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[2016] ZAECPEHC 66
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Zephan Properties Proprietary Limited v Sabivert Proprietary Limited (695/2016) [2016] ZAECPEHC 66 (4 October 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH
Case
No.: 695/2016
Date
Heard: 8 September 2016
Date
Delivered: 4 October 2016
In
the between:
ZEPHAN
PROPERTIES PROPRIETARY LIMITED
Applicant
and
SABIVERT
PROPRIETARY LIMITED
Respondent
JUDGMENT
EKSTEEN
J:
[1]
The
applicant is the registered owner of an immovable property known as
Nashua House situate on erven 3057, 3058 and 3059 and the
remaining
in extent of erf 3087, North End, Port Elizabeth. The
respondent is currently in occupation of at least portion
of the
building which is, in turn, rented out to the Nelson Mandela
Metropolitan University as student accommodation. The
applicant
seeks the eviction of the respondent from the property alleging that
it has no right to occupy the property.
Background
[2]
The
relationship between the applicant and the respondent has persisted
for some years as will appear more fully below, however,
it appears
that during or about February 2016 the relationship soured. The
respondent launched an application against the
applicant and the
Nelson Mandela Metropolitan Municipality seeking certain relief
relating primarily to the interruption of the
electricity supply and
obtained an interim order ex parte. The respondent’s
application was in due course opposed and
dismissed due solely to
procedural irregularities. The applicant, however, responded
with a counter application, which forms
the subject matter of the
present litigation. Initially the applicant sought extensive
relief, however, during argument before
me the applicant sought no
more than the eviction of the respondent from the property. Mr
Ronaasen
SC, on behalf of the applicant emphasises that applicant does not
seek the eviction of students who occupy under and through the
respondent. The relief sought by the respondent in her initial
application and the additional relief initially sought by
the
applicant, which was abandoned at the hearing, are not material to
the resolution of the issues which fall to be decided.
Extensive papers have been filed on either side, much of which
finds no application to the relief now sought. I deal
herein
with the material contentions.
History
[3]
During
about December 2012 or January 2013, Nicholas Georgiou, the
driving force behind the applicant and the deponent to
the founding
affidavit, was introduced to Ms Mbeki, who is the driving force
behind the respondent and the deponent to the respondent’s
affidavit. Georgiou states that he was impressed by Mbeki and
he perceived her as a vibrant, knowledgeable and highly motivated
young lady. At the time Mbeki states that the applicant was
allegedly experiencing difficulty in obtaining tenants for certain
of
his buildings and she advised Georgiou that she was interested in
acquiring buildings from the applicant which were either wholly
or
partially let to government. She expressed the view that she
was more likely to secure government lease agreements than
the
applicant. This Georgiou acknowledged.
[4]
Mbeki
offered to do business with the applicant and she says that it was
agreed that in order to pay for the purchase price of the
buildings
which she might acquire she would pay the profit on rentals acquired
from various tenants in the buildings over time
to the applicant in
reduction of the purchase price. Mbeki states that it was
envisaged that she would acquire the buildings
through the respondent
or another corporate vehicle with the financial support provided by
the applicant.
[5]
Against
this background their negotiations culminated during May 2013 in the
conclusion of an agreement of sale in terms of which
the respondent
purchased Nashua House from the applicant for a purchase price of R48
million (the first agreement). The first
agreement was hotly
debated at the Bar and it is the applicant’s contention on the
papers that the first agreement lapsed
by virtue of the
non-fulfilment of a suspensive condition.
[6]
It
is necessary at this stage to set out the material terms upon which
the arguments centred. Clause 1 of the first agreement
describes the property in a manner which I have set out earlier
herein. Clause 2 provides:
“
PURCHASE
PRICE
The
purchase price is the sum of R48, 000,000 (forty eight million
rand) inclusive of VAT at zero rate which is payable by
the Purchaser
to the Seller free of exchange at Johannesburg on date of
registration of transfer of the Property. Should
the purchaser
require any improvements to be done to the building as a condition to
the obtainment of the Lease envisaged by (clause)
24, the Seller
shall (provided that the Lease is signed) pay the costs of the
improvements which shall be added to the Purchase
Price.”
[7]
Clause
4 and 5 provide:
“
4.
TRANSFER
Following
compliance of the suspensive conditions referred to in clause 24
below, transfer of the Property shall be given to the
Purchaser as
soon as possible after payment in terms of 5 hereunder is made, and
shall be effected by the Seller’s attorneys.
5.
PAYMENT
5.1
The Purchaser shall be entitled to take occupation of the property on
the first day of the
commencement of the lease as envisaged by 24.3
hereunder (“the Occupation Date”).
5.2
Transfer of the Property into the name of the Purchaser shall be
effected after payment
of the Purchase Price has been made in full or
guaranteed to the satisfaction of the Seller.
5.3
Pending payment of the Purchase Price the Purchaser shall pay to the
Seller interest calculated
at 9% per annum from the Occupation Date
monthly in arrears.”
[8]
The
suspensive condition is set out in clause 24 of the first agreement
as follows:
“
24.1
This entire agreement is conditional upon the fulfilment of the
conditions precedent contained in 24.2 hereunder
failing which this
Agreement shall lapse in all its parts and be of no further force or
effect whatsoever, namely:
24.2
The Purchaser, within 6 (six) months of the signature date or such
further time as may be agreed in
writing, obtain a Tenant for the
premises on a lease for a period of not less than 9 (nine) years and
11 (eleven) months on terms
and conditions acceptable to the
Purchaser.
24.3
In the event of the condition not being met or fulfilled within the
time provided for, or within such
further period as the parties may
agree in writing, this agreement shall be null and void and of no
further force or effect, unless
the conditions are so waived in
writing by the Purchaser.”
[9]
Clauses
17 and 18 of the first agreement provide:
“
17.
VARIATION
No
addition to or variation, consensual calculation or novation of this
Agreement and no waiver of any right arising from this Agreement
or
its breach or termination, shall be of any force or effect unless
reduced to writing and signed by all the parties or their
duly
authorised representatives.
18.
RELAXATION
No
latitude, extension of time or other indulgence which may be given or
allowed by any/either party to any/other party in respect
of the
performance of any obligation hereunder and no delay or forbearance
in the enforcement of any right of any/either party
arising from this
Agreement, and no single or partial exercise of any right by/either
party under this Agreement, shall in any
circumstances be construed
to be an implied consent, or election by such party or operate as a
waiver of or novation of or otherwise
effect any of the party’s
rights in terms of or arising from this Agreement, or estop or
preclude any such party from enforcing
at any time and without
notice, strict and punctual compliance with each and every provision
or term hereof.”
[10]
It
is common cause that the provisions of clause 24 were not strictly
complied with. No written extension of time was ever
granted
nor was a written waiver effected by the respondent. Mbeki
states, however, that the Department of Home Affairs was
already a
tenant of the applicant at the time and that its contract was due to
expire. Mbeki secured the renewal of the contract
by the
Department of Home Affairs which still endures. She further
negotiated agreements of lease with the Nelson Mandela
Metropolitan
University for the remainder of the building to be utilised as
student accommodation. She states that the parties
were in
agreement that the contracts which she did in fact conclude with Home
Affairs and with the university, although not strictly
complying with
the provisions of clause 24, were sufficient to meet the provisions
of clause 24. As recorded earlier the
portion of the building
not let to the Department of Home Affairs was in a dilapidated
condition. It required renovation
in order to make it suitable
for student accommodation. It is common cause that upon
respondent securing a contract with
the university, the applicant
proceeded to renovate the building thereby spending approximately
R14 688 000. This
Georgiou contends was pursuant to
an oral agreement between the parties. Mbeki, however, contends
that it was done pursuant
to the provisions of clause 2 of the
agreement which provides specifically for this obligation.
[11]
Mbeki
proceeds to state that all amounts due in respect of the sale
agreement as and when they became due, have been paid.
The
rentals received were paid into a bank account which Mbeki states was
controlled by Georgiou. Georgiou withdrew such
amounts as were
due in terms of the first agreement as and when they fell due and, so
Mbeki contends, he withdrew additional amounts
too. There is a
considerable dispute on the papers relating to amounts paid pursuant
to the first agreement, however, it
is common cause that the contract
has never been cancelled in the manner provided for in the agreement
and it is not necessary
herein to resolve the disputes relating to
the amounts in fact paid. Whilst it is unclear precisely when
the respondent was
given occupation of the property Georgiou states
that an amount of R2 799 865,14 was paid during the period
of October
2013 to October 2014 “in terms of the first
agreement”.
[12]
On
13 December 2013 a further agreement was concluded in similar terms
to the first agreement (herein referred to as the second
agreement).
The second agreement provided for the purchase of approximately 26
properties, including the property subject
to the first agreement for
a purchase price of R2 768 000 000. Georgiou
contends that the second agreement
came about because the first
agreement had lapsed for non-fulfilment of the suspensive condition.
He contends that it too
lapsed in due course for the same reasons.
Mbeki, however, explains that Georgiou had sought to convince her
that it would
be appropriate for the respondent to be registered on
the Johannesburg Stock Exchange. She gained the impression that
whilst
the applicant would support her in this endeavour the
applicant would also benefit from such a registration on the stock
exchange
as it would be entitled to shareholding in the company as a
result of the financing of the company undertaken by it.
Georgiou
further convinced her that in order to arrange for such a
registration it was necessary to conclude the second agreement which
would reflect a substantial portfolio of properties owned by the
respondent for the substantial value of R2,768 billion. The
transaction, she says, was nothing more than a simulated transaction
and it was never the intention that the respondent would acquire
the
26 properties from the applicant.
Approach
to factual disputes
[13]
There
are numerous disputes of fact which arise from the papers. The
applicant seeks final relief. Where such relief
is sought in
proceedings on motion and where disputes of fact have arisen on the
affidavits, a final order may be granted if those
facts averred by
the applicant which have been admitted by the respondent, together
with the facts alleged by the respondent justify
such an order.
See
Stellenbosch
Farmers Winery Limited v Stellenvale Winery (Pty) Ltd
1957
(4) SA 234
(C) at 235E-G and
Plascon-Evans
Paints Ltd V Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634H-I. In
Plascon-Evans
Paints
supra
Corbett JA added, however, at 634I-635C:
“
The
power of the Court to give such final relief on the papers before it
is, however, not confined to such a situation. In certain
instances
the denial by respondent of a fact alleged by the applicant may not
be such as to raise a real, genuine or
bona
fide
dispute of fact … If in such a case the respondent has
not availed himself of his right to apply for the deponents
concerned to be called for cross-examination under Rule 6(5)
(g)
of the Uniform Rules of Court … and the Court is
satisfied as to the inherent credibility of the applicant's
factual
averment, it may proceed on the basis of the correctness thereof and
include this fact among those upon which it determines
whether
the applicant is entitled to the final relief which he seeks.”
[14]
It
is not contended that disputes raised in this case are not real,
genuine or
bona
fide
disputes and neither party has requested that the matter be referred
to oral evidence. On an application of the principle
set out in
Plascon-Evans
Paints
supra
the version of Mbeki must prevail.
PIE
[15]
In
limine
Ms
Mey
argued that the relief sought by the applicant could not succeed by
virtue of the non-compliance with the prevention of illegal
eviction
from an Unlawful Occupation of Land Act, 19 of 1998 (PIE). I
have recorded earlier that the applicant had abandoned
most of the
relief which it had sought in its Notice of Motion and at the hearing
sought only the eviction of the respondent.
In particular, Mr
Ronaasen
recorded that he did not seek the eviction of any of the natural
persons in occupation in the building and accordingly argued that
the
provisions of the Act do not find application. Ms
Mey
,
correctly, in my view, acknowledged that by virtue of the relief
sought during argument the provisions of the Act find no
application.
In the circumstances I do not refer further to the
provisions of PIE.
The
second agreement
[16]
In
the case made on the papers the applicant contended that the second
agreement superseded the first agreement before it too lapsed
for
failure to fulfil a suspensive condition similarly worded to that in
the first agreement. In argument before me Mr
Ronaasen
intimated, without abandoning the reliance on the second agreement,
that he did not intend to address any argument to me founded
on the
provisions of the second agreement. I consider that it was
prudent to do so.
[17]
On
the application of the principles set out in
Plascon-Evans
the second agreement falls to be considered on an acceptance of the
version set out by Ms Mbeki. These circumstances, it
seems to
me,
prima
facie
,
indicate that I would have been obliged to conclude, in any event,
that the agreement was a mere simulation and that the parties
had no
intention thereby to bring about an enforceable contractual
arrangement between them. It is, however, not necessary
for me
in the circumstances to make a finding in this regard.
The
applicant’s case
[18]
As
alluded to earlier the applicant persists only with a prayer for the
eviction of the respondent from Nashua House on the basis
that it is
the rightful owner of the property and that the respondent has no
right to occupy. The respondent, as set out
earlier, obtained
occupation pursuant to the first agreement which the applicant
alleges was unenforceable.
[19]
The
principle at common law is that a seller of an immovable property
under an invalid contract of sale has a right to claim possession
of
the property based only on its ownership and the respondent’s
occupation (see
Graham
v Ridley
1931 TPD 476
;
Chetty
v Naidoo
1974 (3) SA 13
(AD); and
Hartland
Implemente (Edms) Beperk v Enal Eiendomme Beperk en andere
2002 (3) SA 653
(NC)). The respondent then bears the onus to
establish a right to continue to hold the property as against the
owner.
(See
Chetty’s
case
supra
at 20A-D.) The enforceability of the first agreement is
therefore central to the debate.
Condition
precedent
[20]
The
thrust of the applicant’s case on the papers is that the first
agreement lapsed for non-fulfilment of the suspensive condition
set
out in clause 24 thereof. On behalf of the applicant it is
argued that the contention that the suspensive conditions
were
“waived” is untenable in the light of the clear wording
of the agreement that any such waiver had to occur in
writing.
In these circumstances it is contended that the respondent has no
further right of occupation and that the applicant
is entitled to an
order evicting the respondent from the premises.
[21]
Mr
Ronaasen
relied heavily on the provisions of clause 17 and 18 of the first
agreement as set out earlier herein. The effect of a
non-variation
clause as set out in clause 17 was considered in
SA
Sentrale Ko-op Graanmaatskappy Beperk v Shifren en andere
1964 (4) SA 760
(A). The Appeal Court (now the Supreme Court of
Appeal) held that a non-variation clause of this nature was valid and
binding
upon the parties. The effect thereof is that any
attempt to agree informally on a topic covered by a non-variation
clause
in order to vary informally a contract containing a
non-variation clause must fail (see
Kovacs
Investments 724 (Pty) Ltd v Marais
2009
(6) SA 560
(SCA) at para [23]). Whilst the principle in
Shifren
proved to be somewhat controversial initially it has recently been
unequivocally confirmed in
Brisley
v Drotsky
2002 (4) SA 1
(SCA).
[22]
Mr
Ronaasen
argues in the circumstances that by virtue thereof that it is common
cause that the provisions of the suspensive condition set
out in
clause 24 of the first agreement have not been specifically met it
follows that the agreement lapsed at the conclusion of
the time
period stipulated in clause 24. No waiver of the provisions of
the clause nor any informal agreement on an extension
of time could
be valid and, so the argument goes, the respondent is bound by the
consequences which flow from the non-fulfilment
of the condition.
[23]
The
version of Mbeki relating to this issue is set out earlier under the
history of the matter. She contends that the parties
agreed
that the lease agreements which she concluded with the Department of
Home Affairs on the one hand and the university on
the other would be
sufficient to meet the provisions of clause 24 even though they did
not strictly comply with the written agreement.
The facts
reveal that the applicant elected to accept the lease agreements with
the university and proceeded to affect improvements
to the building
which were required to give effect to the lease agreement with the
university as he was obliged to do in terms
of clause 2 of the first
agreement. The obligation in clause 2 of the agreement to
affect improvements of this nature arises
only upon the fulfilment of
clause 24 and the costs occasioned by the improvements would then
only be added on to the purchase
price. This is precisely what
did occur.
[24]
Mr
Ronaasen
submits that this is no more than an indulgence as envisaged in
clause 18 of the agreement and that it accordingly does not assist
the respondent. I do not agree. In
Telcordia
Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA) the Supreme Court of Appeal again confirmed the
Shifren
principle. Harms JA considered that the
Shifren
principle “does not create an unreasonable straight jacket
because the general principles of the law of contract still apply,
and these may release a party from its workings”. One of
these principles particularly raised by Harms JA is the rule
that a
party may not aprobate and reprobate. This, it seems to me, is
precisely what the applicant seeks to do in the present
matter.
It accepted the lease agreements obtained by the respondent as
fulfilment of clause 24 and it proceeded with the
contract thereby
acknowledging the fulfilment of the suspensive condition. It
cannot now, some three years later, fall back
upon the provisions of
clause 17 and 18 of the agreement in order to assert that the
agreement never came into existence.
[25]
The
applicant accepted a lesser performance as sufficient discharge of
the obligation placed upon the respondent in the suspensive
condition. That, in my view, does not constitute a variation of
the agreement nor a waiver of the clause. (Compare
Telcordia
Technologies
supra
at 282E.)
[26]
In
the circumstances I do not consider that the applicant’s main
argument cannot succeed.
Validity
of the agreement
[27]
The
matter does not, however, end there. At the conclusion of
argument Mr
Ronaasen
requested the opportunity to file supplementary heads. In his
supplementary heads Mr
Ronaasen
argues that the first agreement does not contemplate the payment of
the purchase price of the property in instalments. If
it is
accepted, as Ms Mbeki asserts, that the purchase price would be paid
over time in instalments derived from periodic rental
payments then,
it is submitted, that the agreement is null and void by virtue of the
provisions of the Alienation of Land Act,
68 of 1981 (the Act).
[28]
In
response Ms
Mey
contends that the applicant’s claim as presented to court on
the papers was not premised on any allegation of invalidity
of the
first agreement but solely on the allegation that the first agreement
is null and void
ab
initio
for wont of compliance with the suspensive condition contained in
clause 24 of the first agreement. The suggestion is that
the
issue of the original validity of the first agreement is not before
me.
[29]
The
present matter is an application. The papers serve the function
of both the pleadings and the evidence. In his founding
papers
Georgiou states “the applicant is the owner of the property and
the respondent has no entitlement or right to occupy
the property
…”. For the reasons set out earlier herein I
consider that that is all that it was necessary to
say for purposes
of the relief which is persisted with in the application. It is
for the respondent then to set out facts
so as to establish a right
to occupation.
[30]
The
respondent chose to set out in some detail the basis for the right to
occupation. It is founded on the first agreement.
Mbeki
records the events which led to the conclusion of the first agreement
and asserts that the parties had discussed and agreed
that she would
pay the purchase price from profits on rentals acquired from various
tenants in the building. She states that
such an arrangement
was considered to be beneficial to both parties. It is accordingly
the respondent’s case on the papers
that the purchase price was
not payable in cash on or before any stipulated date, but that it
would be paid over time in undetermined
instalments from profit
generated out of leases obtained, as and when such money became
available. The question of the validity
of the first agreement
arises fully from the evidence before me and is a question of law
which it is necessary to decide.
[31]
Section
2(1) of the Act provides that no alienation of land shall be of any
force or effect unless it is contained in a deed of
alienation signed
by both parties or their agents. Whilst the Act does not define
what is required to be in writing it is
now well-established that all
material terms must be in writing. (Compare
Johnston
v Leal
1980 (3) SA 927
(A);
Van
Leeuwen Pipe and Tube (Pty) Ltd v Mulroy
1985
(3) SA 396
(D).) The price is of course an essential term of a
contract of sale and the method of payment of the price is a material
term. In the circumstances, a contract that leaves the method
of payment vague is void and therefore cannot be rectified.
(See
Patel
v Adam
1977 (2) SA 653
(A).)
[32]
A
perusal of the provisions of clause 2, 4 and 5 of the first agreement
reveals that the first agreement makes no provision for
the manner of
payment of the purchase price. It provides merely that payment
is to be made on date of registration of transfer.
Registration
of transfer in terms of clause 5 will occur after payment of the
purchase price, or provision of guarantees.
No time is
stipulated. It is significant that the first agreement
does not contain the usual clause for the conveyancing
attorney to
demand payment of the purchase price or the delivery of guarantees.
It is not the respondent’s case either
that it was intended
that the purchase price would be paid in cash upon demand and on
respondent’s averments any such demand
would be contrary to the
agreement. It is apparent from the evidence cited earlier that
it is the respondent’s contention
that the manner of the
payment of the purchase price was agreed upon orally outside of the
written document. Evidence to
prove such a contemporaneous
agreement is inadmissible (compare
Du
Plessis v Van Deventer
1960 (2) SA 544
(A); and
Kroukamp
v Buitendag
1981 (1) SA 606
(W)). It has been held that the method of
payment may be made sufficiently certain by implied terms, provided
that they can
be implied from the document itself. (See
Ghandi
v SMP Properties (Pty) Ltd
1983 (1) SA 1154
(D)
.
I have been unable to find any indication in the agreement of sale
itself which could give rise to an implied term which
accords with
the respondent’s contention. It has also been held that
an agreement which is deficient in its description
of the manor of
payment could be saved by a tender of cash. (See for example
Dold
v Bester
1984 (1) SA 365
(W).) This too does not assist the respondent
as no tender is made.
[33]
Section
6 of the Act provides for the sale of land in instalments.
Section 6(1)(g) provides in such a case that the written
contract
must contain the amount of each instalment payable in reduction of
the purchase price and section 6(1)(h) requires that
the date or
method of determining the date of each instalment must be set out.
The first agreement is silent on these issues.
[34]
In
all the circumstances I am constrained to conclude that the first
agreement is indeed void for wont of compliance with the provisions
of section 2(1) of the Act. In those circumstances the
respondent has failed to discharge the onus placed upon it to
establish
a right of occupation in the building owned by applicant.
[35]
In
the result, the application succeeds and the following order is made:
1.
The
respondent is evicted from the NMMU PORTION of the property known as
PE Home Affairs, Nashua House situate on erven 3057, 3058
and 3059
and remaining extent of erf 3087, North End, Reg Div Port Elizabeth
RD, Eastern Cape.
2.
The
respondent is ordered to pay the costs occasioned by the application.
J
W EKSTEEN
JUDGE
OF THE HIGH COURT
Appearances:
For
Applicant: Adv
O Ronaasen SC instructed by Natalie Lubbe & Associates
Inc c/o
Van Rooyen & Efstratiou, Port Elizabeth
For
Respondent: Adv C Mey instructed by Rob
McWilliams Attorneys, Port Elizabeth