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[2017] ZAECPEHC 15
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Transnet Limited v Ed-U-College (Port Elizabeth) (3618/2016) [2017] ZAECPEHC 15 (21 February 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
Case
No: 3618/2016
In
the matter between:
TRANSNET
LIMITED
Applicant
[Registration
No. 1990/00090/06]
and
ED-U-COLLEGE
(PORT ELIZABETH)
1
st
Respondent
[Registration
No. 1995/011813/08]
MAZARS
(A FIRM OF CHARTERED
ACCOUNTANTS
(SA))
2
nd
Respondent
JUDGMENT
MBENENGE
J:
[1]
The applicant, in its capacity as owner of certain properties subject
to this application, and the first respondent, a registered
school in
terms of the
South African Schools Act 84 of 1996
and an association
not for gain in terms of section 21 of the Companies Act 61 of 1973,
concluded two lease agreements; the one
lease agreement related to a
building colloquially referred to as Payne’s Building,
which the first respondent leased
from the applicant approximately 20
years ago renewable from time to time, but terminating on 31 December
2011, whilst the other
related to a property colloquially known as
the Harbour Building concluded during 2008 which terminated during
April 2013.
[2]
It is not in dispute that, notwithstanding the termination of the
lease agreements, the first respondent renewed its occupation
of the
Payne and Harbour Buildings. The first respondent did not pay
rental promptly and this resulted in the applicant resorting
to court
proceedings on diverse occasions for recovery of arrear rental and/or
for the eviction of the first respondent from the
subject
properties. The applicant and the first respondent have been
embroiled in litigation since approximately the year
2011.
[3]
On 14 July 2011 the applicant launched an action against the first
respondent (the respondent)
[1]
before this Court under case no.1729/2011 seeking payment of
R1 115 090.88 as and for arrear rentals in respect of
Payne’s
Building. The parties however reached agreement
in settlement of that action during or about October 2011, when the
respondent
acknowledged being indebted to the applicant in the sum of
R1 118 383.00 “
which
[represented] the total arrear rental up to and including August
2011”
and undertook to pay the outstanding amount timeously on the tenth
day of each month commencing on 1 September 2011 and on the
tenth of
each succeeding month thereafter. According to the
agreement, failure to effect timeous payment as undertaken
after 7
days’ notice would result in the full balance outstanding
becoming due and payable immediately.
[4]
The parties further agreed that the respondent would remain in
occupation of Payne’s Building until 31 December 2011,
subject
to a further undertaking that the respondent would “
pay the
rental and operating costs due for the period September 2011 to
December 2011 in the sum of R49 129.20 per month plus
electricity commencing with effect from 1 September 2011 and
thereafter payable on the 10
th
day of each
succeeding mont
h.”
[5]
The settlement agreement in relation to case no. 1729/2011 was made
an order of court on 7 July 2012.
[6]
The respondent once again defaulted in its payment of rental and,
demanding notwithstanding, failed to remedy its breach.
Consequent upon this state of affairs, on 22 November 2012, the
applicant caused a writ of execution to be issued.
The
execution resulted in a
nulla bona
return of service, on the
strength of which the applicant brought an application under case no.
135/2013 before this court for
the liquidation of the respondent.
Side by side with that, the applicant also sought to evict the
respondent from Payne’s
Building.
[7]
The respondent did not give heed to the notice to vacate Payne’s
Building. The applicant thereupon brought an application
for
the eviction of the respondent under case no. 212/2013 on 25 January
2013. The parties once again entered into negotiations
with a
view to settling the disputes that beset them. It is not in
dispute that, at this point, the parties had evinced a
determination
to resolve even a dispute relative to the Harbour Building which had
also, on its own, attracted pending litigation
due to unpaid rentals.
The papers shed no further light regarding the nature of these
pending proceedings. At the relevant
negotiations the parties
were represented by their respective attorneys.
[2]
[8]
The negotiations culminated in a further settlement, made an order of
court on 28 March 2013, being reached in relation to case
no.
135/2013 (the liquidation application ) and case no. 212/2013 (the
eviction application). The preamble to the settlement
agreement
(hereinafter referred to as the 2013 agreement) makes it plain that
“
the parties [had] settled both disputes
,..
which
agreement [in those cases] … they [wished] to be made an order
of court.”
[9]
The relevant part of the 2013 agreement, quoted copiously, reads:
“
3.
The parties’ respective auditors
will endeavour to determine the amount owed by the Respondent
to the
Applicant, if anything, in respect of the lease of Payne’s
Building and the Harbour Building within fifteen working
days of the
Respondent’s auditors being provided with all the necessary
documentation requested by them.
4.
In the event of a party’s respective auditors being unable to
reach agreement
within ten working days as to the amount owing, if
anything, the parties agree that the Chairman of the Port Elizabeth
District
Region of the South African Institute of Chartered
Accountants shall within five days appoint an dependent auditor to
determine
the said amount, whose decision will be final and binding
on the parties.
5.
In respect of the eviction application the Respondent hereby
undertakes to vacate
Payne’s Building and the Harbour Building
by not later than 31 July 2013.
6.
The Respondent tenders to pay the Applicant’s taxed party and
party costs of
the eviction application.
7.
The Respondent will be
liable to pay monthly rental in respect of the Payne’s
Building
and R33 000 in respect of the Harbour Building until such time as it
vacates both buildings.”
[10]
That did not bring to an end embroilment by the parties in
litigation,
[3]
but the
background outlined above suffices for present purposes.
[11]
Pursuant to clauses 3 and 4 of the 2013 agreement, and upon it
emerging that the parties were not
ad idem
regarding the
amount the respondent owed the applicant, the second respondent, an
independent firm of chartered accountants (Mazars),
was appointed by
the Chairman of the Port Elizabeth District Region of the South
African institute of Chartered Accountants to
arbitrate the matter
and determine the indebtedness of the respondent.
[12]
The applicant is of the view that the arbitration process has merely
to determine the indebtedness of the respondent in respect
of Payne’s
Building from 1 September 2011, as, in terms of the initial agreement
concluded during October 2011, the indebtedness
of the respondent to
the applicant for debts in respect of Payne’s Building before 1
September 2011 was agreed upon as being
in the amount of R1 183
383.00. In respect of the Harbour Building, goes the
applicant’s case, the arbitration process
has to determine the
indebtedness over the period the respondent occupied this building up
to and including the date of vacation
thereof.
[13]
The respondent, on the other hand, sees things differently; the
arbitration process has to consider the indebtedness of the
respondent towards the applicant afresh, as the 2013 agreement
intended to start the applicant and the respondent off on a clean
slate, even in respect of Payne’s Building for the pre- 1
September 2011 period.
[14]
The arbitration process has now ground to a halt, as the arbitrator
has no jurisdiction to determine a proper interpretation
of the March
2011 agreement and the 2013 agreement.
[15]
This court has been called upon to resolve the dispute and, to that
end, the applicant seeks an order:
“
1.
declaring that the Respondent is
indebted to the Applicant in the amount of R1 181 383.00 as at
1
September 2011;
2.
interest at 11% on the amount of R1 181 383.00 as from 1 September
2011 to the date
the Respondent vacated the Payne’s Building;
3.
that Mazars a firm of Chartered Accountants (SA) is ordered to
determine the indebtedness
of the Respondent in respect of
outstanding rental payments for the buildings of Payne’s
Building from 1 September 2011 until
the date this building was
vacated and to further determine the indebtedness in terms of the
Respondent’s rental payments
in respect of the Harbour building
from the commencement of the rental agreement until the date the
Respondent vacated the harbour
building;
4.
consequent upon the determination of the rental amount per paragraph
3 above,
the First Respondent is ordered to effect payment of the
amount so determined within a period of 30 days of such
determination;
5.
that the Respondent pays the cost of this application;
6.
[for] further and/or
alternative relief.”
[16]
What has fallen to be determined is principally whether the
respondent’s acknowledgement of indebtedness to the applicant
in the sum of R1 181 383.00 “
which represents the total
arrear rental up to and including August 2011
,” made an
order of court on 7 February 2012, was in effect compromised by the
2013 agreement.
[17]
It is trite law that the onus is on the party alleging that a
compromise has been effected,
[4]
and because compromise is a form of novation and involves the waiver
of the existing rights (or claimed rights) it must be as clearly
and
unambiguouslyproved as any other waiver or novation.
[5]
[18]
In its papers the respondent contends, in essence, that the final and
only enforceable order which regulates the dispute of
arrear rental
remains that of 28 March 2013. The respondent then proceeds to
state that “
[i]t
is clear from the March 2013 Agreement that there has at all material
times been a dispute regarding the alleged arrear rental
which was
owed
”
as is apparent at paragraph 3 in so far as it refers to an endeavour
by the auditors to determine the amount owed by the
respondent to the
applicant, “
if
any,
”
and paragraph 9 of the same agreement, which reads:
“
If
any amount is found to be due by the respondent to the applicant …it
will be settled in full by 31 December 2013.”
[19]
The respondent then concludes by saying “
[n]othing recorded
in the March 2013 Settlement Agreement suggests that there was a
predetermined amount which was due and payable
at that point.
”
[20]
The 2013 agreement related primarily to case numbers 135/ 2013 and
212/2013, and regulated, in the main, the withdrawal of
these
litigious matters. Much as there is reference in the clauses in
question to an endeavour having to be made to determine
“
any
amount
” that might be owed even in respect of the Harbour
Building, no specific reference is made to the order embodying
acknowledgement
of indebtedness by the respondent to the applicant in
the sum of R1 118 383.00 in respect of Payne’s Building for the
period
prior to 1 September 2011.
[21]
The order of 7 February 2012 preserving the extent of acknowledgment
of indebtedness by the respondent to the applicant for
the pre- 1
September 2011 period was neither appealed nor rescinded by the
respondent.
[22]
Instead, the respondent’s erstwhile attorneys, on 3 April 2013,
wrote a letter wherein
inter
alia
they
acknowledged that the calculation by the arbitrator should be done in
respect of Payne’s Building from 1 September 2011.
On the
authority of
Hlobo
v Multilateral Motor Vehicle Accident Fund
[6]
,
it is not available to the respondent to contend that its erstwhile
attorneys did not have the power to bind it the way the attorneys
did.
[23]
The words “
if any
” relied on by the respondent
should, in my view, not be interpreted as compromising the
applicant’s entitlement to
being paid R1 118 383.00 for the
pre- September 2011 period. An intention to the contrary should have
been conveyed in clear and
unambiguous terms. “
If any
”
should be interpreted, in this instance, as referring to such of the
respondent’s indebtedness to the applicant for
the period
computed from 1 September 2011 onwards (in relation to Payne’s
Building) as may be determined by the auditors.
It is hard to
believe why the applicant would, after binding the respondent in the
manner done in 2011, in the course of time,
turn around and waive or
compromise its vested right in circumstances where the indebtedness
of its debtor was of an ongoing nature.
That stance defies
logic. “
If any’
has, in my view, not freed the
respondent from the obligation imposed by the 2011 agreement. A
clearer indication of intention
to free the respondent from the
obligation is required than the mere use of “
if an
y.”
The parties merely contemplated the possibility that there might be
no indebtedness in relation to the period, after August
2011.
[24]
I am therefore of the view that the onus resting on the respondent to
clearly and unambiguously prove compromise has not been
discharged.
[25]
It now remains to consider the appropriate relief to which the
applicant is entitled. Prayer 1 is not competent because
the
order of 7 February 2012 has already determined that the respondent
is indebted to the applicant in the sum of R1 118 383.00
“
which
represents the total arrear rental up to and including August 2011
.”
Consequent upon that, prayer 2 relating to interest must also fall by
the wayside. Mr
Rautenbach
, who appeared for the
applicant, conceded as much, and was content to press for an order in
terms of prayer 3. Prayer 4 is a matter
to be dealt with
approximately once the arbitrator has made his determination.
[26]
The applicant has attained substantial victory in these proceedings.
There is thus no reason why costs should not follow the
result.
[27]
I therefore grant the following order:
1.
The second respondent is directed to determine the indebtedness of
the first
respondent in respect of outstanding rental payments for
Payne’s Building, from 1 September 2011 until the date this
building
was vacated, and to further determine the indebtedness of
the first respondent towards the applicant in respect of the Harbour
Building from the commencement of the relevant rental agreement until
the date the first respondent vacated the Harbour Building.
2.
The first respondent is directed to pay the costs of this
application
.
___________________________
S
M MBENENGE
JUDGE
OF THE HIGH COURT
Counsel
for the Applicant
:
J G
Rautenbach SC
Instructed
by
: Siya
Cokile Inc. Attorneys
16
Clyde Street
Central
PORT
ELIZABETH
Counsel
for the 1
st
Respondent
:
B C
Dyke SC ( with him
,
A C Barnett)
Instructed
by
: Listen
Brewis & CO
35
Albany Road
Central
PORT
ELIZABETH
Date
heard
: 9
February 2017
Judgement
delivered
: 21
February 2017
[1]
The second
respondent has been cited out of caution and has not opposed the
applicant, hence the first respondent is, for the
sake of
convenience, referred to as “
the
respondent
”
[2]
At
that point the applicant was represented by its erstwhile attorneys
Burmeister, De Lange, Soni Incorporated, and the first
respondent,
attorneys Spilkins Incorporated
[3]
For example,
even though agreement had been reached that the respondent would
vacate both buildings by 31 July 2013, that did
not come about.
Yet another application for the eviction of the respondent was
resorted to. At some other point, the respondent
brought another
application under case number 62/2014 to interdict the applicant
from evicting the respondent pending the launch
of proceedings to
determine the applicant’s alleged constitutional obligation to
continue to provide the respondent with
accommodation.
[4]
The Torch
Moderne Binnehuis Vervaardiging Venn (Edms) Bpk v Husserl
1946
CPD 548
[5]
HR Christe
,
The law of Contract in South Africa
(5
th
Ed
)
p 456
[6]
2001 (2) SA
59
(SCA)