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2010
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[2010] ZAGPJHC 21
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Pareto Limited and Others v Kalnisha Sigaban t/a KS Flowers N More (A3096/09) [2010] ZAGPJHC 21 (15 April 2010)
REPUBLIC OF SOUTH AFRICA
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO: A3096/09
In the matter between:-
PARETO LIMITED First Appellant
ABSA BANK LIMITED N.O. Second Appellant
IN ITS CAPACITY AS TRUSTEE FOR
THE ALAN GRAY PROPERTY TRUST
SCHEME
ABSA BANK LIMITED N.O. Third Appellant
IN ITS CAPACITY AS TRUSTEE FOR THE
SYCOM PROPERTYFUND COLLECTIVE
INVESTMENT SCHEME
And
KALNISHA SIGABAN t/a KS FLOWERS N MORE
Respondent
J U D G M E N T
MATHOPO, J
:
[1]
This is an appeal
against the refusal of the Magistrate Johannesburg to grant default
judgment in respect of the appellants claim
for rental and other
related charges i.e. electricity, water, sewerage charges unpaid
municipal rates.
[2]
The appellants
issued summons against the respondent for the payment of rentals and
other amounts or charges.
[3]
The summons was
served on the respondent at her chosen domicilium address and after
the expiry of the dies and the respondent’s
failure to enter
appearance to defend, the appellants applied for default judgment in
terms of Rule 12(1) of the Magistrate’s
Court Rules.
[4]
The Magistrate
refused to grant default judgment on the appellants claims on the
basis that since the appellants claims were for
rental and other
related charges, these charges were in the nature of a utility as
defined in Section 1 of National Credit Act
34 of 2005 (The Act), and
that absent compliance with section 129 of the Act, the appellants
claims were premature.
[
5] The appeal is
therefore directed at two consequences of the magistrate’s
order:
5.1 his refusal to grant judgment in respect of the rental component
5.2 his refusal to grant judgment in respect of the so-called
“utility” charges
[6]
The crisp point in
this appeal, is thus whether section 129 of the Act (which obliges a
creditor in certain circumstances to deliver
a specific form of
notice of demand to a debtor prior to the institution of the court
proceedings) applies to amounts other than
rental payable by the
lessee in terms of a lease notwithstanding that section 129 does not
apply to the rental component of the
landlord’s claim.
[7] It seems to me that the Magistrate simply
lumped the two claims together and concluded that since there had not
been compliance
with section 129 in regard to one part of the claim
(utility charges), the entire action of the appellants was premature
and denied
the appellants judgment
in respect of the rental component on the claim.
[
8] Although not very
clear from the Magistrate’s judgment it appears that
t
he Magistrate applied
the provisions of the Act to one isolated portion of the agreement of
lease dealing with the lessee’s
obligation to pay for
electricity, unpaid municipal rates, water and sewerage and
classified same as a Credit Agreement in terms
of section 4 of the
Act or an incidental Credit Agreement in terms of section 5 of the
Act.
This approach is fallacious
because it is in conflict with the provisions of the Act. According
to the Act, an agreement constitutes a credit agreement if
it is:
a credit facility
a credit transaction
a credit guarantee
any combination of the above transactions
[9]
A lease agreement in
respect of immovable property is specifically excluded in the Act
does not fall within the definition of a
credit agreement as
contemplated in the Act. Thus the approach of the Magistrate is
fallacious because it is in conflict with
the provisions of the Act.
[10] The fallacy in the Magistrate’s
approach is that a lease agreement is a composition of rights and
obligations enforceable
between the landlord and tenant. It is
incongruous to single out that part of the agreement of lease which
relates specifically
to the right of the tenant to utilise the
immovable property and the concomitant obligation to pay the landlord
for the use of
that property and call that “the lease”
and then call everything else agreed upon by some other name.
[
11] A lease agreement
does not mean that part of the agreement dealing with rental but the
composite agreement which includes all
the material terms. It is
incorrect and fallacious to attempt to sever or isolate certain parts
of the agreement from the entire
or whole agreement.
See
Johnston v Leal
1980 (3) SA 927
(A)
where Corbett JA dealing with a case relating to the agreement from
the Sale of Immovable property held that the provisions of
the
Alienation of land Act, Act 68 of 1981
do not apply solely to the essentialia of a sale but the provisions
apply to all material terms thereof. The agreement must be
read in
its entirety, because to attempt to read the agreement as isolated
like the Magistrate did, would in my view be tantamount
to creating a
new agreement for the parties. Thus when the Act specifically
excludes a lease of immovable property as in the instant
case it is
incorrect to say that certain parts of the agreement are hit by the
provisions of the Act while others be exempt. The
agreement
constitutes a composite, indivisible and the entire agreement is
regarded as an agreement for the lease of immovable
property.
[12] Consequently a lease as contemplated in the
Act does not mean simply that part of the agreement which constitutes
the essentialia
of the lease but includes also all the material terms
thereof.
[
13] It is clear from
the reading Section 8(2) of the Act that it does not apply to a claim
for rental in respect of immovable property.
Professor
Otto in his book
National Credit Act Explained
,
also shares the view that a lease in
terms whereof the lessee pays rents which does not include a fee,
charge or interests and in
terms whereof ownership remains with the
lessor throughout will not be subject to the Act at all. It is
difficult to glean from
the Magistrate’s judgment why he did
not grant judgment in respect of the rental component of the claim.
In my view there
is no reason save an oversight on the part of the
Magistrate why the appellants should not have succeeded in respect of
the claim
for the rental component.
[
14] I now turn to deal
with the utility charges claim.
The Act defines a
“utility”
as:
The
supply to the public
of an essential-
(a) commodity such as electricity, water or gas: or
(b) service, such as waste removal, or access to sewage lines,
telecommunication networks or any transportation infrastructure
Subsection 4(6)(b) provides as follows:
“Despite any provision of this Act-
(b) if an agreement provides that a supplier of a utility or other
continuous services-
(
i) will defer payment
by the consumer until the supplier has provided a periodic statement
of account for that utility or other
continuous services; and
(ii) will not impose any charge contemplated in
Section 103 in respect of any amount so deferred, unless the consumer
fails to pay
the full amount due within at least 30 days after the
date on which the periodic statement is delivered to the consumer
that agreement is not a credit facility within the meaning of section
8(3), but any overdue amount in terms of that agreement,
as
contemplated in subparagraph (ii), is incidental credit to which this
Act applies to the extent set out in section 5.
[15
] From the section it
appears that in respect of any overdue amount owing in terms of an
agreement, the Act does apply. Now to
apply the Act to that portion
of the lease which obliges the tenant to pay the landlord for those
utility charges, a number of
conditions have to be satisfied:
15.1 There has to be an agreement for the supply
of the services in respect of which the utility charges are owed.
There is in
casu
no such agreement. It is highly artificial to regard the lease as
constituting such an agreement. The appellants certainly have
not
agreed to supply the respondent those utilities.
15.2 Section 4(6) (a) refers specifically to
“the person who sells the goods or services”.
The landlord is not such a person. Reading the
whole of section 4(6) contextually, it is clear that the section is
referring to
an agreement as between the
utility
supplier
and the
ultimate
consumer.
The overdue portion of the
amount owing in respect of a utility charge is then regarded as
constituting incidental credit, as defined.
The purpose of section
4(6) is therefore to bring within the net, the overdue portion which
a consumer owes a utility supplier.
Nothing therein indicates that
the amounts owing in respect of utility charged by a tenant to a
landlord (the latter not being
a utility supplier) are to be
regarded as falling within the scope of the Act.
[16] In essence, the rationale of the Magistrate’s
judgment is to the effect that if the lease were to vest a landlord
with
a right to claim immediate payment of the rental or eviction
upon the commission of the breach by the tenant, the landlord would
not be entitled to claim everything then owing by the tenant. I do
not think that the legislature would have intended to bring
about
such a state of affairs which might possibly lead to a multiplicity
of actions. I say this for the reason that the landlord
is not
entitled to split up its claims. It cannot claim rental in one
action and at a later stage claim the separate amounts in
respects of
the utility charges. Such conduct would lead to an anomaly and cause
hardship to defaulting tenants who would have
to face multiple
actions all arising out of the same agreement which could have been
adjudicated or enforced in one action.
[17] In my view it is clear that provisions in a
lease agreement which entitle the landlord to recover from the tenant
utility charges
are not ones intended to profit the landlord in any
manner. In effect, the landlord disburses money to a utility
provider on behalf
of the tenant and all that the landlord is seeking
to do is to recover from the tenant that which it disbursed on the
latter’s
behalf and for the latter’s benefit. The
Magistrate erred in regarding the Act as applicable to that portion
of the appellants
claims which relates to utility charges.
[18] I therefore conclude that the Magistrate
misconstrued his position by refusing default judgment on the basis
of non-compliance
with section 129 of the Act which is clearly not
applicable in the present matter.
1. Based on the conclusions made above, the appeal should therefore
be upheld. I therefore make the following order:
2. The appeal is allowed to the extent that the order of the
Magistrate is set aside and substituted with the following:
a) Judgment is granted in favour of the plaintiff
in terms of prayer 3 of the Particulars of Claim for payment of the
sum of R59
946.18
b) The defendant is ordered to pay the plaintiff’s
costs on an attorneys and client scale.
____________________________
RS MATHOPO
JUDGE OF THE HIGH COURT
I agree:
_____________________________
BHAM AJ
JUDGE OF THE HIGH COURT
Appearances:
For the Applicant : Adv. AJ Horwitz SC
With Adv. C Robertson
Instructed by : Gideon Pretorius Incorporated
For the Respondents : No appearance
Instructed by :
Date of hearing : 12 April 2010
Date of Judgment : 15 April 2010