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[2016] ZAGPJHC 172
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Kythera Court v Le Rendez-Vous Cafe CC and Another (2016/11853) [2016] ZAGPJHC 172; 2016 (6) SA 63 (GJ) (22 June 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE
NO: 2016/11853
Not
reportable
Not
of interest to other judges
Revised.
In the matter between –
KYTHERA
COURT
APPLICANT
And
LE
RENDEZ-VOUS CAFĒ CC
t/a
NEWSCAFE BEDFORDVIEW
(IN
BUSINESS
RESCUE)
1
ST
RESPONDENT
THOMAS
HENDRICK SAMONS
NO
2
ND
RESPONDENT
JUDGMENT
BORUCHOWITZ J:
[1] In this application,
launched as a matter of urgency on 8 April 2016, an order is sought
to evict the first respondent from
Shop 53, cnr Van Buuren
Road and Hawley Road, Bedfordview (the premises), on the ground that
the lease agreement between
the parties has been cancelled,
alternatively on the basis that the lease has now expired.
[2] The applicant is a
partnership trading as a property rental firm. The first
respondent is Le Rendez-Vous Café CC,
trading as Newscafé,
Bedfordview, which close corporation was placed under supervision in
terms of s 129 of the Companies
Act, 71 of 2008 (the Act) on 2
December 2015. The second respondent, Thomas Hendrik Samons, is
the duly appointed business
rescue practitioner of the first
respondent.
[3] Broadly stated, the
applicant’s case is premised on the following facts. The
applicant alleges that the parties
concluded a written lease on 30
April 2010 in terms whereof the premises were leased to the first
respondent for a period of six
years, commencing in May 2010 to 30
April 2016. The first respondent placed itself in business
rescue after it had fallen
into arrear with the payment of three
monthly rentals and municipal charges. The applicant cancelled
the lease agreement
on 7 March 2016 but the first respondent has
refused to vacate the premises. The applicant asserts that the
first respondent
is misusing the business rescue process by
unlawfully remaining on the premises and operating its business
without making any rental
payments or any other charges.
Moreover, the second respondent has failed to file a business rescue
plan as required under
the Act and has reneged on an undertaking to
pay rental. The second respondent has also reneged on an
undertaking to find
alternative premises for the first respondent on
the expiry of the lease.
[4] The first respondent
opposes the application on the following grounds. First, it
contends that the moratorium envisaged
s 133(1) of the Act
precludes the applicant from cancelling the alleged lease and
launching the current application.
Second, it avers that the
alleged written lease is invalid as the person purporting to
represent the first respondent was not authorised
to bind it.
The first respondent claims that it occupies the premises in terms of
a tacit lease which has not expired.
Third, that it has
an enrichment lien as it has expended money on necessary and useful
improvements to the property and that until
it is compensated by the
owner it is lawfully entitled to remain in occupation of the
premises. Fourthly, even if the disputed
lease were found to
exist, the first respondent has suffered damages as a result of a
misrepresentation relating to the size of
the property, which off-set
the arrears owing to the applicant.
[5] The first contention
can be readily disposed of. Section 133(1) provides for a
general statutory moratorium in favour
of a company that is
undergoing business rescue proceedings, and reads, in relevant part,
as follows:
“
During
business rescue proceedings, no legal proceedings, including
enforcement action, against the company, or in relation to any
property belonging to the company, or lawfully in its possession, may
be commenced or proceeded with in any forum, except –
(a)
with the written consent of the practitioner;
(b)
with the leave of the court and in accordance with any terms the
court considers suitable.
… ”
[6] The question that
arises is whether leave is necessary in terms of s 133(1)(b) for
the applicant to bring the eviction
application.
[7] The ambit of the
moratorium is a matter of interpretation. As was emphasized in
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) paragraph 18, the starting point in
interpreting a statute is the language of the provision itself, read
in context and having
regard to its purpose. It is accepted
that the purpose of the moratorium is to provide crucial breathing
space to enable
the financially distressed company to restructure its
affairs. This allows the practitioner, in conjunction with the
creditors
and other affected parties, to formulate a business rescue
plan designed to achieve the purpose of the process without the
distraction
of having to deal with legal proceedings (see
Cloete
Murray NNO v First Rand Bank Limited t/a Wesbank
2015 (3) SA 438
(SCA) at 441 para 14;
Chetty t/a Nationwide Electrical v
Hart & Ano NNO
2015 (6) SA 424
(SCA) at paras 35 and 39;
Elias Mechanicos Building & Civil Engineering Contractors
(Pty) Limited v Stedone Developments (Pty) Ltd and others
2015
(4) SA 485
(KZD) at paras 7, 9 and 11).
[8]
But the moratorium is not an absolute bar to legal proceedings being
instituted or continued against a company under business
rescue.
It is intended to be of a temporary nature only and cannot be
utilised to indefinitely delay satisfaction of
the claims of
creditors; or result in the extinguishment of the claims of
creditors. Subsection 133(1)(a)-(e) lists
five exceptions
when legal or enforcement proceedings may be continued with or
initiated. Subsection 133(1)(a) permits a
creditor to initiate
or continue proceedings with the written consent of the practitioner
and subsection 133(1)(b) permits
a creditor to seek the Court’s
leave to institute or continue legal proceedings in the event of a
practitioner’s refusal
to give consent, or even without the
consent of the practitioner having been sought (see
Chetty v Hart
(
supra
) para 40).
[9] The phrase “
in
relation to any property belonging to the company, or lawfully in its
possession
”, which appears in s 133(1), is, in my
view, a textual indication that the purpose of the moratorium is to
preclude
the institution or continuation of legal proceedings or
enforcement action in relation to property that belongs to the
company
in business rescue or is lawfully in its possession. In
its plain meaning, the phrase appears to limit the reach of the
moratorium
and renders it inapplicable to legal proceedings or
enforcement action in relation to property belonging to persons or
entities
other than the company in business rescue or in relation to
property that is unlawfully possessed by the company. Were it
the intention of the drafters of the section that the moratorium
apply to all actions of whatever nature there would have been
no need
to have introduced the italicised phrase. It is an interpretive
principle that when the lawmaker uses particular
words to achieve its
purpose, they must be given effect. Based on these
considerations I am of the view that vindicatory
proceedings or
proceedings for the repossession or attachment of property in the
unlawful possession of a company in business rescue
would be
permissible.
[10] I am fortified in
this view by the wording of s 134(1)(c) which is cast in
strikingly similar terms. The section
deals with the protection
of property interests, and reads:
“
(c)
despite
any provision of an agreement to the contrary, no person may exercise
any right
in
respect of any property in the lawful possession of the company
,
irrespective whether the property is owned by the company, except to
the extent that the practitioner consents in writing.
”
[My
emphasis]
[11] Section 134(1)(c)
conditionally proscribes the exercise of any right in respect of
property in the “
lawful possession of the company
”
irrespective whether the property is owned by the company. But,
what it does not proscribe is the converse, namely,
the exercise of a
right in respect of property in the unlawful possession of the
company.
[12] The justification
for the introduction of the italicised phrases in the aforesaid
sections is self-evident. To apply
the moratorium to all legal
proceedings of whatever nature, including those brought by persons
who legitimately seek to vindicate
or protect their property would be
a drastic interference with their common law rights of ownership.
When interpreting a
statute, it is presumed that the lawmaker does
not intend to alter the common law more than is necessary. It
could not have
been the intention of the legislature to frustrate the
rights of property owners and render them remediless during business
rescue
proceedings (see, in this regard:
Barloworld South Africa
and others v Blue Chip Mining & Drilling (Pty) Limited
(unreported Case No 2015/332 (NCD) para [15]; compare also
Madodza (Pty) Limited v Absa Bank Limited
2012 JDR 1350
(GNP)).
[13] In
Cloete Murray
(para 40), it was emphasized that the legislature intended to
allow the financially distressed company the necessary breathing
space
by placing a moratorium on legal proceedings and enforcement
action, but not to interfere with the contractual rights and
obligations
of the parties to an agreement. It was also held
(in paras 33-44) that the juristic act of cancelling the agreement
does
not constitute enforcement action as contemplated in s 133(1)
and that it is permissible for an agreement to be cancelled in
during
business rescue proceedings.
[14] It is trite law that
on the termination of a lease (whether by cancellation or the
effluxion of time) it is the duty of the
lessee to vacate the
property subject only to the lessee’s right to compensation for
improvements. The failure to vacate
properties when there is an
obligation to do so renders the lessee an unlawful occupier.
[15] But, in the context
of business rescue proceedings, the right to cancel a lease may be
affected by the provisions of s 136(2)(a)
of the Act. The
section provides that the business practitioner may, despite any
provision of an agreement to the contrary,
entirely, partially or
conditionally suspend, for the duration of the business rescue
proceedings, any obligation of the company
that arises under an
agreement to which the company was a party at the commencement of the
business rescue proceedings. By
invoking this section, the
business practitioner may prevent a landlord from cancelling a lease
and from instituting eviction proceedings
(see
Cloete Murray
para 35).
[16] Based on what is set
out above, there is sufficient reason to conclude that the general
moratorium in s 133(1) does not
encompass legal proceedings for
ejectment where a lease has been validly cancelled and the company in
business rescue is an unlawful
occupier. In the notice of
motion, the applicant seeks an order granting it leave in terms of
s 133(1)(b) to bring the
present proceedings. In the light
of this conclusion such leave is unnecessary.
[17] I turn now to the
merits of the dispute.
[18] There are
essentially three issues to be determined. The first is whether
or not the parties entered into the alleged
written lease agreement
(Annexure FA1 to the Founding Affidavit) on 30 April 2010.
Second, whether the alleged lease was
cancelled or terminated on 30
April 2016; and, thirdly, whether in the light of the express
provisions of the lease, a lien can
exist, and damages proffered
against the applicant or set off against arrear rentals and other
charges.
[19] It is common cause
that the lease agreement relied on by the applicant was signed by
Mr Robert Lacic (Lacic) who
purported to represent the
first respondent. But, the deponent to the first respondent’s
answering affidavit, Mrs Antoinette
Murray, supported by a
confirmatory affidavit of her husband, Mr James Henry Murray
(Murray), states that Lacic was not capable
of entering into the
lease agreement because he was not a member of the first respondent
or authorised to contract on its behalf.
[20] The factual dispute
raised in regard to Lacic’s authority is clearly untenable and
can be rejected on the papers.
My reasons for this view are the
following.
[21] In his confirmatory
affidavit, Murray states that he bought the Newscafé business
for his son in 2010. He negotiated
the terms of the franchise
agreement with the franchisor, Fournews Developments (Pty) Limited,
as well as the lease agreement.
He states further that he was
not a member of the first respondent and could not sign any
agreements on its behalf. Murray
advances the specious reason
that the lease agreement was signed by Lacic because his son and
wife, the two members of the first
respondent, were in America at the
time and thus could not sign the agreement. This explanation is
in itself a sufficient
reason to infer that Lacic had the necessary
authority to enter into the lease agreement on the first respondent’s
behalf.
[22] But, the following
are clear indications that Lacic had the necessary authority to
contractually bind the first respondent.
On 30 April 2010,
being the date of the execution of the agreement of lease, Murray and
Lacic executed a deed of suretyship in
terms whereof they bound
themselves jointly and severally as sureties and co-principal debtors
in favour of the applicant for the
due payment by the first
respondent of all moneys from whatsoever cause arising. As a
probability, Lacic would not have bound
himself as a surety unless he
was a member of the first respondent or had a financial interest in
its affairs.
[23] Lacic has filed an
affidavit wherein he states that when he signed the written lease
agreement he was a member of the first
respondent, and in
confirmation thereof attaches a Form CK2 in terms of the Close
Corporation Act, 1948, as amended (marked Annexure
RL2).
[24] Murray also refers
in his affidavit to a copy of a franchise agreement entered into
between the first respondent and the franchisor,
Fournews
Developments (Pty) Limited. That agreement was signed by Lacic
as a representative of the first respondent and Lacic’s
signature is witnessed by Murray. Lacic also signed further
documents relating to the franchise agreement, more particularly,
a
debit order instruction as well as a resolution on behalf of the
members of the first respondent to enter into the franchise
agreement. He also signed the registered user agreement
permitting the first respondent to utilise the Newscafé
trademarks.
Furthermore, Lacic and Murray jointly stood surety
for the obligations of the first respondent to the franchisor in
terms of the
franchise agreement.
[25] Mr & Mrs Murray
have failed to advance a credible or probable explanation as to why
Lacic was authorised to enter into
the franchise agreement as well as
the suretyship pertaining thereto, but not authorised to sign the
written lease agreement.
[26] I am satisfied that
the denial that Lacic was authorised to enter into the written lease
agreement is disingenuous and can
safely be rejected on the papers.
The following dictum of Heher JA in
Wrightman t/a JW
Construction v Headfour (Pty) Ltd and another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) (at para 13) is instructive in this regard:
“
A
real, genuine and bona fide dispute of fact can exist only where the
court is satisfied that the party who purports to raise the
dispute
has in his affidavit seriously and unambiguously addressed the fact
said to be disputed. There will of course be instances
where a bare
denial meets the requirement because there is no other way open to
the disputing party and nothing more can therefore
be expected of
him. But even that may not be sufficient if the fact averred lies
purely within the knowledge of the averring party
and no basis is
laid for disputing the veracity or accuracy of the averment. When the
facts averred are such that the disputing
party must necessarily
possess knowledge of them and be able to provide an answer (or
countervailing evidence) if they be not true
or accurate but, instead
of doing so, rests his case on a bare or ambiguous denial the court
will generally have difficulty in
finding that the test is satisfied
…
”
[27] The evidence
overwhelmingly shows that Lacic was authorised to contractually bind
the first respondent. Accordingly,
the applicant has
established that the parties entered into the alleged written lease
agreement on 30 April 2010.
[28] I am also satisfied
that lease has been validly cancelled. The applicant caused breach
notices to be addressed to the first
respondent in terms of clause
12.1 of the lease agreement. On 18 November 2015 the applicant
sent a letter to the first respondent
informing it that it was in
breach of the lease as a result of the non-payment of the October
2015 and November 2015 rental and
municipal account. The applicant
afforded the first respondent seven days to remedy the breach from
the date of receipt of the
notice. The applicant sent another
letter to the first respondent on 2 December 2015 informing it that
it had breached the
lease by not paying the rental amounts and
municipal utilities for October 2015, November 2015 and December
2015. The applicant
again afforded the first respondent seven
days to remedy the breach. That these notices were addressed to
the first respondent
is not in issue, nor is it in dispute that the
first respondent was in arrear with the payment of rental and other
charges.
[29] On 9 December 2015,
the applicant received notification that the first respondent had
been placed in business rescue and that
the second respondent had
been appointed as the business rescue practitioner. Since that
date no payments for rental or utilities
have been made even though
the first respondent has continued operating its business from the
premises.
[30] The applicant
cancelled the lease agreement on 7 March 2016 and afforded the first
respondent seven days to vacate the premises
but it has not done so.
In the answering affidavit the first respondent does not deal with
the allegations relating to the
cancellation notice but disputes the
applicant’s entitlement to cancel the lease based on the
provisions of ss 133(1)
of the Act. As indicated above
there is no merit in this contention as it has been finally settled
that an agreement may
be cancelled during business rescue proceedings
(see
Murray Cloete
(
supra
)).
[31] It is important to
note that the second respondent has not sought to invoke the
provisions of s 136(2)(a) of the Act.
Accordingly, the
first respondent’s obligation to pay monthly rentals and
municipal utilities had not been suspended prior
to applicant’s
cancellation. Had the section been invoked by the second
respondent, the applicant may have been prevented
from cancelling the
lease agreement. On the contrary, it appears that at the first
creditors’ meeting held on 21 January
2016, the second
respondent confirmed the existence of the lease agreement. On 1
February 2016, the applicant’s legal
representatives met the
second respondent who undertook to give the applicant written
confirmation that rental payments would commence
at the end of
February 2016. He also informed them the first respondent was
not going to renew the lease after its expiry
and would vacate the
premises.
[32] The alleged claim or
counterclaim for damages cannot avail the first respondent.
Clause 1 of the lease agreement precludes
the first respondent from
setting off or deducting any amounts from the rental payable.
The clause reads, in relevant part,
as follows:
“
1.
PAYMENT
OF RENTAL
The
Lessee shall pay the rental on or before the 1
st
(first) day of each calendar month, in a manner advised by the Lessor
from time to time. The rental shall be paid free of
any set-off
or deduction for any reason whatsoever. …
”
[33] What remains for
consideration is whether the first respondent has any lawful right to
remain in occupation of the premises.
[34] Murray contends that
the first respondent has a lien over the premises. He alleges
that the applicant orally agreed that
the first respondent could
effect improvements to the property and that the applicant would
reimburse it for such improvements.
The claim of a lien over
the premises is untenable in the light of the following express
provisions of the written lease.
Clause 3 provides as follows:
“
3.
IMPROVEMENT,
REPAIRS AND MAINTENANCE
3.1 The Lessee shall not
erect any structures or make alterations to the leased premises save
with the Lessor’s written consent
which consent will only be
considered on receipt by the Lessor of plans indicating the nature of
the proposed structures and/or
alterations, which plans shall have to
be approved by the Lessor’s architect(s).
3.1.1 Any improvements
erected in terms hereof shall become the Lessor’s property.
3.1.2
Notwithstanding anything to the contrary herein contained, the Lessee
shall have no claim of whatsoever nature against the
Lessor for the
cost of any improvements and/or structures erected by them on or to
the leased premises.
”
[35] As is evident from
the above clause, the parties chose to contractually regulate any
potential claim for improvements on the
premises by making provision
for written consent before such improvements could be made to the
premises. Further, it was
agreed that no claim would exist
against the applicant for such improvements.
[36] In any event, the
alleged oral agreement to effect payment for improvements is at
variance with the provisions of clause 19
of the written lease, which
reads:
“
19.
WHOLE
AGREEMENT
The
Lease constitutes the whole agreement between the parties and no
warranties or representations whether express or implied, not
stated
herein shall be binding on the parties. No agreement at variance with
the terms and conditions of the Lease or consensual
cancellation
thereof shall be binding on the parties unless reduced to a written
agreement signed by or on behalf of the parties.
”
[37] In my judgment,
there is no foundation for the first respondent’s contention
that it has a lien over the premises for
improvements made. In
the circumstances the first respondent is not in lawful occupation of
the premises and falls to be
evicted.
[38] There are sufficient
grounds to evict the first respondent from the premises as a matter
of urgency. The first respondent
appears to be misusing the
business rescue process by unlawfully remaining on the premises and
operating its business without making
any rental payments or any
other charges. The business rescue process with which the
applicant has cooperated, appears to
have become moribund. The
creditors of the first respondent had agreed at the first
respondent’s creditors’ meeting
that the business rescue
plan would be submitted by no later than 12 February 2016. This
did not occur. At a meeting
held on 1 February 2016, the second
respondent undertook that rental payments would commence at the end
of February 2016, but this,
too, did not occur. The second
respondent informed the applicant that it had not taken control of
the first respondent’s
bank accounts and that the first
respondent was simply not willing to cooperate in that regard.
[39] The applicant is in
the process of negotiating the terms of a new lease agreement with a
new tenant. But the applicant will
lose the potential tenant as the
first respondent refuses to vacate the premises. The on-going loss
and damage suffered by the
applicant appears to be irreparable and is
unlikely to be recovered from the first respondent, which is in
business rescue due
to its financial difficulties.
[40] The applicant seeks
an order that both the first and second respondents pay the costs of
this application on the scale as between
attorney and client. I
see no reason to award costs against the second respondent, who has
acted throughout the proceedings
in an official capacity.
Although there has been delay in the business rescue process, it
appears that this was due to a
lack of cooperation on the part of the
first respondent and not as a result of any wrongful conduct on the
part of the second respondent.
Given the fact that the first
respondent has appeared to misuse the business rescue process I am of
the view that it should pay
the costs of the application on the
attorney and client scale.
[41] In the result, the
following order is made.
(a)
The first respondent and all those occupying through or under it are
to be evicted, within fifteen (15) days from the grant
of this order,
from Shop 53, corner Van Buuren Road and Hawley Road, Bedfordview
(the premises).
(b) In
the event of the first respondent failing to comply with the order in
paragraph (a) above, the Sheriff or his deputy is hereby
authorised
to evict the first respondent and those occupying through or under it
from the premises, and to secure the services
of a locksmith and the
assistance of the South African Police Services, if necessary.
(c)
The costs of this application are to be paid by the first respondent
on the scale as between attorney and client.
__________________________
BORUCHOWITZ J
JUDGE OF THE HIGH COURT
DATE OF HEARING
:
8 June
2016
DATE
OF JUDGMENT :
22 June 2016
ON BEHALF OF
THE
APPLICANT
:
ADVOCATE ANDRÉ GAUTCHE SC
with
ADVOCATE JC BURGER
INSTRUCTED BY
:
STUPEL
& BERMAN INC
Ref:
053992/M BERMAN
ON BEHALF OF
THE 1
ST
&
2
ND
RESPONDENTS
:
ADV SJ
VAN RENSBURG
INSTRUCTED BY
:
DLBM
INC
Ref:
PC LESSING