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[2011] ZASCA 148
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Transnet Ltd v Erf 152927 Cape Town (Pty) Ltd and Others (798/2010) [2011] ZASCA 148 (26 September 2011)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 798/2010
In the matter between:
TRANSNET LIMITED
.................................................................................................
A
ppellant
and
ERF 152927 CAPE TOWN (PTY) LTD
..........................................................
First
Respondent
JOHAN LOMBARD
….................................................................................
Second
Respondent
CROSS COUNTRY CONTAINERS (PTY) LTD
…....................................
Third
Respondent
VINTAGE AFRICA INVESTMENTS 706
(PTY) (LTD)
…...............................................................................................
Fourth
Respondent
VONPROP ONE (PTY) LTD
….......................................................................
Fifth
Respondent
SMOKEY MOUNTAIN TRADING 151
(PTY) LTD
….....................................................................................................
Sixth
Respondent
SOUTHERN CARGO (PTY) LTD
….........................................................
Seventh
Respondent
ROMAN EMPEROR INVESTMENTS 7
(PTY) LTD
…..................................................................................................
Eighth
Respondent
PEARL ISLE TRADING (PTY) LTD
….......................................................
Ninth
Respondent
NICOLHEATH PROPERTIES (PTY) LTD
…............................................
Tenth
Respondent
LORCOM SIX (PTY) LTD
…...................................................................
Eleventh
Respondent
MALKEN CC
….............................................................................................
Twelth
Respondent
CMC GRINROD (PTY) LTD
…............................................................
Thirteenth
Respondent
(SUCH OTHER PERSONS AS MAY BE
FOUND TO BE IN OCCUPATION OF THE
PROPERTY)
….......................................................................................
Fourteenth
Respondent
SOUTH CAPE CONTAINERS (PTY) LTD
….......................................
Fifteenth
Respondent
____________________________________________________________
Neutral Citation:
Transnet
Limited v Erf 152927 Cape Town (Pty) Ltd & others
(798/2010)
[2011] ZASCA 148
(26
September 2011)
Coram:
NAVSA, VAN HEERDEN,
MHLANTLA, THERON & WALLIS JJA
Heard:
1 September 2011
Delivered:
26 September 2011
Summary
:
Eviction sought by way of motion proceedings – foreseeable
bona fide dispute of fact raised – high court correctly
refusing
to refer to oral evidence and dismissing application.
Order
On appeal from:
Western Cape High Court, Cape Town (Koen AJ
sitting as a court of first instance):
The appeal is dismissed with costs, including the costs of two
counsel.
judgment
van heerden ja (NAVSA, MHLANTLA, THERON AND WALLIS JJA concurring):
If a
valuation report which forms part of the record is to be believed,
Transnet Limited (Transnet) is the owner of most of the
vacant or
undeveloped properties within a five kilometre radius of the harbour
in Cape Town. As a result of industrial expansion
in the Cape
Peninsula, there is a strong demand for such properties, inter alia
for the purpose of storing containers. Transnet
currently have in
place a moratorium on the disposal of properties owned by it. This
greatly affects the demand and supply situation
in the area.
One
such property (the property), situated only 3.6 kilometres from the
harbour entrance and served by railway sidings, forms
the subject of
the present appeal. In February 2007, Transnet applied for the
eviction of the respondents from the property.
It asserted simply
that it was the owner of the property and that the respondents were
in occupation. After the institution of
the application, Transnet
concluded that a number of the respondents were not in occupation of
the property. It therefore confined
the relief sought by it to the
first, third, fifth, tenth, eleventh, thirteenth, fourteenth and
fifteenth respondents.
The
eleventh respondent, Lorcom Six (Pty) Ltd (Lorcom), in its affidavit
filed in opposition to the eviction application, contended
that it
was entitled to occupy the property in terms of an oral lease
agreement concluded between itself and Transnet. It stated
that,
while Lorcom occupied a small portion of the property, it had sublet
the remainder to the first respondent, Erf 152927
Cape Town (Pty)
Ltd, which had in turn sublet portions of the remainder to the other
respondents against whom Transnet sought
an eviction order. In its
replying affidavit, Transnet denied the existence of a lease with
Lorcom.
It is
common cause that the first respondent purchased the property from
Transnet on 18 February 1998, pursuant to the exercise
of the option
dealt with below. Lorcom claims that it is in occupation of the
property by virtue of the oral lease referred to
in the preceding
paragraph, pending the transfer of the property to the first
respondent. The transfer has been beset by technical
difficulties
which, it is alleged, are currently being addressed. It appears that
at least part of the delay in the transfer
has been caused by
obstructiveness on the part of Transnet flowing from the
abovementioned moratorium and consequent attempts
by Transnet not to
comply with its legal obligations. The second respondent, Mr Lombard
(Lombard), is a director of both Lorcom
and the first respondent and
is also Lorcom’s representative.
Transnet’s
application was dismissed with costs by Koen AJ in the court below.
The learned acting judge did so on the basis
that there had been a
foreseeable bona fide dispute of fact on the question of the
existence of an oral lease and that the defence
based on the lease
could not be rejected on the affidavits alone. Koen AJ also rejected
Transnet’s submission that, if
a dispute of fact was found to
exist with regard to the conclusion of an oral lease, the court
should refer the matter for the
hearing of oral evidence. The
consequent appeal by Transnet serves before us with the leave of the
court below.
There
are only two issues to be decided in this appeal. First, whether the
court below was correct in concluding that the defence
contended for
by Lorcom, namely the oral lease, created a bona fide dispute of
fact and was not so far-fetched or clearly untenable
that the court
was justified in rejecting it merely on the papers.
1
Second, whether the court below was correct in exercising its
discretion to dismiss Transnet’s application, instead of
referring the matter to trial or for oral evidence, on the basis
that Transnet ought reasonably to have foreseen a dispute of
fact in
regard to the conclusion of an oral lease with Lorcom.
Because
of the nature of the proceedings and the dispute which has arisen,
it is necessary to set out the contents of the affidavits
in some
detail.
For
many years, Transnet and its predecessor, the South African
Transport Services (SATS), had leased the property to a range
of
occupiers. The relevant agreements which form the background to the
alleged oral lease agreement relied on by the respondents
are: a) a
written lease agreement for a period of thirty years concluded
between SATS and Coalcor Cape (Pty) Ltd (Coalcor) on
11 December
1987; and b) a written option agreement, also for a period of thirty
years, and also concluded on 11 December 1987,
whereby Coalcor, as
tenant, was given the option to purchase the property from SATS (the
option).
As the
property was then (and remains) an unregistered erf, Clause 5 of the
option provided that ‘in anticipation of the
exercise of this
Option, it shall be incumbent on TRANSPORT SERVICES to procure the
subdivision, including the survey, preparation
and approval of
Subdivisional Diagrams as may be necessary in order to enable this
transaction to be implemented forthwith upon
exercise thereof’.
The
rights of the lessee and option holder were over the years ceded and
assigned to various entities. However, by February 1998,
Macphail
(Pty) Ltd (Macphail) was both the lessee and the option holder. On
18 February 1998, Macphail exercised the option to
purchase the
property. As it was entitled to do, Macphail nominated the first
respondent as the purchaser of the property in
respect of the sale
agreement resulting from the exercise of the option.
Despite
an attempt by Transnet to repudiate its obligations under the option
agreement, the first respondent obtained an order
in the
Johannesburg High Court on 29 October 1998, confirming that the
first respondent was entitled to enforce the agreement
of sale
resulting from the exercise of the option and directing Transnet to
take all such steps as may be required and necessary
to transfer the
property to the first respondent. The judge (Schabort J)
recorded that the property was at that time an
unregistered
consolidated erf. It remains such.
That
order notwithstanding, the first respondent has still not received
transfer of the property, largely due to delays in obtaining
the
necessary regulatory approvals required to register the property as
a consolidated erf. Moreover, since early 2007, and despite
the
court order, Transnet has once again adopted the stance that, on
various grounds (including prescription), it is not obliged
to
transfer the property.
Counsel
for the respondents contended that Transnet’s executory
obligation to transfer the property formed the basis of
the
conclusion of the oral lease agreement upon which the respondents
rely. It is certainly so that the parties approached the
matter, at
the time the oral lease agreement is said to have been concluded, on
the basis that transfer of ownership of the property
to the first
respondent was expected to occur in the near future.
It is
apparent that by late 2000, Transnet and Lorcom knew that Maphail
was going to terminate its lease of the property. On 22
August 2000,
Lombard sent an email to Mr Bhoola (the acting senior property
manager for Transnet’s Spoornet division) (Bhoola),
requesting
Transnet to consent to Macphail subletting the property to Lorcom
for the period 1 September 2000 to 28 February
2001. Bhoola
responded by email on 28 August 2000, indicating that Transnet was
awaiting Macphail’s six months’ notice
to terminate the
lease, but that, assuming such notice was received, Transnet would
in principle be prepared to allow Macphail
to sublet the property to
Lorcom for the six month period.
On 31
August 2000, Macphail gave six months’ notice of the
termination of its lease. Lorcom then occupied the property.
It
asserted that it had the right to do so with effect from 31 August
as Macphail’s subtenant, with Transnet’s consent.
On 1
September 2000, a meeting was held between Bhoola and Mr Vilakazi
(Transnet’s executive: property and asset management)
(Vilakazi), on the one hand, and Lombard, Mr Cohen (the respondents’
attorney) and the latter’s clerk, on the other.
According to
Lombard, the purpose of the meeting was to discuss whether, on the
termination of Macphail’s tenancy and assuming
that transfer
of the property had not yet taken place, Transnet would be willing
to permit Lorcom to enter into a lease agreement
for the period
between the termination of the Macphail lease and the transfer of
property to the first respondent. Bhoola followed
up this meeting
with an email on that same day, advising that Transnet consented to
Lorcom subletting from Macphail for a three
month period, effective
from 31 August 2000. However, it is important to note that it was
clear from this email that Transnet
was hoping to conclude a new
lease agreement with Lorcom during this three month period.
After
the three months had expired at the end of November 2000, Lorcom
remained in occupation of the property for the remainder
of the
Macphail lease agreement without any objection from Transnet. On 26
February 2001, just two days before the termination
of the Macphail
lease, Lombard commenced negotiations with Transnet’s
representatives, Bhoola and Vilakazi, in regard to
the conclusion of
an interim lease agreement, which agreement would authorise Lorcom’s
occupancy of the property pending
what all parties then perceived to
be the imminent transfer of the property to the first respondent.
From 1 March 2001, Lorcom remained in occupation of the property
without any objection from Transnet. Between this date and
March/April 2002, there were ongoing written and oral negotiations
between Lombard, Bhoola and Vilakazi concerning the period
of the
abovementioned lease agreement and the rental payable. These
negotiations are set out in some detail in the judgment of
the court
a quo and I do not consider it necessary to repeat this exercise.
Suffice it to say that, according to Lombard, by
March 2002 an oral
lease agreement was in place which would endure until transfer of
the property to the first respondent. The
rental was R50 000 per
month, subject to an agreed annual escalation of between eight and
ten per cent.
For
nearly two years after this, nothing happened, and Lorcom and the
respondents who occupied the property through it remained
in
occupation. On 27 September 2004, Bhoola sent an email to Lombard
requesting a meeting to finalise ‘the matter of the
sale/lease
of the premises’ which was ‘long outstanding’.
This email evoked no response from Lombard and another
two years
went by. Then, in August 2006, an attorney engaged by Transnet
attended at the property in order to ascertain who was
occupying it.
Pursuant to his enquiries and on 25 August 2006, letters were
addressed by Transnet’s attorneys to the entities
which
appeared to be in occupation of the property, including the first
respondent and Lorcom. Relying solely on Transnet’s
ownership
of the property, these occupiers were given ten days ‘to
vacate the premises failing which an action will be
instituted
against you for your eviction’. This was the very first
indication that Transnet objected to Lorcom’s
occupancy of
almost six years.
In
response to the letters, the first respondent’s attorney
stated that its client was entitled to remain on the property,
as
were the other entities to which eviction letters had been
addressed. In a further letter dated 13 September 2006, the
first respondent’s attorney reiterated that its client and the
other entities on the property were in lawful occupation
and that
Transnet was not entitled to an eviction order. On 21 September
2006, two of the other entities wrote to Transnet’s
attorneys,
advising them that each occupied the property in terms of a lease
with the first respondent. In terms of these written
lease
agreements, the leases were due to terminate on 31 December
2007.
Lombard
acknowledged that Lorcom had not paid rental under the lease
agreement, but asserted that he had repeatedly requested
both VAT
invoices and a schedule of arrear rentals from Transnet, which had
failed to furnish them. According to Lombard, he
had indicated to
Bhoola and Vilakazi on several occasions that Lorcom would pay the
rent on the provision of these documents
and that they had agreed to
provide them, but did not do so.
It was
submitted on behalf of Transnet that, on a close scrutiny of
Lombard’s own version, no case had been made out for
an oral
lease of indefinite duration pending transfer of the property to the
first respondent. However, it was unable to procure
affidavits from
either Bhoola or Vilakazi and thus could not adduce admissible
evidence to controvert what Lombard had said about
the conclusion of
the oral lease. This notwithstanding, Transnet contended in its
replying affidavit that Lombard’s version
was so far-fetched
as to warrant rejection on the papers alone.
2
Counsel
for Transnet analysed Lombard’s evidence in considerable
detail and highlighted several features of this evidence
which, it
was argued, showed that no oral lease as contended for by Lombard
was ever concluded. Thus, it was submitted that Vilakazi’s
agreement to accept less rental than had previously been agreed upon
(R50 000 per month as opposed to R65 000 per month) was
not
explained by Lombard and was ‘baseless and inexplicable’;
that in a letter dated 5 April 2002, Lombard
requests
Bhoola
to agree to a minimum lease period of 12 months and there is no
allegation that Transnet ever agreed to this request;
that Lombard’s
request to Bhoola in this letter to
draft
a agreement
indicated that none had yet been concluded; that Lombard’s
excuse for not having paid rent, namely that no
VAT invoices and no
schedule of arrear rentals had been supplied to him, was incredible;
that in an email dated September 2004,
Bhoola had requested a
meeting to finalise ‘the matter of the sale/lease of the
premises’ which was ‘long outstanding’,
and that
Lombard’s explanation that he understood the reference in this
email to refer to a formal written lease agreement
was contrary to
his own version and unbelievable. Counsel for Transnet also made
much of the fact that an oral lease agreement
had not been mentioned
in the attorneys’ letters written during August 2006 in
response to the eviction notice, indicating
that Lombard’s
version was a recent fabrication.
As the
court a quo pointed out, what made things difficult for Transnet was
that what Lombard had said about the oral lease was
not
controverted, and the truthfulness of his evidence could only be
measured against inherent contradictions therein and against
the
established facts. I agree with counsel for the respondents that, by
poring over the minutiae of the evidence, Transnet impermissibly
attempted to evaluate the respondent’s version by reference to
the probabilities. This is not the function of motion proceedings
–
‘
Motion
proceedings, unless concerned with interim relief, are all about the
resolution of legal issues based on common cause facts.
Unless the
circumstances are special they cannot be used to resolve factual
disputes because they are not designed to determine
probabilities.’
3
In
essence, Lombard’s version is summed up in the following
paragraph in his answering affidavit –
‘
31.27.
Both Vilakazi and Bhoola accepted that the lease would endure until
transfer of the Property was effected. While the above
email refers
to a twelve month period (this period had been suggested by me for
planning purposes only (ie all anticipated that
the transfer of the
Property should occur within this period), it was at all material
times the intention of both Lorcom and the
applicant [Transnet] that
the whole purpose of the interim lease was to enable Lorcom to remain
in occupation of the Property pending
transfer to the first
respondent of the Property and that the head lease would endure
pending the transfer of the Property to the
first respondent. As
stated above as the term of the head lease was indefinite in the
sense that it would endure until the Property
had been transferred to
the first respondent, annual percentages in rental were requested by
Bhoola and agreed to by me.’
However
robust a court may be, in order to reject Lombard’s version,
it must be held to be ‘so far-fetched or clearly
untenable
that it can confidently be said, on the papers alone, that it is
demonstrably and clearly unworthy of credence’.
4
I agree with the court below that there are no inherent
contradictions in Lombard’s version and that his evidence does
not conflict to any material degree with the common cause facts.
There is nothing about Lombard’s version which strikes
one as
being palpably implausible, far-fetched or clearly untenable. In
fact, in the absence of affidavits by Bhoola and Vilakazi,
there is
simply nothing to gainsay Lombard’s version as summarised
above.
There is another aspect which was not referred to by counsel, but
was raised by this court. As indicated above, Macphail exercised
the
option to purchase the property on 18 February 1998 and nominated
the first respondent as the purchaser of the property in
respect of
the sale agreement resulting from the exercise of the option. Clause
7 of the option agreement, headed ‘Payment
of Purchase Price’,
contains the following words:
‘
For
the avoidance of doubt, it is confirmed that the rental due in terms
of the Lease shall remain payable up to the date upon which
transfer
is actually registered as aforesaid.’
This
clause anticipates that there would be continued occupation of the
property pending registration of transfer and that rental
would
remain payable throughout this period. Of course, in terms of this
clause, it would be the first respondent who would remain
in
occupation of the property and pay rent. As stated above, the
respondents’ case was that there was a head lease for
the
property between Transnet and Lorcom, that Lorcom occupied a small
portion of the property and had sublet the remainder to
the first
respondent, which had in turn sublet portions of the remainder to
some of the other respondents. This notwithstanding,
clause 7 lends
weight to the contention that Transnet contemplated continued
occupation of the property in terms of a lease agreement
pending
registration of transfer.
If
anything is not credible, then it is Transnet’s assertion that
the relevant respondents have been in occupation of the
property for
nearly six years without the existence of any kind of agreement to
occupy and that Transnet tolerated this state
of affairs. In my
view, this is a weighty factor to be taken into account in
considering whether there was a genuine dispute
of fact concerning
the existence of an oral lease. As is evident from paragraph 31
below, this was not lost on the court a quo.
As
indicated above, the court below exercised its discretion in terms
of Uniform rule 6(5)
(g)
by dismissing Transnet’s
application, instead of referring the matter to oral evidence as had
been contended for by Transnet,
on the basis that Transnet ought
reasonably to have foreseen a dispute of fact in regard to the
conclusion of an oral lease with
Lorcom. Are there any grounds for
interfering with this exercise of the court’s discretion?
As was stated in
Tamarillo (Pty) Ltd v B N Aitken (Pty) Ltd
1982
(1) SA 398
(A):
5
‘
A
litigant is entitled to seek relief by way of notice of motion. If he
has reason to believe that facts essential to the success
of his
claim will probably be disputed he chooses that procedural form at
his peril, for the Court in the exercise of its discretion
might
decide neither to refer the matter for trial nor to direct that oral
evidence on the disputed facts be placed before it,
but to dismiss
the application.’
6
In
this regard, Koen AJ pointed out that Lorcom had been in occupation
of the property since August 2000. It came into possession
of the
property lawfully, with Transnet’s consent, and remained in
undisturbed possession with Transnet’s consent
until the oral
lease about which Lombard testified on affidavit was allegedly
concluded. Thereafter, Transnet knew that Lorcom
and at least some
of the respondents continued to occupy the property, but took no
action to evict Lorcom or anyone else. The
first respondent was, in
terms of the order of Schabort J, entitled to take transfer of the
property. Transnet recognised this
for years and even if it now
holds a different view about the enforceability of the order, it
ought reasonably to have foreseen
that there would be a dispute
about Lorcom’s right to occupy. From the correspondence
directed by the respondents’
attorneys to Transnet following
the demand to vacate the property, Transnet had been unequivocally
told that Lorcom was in lawful
occupation of the property and that
any eviction proceedings instituted by Transnet would be resisted.
The tone of the correspondence
exchanged between the parties after
the demand to vacate had been made during 2006 was confrontational,
reinforcing the conclusion
that disputes were bound to arise. In
September 2006, Transnet’s attorneys received letters from two
of the respondents,
stating that they had rights of occupation in
terms of lease agreements which they had concluded with the first
respondent. Transnet
thus knew that the first respondent held itself
out to be entitled to occupy the property. According to the learned
acting judge,
Transnet or its attorneys must have known that Lorcom
asserted, or would assert, that a lease existed, because Lorcom’s
failure to pay rental was a topic broached in a discussion between
Transnet’s attorney and the respondents’ attorney
recorded in a letter dated 13 September 2006, more than five months
before the eviction application was launched.
7
The
court a quo did not discount the fact that Lorcom’s attorneys
were vague about the basis of Lorcom’s right to
occupy the
premises in their letter written in response to the demand to vacate
the property. This notwithstanding, the court
held that, had any
reasonable level of enquiry been made before the application
proceedings were instituted, Transnet would have
concluded that a
serious dispute of fact was likely to arise. This was particularly
so, given the long history of the matter
and the extent of the
correspondence exchanged between Lombard, on the one hand, and
Vilakazi and Bhoola, on the other. Transnet’s
contention that
the respondents, despite several opportunities to do so, had not
specifically alleged a lease before the application
was launched,
does not really hold water. A party anticipating litigation is under
no obligation to disclose in advance the basis
of its defence.
In
Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949
(3) SA 1155
(T),
8
the court said:
‘
It is certainly not proper
that an applicant should commence proceedings by motion with
knowledge of the probability of a protracted
enquiry into disputed
facts not capable of easy ascertainment, but in the hope of inducing
the Court to apply Rule 9 to what is
essentially the subject of an
ordinary trial action.’
Koen AJ
concluded that this was precisely what had happened in this case. In
the circumstances, he dismissed the application.
I am
in agreement with the approach of the court below as set out in
paragraphs 31 and 32 above. It cannot in my view be faulted
for
having refused the application by Transnet for a referral to oral
evidence.
For all the reasons stated above, the following order is made:
The appeal
is dismissed with costs, including the costs of two counsel.
______________________
B j van heerden
JUDGE OF APPEAL
appearances:
appellant: F H Odendaal sc (with him v p ngutshane)
Instructed by Cliffe Dekker Hofmeyr Inc, Johannesburg
Matsepes, Bloemfontein
respondeNTS: J MULLER SC (with him g rome)
Instructed by Eversheds, Johannesburg
Lovius Block, Bloemfontein
1
Fakie
NO v CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4)
SA 326
(SCA) para 55.
2
See
Plascon-Evans Paints (Pty) Ltd v Van
Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA
623
(A) at 634I-635C.
3
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA) para 26.
4
Fakie
NO v CCII Systems (Pty) Ltd
para 56.
5
At
430G-H.
6
See
also
Gounder v Top Spec Investments
(Pty) Ltd
[2008] ZASCA 52
;
2008 (5) SA 151
(SCA) para
10.
7
In
any event, Transnet is not precluded from proceeding by way of
action to recover such arrear rental as, by Lorcom’s own
admission, is owing.
8
At
1162.