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[2018] ZAGPJHC 490
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Auckland Park Theological Seminary and Another v University of Johannesburg (A5017/17) [2018] ZAGPJHC 490 (4 July 2018)
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG)
CASE
NO: A5017//17
Not
reportable
Of
interest to other judges
revised.
4
July 2018
In
the matter between
AUCKLAND
PARK THEOLOGICAL SEMINARY
FIRST
APPELLANT
WAMJAY
HOLDING INVESTMENTS (PTY) LTD
SECOND
APPELLANT
and
UNIVERSITY
OF
JOHANNESBURG
RESPONDENT
J
U D G M E N T
VAN
OOSTEN J:
Introduction
[1]
At issue in this appeal is the validity of the first appellant’s
cession to the second appellant, of its rights in a notarial
lease
agreement, concluded with the respondent. After conclusion of the
trial, the court a quo (Victor J) gave judgment in favour
of the
respondent (UJ) in ordering the eviction of the appellants from the
leased premises and the cancellation and deregistration
of the
notarial long term lease agreement (the lease agreement). The
appellants’ counterclaim was dismissed with costs. The
appeal
is directed against the whole of the judgment and the order granted
and is with leave of the court a quo.
Background
facts
[2]
The facts of this matter are relatively uncomplicated and largely
common cause. The determination of the core issue in this
matter, in
essence calls for an interpretation of the lease agreement in the
light of the surrounding circumstances at the time.
These are the
facts relevant to the issue: A contractual relationship between UJ
and the first appellant (ATS) had existed since
17 June 1993, which
was when an academic co-operation agreement was concluded between
them. UJ was the owner of immovable property
at its campus in
Auckland Park. In terms of the lease agreement, concluded on 6
December 1996, ATS leased a portion of the immovable
property from UJ
for a period of 30 years, renewable for further periods of 30 years
after expiry of the initial lease. The rental
was a one-off payment
of R700 000. Approval of the transaction by the Minister of Education
was required in terms of the then Rand
Afrikaans University Act, 51
of 1996, which was granted on 18 June 1996.
[3]
On 3 December 2011 UJ, as it was entitled to do, gave ATS one year’s
notice of the termination of the co-operation agreement.
On 28 March
2011 ATS and the second appellant (Wamjay), without notice or
reference to UJ, concluded a written cession agreement
in terms of
which ATS ceded to Wamjay its rights (and not obligations) in the
lease agreement (the lease rights) for a consideration
of R6.5
million. Wamjay’s purpose in obtaining the lease was for the
purpose of constructing and operating a pre-primary,
primary and high
school on the leased premises with an Islamic ethos. On 13 October
2011 a notarial deed of cession of long lease
was registered in
favour of Wamjay.
[4]
On 5 October 2012 UJ’s attorneys cancelled the lease agreement
on a number of grounds only one of which was pursued in
the court a
quo, which was that ATS had repudiated the lease by ceding the lease
rights to Wamjay, on the basis that ATS was
delectus personae
in relation to the lease.
[5]
As a result of the repudiation and cancellation of the lease
agreement, UJ instituted action against ATS and Wamjay for their
eviction from the leased premises and the cancellation and
de-registration of the lease agreement.
The
judgment of the court a quo
[6]
In upholding the claim of UJ, the court a quo interpreted the wording
of the lease agreement in regard to tertiary education,
and in view
thereof, considered the intended use of the leased premises by
Wamjay, which it concluded was not to erect a ‘university
type
of educational facility’. The learned judge a quo proceeded to
consider the principal and crucial issue which was whether
the lease
rights were personal or
delectus persona,
which would have
disentitled ATS from ceding those rights to Wamjay.
[7]
The court a quo considered the issue on an interpretation of the
lease agreement within the statutory framework, the relationship
between the parties to the co-operation agreement and certain
material contextual facts arising from the evidence adduced and
concluded that the lease ‘is indeed one which was personal to
the Theological College (ATS)’.
[8]
The conduct of ATS in ceding the lease rights and selling the
property to the various developers, the court a quo finally held,
constituted a repudiation of the lease agreement, which was accepted
and the lease agreement duly cancelled.
The
minority judgment of Wright J
[9]
I regret that I am unable to agree with the ‘difficulty with
the lease itself’ as expressed by Wright J in paragraph
13 of
his judgment. When this ‘difficulty’ was put to counsel
in argument before us, they both, in my view quite rightly
so,
retorted that this point was not raised at any time either in the
trial or thus far in the appeal. Had it been raised, counsel
correctly contended, it could and would have been dealt with.
It is further significant that no notice of this point, which
was
raised by way of surprise by Wright J in argument before us, was
given to the parties prior to the hearing of this appeal.
The point
raised does not arise nor is it incidental to any of the issues
raised in and dealt with by the trial court, or addressed
by counsel
in their heads of argument. It is my respectful view that points such
as this, should be brought to the attention of
counsel well in
advance of the hearing of the appeal, which will avoid the element of
surprise, the inevitable prejudice that may
result to both parties in
the appeal and ultimately a failure of justice. The law reports are
replete with judgments of the Supreme
Court of Appeal where the court
properly informed the parties of a new point to be raised at the
hearing of the appeal and affording
the opportunity to respond by way
of supplementary heads of argument. There is no reason why this
salutary practice followed by
our highest courts, should not have
been adopted concerning the point raised by Wright J in this appeal.
[10]
The short answer to the difficulty articulated by Wright J is that
upon renewal of the lease for a further period of thirty
years, it
was at least implicit in the lease agreement that the Minister’s
consent was necessary. I do not agree, as held
by Wright J, that this
clause is so integral to the lease agreement that it cannot be
severed from the remainder thereof. The consent
of the Minister, in
any event, was a statutory requirement and compliance therewith
required, notwithstanding the agreement between
the parties. The
absence of an express provision in the lease agreement relating to
this requirement in the event of a renewal
of the lease, cannot and
does not affect its validity.
Discussion:
The merits of the appeal
[11]
The reasoning and findings of the court a quo cannot be faulted. I
accordingly only consider it necessary to add a few remarks
in
support of the conclusions reached.
[12]
The issue whether the lease rights are
delectus personae,
brings
to the fore the fundamental question whether all leases, by their
inherent nature, are not to be considered personal? As
the facts of
this matter clearly show, the choice of a lessee by a lessor in the
decision to conclude a lease agreement, is generally
personal.
Factors such as the nature of the property let, the purpose for which
the property is let and the personal circumstances
of the lessee are
vitally important to the landlord’s decision to conclude a
lease with that particular lessee. It may well
become necessary to
reconsider the general statement by Greenberg JP in in
Boshoff v
Theron
1940 TPD 229
at 303-304:
‘
In the
ordinary obligations owed by a lessor...it can make little difference
to the lessee who his lessor is, insofar as his legal
rights are
concerned…[because] as regards the lessor there is ordinary no
delectus personae
; the property itself generally affords the
lessee sufficient security for the performance of the lessor’s
obligations. The
position may be different for an obligation on the
lessor which calls for some special quality on his part…’
Addressing
this proposition in argument, counsel were inclined to agree but in
view of the findings in both the court a quo and
of this court, I
need not say anything more on this aspect.
[13]
There are several pointers to the personal nature of the lease
rights. In addition to those mentioned by the court a quo, the
motivation of UJ in support of the application for consent to the
Minister, is instructive:
‘
The
Apostolic Faith Mission (ATS) urgently needs property, in the
vicinity of our university to build their Theological College.
The
students will come from multi-cultural backgrounds and the College
will be responsible for the training of all future pastors
of the
Apostolic Faith Mission of South Africa. They have identified
property owned by our university as the most suitable site
for
erecting their Theological College. We would like to extend a helping
hand to them by letting this property to them over a
period of thirty
years.’
[14]
The use of the property as defined in clause 8.1 of the lease
agreement, and heavily relied upon by the court a quo, was ‘vir
opvoedkundige, godsdienstige en aanverwandte doeleindes, oprigting
van kampus vir onderwys, onderrig, navorsing opleiding, kantore
en
studentefasiliteite’. To read into this clause the purpose for
which Wamjay intended to use the leased property, is contrived
and
artificial.
[15]
Finally, it is of vital significance that UJ and ATS were clearly
operating in tandem and their functions and goals intertwined.
As
much is readily apparent from the provisions of the co-operation
agreement: both institutions provided higher education for
students;
students at the ATS would eventually obtain a university degree in
theology and interaction was provided for in regard
to curriculum
courses offered, representation on faculty level and at the senate of
UJ. Again, the pre-primary, primary and high
school facilities
planned by Wamjay, cannot be reconciled with these provisions. Some
attempt was made to make much of the co-operation
agreement having
been cancelled prior to the conclusion of the cession agreement. It
is short-lived: the intention of the parties
at the time of entering
into the lease agreement and having regard to the consent granted by
the Minister on the facts and motivation
provided in support of the
application, constitute decisive considerations. I merely need to add
this absurdity flowing from the
cession, if upheld: ATS’s
cession of the lease rights to Wamjay would have resulted in Wamjay
becoming the holder of those
rights, juxtaposed to ATS remaining
bound by the obligations under the lease agreement. This proposition
understandably so, counsel
for the appellants, wisely, did not
attempt to support.
[16]
For all these reasons I conclude that the appeal must fail.
Order
[17]
In the result the following order is made:
1.
The appeal is dismissed
.
2.
The appellants shall pay the costs of the appeal, such
costs to include the costs consequent upon the employment of two
counsel
where so employed.
________________________
FHD
VAN OOSTEN
JUDGE
OF THE HIGH COURT
I
agree.
_________________________
Z
CARELSE
JUDGE
OF THE HIGH COURT
COUNSEL
FOR APPELLANTS
ADV G KAIRINOS SC
APPELLANTS’
ATTORNEYS
WP STEYN ATTORNEY
COUNSEL
FOR RESPONDENT
ADV ARG MUNDELL SC
RESPONDENT’S
ATTORNEYS
WEBBER WENTZEL
DATE
OF HEARING
6 JUNE 2018
DATE
OF JUDGMENT
4 JULY 2018
DISSENTING
JUDGMENT
WRIGHT
J
1.
The present respondent university, UJ owns certain immovable property
at its Auckland Park campus. On 25 April 1996 it requested
the
permission of the Minister of Education to lease out a portion of its
property for 30 years "
to the advantage of the state, the
community and the students."
Permission was required under
section 4(2) of the Rand Afrikaans University Act 51 of 1966 which
Act was repealed on 2 November
2001 by
section 26
of the
Higher
Education Amendment Act 23 of 2001
read with the schedule to that
Act.
2.
On 18 March 1996 the Minister granted permission to UJ to let the
property for 30 years •
for the purposes of developing these
properties."
3.
In December 1996 UJ and the present first appellant the Auckland Park
Theological Seminary concluded a written lease. UJ would
let the
property to the Seminary for 30 years for a once off rental of R700
000. Under clause 5.2 read with clause 5.5 the Seminary
had the right
to renew for a further 30 years without paying any further rent.
4.
Under clause 8.1 the premises would be used by the Seminary for
educational religious and related purposes and the establishment
of a
campus for teaching, research, training, office and student
facilities. Under clause 8.2 the Seminary had the right to build
buildings, constructions, facilities, improvements and to effect
landscaping with a view to enjoying the property as it was entitled
to do under clause 8.1.
5.
Under clause 11 in the event of either party breaching the lease the
other party could, after giving 30 days' notice, cancel
the lease.
6.
Under clause 16.1 neither side waived any right by not insisting
timeously on its rights.
7.
On 28 March 2011 the Seminary, without reference to UJ, concluded a
written cession agreement with the present second appellant,
Wamjay
Holdings Investments (Pty) Ltd. UJ ceded to Wamjay its rights, but
not its obligations under the written lease for the sum
of RS 500
000. Under clause 2.7 the rights ceded to Wamjay included the right
to renew the written lease for a further 30 years.
Under clause 6.2
Wamjay acknowledges that its use of the property is limited to
educational, religious and related purposes ,and
to the erection of a
campus for education, training, research, offices and student
facilities.
8.
It came to the attention of UJ on 31 August 2012 that the Seminary
had purported to cede its rights under the written lease to
Wamjay.
UJ had learnt at the same time that Wamjay had submitted plans to the
local authority for approval in which plans Wamjay
contemplated the
building of pre-primary, primary and high school facilities. UJ had
also learnt that Wamjay, with the knowledge
of the Seminary, had
conducted extensive landscaping and earthworks on the property and
had cut down trees of historic significance.
9.
UJ saw this conduct by the Seminary as a repudiation of the written
lease and on 5 October 2012 UJ's attorneys sent a letter
to the
Seminary cancelling the written lease on the ground of repudiation.
To the extent that either the Seminary or Wamjay occupied
the
property they were ordered to vacate immediately.
10.
UJ brought an action to evict the Seminary and Wamjay and UJ sought
too an order that the Registrar of Deeds cancel the registration
of
the written lease. The Seminary and Wamjay counterclaimed for a
declarator that the written lease and the written cession are
valid.
11.
The matter came before Victor J who granted an order for the eviction
of the Seminary and Wamjay and ordered the Registrar of
Deeds to
cancel the registration of the written lease. The counterclaim was
dismissed.
12.
The Seminary and Wamjay appeal with the leave of my learned sister.
There is no cross-appeal.
13.
I have difficulty with the written lease itself. The request to the
Minister made no reference to the right of a potential lessee
to
renew at all, let alone for 30 years. The Minister's permission
cannot be interpreted to include a right vesting in UJ to allow
a
lessee the option to renew at all, let alone for 30 years. In my
view, for this reason alone the written lease was invalid and
any
subsequent purported cession was consequently also invalid. The 30
year option clause is so integral to the lease between UJ
and the
Seminary that it cannot be severed from the balance of the agreement.
14.
If I am wrong and the written lease is not invalid for the reason I
have given, then in my view the Seminary repudiated the
written
lease. if not by concluding the cession with Wamjay without the
permission of UJ, then by the Seminary together with Wamjay,
attempting to build pre-school primary and high school facilities on
property clearly meant, by the Minister and by UJ and the
Seminary
when they concluded the written lease, to be used for tertiary
education.
15.
An argument by the Seminary and Wamjay that certain conduct of UJ
amounted to a waiver of its rights founders on the provisions
of
clause
16.
I would have suggested the following order.
a. The appeal is
dismissed with costs, including those of two counsel where so
employed.
b. The
appellants are jointly and severally to pay the costs of the
respondent.
On
behalf of the Appellants: Adv G Kairinos SC
Instructed
by: WP Steyn
011
726
8535
wpsatt@iafrica.com
On
behalf of the Respondent: Adv ARG Mundell SC
Instructed
by: Webber-Wentzel 011 530 5368
Date
of Hearing: 6 June 2018
Date
of Judgment: 2 July 2018