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[2010] ZAGPJHC 20
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Hyprop Investments Limited and Another v NSC Carriers and Forwarding CC and Another (2009/12568, 2009/47543) [2010] ZAGPJHC 20 (12 April 2010)
IN
THE SOUTH GAUTENG HIGH COURT
(JOHANNESBURG)
REPORTABLE
CASE NUMBERS:
2009/12568 and 2009/47543
In the matters
between:-
HYPROP
INVESTMENTS LIMITED First Applicant
ABLAND
(PTY) LTD Second Applicant
and
NSC
CARRIERS AND FORWARDING CC First Respondent
NORBERTO
JOSE SANTOS COSTA Second Respondent
JUDGMENT
MOKGOATLHENG
J
In these two
matters, the applicants seek an order confirming the cancellation of
two lease agreements, payment of arrear rentals,
ancillary charges,
and the ejectment of the first respondent from premises situate at
Stoneridge Centre, Stoneridge Drive, Modderfontein.
At the inception of
these proceedings, the parties agreed that as applicants in
case
no: 2009/12568
are identical to those in
case no: 2009/47543,
and seek similar relief against identical respondents in both
matters, the judgment in the former matter should be applicable
to
the latter matter as the issues arising therefrom are identical.
FACTUAL MATRIX
In both matters it
is common cause that during August 2008 the applicants and the first
respondent concluded identical lease agreements
the terms whereof,
entitled the latter to conduct a niche restaurant and a tobacconist
respectively at Shops Nos. 14 and 44 situate
at Stoneridge Centre,
Stoneridge Drive, Modderfontein.
In both matters,
the second respondent has signed written deeds of suretyships
binding himself in favour of the applicants jointly
and severally as
surety and co-principal debtor in
solidum
with the first respondent, for the due and punctual performance by
the latter of all obligations arising from the lease agreements.
The applicants
contend that the first respondent has breached the lease agreements
as a result of its failure to pay monthly rentals
and ancillary
charges, consequently, both lease agreements were cancelled. The
first respondent was requested to vacate the
respective premises,
but has refused to do so. Consequently since the 3 February 2009
the first respondent has been in unlawful
occupation of the
premises, and continues to unlawfully trade therefrom.
The respondents
oppose the granting of the relief claimed on the basis that when the
second respondent negotiated with the applicants
representatives, to
lease the premises, during such discussions which ultimately led to
the conclusion of the lease agreements,
applicants representatives
made fraudulent misrepresentations which induced him to enter into
the lease agreements on behalf
of the first respondent, and
consequently bind himself as surety and co-principal debtor.
The first
respondent contends that pursuant the fraudulently induced lease
agreements, it has effected useful and necessary improvements
to the
premises to the value of R5 358 000.00
and
R1 300 000.00 respectively in respect of the niche
restaurant and tobaconnist, and accordingly, has a
ius
retentionis
that is an improvement lien in respect thereof which entitled it to
remain in occupation and possession of both premises until
compensated.
The respondents
contend further that implicit in the lease agreements was the
fraudulent misrepresentation that in concluding
same, the applicants
had obtained from the local authority consent:
(a) to commence
building the premises;
for the first
respondent as a tenant to occupy the built premises;
to apply for an
occupational certificate which was eventually obtained in respect of
the premises;
to apply for and
obtain approval of the building plans; and
comply with all
the relevant by-laws of the local authority.
The first
respondent also contends that when occupation of the premises was
given to it, without the issue by the local authority
of a
certificate of occupancy in respect of Stoneridge Centre in which
premises are situate, this was a breach of the provisions
of
section 14
of
the
National Building Regulations and Building Standards Act 103 of
1977,
and which in terms of
section
14(4)(a)
is a criminal offence. Consequently, applicants are in breach of
the maxim
nemo
ex suo delicto meliorem suam conditionem facere potest
(no one is allowed to improve his own condition by his own
wrongdoing), and applicants are therefore, precluded from
recovering
rentals and ancillary charges in terms of the lease
agreements.
The respondents
contend therefore that as a result of such fraudulent
misrepresentations, the lease agreements were
void
ab
origine
alternatively,
voidable,
thus
entitling
the first respondent to rescind same and claim consequential
damages.
A
CONSIDERATION OF THE RESPONDENTS DEFENCES
Fraudulent
Misrepresentation
The civil law onus
of proving fraud is on the respondents. In
Lawsa
2
nd
edition Vol 6 Criminal Law
it
is
stated:
“
although
mere civil fraud is not necessarily equivalent to criminal fraud, it
must still be established that when a person through
misrepresentation, that is “the perversion of the truth”
alleges that a set of facts exists when it does not, he
or she has
the intention to commit fraud (for purposes of civil law) which
results in actual or potential prejudice to the representee”.
In
R
v Myers
1948 1 SA 375
(A),
a case where the issue was whether a person was guilty of fraud or
was merely negligent. Greenberg AJ,
at
382-383
et
seq
,
quoting
Lord
Herschell’s Report at page
374
in
Derry
v Peek
expressed himself thus
:
‘…
fraud
is proved when it is shown that a false representation has been
made(1) knowingly or (2) without belief in its truth, or
(3)recklessly, careless whether it be true or false. Although I have
treated the second and third as distinct cases, I think the
third is
but an instance of the second, for one who makes a statement under
such circumstances can have no real belief in its truth….”
Mr Roos on
respondents’ behalf argued that the court should find that the
respondents had proven that the applicants representatives
were
guilty of fraud by having made fraudulent misrepresentations to the
second respondent which induced him to conclude the
lease agreements
on first respondent’s behalf. Counsel further submitted that
the applicants had not denied this assertion.
Mr Nowitz on
applicants’ behalf argued that all the defences raised by the
respondents were legally invalid and not sustainable
as all were
premised on facts which were extraneous to the purview of the lease
agreements.
I now turn to
consider whether Mr Roos’ submissions relating to his
contentions regarding fraud or fraudulent misrepresentations
as
argued are sustainable.
On the 7
th
July 2008 the first respondent’s Board of Members adopted a
resolution authorising the second respondent to
“enter
into and sign a lease agreement binding the company/corporation (as
Tenant) to
Hyprop
Investments Limited and Abland (Pty) Ltd
Corporation
and any of their successors in title or transferees (or Landlord) in
respect of the premises being Shop 14 at Stoneridge Centre
upon
such terms and conditions as set out in the lease agreement laid
before the meeting and approved”
(my
emphasis)
It is patent that
the first respondent’s Board of Members resolution
incontrovertibly shows that it had sight of the lease
agreement,
when it discussed the terms thereof, and it thereafter voluntarily
(without prior fraudulent misrepresentations as
alleged) resolved to
bind the first respondent and consequently, authorised the second
respondent to sign the lease agreement
on first respondent’s
behalf.
The applicants
attorney’s letter dated the 14 January 2009 written in
response to the respondents attorney’s letter
dated the
8
th
January
2009, pertinently and emphatically denied the fraudulent
misrepresentations imputed by the respondents to their
representatives during the contractual negotiations by stating:
“8.2
apart from denying the allegations made by you against our clients’
leasing team in your letter under reply,
your attention is drawn to
paragraph 38.4 which provides that
the
LANDLORD shall not be bound by any express or implied term,
representation, warranty, promise or the like not recorded in
the
Lease Agreement and you waive the defence of estoppel in this
regard
”
.
(my emphasis)
The respondents in
their attorneys’ letter dated 6 February 2009, made
the following remarks:
“
11 …
Our client (that is the first respondent) is not seeking a reduction
in rental, but merely an indulgence within which
to commence paying
rentals in October 2009 (for October 2008 and October 2009), and
continue to pay double the amount of rental
on a monthly basis, which
would be in lieu of the first year and second year jointly. The
third year rentals would be paid in
accordance with the lease ….
12. Our client
has spent a large amount of money on both its businesses, and
clearly they do not wish to forego and/or lose that
money. Thus
clearly it is our client’s intention to honour the lease, and
continue for a further period thereafter, in order
to recover its
monies invested in the businesses.
13. Accordingly
we again request, that your client consider our clients proposal
regarding the delayed payment of the rentals,
and that it also
considers the complaints raised by our client and advises that
positive action it will take in that regard.
”
Mr Roos argued that
the content encapsulated in the respondents attorney’s letter
dated 6 February 2009 is inadmissible
as it is evident that the
letter was captioned “
without
prejudice
”
.
It
is trite that the phrase “
without
prejudice”
in a document does not
per
se
presage an absolute bar to its admissibility as evidence.
Combrik J in
Jili
v South African Eagle Insurance Co. Ltd 1995 (3) 269 (N
)
at
275
held:
“No
conclusive legal significance attaches to the phrase 'without
prejudice'. The mere fact that a communication carries
that phrase
does not per se confer upon it the privilege against disclosure …
(Gcabashe
v Nene
1975 (3) SA 912
(D) at 914E-G, and see Cross D on Evidence
5th ed at 300)
”.
A perusal of the document does not foreshadow any confidentiality
or privilege pertaining to settlement negotiations, neither
does it
attempt to compromise actual or impending litigation.
Communications
between the parties clearly show that as late as the 4 August 2009,
the respondents never raised the question
of the second respondent
having been fraudulently induced to enter into the lease agreements
on first respondent’s behalf,
neither is there any suggestion
that the first respondent intended to resile from or cancel the
lease agreements as a consequence
of the purported fraudulent
misrepresentations.
The imputation by
the second respondent that he was purportedly through fraudulent
misrepresentations induced by the applicants
representatives to
conclude the lease agreements is consequently unsustainable. The
objective proven facts ineluctably demonstrate
that the respondents
have not proven that the applicants are guilty of fraudulent
misrepresentations or indeed, fraud as they
must to succeed with
this defence.
THE DEFENCE
RELATING TO MISREPRESENTATIONS PERTAINING TO THE PREMISES
The first
respondent denies breach of the lease agreements and contends that
the applicants fraudulent misrepresentations relate
to its failure
to:
deliver an
almost full level of occupancy of the premises projected as an
upmarket shopping centre;
provide secure
parking, adequate security and display of the premises name;
launch and
market the premises in a proper and acceptable manner;
provide the
roof cover over the walkways; and
provide health
club and a billboard for the premises.
The first
respondent contends that as a result of the failure by the
applicants to execute its representations, on 11 March 2009
it
elected to rescind the lease agreements, because as a result of the
applicants’ fraudulent misrepresentations as alleged
same were
void ab
origine.
Clause 38
of
the lease agreement provides:
“
38
ENTIRE
AGREEMENT
This Lease
constitutes the entire and whole agreement between the parties who
acknowledge and record that there were no prior
representations or
warranties given which induced the contract, save insofar as such
warranties or representations are set
out herein.
The LANDLORD
shall not be bound by an express or implied term, representation,
warranty, promise or the like not recorded herein,
and the TENANT
waives the defence of estoppel in this regard.
”
I now turn to
consider whether the first respondent’s purported rescission
of the lease agreement is legally valid, or whether
a perusal of the
terms of the lease agreement necessarily establish whether these
“
complaints
”
or undertakings as described by the first respondent are within or
extraneous the purview of the lease agreements. Regarding:
the suitability
of the premises as an upmarket shopping centre,
clause 21
provides:
the
Landlord does not warrant that the premises will comply with any
requirements of any local or other authority for the
purpose of
any licence required by the Tenant for the conduct of its
aforesaid business or that the premises are fir for
the purpose
for which they are let or that any licence or that any premises
are fit for the purpose for which they are let
...;”
security and
display of premises name,
clauses
4 and 19
absolve the applicants from any obligation and liability;
marketing and the
launching of the centre,
c
lauses
5
of annexure “
D
”
and
clause
46
respectively refer to marketing but neither imposes any
contractual obligations on the applicants;
the health club,
there is no reference or warranties thereto in the lease
agreement;
open date and
launch,
clause 5
which refers to this exigency imposes no liability on the
applicants and creates no contractual obligation;
Liability for
damages ,
clause
19
which exempts the applicants from liability provides:
“
19.1 The
Tenant shall not under any circumstances have any claim or right of
action whatsoever against the Landlord for damages,
whether direct or
indirect, loss, cancellation or otherwise, nor shall it be entitled
to withhold or defer payment of rent, by
reason of:
The premises
being in a defective condition or falling into disrepair or any
particular repairs ... and whether arising from
the negligence of
the Landlord, its servants or agents;
All provisions
of this clause shall apply and shall be fully operative
notwithstanding that any loss, damage or injury hereinbefore
referred to may occur or be sustained in consequence of any act or
omission by the Landlord or any of its directors, servants
or
agents whether negligently or otherwise and notwithstanding that
the Landlord may have been in breach of any of its obligations.”
There is no dispute
that the lease agreements have been cancelled, the applicant
contending that such cancellation occurred on
the 3 February
2009 and was predicated on the first respondent’s breach due
to its failure to pay arrear rentals and
ancillary charges. The
first respondent contends cancellation premised on fraudulent
misrepresentation, alternatively, rescission
on 11 March 2009.
There was consequently no privity of contract between the parties at
the inception of these proceedings.
The first
respondent is in terms of
Clause
31
is obliged to continue to pay the monthly rentals irrespective of or
pending the determination of any dispute between the parties.
Clause
31
provides:
“
31
DISPUTED
OCCUPATION
While for any
reason or on any grounds the TENANT occupies the premises and the
LANDLORD disputes its right to do so, the TENANT
shall, pending
determination of such dispute, either by negotiation or litigation,
continue to pay an amount equivalent to the
monthly rental and the
amounts due in terms of
clauses
6 and 40
provided
in this Lease….
”Consequently,
the first respondent by its failure to pay monthly rentals and
ancillary charges is in breach of the lease
agreement and
consequently has no legal basis in law to rescind the lease
agreement.
In
Bowditch
v Peel and Magill
1921 AD 561
at p572
,
Innes C.J held: “
A
person who has been induced to contract by the material and
fraudulent misrepresentations of the other party may either stand
by
the contract or claim a rescission. …It follows that he must
make his
election
between those two inconsistent remedies within a reasonable time
after knowledge of the deception
.
And the choice of one necessarily involves the abandonment of the
other. He cannot both approbate and reprobate. Here the
plaintiffs
alleging that the contract was fraudulently induced not only claimed
damages as distinct from rescission, but they
claimed damages for
breach of contract. By their pleadings they elected to stand by the
contract, and thereby they abandoned
any right to rescind it. The
learned Judge held that fraud had not been proved, and that,
therefore, the plaintiffs could not
claim damages on that basis; but
they could claim rescission. Even then, however, they still had the
other choice; they could
stand by the contract and enforce it, or
claim damages for its breach. The principle was laid down by DE
VILLIERS, C.J. (
Woodstock
Municipality v Smith
(26
&C at p. 701
)).”
The first
respondent did not exercise its remedies within a reasonable time
neither did it timeously allege any knowledge of deception
before
the 3 February 2009, when the applicants cancelled the lease
agreements as a result of its failure to pay monthly rentals
and
ancillary charges.
The first
respondent belatedly, as a consequence of the applicants
cancellation of the lease agreements on 3 February 2009, only
in
August 2009, does it allege fraudulent misrepresentation. This
belated allegation of fraud is a patent recent fabrication,
it is a
chimera, a mirage and proffered as a last refuge by the respondents
in order to salvage a lost cause and consequently,
has no legal
validity.
It is patent that
prior representations, warranty, promises, or the like do not and
cannot bind the applicants, consequently,
whatever representations
applicants representatives made to the second respondent as alleged,
such are extraneous the lease agreement,
and are not binding on the
applicants, consequently same cannot entitle the first respondent to
lawfully rescind the lease agreement.
THE DEFENCE OF
IUS
RETENTIONIS
The first
respondent alleges that it has a claim for damages arising from a
ius
retentionis
over the leased premises in respect of useful and necessary
improvements made, and is therefore entitled to occupy the premises
until it has been compensated the amounts of R1 300 000.00
and R5 358 000.00 respectively and consequential
damages
which it is still quantufying.
In the case of
Business
Aviation Corporation (Pty) Ltd and Another v Rand Airport Holdings
(Pty) Ltd
2006 (6) SA 605
(SCA) para 6 at 609
it was held:
“An
appropriate starting point for a discussion of the questions raised
by the appeal appears to be a statement of the generally
accepted
principle that in Roman-Dutch law, following Roman law, lessees were
originally in the same position as bona fide possessors
as far as
claims for improvements to leased properties were concerned.
It
follows that absent any governing provisions in the contract of
lease
,
lessees, like bona fide possessors, had an enrichment claim for the
recovery of expenses that were necessary for the protection
or
preservation of the property (called impensae necessariae ), as well
as for expenses incurred in effecting useful improvements
to the
property (called impensae utiles )… More pertinent for
present purposes, lessees, like bona fide possessors, who
were still
in possession of the leased property, also had an enrichment lien (a
ius retentionis ) that allowed them to retain
the property until
their claims for compensation had been satisfied
.”
Pertinently, in the
lease agreements the governing provisions are encapsulated in
Clauses
11.2 and 19
respectively.
Clause
19
provides:
“
19
EXEMPTION FROM LIABILITY
19.1 The Tenant
shall not under any circumstances have any claim or right of action
whatsoever against the Landlord for damages,
whether direct or
indirect, loss, cancellation or otherwise, nor shall it be entitled
to withhold or defer payment of rent, by
reason of:
19.1.1 The
premises being in a defective condition or falling into disrepair or
any particular repairs not being effected by the
Landlord and whether
arising from the negligence of the Landlord, its servants or agents
or any other cause whatsoever.
Clause 11.2
provides: “
If
any alterations or additions are made by the TENANT whether with or
without the LANDLORD’s written consent, it shall
be obliged
prior to the expiry or earlier termination of the Lease to remove
them and reinstate the premises to the condition
in which they were
before the additions and alterations were effected and to make good
any damage caused by the removal and reinstatement
unless the
LANDLORD directs in writing that such alternations or additions be
not removed or reinstated, in which event such
alterations or
improvements shall become the LANDLORD’s property in terms of
Clause
11.3
.
The TENANT shall
in no circumstances have any claim for compensation for any such
alteration or additions whether or not they are
removed or the
premises reinstated. The TENANT appoints the LANDLORD as its
attorney and agent irrevocably and in rem suam with
power of
substitution, to effect any such removal of the alternations and the
reinstatement of the premises at the cost of the
TENANT.”
The lease agreement
patently and absolutely precludes the first respondent of availing
itself of the defence of
ius
retentionis
and absolves the applicants from liability arising from damages or
any right of action or in particular compensation arising
from the
first respondent’s
ius
retentionis.
I concur with Van
Reen J in
Rekdurum
(Pty) Ltd v Weider Gym Athlone (Pty) Ltd t/a Weider Health &
Fitness Centre
1997 (1) SA 646
(C)
that:
“
the
essential content of a ius rentitionis in South African Law is the
right on the part of a retento to retain physical control
of
another’s property as a means of securing payment by the owner
thereof- to the extend that he has been enriched.
… …
the
exercise of a ius retentionis based on enrichment resulted in a pro
tanto diminution of the rights of dominium of the owner
of the
object over which such rights were exercised
(
See
Kommissaris van Binneslandse Inkomste v Anglo American (OFS) Housing
Company Ltd
1960 (3) SA 642
(A) at 657C G
).
The
respondent, by conducting a business on the premises, is using it
for a purpose wider than merely an object of security.
By doing so
the respondent is infringing the applicant’s dominium minus
plenum, namely its dominium minus the ius retentionis.”
There is no
authority in South African Law which supports the proposition that
the first respondent in securing its
ius
retentionis
may
continue to conduct trade from the applicants’ premises
contrary to the stipulations of the terms of a lease agreement.
Consequently,
legally the first respondent is holding over and is trading
unlawfully from applicants’ premises because the
lease
agreement has been cancelled. See
Port
Wild Props 12 (Pty) Ltd v Real Time Investment 384 CC,
an unreported Full Bench judgment of this court
case no: A5041/08.
Where a lease
agreement has not been induced by fraudulent misrepresentation and
has been lawfully terminated as a result of a
breach thereof by the
lessee, it is legally impermissible for the lessee to continue to
remain in occupation of the premises
on the basis that such
continuing occupation insures the security of its
uis
retentionis.
THE
PARI DELICTO
DEFENCE
The first
respondent contends that occupation of each of the premises was
given without the issue by the local authority of a
certificate of
occupancy in respect of the buildings in which each of the premises
is situate, this argued the first respondent
is in breach of the
provisions of
section
14 of the National Building Regulations and Building Standards Act
103 of 1977
and in terms of
section
14(4)(a)
is a criminal offence on the part of the applicants.
Section 14(4)(a)(i)
provides:
“
(4) (a)
The owner of any building or, any person having an interest therein,
erected or being erected with the approval of a local
authority, who
occupies or uses such building or permits the occupation or use of
such building-
unless a
certificate of occupancy has been issued in terms of subsection
(1) (a) in respect of such building;
…
shall
be guilty of an offence.”
Mr Roos referred me
to the California Court of Appeal case of
Espinoza
Calva (2008) 169 CAL App. 4
th
1393
,
Cal.Rptr.3
rd
and
urged me to follow the principle expounded therein by invoking
section
39(1)(b) and (c) of The Constitution of the Republic of South Africa
Act 108 of
which
decrees that this court can have regard to international and foreign
law where there is no analogous precedent in our law.
Mr Roos argued that
the
Ispinoza
judgment
directly accords with the maxim: “
Nemo
ex suo delicto meliorem suam conditionem facere potest
(no
one is allowed to improve his own condition by his own wrong doing)
and there was no reason why this court could not apply the rationale
in that decision to the present matter.
See:
Wimbledon
Lodge (Pty) Ltd v Gore NO and Others
2003 (5) SA 315
(SCA)
at
321G, para 10
A cursory perusal
of the
Ispinoza
decision shows that
section
109(1) of the SANTA Ana Municipal Code
“
prohibits
the use or occupation of a building until the building official has
issued a certificate of occupancy”.
In
contra-distinction,
section
14(4)(a)(i)
of the
National
Building Regulations and Building Standards Act 103 of 1977
does not
per
se
necessarily impose an absolute and complete prohibition of the
occupancy or use of a building unless a certificate of occupancy
has
been issued.
In terms of
section
14(1A)
of
the said Act:
“
The
local authority may, at the request of the owner of the building or
any other person having an interest therein, grant permission
in
writing
to
use the building before the issue of the certificate
referred to in subsection (1), for such period and on such
conditions as may be specified in such permission, which period and
conditions may be extended or altered as the case may be, by such
local authority.
”
In the
Espinoza
judgment reference is made to the fact that
The
California Supreme Court
held
in
Tri-C- Inc v Sta-Hi Corp.
(1965) 63 Cal. 2d 199
:
“There is no doubt that the general rule requires the courts
to withhold relief under the terms of an illegal contract
or
agreement which is violative of public policy....
When the evidence
shows that ... [an illegal party] in substance seeks to enforce
an
illegal contract or recover compensation for an illegal act
,
the court has both the
power
and duty to ascertain the true facts
in order that it may not unwittingly lend its assistance to the
consummation or encouragement of an illegal contract or act which
public policy forbids.
These
rules are intended to prevent the guilty party from reaping the
benefit of his unlawful conduct, or to protect the public
from future
consequences of an illegal contract. They do not necessarily apply
to both parties to the agreement unless both are
truly
pari delicto
.
”
The lease agreement
the parties concluded, is
not
an illegal contract
,
neither is it a nullity nor is it
void
ab
initio
.
See:
Kopelowitz
v West and Others 1954 (4) SA (W) at 300-301
:
“
The
maxim in pari delicto potior est conditio defendentis is concerned
with the parties moral guilt, not criminality”.
In the case of
Jajbhay
v Cassim
1939 AD 537
it was held: “
A
party seeking to extricate himself from the consequences of an
illegal or immoral
contract
had to demonstrate that he had come to court with clean hands.
... Courts must
discourage illegal transactions, nevertheless recognised that its
strict enforcement may sometimes cause inequitable
results between
parties to an illegal contract”. To prevent inequalities,
therefore, it thus enunciated the principle that
the rule must be
relaxed where it is necessary to prevent injustice or to promote
public policy. One such instance where the rule
would be
subordinated to ‘the overriding’ consideration of public
policy was where the defendant would be unjustly
enriched at the
plaintiff’s expense.”
See:
Klovow
v Sullivan
2006 (1) SA 259
(SCA)
The first
respondent admits that it has not since the inception of the lease
agreements (except one payment) paid monthly rentals
and ancillary
charges, which include the local authority rates and taxes, water
and electricity and VAT in respect of the monthly
lease rentals.
The first respondent makes bold that it is occupying the respective
premises and trades therefrom as a niche
restaurant and tobacconist
in order to secure its goodwill, pay its staff and exercise its
ius
retentionis
.
The continued
unlawful occupation by the first respondent of the applicants
premises and its failure to pay monthly rentals and
ancillary
charges constitutes unlawful enrichment. The first respondent’s
unlawful refusal to pay the local authorities
rates and taxes,
electricity, water and VAT on monthly rentals, is a breach of the
local authority’s by-laws and the
Value
Added Tax Act 89 of 1991.
It may be cogently
and persuasively argued that both parties are in
pari
delicto
,
in that, the applicants have contravened
section
14 of Act 103 of 1977.
The
equities however, favour the applicants in that they are continually
suffering loss of income and consequential damages as
a result of
the first respondent’s unlawful refusal to vacate their
premises. The first respondent sustains no consequential
damages or
loss whatsoever, and is daily unlawfully enriching itself at the
expense of the applicants whilst contravening the
local authority
by-laws and
Value
Added Tax Act 89 of 1991
.
In the present
circumstances, “
the
overriding”
consideration
of public policy dictates that the maxim
in
pari delicto potior est conditio defendentis
can
be
relaxed to prevent injustice and inequity because the first
respondent is, and continues, to be unjustly enriched at the
applicants expense whilst being guilty of continuously contravening
the law.
Concerning the
question of costs, Mr Roos argued that
clause
30.2
only entitled applicants to recover attorney and own client costs
after obtaining a court order in respect thereof, and after
taxation
of such costs. I demur,
clause
30.2
provides: “
if
as a result of breach or non observance or delay in complying
with any of its obligations under this Lease by the Tenant,
the
Landlord instructs or consults an attorney in enforcing its rights,
the Tenant shall pay on demand all costs and expenses
thereby
incurred by the Landlord with such attorney on the scale as between
attorney and own client …”
It is patent that
this clause does not lend itself to the interpretation accorded it,
that this clause only entitles the applicant’s
to claim
attorney and own client costs as contended by Mr Roos. There is no
necessity for the applicant’s to obtain a
court order or to
tax such costs before recovering same. This does not however,
denude the first respondent of its right to
dispute such costs and
insist on the taxation thereof before paying same.
THE ORDER
In the premises the
applicants have succeeded in proving that the respondents defences
are legally unsustainable, consequently,
the following order is
made:
Cancellation of
the two lease agreements is confirmed;
The first
respondent is ordered to vacate Shop Nos 14 and 44 respectively
situate at Stoneridge Centre, Stoneridge. Modderfontein
within 7
(seven) days of this order, failing the Sheriff is authorised to
evict the first respondent.
The first and
second respondents are jointly and severally ordered to pay the
applicants the amount of R 88 794.12 and interest
thereon at the
rate of 15.5% per annum
a
temporae
morae
from
the 13 January 2009 to date of final payment, the one paying the
other to be absolved in respect of
case
no: 2009/12581
.
The first and
second respondents are jointly and severally ordered to pay the
applicants the following amount of R 711 208.11
and interest
thereon at the rate of 15.5% per annum
a
temporae
morae
from
the 13 January 2009 to date of final payment, the one paying the
other to be absolved in respect of
case
no:
2009/47543
.
The first and
second respondents are jointly and severally ordered to pay the
applicants legal costs on an attorney and client
scale, the one
paying the other to be absolved.
________________________
MOKGOATLHENG J
JUDGE OF THE HIGH
COURT
DATE OF HEARING:
27
November 2009
DATE OF JUDGMENT:
ON BEHALF OF THE
APPLICANT:
INSTRUCTED BY:
Nowitz
Attorneys
TELEPHONE NUMBER:
(011)
325 - 5300
ON BEHALF OF THE
RESPONDENT:
INSTRUCTED BY:
Dogulin
Shapiro & Da Silva Inc.
TELEPHONE NUMBER:
(011)
450 - 2915