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[2017] ZAECPEHC 51
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Oryx Properties Limited v Ukuvula Investment Holdings (Pty) Ltd (2014/2017) [2017] ZAECPEHC 51 (3 October 2017)
Links to summary
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH
CASE
NO.: 2014/2017
In
the matter between
ORYX
PROPERTIES
LIMITED
APPLICANT
and
UKUVULA
INVESTMENT HOLDINGS (PTY) LTD
RESPONDENT
JUDGMENT
JAJI
AJ
[1]
The matter came before me as an application for summary judgment.
The applicant prayed for judgment against respondent
in the following
terms:
(a)
Payment of the amount of R4 233 288.66 (excluding VAT), calculated as
follows:
(i)
R63 334.25 (excluding VAT), being arrear rates owing as at 1 April
2013;
(ii)
R554 012.09 (Excluding VAT), being arrear monthly rentals and rates
for the
period 1 May 2013 to 31 January 2014;
(iii)
R901 026.58 (excluding VAT) being arrear monthly rentals and rates
for the period 1 February
2014 to 31 October 2014;
(iv)
R453 030.32 (Excluding VAT),being damages for the period of 1
November 2014 to 31 December
2014;
(v)
R170 265.84 (excluding VAT), being damages for the month of January
2016;
(vi)
R1 314 849.69 (excluding VAT), being damages for the period 1
February 21016 to 31 December
2016;
(vii)
R119 531.74 (excluding VAT), being damages for the month of January
2017;
(viii)
R657 238.15(excluding VAT) being damages for the period 7
February 2017 to 30 June 2017.
(b)
Interest on the above amounts in terms of clause 14.4 of the
agreement;
(c)
Taxed or agreed attorneys and own client legal costs.
[2]
The respondent opposed the application and raised various
defences viz:-
(i)
deponent not authorized to bring the application;
(ii)
applicant’s particulars of claim do not make out a cause of
action;
(iii)
the claim for damages do not constitute liquidated amounts;
(iv)
bona fide defence in that various amounts claimed appear to have
prescribed.
[3]
BACKGROUND
(i)
The plaintiff sued the defendant for the various amount due by the
principal
debtor (Cordustex). Cordustex failed to maintain regular
payments to plaintiff in respect of rentals and other amounts;
(ii)
Cordustex was placed under business rescue until the company
(Cordustex) was placed
under a provisional order of Liquidation.
(iii)
There were outstanding amounts due by Cordustex to the applicant as
per the application.
Letter of demand was given to the principal
debtor (Cordustex) and notice of termination was also given in 2014
(October) month.
(iv)
Subsequent to termination of agreement, the property remained unlet,
monthly rentals and
rates payable remained unpaid until such time
plaintiff entered into agreement with BPD after ejecting the
respondent.
(v)
On the 25 September 2009, the respondent entered into a deed of
suretyship in favour
of the plaintiff for the obligations Cordustex
(principal debtor) in terms of the agreement.
(vi)
In terms of the agreement the respondent bound itself as surety and
co-principal
debtor, jointly and severally in solidium to the
plaintiff for the due and proper fulfillment of the obligations
of Cordustex
to the plaintiff in terms of the agreement (See
page 19 of the particulars of claim.)
[4]
(i) The applicant
contended that the
respondent has simply raised technical
defences. There was no defence raised on the merits. It
averred that there
was no dispute raised by defendant regarding the
fact that the principal debtor had occupied the premises in question
for extended
periods of time without paying the agreed rates or
rental in full and accumulated substantial arrears in respect of
rates and rentals.
(ii)
In its head of argument and opening remarks, applicant submitted that
the respondent
was not persisting with two of its grounds for
opposition, that is, the lack of authority to bring the
application and the
claim for prescription. The other two
grounds for opposition still stand ,that is, no cause of action,
claim excepiable and
claim for damages not liquidated claim and not
easily calculable.
[5]
(i) The applicant
submitted that the
plaintiff in concluding the lease with the
principal debtor acted “as a trustee for company to be
formed:. The
plaintiff concluded the agreement as
stipulans and principal debtor as promittens. It referred to
the matter of (Mc
Cullogh vs Fernwood Estate Ltd
1920 AD 204
at
207). It contended that prior to the acceptance by the
beneficiary or third party, the principal debtor was contractually
bound to the plaintiff for the benefit of the third
party. It submitted that the existence of the obligation
between principal debtor and plaintiff entail that the
plaintiff would have necessary authority to enforce the
agreement
and ask for specific performance; applicant quoted
the following authorities :- (
Ackerman, NO vs Burland
and Milunsky, 1944 (WLD) 172 at 175
(trustee in so called
company to be formed acts as principal);
Semer v Retief and
Berman 1948(1) SA 182 (C)
(the trustee will in his
personal capacity have rights and be subject to obligations in regard
to that contract
) Bagradi v Cavendish Transport Co (Pty) Ltd
1957
(1) SA 663
(d)
(a person who contract as trustee for company to
be formed contracts as a principal);
Gardner v Richardt
1974 (3)
SA 768
(c)
(the question whether and the circumstances
under which a person contracting as trustee for a company
in the
course of formation has the right to sue for specific
performance, must be answered by reference to the terms
of the
particular contract under consideration).
(ii)
The authority as a matter of construction or interpretation of the
main lease and
the suretyship herein, to plaintiff’s
particulars of claim as a whole, including all the relevant
extraneous facts contained
in annexures hereto.
The particulars of claim
show:-
(i)
Cordustex accepted that plaintiff would became future
landlord,
unless it nominated another party;
(ii)
Premises were transferred to plaintiff by Cordustex on 2 February
2010;
(iii)
the defendant (principal debtor) effected all its rental payment
to plaintiff in
terms of the lease agreement;
(iv)
Plaintiff ,all material times and to full knowledge of
Cordustex, was the landlord
of the premises;
(v)
the surety (respondent was at all material times, fully
aware of the state
of affairs regarding the property;
(vi)
Importantly ,Yerolemou, signed the lease on behalf of the principal
debtor as well as the
deed of suretyship on behalf of respondent.
(vii)
Yerolemou was a director of Cordustex and is director of the
respondent (surety).
[6]
(i)
The plaintiff submitted that as a general
rule, is that a claim for a
liquidated amount in money,
inter alia,
if the
ascertainment of the amount is a matter of simple calculation.
(ii)
The claims are based on the deed of suretyship, pursuant to the
respondent bounding
itself as surety and co-principal debtor to the
plaintiff for the obligations of Cordustex in terms of the
written agreement
of lease.
(iii)
Lease were for ten years, Cordustex paid to the plaintiff rentals
and fallen in
arrears and plaintiff cancelled. The
liquidity of arrear rates and rentals could not be disputed.
Calculation of damages
set out in paragraph 19-21 of the particulars
of claim on pages 15-18. Accordingly, plaintiff insisted that the
lease, surety and
lease addendum, all being liquid documents were
attached to particulars of claim and as submitted that the
plaintiff’s claims
are for liquidated amount in money.
[7] The respondent
submitted as follows:
(i)
The plaintiff does not refer to any facts which supports its
conclusion that the lease upon
which it relies gave rise to
(stipulation alteri)
(ii)
No circumstances is specifically pleaded save where plaintiff relied
upon an existence
of a resolution by principal debtor to sell the
property to plaintiff or its nominee.
(iii)
It contended that in order to establish a course of action, plaintiff
is obliged to plead
every fact which it would be necessary for
plaintiff to prove, if traversed, in order to support its right to
judgment of the court.
It does not comprise every piece of evidence
which is necessary to prove each fact, but every fact which is
necessary to be proved
(Mckenzie v Famers Co-operative Meat
Industries Ltd (1922)AD 16 at 22.
(iv)
It contended in its heads of argument that plaintiff has pleaded no
factors to support
a conclusion that the lease upon which it relies
constituted a
stipulation
altreri.
Nor
has it pleaded facts to support a conclusion by a court in due course
that it is apparent from the terms of the contract
that the
parties thereto intended that the plaintiff would be entitled to
pursue specific performance thereof or to exercise the
rights of
lessee . It claimed that the plaintiff has not made out a cause
of action constituted
a
bona fide
defence.
(v)
Regarding the defence that claims in respect of damages are not
liquidated amounts.
The plaintiff did not plead reasonable
steps it took to mitigate its damages. The respondent contended
that on the face of
it the claim is readily calculable, it took no
account of whether the plaintiff adequately mitigated its loss.
It submitted
that for summary judgment for damages, plaintiff should
have done so. In the circumstances, it submitted that the
amounts
it claim for damages cannot be said to be liquidated amount.
[8]
THE
LAW
In
a summary judgment application:
(i)
Summons must disclose: locus standi, jurisdiction of court, element s
required
for cause of action and proper service;
(ii)
Affidavit: deponent to
allege that
he/she has personal knowledge of the facts ,that
is, it must be made by the applicant himself or by a person
which
has direct and personal knowledge of the facts (
see
Shacklton v Credit Management (Pty) Ltd v Microzone Trading as 88CC
and Another 2010 (5) SA112 (KZP)
. The deponent swears
positively to the fact verifying the cause of action and the amounts
claimed. Verifying an allegation
and the cause of action and
amount claimed complies with Rule 32 (2). If summary judgment is
opposed, defendant’s defence,
in affidavit must comply with the
two requirements:
(a)
it must disclose fully the nature and ground of the defence and
the material facts
relied upon and,
(b)
defence so disclosed, if proven must be bona fide and good in law.
Unless a plaintiff
presents a clear case on technically correct papers in strict
compliance with Rule 32, summary judgment must
be refused. If
the claim is founded on liquid document, copy must be attached to the
application, unless previously attached
on summons, not necessary to
attach in the application. The test applicable for summary
judgment is trite and established,
namely, whether the defendant’s
affidavit discloses a defense at law, which, if established at the
trial, will be a complete
answer to plaintiff’s case the so
called
bona fide
defence. So, affidavit resisting
summary judgment application must disclose a
bona fide
defence
and should comply with judicial pronouncement with regard to the
knowledge of the facts by the deponent.
(iii)
RULE 32
CONTENTS OF AFFIDAIVT
……………………
.bona
fide defence to the action, such affidavit or evidence shall disclose
fully the nature and grounds of the defence and the
material facts
relied upon. (See
Jacobson
Van der Berg SA (Pty) Ltd v Triston Yatchtring Suplies
1074 (2)
SA 584(O)
at 585.
“
Rule
32 (3)(b) requires the opposing affidavit to disclose fully the
nature and grounds of the defence and the material facts
relied
upon, so that the court is satisfied that the defendant has a
bona
fide
defence, not merely that he “appears” to have a
bona
fide
defence. Every cause of action has a peculiar characteristic as
to its background, time value, make-up knowledge, conduct
and
attitude of the parties and so forth and every defence thereto must
have corresponding features of its own”. The court
declined in
the matter to exercise its discretion in favour of the respondent and
granted summary judgment. Respondent having
failed to allege a
proper defence in terms of Rule 32 (3)(b).
Tesuen
CC and Another v South African Bank and Another
2000 (1) SA 268
(SCA
).
Where a defence is based on facts (that is, where defendant disputing
facts alleged by plaintiff in summons or raising
new
facts in defence) the court is not to determine the balance of
probabilities, it will only determine:
(a)
whether defendant fully disclosed nature and grounds of defence and
material facts upon
which founded and
(b)
whether, on facts disclosed defendant having bona fide defence good
in law. The word
“fully” requiring the defendant to
disclose defence and material facts upon which it is based with
sufficient particularity
and completeness to enable the court to
divide whether the affidavit discloses
bona fide
defence.
In the case at hand,
respondent did not dispute the terms of the contract. Principal
debtor was on arrears for rentals and
rates, notified, contract
cancelled and ejectment took place, new tenant found and the
respondent sued as surety. There is
no defence raised relating
to the above. The respondent’s opposing affidavit falls
short of what is required by Rule
32 (3) to enable court to assess
the defendant’s
bona fides
.
In
Muller and Others v
Botswana Development Corporation Ltd
2003 (1) SA 621
(SCA),
it
was held in summary judgment application that the issue
was not whether the defence raised was likely to succeed
or
fail but merely whether it was bona fide. Therefore the
opposing affidavit had to disclose fully the nature and
grounds of
defence and the material facts relied upon.
Maharaj
v Barclays National Bank Ltd 1976(1) SA 418 (A) at 426
.
If the defence is based on facts, all the court enquired into
is:
(a)
whether the defendant has fully disclosed the nature and grounds of
this defence and the
material facts upon which is founded, and
(b)
whether on the facts so disclosed the defendant appears to
have, as either the whole
or part of the claim, a defence which is
both
bona fide
and good in law. If, satisfied on these,
the court must refuse summary judgment.
(iv)
CAUSE OF ACTION
In application
proceedings the applicant must make its case in the founding
affidavit and not thereafter. The founding affidavit
embodies
both pleadings and evidence. Documentary evidence may be
attached in support of allegations in the founding affidavit,
but an
applicant may not justify its case by relying on facts which emerged
from annexures which had not been attached.
In actions, the principle
is the same and applies. In a combined summons the cause of
action must appear from the particulars
of claim, in a simple summons
from the body of the summons.
(a)
What facts constitute a cause of action is a matter of substantive
law and will depend on
the nature of the relief. For instance,
in a claim sounding in money based on a loan agreement, it will be
sufficient to
allege in a simple summons that the claim is in respect
of “monies lent and advanced by the plaintiff to the defendant
(place
and date)….”and that…the sum of
(amount claimed) was payable on demand or on a date which
had lapsed) and not withstanding demand (placing in mora) the
defendant had failed to pay the said sum which is now
due,
owing and payable….”Obviously, in application
proceedings, sufficient evidence must be disclosed to
establish
the facts which constitute the cause of action. Also, in a
combined summons the provisions of Rule 18 must be complied
with in
regard to the formulation of the cause of action.
(v)
Technicalities and dilatory defences
(a)
(See
Ncoweni v Bezuidehout 1927 (CPD) 130.)
Gardiner JP
remarked at 130 that “The rules of procedure of this court are
devised for the purposes of administering
justice and not
hampering it, and where the rules are deficient, I shall so far
as I can in granting orders which would help
to further the
administration of justice.”
In
Re-Publikanse
Publikaseer (Edms) Bpk v Afrikaanse Pers Publication1927 (1) SA 773
(A
) at paragraph 42 “substance should be put ahead of
form and where parties entered into an agreement and agree on terms
and one suddenly perform a volte-faux and demand strict
adherence with that self same rule borders on the
ludicrous”.
In Rex (Respondent) v
Hepworth (Appellant) 1928 (AD) 265 at page 277. “A
criminal trial (same with civil trial and applications.
I wish
to believe) is not a game where one is entitled to claim the benefits
of any omission or mistake made by the other side,
and a judge (I
believe the magistrate as a judicial officer, it applies to him/her
as well) position is not merely that of an umpire
to see that rules
of game are observed by both parties. A judge is an
administrator of justice, he is not merely a figure
head, he has not
only to direct and control the proceedings according to recognized
rules of procedure but to see that justice
is done.”
(b)
Even if the respondent was correct which is denied by applicant,
Levenson AJ (as he then
was) in
Brenners Service Station and
Garage (Pty) Ltd vs Mine and Another
1983 (4) SA 233
(W) at
237G-
H, remarked as follows:
“
I
think it emerges from the passage quoted-that in appropriate cases,
the court is entitled to refuse to take heed of a technical
irregularity in a procedure which does not cause prejudice to the
opposite party”. The remark was previously
echoed
by G Schriever J in
Trans-African
Insurance Co Ltd vs Maluleka
1956 (2) SA 273
(A) at 278F-G
stating
that “Technical objections to less than perfect procedural
steps should not be permitted, in the absence of
prejudice to
interfere with the expeditious and if possible inexpensive decision
of cases on their real merits.”
From the above cases,
even if the respondent was correct regarding his opposition and
defences, it would not come to his assistance.
He has not dealt with
merits or subsistence of the application. He took issue with
form instead of substance.
Regarding
the interpretation of documents, Wallis JA set out the proper
approach to their interpretation, “Interpretation
is the
process of attributing meaning to the words used in a document, be it
legislation, some other statutory instrument, or contract,
having
regard to the context provided by reading the particular provision or
provisions in the light of the document as a whole
and the
circumstances attended upon its coming into existence. Whatever the
nature of the document, consideration must be given
to the language
used in light of the ordinary rules of grammar and syntax, the
context in which the provision appears; the apparent
purpose to which
it is directed and the material known to those responsible for its
production. Where more than one meaning
is possible each
possibility must be weighed in light of all these factors. The
process is objective, not subjective. A sensible
meaning is to
be preferred to one that leads to insensible or unbusinesslike
results or undermines” the apparent purpose
of the document.
The facts of the case at
hand-regarding what was the intention of parties is answered by the
courts as per Wallis JA judgment.
The respondent knew that
applicant would carry on acting as a principal. It knew that
the principal debtor owed rent and
arrears pursuant to a lease
agreement. It is clear that parties in the case at hand signed
the contract with the intention
to be bound by its terms. The facts
themselves indicated that parties regarded the agreement as binding
form inception. The
applicant complied with its obligations and
principal debtor complied by paying rent until it fell into arrears.
“
All
that needs to be added is that it can be accepted that the way in
which the parties to a contract carried out their agreement
may be
considered as part of the contextual setting to ascertain the meaning
of a disputed term. (See
Rene
Investment Trust v Commissioner South African Revenue Services 2003
ZA SCA
60,
2003(6) SA 32G (SCA) paragraph 27
.
As per the above matter, the written document, whether
intended by parties to be binding , conduct of parties post
signature
showing that they intended to be bound and that their agreement was
not subject to another formal agreement being
concluded (See
Unica
Iron and Steel vs Mirchandani 2015 ZASCA (150) 1 October 2015.
Liquidated amount
Griesel J in
Tredores
vs Kellerman 2010(1) SA 166 (CPD) at 18
“a liquidated
amount of money is an amount which is either agreed upon or
which is capable of speedy and prompt ascertainment
of the amount in
issue is a matter of calculation”. The court granted
summary judgment in conceded amount and in respect
of which no
evidence of payment had been placed before court. In the case
at hand, the amounts claimed by applicant are not
disputed. The
rent was as per the agreement, arrears on rented and rates are easily
calculable. The extent of arrears
and interests is easily
ascertainable. The issue of mitigation has no relevance as to
whether the damages have been mitigated
or not. In any event
the applicant mitigated by ejecting the principal debtor
and got a new tenant. The
applicant submitted that its claim is
for liquidated amount in money, whatever the cause of action.
The respondent on 25
September 2008 entered into Deed of Surety in favour of the
plaintiff for obligations of Cordustex.in
terms of the agreement.
Most importantly the respondent bound itself as surety and
co-principal debtor, jointly and severally
in solidium to the
plaintiff for due and proper fulfillment of the obligation of
Cordustex. Surety shall remain in force
as a continuing
covering security until such time as Cordustex’s (principal
debtor) obligations towards the plaintiff in
terms of the agreement
have been duly and properly fulfilled. It is common cause that
the principal debtor’s obligations
have not been fulfilled.
Applicant contended that
there was no defence raised on merits. There is no dispute
regarding the fact that the principal
debtor had occupied the
premises in question for extended period of time without paying the
agreed rates or rentals in full, in
the circumstances accumulated
substantial arrears in respect of such rates. There was no
doubt on the speedy ascertainment
of the damages and respondent
failed to contest that fact and applicant submitted that court is
entitled to accept the claim
as being one for liquidated
amount in money for purpose of summary judgment. Respondent
could not show why the applicant’s
claim is not capable of easy
and promptly ascertainment. Most interesting, corroborating the
applicant contention, the respondent
at page 26 of its heads of
argument state “whilst the claim in the face of it, is readily
calculable it takes no account
of whether plaintiff mitigated
or not”
The
agreement between the parties regulated their conduct and obligations
in the event .of breach. Applicant acted as
per the
agreement (demand, summons, ejectment and getting new tenant).
In light of all available evidence, plaintiff
has to succeed.
The application for summary judgment is accordingly granted.
[9] Order:
(1)
Application for summary judgment is granted as per following prayers
of the application:
1. Payment of the amount
of R4 233 288.00 (excluding VAT), calculated as follows:
1.1
R63 334.25 (excluding VAT), being arrears rates owing as at 1 April
2013;
1.2
R554 012.09 (excluding VAT), being arrear monthly rentals and rates
for the period 1 MAY
2013 TO 31 January 2014;
1.3
R901 026.58 (excluding VAT), being arrear monthly rentals and rates
for the period of 1
February 2014 to 31 October 2014;
1.4
R453 030.32 (excluding VAT), being damages for the period 1 November
2014 to 31 December
2014;
1.5
R170 265.84(excluding VAT), being damages from the month of
January 2016;
1.6
R1 314 849.69 (excluding VAT), being damages for the period 1
February 2016 to 31 December
2016;
1.7
R119 531.74 (excluding VAT), being damages for the month of January
2017;
1.8
R657 238.15 (excluding VAT), being damages for the period 1 February
2017 to 30 June 2017;
(2)
Interest on the above amounts in terms of clause 14.4 of the
Agreement;
(3)
Prayer (3) amended by deleting “own” client. (Taxed and
agreed attorney and
client cost.
_______________
N. P. JAJI
ACTING JUDGE OF THE
HIGH COURT
APPEARANCES
For the Applicant
: ADV
HUISAMEN SC
Instructed by
:
Joubert Galpin & Searle Inc
173
Cape Road, Mill Park
PORT
ELIZABETH
For the
Respondent: ADV
RICHARDS
Instructed by
:
Rushmere Noach Incorporated
5
Ascot Office Park, Conyngham Road, Greenacres
PORT
ELIZABETH
DAED HEARD
; 1
August
2017
Delivered
on
:
3
October 2017