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[2012] ZAECPEHC 24
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Rowan Tree 1169 CC v Cowsta Belleggings (Pty) Ltd (3637/09) [2012] ZAECPEHC 24 (24 April 2012)
15
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE, PORT
ELIZABETH)
CASE NO: 3637/09
Date Heard: 08 November
2011
In the matter between:
Date Delivered: 24 April 2012
ROWAN TREE 1169 CC
…..................................................................................
PLAINTIFF
And
COWSTA BELEGINGS (PTY)
LTD
….............................................................
DEFENDANT
JUDGMENT
DAMBUZA J:
[1] In February 2009 the
plaintiff and the defendant purported to conclude an agreement of
lease in respect of premises located
at the Humerail Shopping Centre
in Port Elizabeth (the premises). Subsequent thereto and in April
2009 that lease agreement was
declared by this court to be null and
void
ab initio
. As a result of that court order the plaintiff
had to vacate the premises and it now claims damages suffered as a
result thereof.
[2] The plaintiff is a
close corporation that, until 2008, conducted business of a
restaurant and pub known as Tapas Al Sol, at
The Brookes Hill
Pavillion in Humewood, Port Elizabeth. It is represented in these
proceedings by its main shareholder Donnovan
Noyle (Noyle). Noyle
represented the plaintiff when the lease agreement relating to the
premises was concluded. He also was the
manager of the plaintiff’s
business at the Brookes Hill Pavillion.
[3] The defendant is a
company registered with limited liability according to the company
laws of South Africa. It conducts a business
of leasing commercial
properties to businesses in Port Elizabeth. The defendant was
represented in the negotiations and conclusion
of the lease agreement
Dr J Narshai.
[4] The background
undisputed facts are that during 2008, whilst the plaintiff was
conducting business at the Brookes Hill Pavillion
the Brookes Hill
Pavillion was sold and the new owners wanted to renovate it.
Consequently the tenants in the building at the time
were given due
notice that their lease agreements would not be renewed when they
expired. In respect of the plaintiff the arrangement
was that it
would vacate the premises at the end of January 2009. In the first
half of 2008 Noyle then started to look for alternative
premises for
the plaintiff. .
[5] It is not in dispute
that the plaintiff ultimately concluded a lease agreement with the
defendant regarding the premises in
question. The lease agreement was
signed, on behalf of the plaintiff on 13 February 2009 and on behalf
of the defendant on 20 February
2009. It is also not in dispute that
subsequent to conclusion of the agreement, the plaintiff commenced
with renovations on the
premises. Whilst the renovations were
underway, a third party Ummi Properties (Pty) LTD intervened as the
Landlord in a head lease
agreement with the defendant in respect of
the humerail Shopping Centre. Ummi then instituted the proceedings in
which it challenged
the validity of the lease agreement between the
plaintiff and the defendant. The court found that in terms of the
head lease agreement,
consent had to be obtained from Ummi in respect
of any lease agreement concluded between the defendant and a tenant.
Such consent
had not been sought from Ummi and the plaintiff had to
vacate the premises.
[6] The damages claimed
by the plaintiff relate to improvements effected on the premises,
loss of profit over the period of the
lease and retrenchment of
staff. In the summons the plaintiff’s claims that the
defendant, through Narshai, gave a warranty
that no person with a
title superior to that of the defendant would evict the plaintiff
from the premises. Alternatively that the
defendant misrepresented to
the plaintiff that the latter would enjoy undisturbed possession of
the premises, or that the plaintiff
was entitled to effect the
improvements to the premises.It was common cause at the trial that
the required consent would have had
to be given by Kenneth Denton of
Ummi Properties
.
[7] The defendant pleaded
that the plaintiff was aware that Denton’s (or Ummi’s)
consent was a pre-requisite for the
validity of the lease agreement
and that Noyle knew from the start that Denton had refused to grant
the necessary consent, so says
the defendant.
[8] At the start of the
trial counsel for the parties brought to my attention an agreement
reached between the parties and recorded
in a Rule 37 Minute, that
issues emanating from certain averments made by the defendant be
separated from issues relating to the
quantum damages suffered by the
plaintiff. I then granted an order accordingly.
[9] The allegations made
by the defendant were that:
i During 2008 Noyle
approached Venter, an agent specializing in the letting of commercial
properties, to inquire whether premises
were available for rental;
ii Venter approached
Denton to negotiate a lease for the premises
iii Denton informed
Venter that the premises were a subject of a lease agreement
concluded between Ummi and the defendant;
iv he also advised him
that Ummi’s ( or Denton’s) consent was required for a
valid agreement of lease with the defendant;
and that
v he (Denton) was not
prepared to grant the necessary consent;
vi Noyle was advised
accordingly nevertheless proceeded to negotiate and ultimately
concluded a lease agreement with the defendant
(through Narshai) in
the hope that Denton could be persuaded to give consent.
[10] Venter testified
regarding his attempts to secure the premises for the plaintiff,
starting from meeting Noyle through Warrick
Taag, a candidate broker
with the firm of commercial property agents for which Venter also
worked.. This was in about August or
September 2008. At the first
meeting which was held at the plaintiff’s old premises at the
Brookes Pavillion Noyle showed
Venter plans that he already had for
the proposed premised. Thereafter, as I have stated Venter met
Denton. Denton informed Venter
that the premises were in fact subject
of a long lease between Ummi and the defendant. It is at this stage,
according to Venter,
that Denton informed Venter that his (Denton’s)
consent was necessary for a valid lease between the defendant and
anyone.
Denton further told Venter that he was not prepared to grant
consent because, firstly, on the plans presented by Venter (from
Noyle)
there was an encroachment on the adjoining property; further,
there would be a serious “parking issue” with the
neighbouring
Virgin Active Fitness Club, and more importantly, he did
not want a third tenant of “that nature” because this
would
affect his tenants. Venter then told Warrick about the meeting
between Denton and himself and Warrick was to relay the information
to Noyle. Warrick reverted with a message from Noyle as a result of
which Venter approached Narshai to inform him that the plaintiff
was
interested in the premises.
[11] According to Venter,
at the first meeting with Noyle, he had proposed two alternative
premises, one located in Walmer and the
other at Dolphin’s
Leap; however Noyle rejected the proposal saying those premises would
not be suitable for his business.
[12] When Venter told
Narshai about Noyle’s interest in the premises, Narshai
encouraged Venter to pursue the proposed lease
agreement with the
plaintiff. He also told Venter that he would deal with Denton
himself.
[13] In November 2008,
Venter and Taag met Noyle for the second time and Venter advised him
to prepare a letter of intent to Narshai,
setting out what would
ultimately be the main terms of the intended lease agreement. Venter
also told Noyle about his meeting with
Denton and the remarks by
Denton, particularly that Denton would not consent to the proposed
lease agreement. Noyle remained intent
on securing the premises and
agreed to submitting the letter of intent to Narshai. But when Venter
sought to submit the letter
of intent to Narshai, Narshai told him
that he had not been authorized to obtain a letter of intent from
Noyle and that he was
communication directly with Noyle about the
proposed lease agreement. This is where Venter’s involvement
with the lease agreement
ended.
[14] Denton’s
evidence was that he first became aware of the agreement between the
parties after being alerted to renovations
that were being effected
by the plaintiff to the premises. He became concerned that the
renovations might be encroaching on his
(or Ummi’s) adjoining
property, which turned out to be true. He also had been told about
the concerns from the nearby Paxton
Hotel regarding possible
disturbance to the hotel patrons from “
these late night
venues
”. He then sought legal advice from his attorney, Mr
Gerald Friedman who advised him of the existence of the clause in the
lease agreement between the defendant and Ummi which required that
consent be obtained from Ummi prior to conclusion of sub-leases
at
the premises. Prior to the advice by Mr Friedman, Denton had not been
aware of the clause requiring his consent.
[15] Denton met with
Narshai and expressed his concerns about the plaintiff’s
impending occupation of the premises. Narshai
undertook to cancel the
sub-lease agreement. Subsequent thereto Narshai confirmed with Denton
that the lease agreement had been
cancelled. But a few days
thereafter when Denton visited the premises the renovations thereon
were in progress. Denton was made
to understand that the lease
agreement had been cancelled but another one had been concluded in
its place.
[16] According to Denton,
Venter had approached him trying to secure a lease agreement for the
plaintiff at other premises (formerly
the “Lobster Pot”
restaurant) also located at the Humerail Shopping Centre. However
Denton was not interested in leasing
those premises to the plaintiff
as he was then negotiating with the Ocean Basket Franchise group
regarding their occupation of
the Lobster Pot premises. Further he
thought that there were enough businesses of the same type as the
plaintiff’s at the
Humerail Shopping Centre at that stage.
[17] Kevin Slattery, an
industrial and commercial property broker, testified that he was also
approached to secure a lease agreement
for the plaintiff at the
Humerail Centre after Noyle’s wife, Lauren, had expressed
concern and frustration to Slattery’s
wife, Zahn, about Noyle’s
inability to secure a lease agreement with Narshai. Lauren and Zahn
worked at Pagden’s attorneys
at the time. Slattery met Noyle
and they discussed the difficulties he was experiencing in securing
premises from Narshai. He also
became aware that other agents,
namely, Taag and Venter were or had been also involved in the same
project. He then phoned Venter
and advised him about his own
involvement in the project. This, according to Slattery, was “to
clear the air” in case
commission would paid in the end. During
that telephone conversation Venter warned him that he (Slattery)
would “never get
it right, under any circumstances”, as
Narshai would not allow alcohol to be sold on the premises. Venter
also informed Slattery
that he wanted nothing further to do with that
project.
[18] Narshai authorized
Slattery to negotiate the lease agreement with Noyle. The only
concerns that Narshai had about the agreement
were that the well
being of the defendant’s other tenants, a medical doctor and a
pharmacist and that the plaintiff would
have to understand that the
defendant would not pay for the renovation costs to the premises that
were to be leased by the plaintiff.
Indeed the lease agreement was
concluded in the early part of 2009 and the plaintiff then proceeded
with the renovations to the
premises. Indeed the lease agreement was
ultimately concluded.
[19] The first time
Slattery became aware that there were problems regarding the
agreement was when Noyle phoned him advising that
Denton was at the
premises and was not happy with the renovations as the renovations
which encroached on his adjoining property.
[20] Noyle’s
evidence was that whilst he was looking for premises for the
plaintiff’s business he became aware that
Café del Mari,
the pub and bar business that was conducted at the premises, was
struggling. He contacted Leonora Haslow,
the owner of Café del
Mari who indicated that she was interested in transferring the lease
agreement in respect of the premises
to someone else. In June 2008
the plaintiff, through its attorneys, wrote to Narshai whom as he was
told by Haslow, was the Landlord
in respect of the premises. He did
not get a response; instead in August 2008 Haslow wrote to Noyle that
he should deal with her
regarding his interest in the premises, and
not directly with Narshai. Towards the end of the same month (or in
September) Noyle
enlisted the assistance of Taag. Still there was no
progress with the lease negotiations and Noyle. Taag then asked
Venter to assist;
he (Venter) indicated that Narshai is a difficult
person but he “knew how to handle him”. But there was
still no progress
regarding the lease agreement, until Slattery came
into the picture. Slattery was able to facilitate the drawing up of a
draft
lease agreement by 14 November 2008 and the final lease
agreement by 13 February 2009.
[21] Renovations on the
premises then started. Whilst were underway, in March 2009 the
plaintiff wrote to Ummi (Denton) requesting
to utilize, at a cost, a
vacant piece of land adjoining the premises. It is subsequent to this
letter that Denton came to the premises
and complained about the
encroachment. Thereafter the issue of consent was raised. According
to Noyle this was the first time that
the issue of Denton’s
consent to the sub-lease was brought to his attention. Later on, in a
letter addressed to the plaintiff’s
attorney, Mr Kent Williams,
Ummi referred to the concerns raised by management of the Paxton
Hotel and Virgin Active. At some stage
the plaintiff and the
defendant decided, through their legal representatives, that the
renovations to the premises be suspended,
the lease agreement that
was concluded in February 2009 be cancelled, Denton’s consent
be obtained, thereafter a new lease
agreement be concluded and the
renovations resume. All this was done, save that Denton never gave
consent. A new lease agreement
was, however, concluded and the
renovations resumed with Narshai’s approval. But in the end the
plaintiff was never able
to take occupation of the premises and the
renovations that had been effected to the premises became part
thereof. Hence the claim
for unjust enrichment.
[22] The evidence leaves
me with mainly two mutually exclusive versions as to whether the
plaintiff can rely on the guarantee to
undisturbed possession of the
leased premises. The main aspects on which these versions differ are
that, on Venter’s version
(on which the defendant relies) when
he (Venter) was requested to assist in securing a lease agreement for
the plaintiff in respect
of the premises, he approached Denton who
immediately informed him that Ummi’s consent was required for a
valid lease agreement
and that he was not going to give the required
consent. This was then communicated to Noyle at a second meeting
between Noyle and
Venter. Therefore the plaintiff was aware of the
consent requirement. On the plaintiff’s version Venter was
never requested
to approach Denton about the premises. The issue of
consent only surfaced subsequent to the letter written on behalf of
the plaintiff
to Ummi in March 2009.
[23] At the trial, the
parties were not in agreement on the question of
onus
.
Mr Buchanan SC who appeared on behalf of the defendant submitted
that,
although
primarily the issue of knowledge of the consent requirement was
raised by the defendant as a special plea,
and
in that sense the onus could be said to be on defendant, the
averments by the plaintiff in the summons,
that
the defendant misrepresented to it that it would be given undisturbed
possession of the premises, placed a burden on the plaintiff
to prove
such misrepresentation.
[24] The writers
Schwikkard and Van De Merwe, in Principles of Evidence
1
refer to the approach set
out in
Pillay
v Krishna
2
in which the following
was held:
“
If one person
claims something from another in a court of law, then he has to
satisfy the Court that he is entitled to it. But there
is a second
principle which may always be read with it; Where the one person
against whom the claim is made is not content with
a mere denial of
that claim, but sets up a special defence, then he is regarded, quod
that defence, as being the claimant; for
his defence to succeed, then
he must satisfy the court that he is entitled to succeed on it……But
there is a third
rule which Voet states….as follows: ‘He
who asserts proves and not he who denies, since a denial of a fact
cannot
natuaraly be proved provided that it is a fact that is denied
and that the denial is absolute’…the onus is on the
person who alleges something and not on his opponent who merely
denies it”.
3
[25] My view is that
ordinarily and as the pleadings stand, the plaintiff would bear the
onus to prove the allegations set out in
the summons and particulars
of claim. Of essence are the allegations regarding,
inter alia
,
the existence of the lease agreement, that the plaintiff took
occupation of the premises on 1 February 2009, that alterations
were
effected by the plaintiff to the premises and , most importantly
that:
“
the defendant
warranted that no person with superior title would disturb the
plaintiff in his use and enjoyment to the premises
during the period
of the subsistence of the lease.”
4
However all these
averments are admitted in the defendant’s plea. All that is
pleaded as the defendant’s defence is
that the plaintiff may
not rely on the warranty because of its awareness of the required
consent.
[26] I agree with the
submission on behalf of the plaintiff that the defendant bears the
onus to prove that Noyle was aware of the
required consent.
[27] For the same reasons
I also agree that the onus remains on the defendant even on the plea
to the alternative claims of misrepresentation
and unjust enrichment.
[28] As to whether
evidence led discharges the onus on the defendant Mr Buchanan
submitted that Venter was not partisan when giving
evidence. Indeed
nothing in his evidence indicates that he was more biased towards one
of the parties than the other. And I agree
that his evidence was
consistent some of the other evidence that was led. But that was on
very limited and immaterial aspects of
the totality of the evidence
led. Venter’s evidence was consistent with Denton’s only
in so far as Denton testified
that Venter did approach him regarding
premises for the plaintiff. But according to Denton this was in
respect of the Lobster Pot
premises. I do accept that the reasons for
rejection of the plaintiff’s proposal by Denton, as per
Venter’s evidence,
were the same as given by Denton himself
when he testified. But that does not add significant value to the
defendant’s version.
[29] On the other hand
Noyle’s evidence was consistent with uncontested objective
evidence that was led. Uncontested documentary
evidence shows that
Noyle was aware from the start that the Landlord in respect of the
premises was Narshai. He started communicating
with Narshai as early
as June 2008. By November 2008 there was a draft lease agreement in
place. There is no explanation as to
why he would still be signing a
letter of intent as contended on the defendant’s version. In
this context the defendant’s
version does not accord with the
probabilities. And as it was submitted on behalf of the plaintiff it
is difficult to understand
why Noyle would instruct Venter to
approach Denton when, to Noyle’s knowledge the landlord was
Narshai. Regarding Slattery’s
evidence it is not in dispute
that by November 2008 Slattery was already in the picture and things
were decidedly moving towards
conclusion of the agreement. Slattery
was criticized for being vague on the question of whether or not he
discussed commission
with Venter over the phone. In my view, whether
Slattery and Venter discussed commission or not in the telephone
conversation does
not, in my view, detract from the value of the
undisputed facts in Slattery’s evidence. In the end the
submission, on behalf
of the defendant, that it is not improbable
that Noyle would have signed the letter of intent and therefore did
meet Venter in
November 2008 is not persuasive in the context of the
other evidence on the history of the matter.
[30] In the end I am
unable, on the evidence before me to find that Noyle was informed of
the consent requirement regarding the
lease agreement. And my view is
that even if I were to find that in November 2008 Noyle became aware
of this requirement that would
not take the defendant’s caseany
further. I hold the view that the relevant time to determine the
state of mind of the parties
regarding the terms of an agreement is
at the time of the conclusion thereof. It happens all the time that
during negotiations
preceding the conclusion of a contract the
position of the parties and the surrounding circumstances change. And
on Venter’s
own version, Narshai undertook to deal with Denton
and presumably resolve the problem about the consent. Thereafter he
gave the
warranty. In my view, when the warranty was given,
at the
time of the conclusion of the agreement,
that the plaintiff would
be given undisturbed possession of the premises the plaintiff was
entitled to rely thereon. Therefore
the question of whether there was
a second meeting between Venter and Noyle is not necessarily decisive
of the matter.
In the result the order I
grant is that:
The defendant is liable
for such damages as the plaintiff may prove to have suffered as a
result of its eviction from erf 446
Port Elizabeth.
The defendant is ordered
to pay the plaintiff’s costs of suit.
_________________________
N. DAMBUZA
JUDGE OF THE HIGH COURT
Appearances:
For the plaintiff: Adv.
R.W. Parker Instructed by Pagdens Attorneys, Central, Port Elizabeth
For the Defendant: Adv.
Buchanan Instructed by Lexicon Attorneys, Central, Port Elizabeth .
1
Revised
3
rd
edition
at 572
2
3
See
also Malherbe v Britstown Munipality 1949(1) SA (C ) at 287;
Obotseng v Labone and Others
1994 (4) SA 88
(BG) at 94
4
As
pleaded in the p
laintiff’s particulars of
claim