of
the radiology equipment.
30.
Accordingly, the Respondent was entitled to
six months' notice of the Applicant's intention to terminate the
radiology services
provided, so as to avail it the opportunity to
wind down its practice, retrench its staff, decommission and store
its equipment.
Accordingly, the notice period of three months,
contained in the letter of 02 April 2016 was inadequate and such
notice letter
is to be disregarded.
31.
In argument, Mr Dalrymple, for the
Applicant shared his intellectual honesty with me in conceding that
were I to find that three
months did not constitute reasonable
notice, then the Application must fail.
32.
Accordingly, I make the following order:
32.1.
the Application is dismissed;
32.2.
the Applicant is to bear the costs of the
Respondent on the scale as between party and party.
NOCHUMSOHN,
G
ACTING
JUDGE OF THE HIGH COURT
On
behalf of Applicant: Mr T Dalrymple
Instructed
by: Read Hope Phillips Thomas & Cadman Inc
On
behalf of the Respondent: Mr KD Iles
Instructed
by: Dockrat Inc
Date
of Hearing: 08 June 2016
Date
of Judgment: 10 June 2016