Brief Summary

Pleadings — Exception — Claim for damages for unlawful holding over — Plaintiff, a subsequent owner of property, claims damages for unlawful occupation by defendant post-lease termination — Defendant excepts on grounds of lack of cause of action and non-joinder of co-owner — Court finds pleadings disclose a valid claim in delict for unlawful occupation, rejecting the technical limitation of "holding over" to contractual breaches — Exception dismissed.

Comprehensive Summary

Summary of Judgment

1. Introduction

This judgment concerns an opposed exception and related procedural objections raised in an action for monetary relief. The proceedings were brought in the High Court of South Africa, Gauteng Local Division, Johannesburg, under case number 31670/19, and the judgment was delivered by Cowen AJ on 25 February 2021.

The plaintiff, Michael Brian Matthews, instituted action against the defendant, Douglasdale Dairy (Pty) Ltd, claiming R6 355 200.00, together with interest and costs. The plaintiff characterised the claim as one for “damages for unlawful holding over”, arising from the defendant’s continued occupation of immovable property after a lease had terminated and after an eviction order had been granted.

After summons and particulars of claim were delivered, the defendant raised an exception in terms of Uniform Rule 23, together with an objection framed as non-compliance with Uniform Rule 18(6). The defendant also raised non-joinder, contending that the plaintiff’s co-owner brother, Mr Rowan Matthews, was a necessary party who had to be joined to the proceedings. The matter was argued on the opposed roll on 23 November 2020, with senior counsel appearing for both sides.

The general subject-matter of the dispute was whether, on the plaintiff’s pleaded case, a subsequent co-owner of property could claim delictual damages (measured by reasonable rental) from an occupier who remained on the property without right after termination of a lease concluded with a previous owner, and whether a co-owner had to be joined as a necessary party in such a damages claim.

2. Material Facts

The court approached the exception on the basis that, for purposes of deciding whether the pleadings disclose a cause of action, the factual allegations pleaded by the plaintiff must be accepted as true. The facts summarised below are those treated by the court as the relevant pleaded allegations for purposes of the exception.

The pleaded background was that the late Armour Brian Hatherly Matthews bequeathed the relevant immovable property, being Portion 8 of the farm Douglasdale 195, Registration Division IQ, Province of Gauteng, to Elizabeth Anne Matthews under a fideicommissum. The will provided that, on Elizabeth’s death, the property would devolve in undivided shares to Mr Rowan Wauchope Matthews (60%) and the plaintiff (40%). The deceased died on 21 January 2000, and the property was transferred to Elizabeth in July 2006 pursuant to the fideicommissum arrangement.

On 25 March 2009, Elizabeth and the defendant concluded a written lease agreement in terms of which the defendant leased the property for 60 months, expiring on 28 February 2014. The defendant remained in occupation after expiry of the lease. Despite demand, the defendant allegedly failed, refused, or neglected to vacate and continued to occupy the property. In May 2016, Elizabeth obtained an eviction order against the defendant in the High Court.

Elizabeth died on 6 September 2016. Upon her death and in accordance with the will, the property devolved in undivided shares to Mr Rowan Matthews (60%) and the plaintiff (40%). The eviction order was not overturned, and the defendant’s appeal to the Supreme Court of Appeal (heard after Elizabeth’s death) did not result in the order being set aside.

After the plaintiff became co-owner, the defendant allegedly continued to occupy the property without consent and against the express wishes of the plaintiff, and it allegedly paid no rental to the plaintiff and had no valid lease agreement with him. On the plaintiff’s pleaded case, the defendant’s occupation was therefore unlawful.

The plaintiff pleaded entitlement to 40% of a reasonable monthly rental from 6 September 2016 until the defendant vacated, or alternatively occupied with consent or under a valid lease with the plaintiff. The plaintiff alleged a reasonable rental of R400 000 per month as at 6 September 2016 escalating at 10% per annum, and he pleaded a computation leading to the amount claimed. The claim was expressly framed as “damages for holding over.”

Where the parties differed for purposes of the exception was not on the broad chronology above, but on the legal characterisation of the claim. The defendant contended that “holding over” damages, properly so-called, were confined to a claim arising from a contractual right to vacant possession at the termination of a lease, which the plaintiff (as a subsequent owner not party to the lease and without cession/assignment) lacked. The plaintiff contended that the pleaded claim was reasonably capable of being understood as a delictual claim based on unlawful occupation and patrimonial loss measured by reasonable rental.

3. Legal Issues

The court identified two central issues.

The first was whether the plaintiff’s pleadings disclosed a cause of action for damages described as “holding over.” This issue was principally a question about the legal sufficiency of pleaded facts, and thus a question of law (or, more precisely, whether the pleaded facts could sustain the pleaded legal conclusion on any reasonable interpretation).

It was common cause between the parties that the particulars of claim did not disclose a claim in contract or unjustified enrichment for holding over. The dispute was whether the pleadings nonetheless disclosed a claim in delict, available to the plaintiff as a subsequent co-owner, and whether the term “holding over” in the particulars should be treated as a technical label confined to contractual claims, or as a descriptive label for unlawful continued occupation sounding in delict.

The second issue was whether Mr Rowan Matthews, as co-owner in an undivided 60% share, had to be joined as a necessary party. This required the court to apply the law of joinder and to determine whether he had a direct and substantial interest in any order the court might make in the action, such that the matter could not properly proceed in his absence.

4. Court’s Reasoning

The court began by restating the established approach to exceptions. An excipient must show that the conclusion of law pleaded cannot be supported by any reasonable interpretation of the particulars of claim, and the exception must be determined on the footing that the plaintiff’s pleaded facts are true. This framed the inquiry as whether, on a reasonable reading of the pleading as a whole, the pleaded facts could support a delictual damages claim notwithstanding the plaintiff’s use of the phrase “damages for holding over.”

On the merits of the exception, the court recorded that during argument the defendant’s counsel conceded that a subsequent owner (who was not party to the terminated lease and had no transferred contractual rights) nonetheless has a delictual claim against a former tenant who continues to occupy the property unlawfully without paying rent. The court accepted that this concession was properly made, particularly in light of the principle that continued occupation without a legal right is per se wrongful.

The defendant nevertheless maintained that the pleadings were excipiable because they were framed as “holding over,” which the defendant contended was a term with a confined technical meaning limited to contractual breach of the obligation to restore vacant possession to the lessor at termination. The defendant relied on Hyprop Investments v NCS Carriers and Forwarding CC 2013(4) SA 607 (GSJ) and Sandown Park (Pty) Ltd v Hunter Your Wine & Spirit Merchant (Pty) Ltd 1985(1) SA 248(W) for this proposition.

The court rejected the exception for three interrelated reasons.

First, the court accepted the plaintiff’s submission that, in context, the phrase “holding over” was reasonably capable of being understood not as an invocation of a narrow contractual cause of action, but as a reference to the conduct of remaining in unlawful possession. In interpreting the particulars, the court did not isolate the phrase but read it in light of the pleading’s overall purpose and context. The court also relied on the statement in Hyprop Investments v NCS Carriers and Forwarding CC 2013(4) SA 607 (GSJ) that the term “holding over” is “no more than a convenient label attached to the conduct or act which affords a remedy in damages.” On that understanding, “holding over” could coherently describe the defendant’s alleged continued unlawful occupation after termination of the prior lease and despite the eviction order.

Second, given that the defendant accepted in argument that a delictual remedy exists for an owner against an unlawful occupier, the court reasoned that if “holding over” is understood as describing continued unlawful occupation, then the pleading could support a claim under the actio legis Aquiliae for patrimonial loss. The court relied on Hefer v Grundling 1979(4) SA 858 (A) for the proposition that an owner who has suffered patrimonial loss caused by another who unlawfully possesses, occupies, or uses the thing may institute the Aquilian action. On that framing, the court held there was no “obvious defect” in the pleading as a delictual claim for patrimonial loss arising from unlawful occupation, and importantly, no further specific defect of the delictual pleading had been raised in the exception beyond the defendant’s semantic/characterisation argument.

Third, the court held that a damages claim described as “holding over” is not confined to contract or enrichment. The court treated it as established (with reference to Hyprop Investments v NCS Carriers and Forwarding CC 2013(4) SA 607 (GSJ)) that such a claim can be formulated in contract, unjustified enrichment, or delict. The court further noted that the usual measure of damages in a holding over scenario is market rental, while recognising that other damages could be competent if properly alleged and proved. The plaintiff had pleaded the usual measure, namely reasonable rental (with escalation), limited to his 40% share.

Although the court remarked that it had not been referred to a case where a delictual “holding over” claim was brought specifically by a subsequent owner rather than by the party whose contractual right to vacant possession was infringed, it found no principled basis to confine the delictual claim to cases where contractual rights vested in the plaintiff. In the court’s view, in principle there was no material difference between such a delictual “holding over” claim and the Aquilian claim contemplated in Hefer v Grundling 1979(4) SA 858 (A).

Because the exception failed on the main issue, the court did not address the objection based on Uniform Rule 18(6), noting that it was accepted in argument that the Rule 18(6) complaint was premised on the defendant succeeding on the “holding over” point.

On the joinder issue, the court applied established constitutional and common-law joinder principles. Relying on Matjhabeng Local Municipality v Eskom Holdings Ltd 2018(1) SA 1 (CC) and South African Riding for the Disabled Association v Regional Land Claims Commissioner 2017(5) SA 1 (CC), the court emphasised the foundational principle that a court should not make findings adverse to a person’s interests without that person being joined, and that an order is generally binding only on parties to the litigation. The court then reiterated the test that a person is a necessary party if they have a direct and substantial interest in the order the court might make, or if the order cannot be sustained or carried into effect without prejudicing that party, with reference to Amalgamated Engineering Union v Minister of Labour 1949(3) SA 637 (A) and the discussion in SARDA.

The defendant invoked authority suggesting joint owners must generally be joined, relying on Rosebank Mall (Pty) Ltd v Cradock Heights (Pty) Ltd 2004(2) SA 353 (W) and the older practice referred to in Morgan and another v Salisbury Municipality 1935 AD 167, as well as the distinction drawn in Muller’s Executors v Small Farms 1910 TPD 199 between cases involving an indivisible interest necessarily affected by a judgment and cases where others might have similar rights but are not necessarily affected by the judgment.

The court held that these authorities did not establish a universal rule that joint owners must always be joined. It treated the present matter as falling within the second class identified in Muller’s Executors v Small Farms 1910 TPD 199, namely where the absent party may have similar rights depending on similar title but is not necessarily affected by the judgment. The court reasoned that the plaintiff’s claim sought to restore his own patrimony (limited to his 40% share) and did not implicate an order altering or disposing of the co-owned property itself. In that setting, the co-owner’s proprietary rights were not directly affected by the relief sought.

The court further reasoned that, while the co-owner might independently wish to pursue a claim for damages, nothing prevented him from doing so, or from applying to join as co-plaintiff if he wished. Conversely, the prospect that he might be affected by precedent or by findings in the case did not, without more, establish a direct and substantial interest requiring joinder, and the court considered that no specific imminent precedent of that nature had been identified. On this basis, the court concluded that Mr Rowan Matthews was not a necessary party.

Finally, on costs, the court applied the ordinary principle that costs follow the result, and expressly held that the issues were sufficiently complex to justify the costs of senior counsel.

5. Outcome and Relief

The court dismissed the defendant’s exception.

The defendant was ordered to pay the costs of the exception on the party and party scale, including the costs of senior counsel.

The court did not determine the merits of the plaintiff’s damages claim at trial stage; the judgment resolved only whether the particulars of claim were excipiable and whether joinder was required at this stage.

Cases Cited

Stewart and another v Botha and another 2008(6) SA 310 (SCA).

Living Hands (Pty) Ltd and another v Ditz and others 2013(2) SA 368 (GSJ).

Hefer v Grundling 1979(4) SA 858 (A).

Hyprop Investments v NCS Carriers and Forwarding CC 2013(4) SA 607 (GSJ).

Sandown Park (Pty) Ltd v Hunter Your Wine & Spirit Merchant (Pty) Ltd 1985(1) SA 248 (W).

List v Jungers 1979(3) SA 106 (A).

Matjhabeng Local Municipality v Eskom Holdings Ltd 2018(1) SA 1 (CC).

South African Riding for the Disabled Association v Regional Land Claims Commissioner 2017(5) SA 1 (CC).

Amalgamated Engineering Union v Minister of Labour 1949(3) SA 637 (A).

Rosebank Mall (Pty) Ltd v Cradock Heights (Pty) Ltd 2004(2) SA 353 (W).

Morgan and another v Salisbury Municipality 1935 AD 167.

Muller’s Executors v Small Farms 1910 TPD 199.

Legislation Cited

Restitution of Land Rights Act 22 of 1994.

Rules of Court Cited

Uniform Rule 23.

Uniform Rule 18(6).

Held

The court held that, on a reasonable interpretation of the particulars of claim, the plaintiff’s use of the phrase “damages for holding over” was capable of referring to the defendant’s alleged continued unlawful occupation and therefore could support a delictual claim for patrimonial loss measured by reasonable rental. The exception accordingly failed because the defendant did not establish that the plaintiff’s pleaded legal conclusion was unsustainable on any reasonable reading of the pleading.

The court further held that the plaintiff’s co-owner, holding an undivided share in the property, did not have a direct and substantial interest in the specific relief sought in the action (damages limited to the plaintiff’s share) such as to require mandatory joinder. The co-owner was therefore not a necessary party.

LEGAL PRINCIPLES

A party raising an exception bears the burden of showing that the pleading’s legal conclusion cannot be supported on any reasonable interpretation of the pleaded facts, and the court must decide the exception on the basis that the pleaded factual allegations are true.

The label “holding over” is not necessarily confined to a narrowly contractual claim; it may operate as a convenient descriptor for conduct giving rise to a damages remedy, and a damages claim arising from continued occupation after termination may be formulated in contract, delict, or unjustified enrichment, depending on the pleaded basis.

An owner may claim delictual damages for patrimonial loss under the actio legis Aquiliae where another unlawfully possesses, occupies, holds, or uses the owner’s property and causes patrimonial loss, and market-related rental is a commonly accepted measure of damages in unlawful holding-over scenarios.

Joinder is required where a person has a direct and substantial interest in the order the court may make, such that the order cannot be sustained or carried into effect without prejudicing that person. The fact of co-ownership does not invariably require joinder; whether joinder is necessary depends on the manner and extent to which the order sought may affect the co-owner’s interests.

Matthews v Douglasdale Dairy (Pty) Ltd (31670/19) [2021] ZAGPJHC 712 (25 February 2021)