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[2016] ZAGPJHC 223
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Capstone 359 (Pty) Limited and Others v Spar Group Limited; In re: Spar Group Limited v Capstone 359 (Pty) Limited and Others (A5039/2015, A QUO 41791/2013) [2016] ZAGPJHC 223 (26 August 2016)
REPUBLIC
OF SOUTH AFRICA
IN THE
HIGH COURT OF SOUTH AFRICA,
GAUTENG
LOCAL DIVISION, JOHANNESBURG
APPEAL
CASE NO: A5039/2015
CASE
NO:
A QUO
41791/2013
DATE:
26 AUGUST 2016
In
the matter between:
CAPSTONE
359 (PTY)
LIMITED
.................................................................................
First
Appellant
VASSILIOS
LOIZOU
..................................................................................................
Second
Appellant
APOSTOLOS
ANDREW
MINA
...................................................................................
Third
Appellant
SYDNEY
DONALD RUSSELL
SEARLE
.................................................................
Fourth
Appellant
And
THE
SPAR GROUP
LIMITED
............................................................................................
Respondent
In
re:
THE
SPAR GROUP
LIMITED
...............................................................................................
Applicant
And
CAPSTONE
359 (PTY)
LIMITED
.............................................................................
First
Respondent
VASSILIOS
LOIZOU
..............................................................................................
Second
Respondent
APOSTOLOS
ANDREW
MINA
...............................................................................
Third
Respondent
SYDNEY
DONALD RUSSEL
SEARLE
................................................................
Fourth
Respondent
Coram:
Tsoka
J, Makume J and Wepener J
Heard:
24
August 2016
Delivered:
26
August 2016
Summary:
Lease:
obligation of sub-lessee to pay increase in rates based on terms of
sublease itself.
O
R D E R
On
appeal from:
Gauteng
Local Division of the High Court, Johannesburg (Mashile J sitting as
court of first instance).
1.
The
appeal is dismissed with costs.
J U D G M E N T
Wepener
J (Tsoka, Makume JJ concurring)
[1]
This appeal concerns the first appellant’s (Capstone’s)
liability to pay increased rates to its landlord, the respondent
(Spar), due to an increase of rates imposed by a local authority.
The second, third and fourth appellants are sureties for
the first
appellant and there is nothing that turns on that fact as their
suretyships are not disputed. If the appellant
is liable to the
respondent the liability of the second, third and fourth appellants
follows.
[2]
Spar was the lessee of a shop in a shopping centre known as 90
Degrees on Rivonia, Morningside. The premises were rented
from
a third party lessor, Express Model Trading 455 (Pty) Limited
(Express Model) in terms of a written deed of lease. Capstone,
in
turn, sublet the premises from Spar in terms of a written lease
agreement. It is common cause that Spar’s obligation to
pay
rates to Express Model arose out of the written head lease which
provides as follows:
‘
14.
RATES
14.1 The LANDLORD shall pay the
rates levied in respect of the PROPERTY which incorporates the
PREMISES.
14.2
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 in respect of the rates year which ends
during the first year of the lease, the TENANT shall on demand
refund
to the LANDLORD 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. The base rates
and taxes
payable shall be the 2005 rates and taxes year
.
’
[3] Capstone’s obligation to pay rental to Spar, in turn, arose
out of the written sublease which provides as follows:
‘
9
RENTAL
9.1 The terms relating to the
determination of the rental payable by SPAR pursuant to the HEAD
LEASE shall apply, mutatis mutandis,
to this sublease, the object
being that the SUB-TENANT shall be obliged to pay to SPAR whatever
amount is payable by SPAR to the
LANDLORD in terms of the HEAD LEASE
. …
9.2
The SUB-TENANT shall also pay to SPAR any amount which does not
constitute rental but which SPAR is, in any event, obliged to
pay to
the LANDLORD pursuant to the HEAD LEASE. In addition, the
SUB-TENANT shall refund to SPAR, on demand, any VAT or RSC
levies or
any other like impost (which may be the subject of future
legislation) that might become payable by SPAR on the income
received
by it pursuant to this sublease. The object in this regard is
to ensure that SPAR is not out of pocket in any way
pursuant to it
remaining as an intermediary between the LANDLORD and the SUB-TENANT
and the SUB-TENANT hereby indemnifies SPAR
and holds it harmless
against any such out of pocket expense which SPAR incurs in
consequence of it remaining as an intermediary
between the LANDLORD
and the SUB-TENANT
.
’
[4]
The effect hereof is that Capstone had to pay to Spar the amount that
Spar would pay to Express Model those amounts which do
not constitute
rental in the strict sense of the word.
[5]
Spar instituted proceedings against Capstone and the sureties to
recover an amount of R519 943,52 being an amount which it alleged
it
was obliged to pay to Express Model being increased rates and
consequently such an amount was due by Capstone to Spar.
Capstone resisted this claim. It alleged and submitted in the court
below and in this Court that Spar failed to prove the quantum
and its
obligation to pay the additional rates.
[6] Spar further alleged that:
‘
In
2008 amendments to the Local Government Municipal Property Rates Act
6 of 2004 (“the Municipal Property Rates Act”)
were
published which effectively caused properties to be valued according
to their market/land value as published in the valuation
roll. This
had the universal effect of the entire property market being affected
by the changed rates through increases to the
value of properties.
’
To this allegation Capstone responded as follows:
’
20.1
I
am advised that the Local Government: Municipal Property Rates
Act 6 of 2004 (“the Municipal Property Rates Act”)
was
amended on 13 October 2008 by virtue of the
Local Government Laws
Amendment Act 19 of 2008
and on 1 July 2009 by virtue of the Local
Government: Municipal Property Rates Amendment Act 19 of 2009.
20.2 It is not disputed that
pursuant to the amendments to the Municipal Property Rates Act the
evaluation of immovable properties
was effected, whereby the values
of immobile properties increased or decreased.
20.3
Save as stated in paragraphs 20.1 and 20.2 above, the allegations
contained herein are denied.
’
[7] The bare denial does not in my view dispute the allegation that
there was indeed an increase in the value of property when
the
Property Rates Act came into operation.
[8] Spar further alleged that it had to pay the increased amount to
Express Model and thus claimed the additional amount from Capstone.
Spar said:
‘
The
landlord in terms of the head-lease had paid rates to the
municipality without being aware of the changes as amended and it
also in turn levied amounts against the Applicant and the Applicant
in turn levied these against the First Respondent. As a result
of the
difference owed to the Municipality, the Applicant in accordance with
Section 14.2 of the head-lease agreement was obliged
to pay the
pro-rata share of the difference which in turn meant that the
Respondent must pay its pro-rata share of the difference.
’
To this Capstone answered:
’
21.1
I refer to what I have stated in this regard in clause 14.1 and 14.2
of the head-lease agreement.
21.2 It is not disputed that
annexure CC3 of the applicant’s founding affidavit is a copy of
a purported letter from Balme
Van Niekerk and Tugman (Pty) Limited to
the deponent to the applicant’s founding affidavit.
21.3
Save as stated in paragraphs 21.1 and 21.2 above, the allegations
contained herein are denied.
’
In addition Spar averred as follows:
‘
The
amount of R519 943,52 is the amount actually disbursed by the
applicant in respect of an increase in rates to the landlord and
in
terms of the relevant provisions of the sublease and suretyship
referred to hereinabove and the respondents are liable to refund
the
said amount to the applicant. …
’
The answer to this allegation was as follows:
’
24.4
The amount claimed was not paid into the trust account of the
respondents’ attorney or into the trust account of the
applicant’s attorneys. In regard to the amount claimed not
being paid into the trust account of the applicant’s attorneys,
the agreement was to the effect that the amount claimed would be paid
into the trust account of the applicant’s attorneys
whereupon
the applicant would consent to the sale by the respondent of the
supermarket business conducted from the premises being
the subject of
the head-lease agreement and sublease agreement. However prior
to payment being made the applicant consented
to the sale and the
need for payment thus fell away.
24.5
Save as stated in 24.1 to 24.4 above, the allegations herein are
denied.
’
[9]
The claim by Spar is consequently one for the payment of additional
rates. There was an issue made of the fact that the contents
of an
annexure to the founding affidavits which calculated the amount due
constituted hearsay evidence. Nothing turns on
this if regard
is had to the express words of the deponent to the founding affidavit
in paragraph 31. The bare denial by
Capstone does not meet the
requirements of a real, genuine and
bona
fide
dispute to exist.
[1]
[10]
In the circumstances Spar had shown both that there was an increase
in the rates payable and that it had paid it. The
result was
that Capstone’s concomitant liability was established.
[11]
The only further question which, in terms of clause 9.2 of the
sublease agreement is to be determined, is whether Spar had
paid an
additional amount to Express Model and whether it demanded payment
from Capstone.
[12]
The first question has already been answered in the affirmative.
The demand for the payment was sent to Capstone and
its liability
arose when that demand was made.
[13]
Capstone argued that certain clauses of the head lease agreement as
read with clause 9.2 of its sublease resulted in an
onus
resting on Spar to show that the rates
payable by Express Model in fact increased. The reasoning is wrong.
There is no privity of
contract between Capstone and Express Model.
The terms of the agreement between Express Model and Spar has no
bearing on the agreement
between Capstone and Spar unless
specifically incorporated, which it was not.
[14]
In all the circumstances Spar paid amounts which it was obliged to
pay to Express Model and pursuant to clause 9.2 of the sublease
Capstone became obliged to refund Spar.
[15]
In all the circumstances the judgment of the court
a
quo
is to be upheld and the appeal
falls to be dismissed with costs.
Wepener
J
I
agree:
Tsoka
J
I
agree:
Makume
J
Counsel for the Appellant: L. Hollander
Attorneys for the Appellant: Phillip Silver Swartz Inc.
Counsel for the Respondent: A. Bishop
Attorneys
for the Respondent: Garlicke and Bousfield
[1]
See
Wightman
t/a J W Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA) para [13].