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[2021] ZAGPJHC 104
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Tower Property Fund Limited v Priority Travel (Pty) Limited and Others (22158/2019) [2021] ZAGPJHC 104 (27 July 2021)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE
NO:
22158/2019
DATE:
27
th
JULY 2021
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In the matter between:
TOWER
PROPERTY FUND
LIMITED
Plaintiff
and
PRIORITY
TRAVEL (PTY)
LIMITED
First
Defendant
SWART
,
FRANCOIS
Second
Defendant
Coram:
Adams
J
Heard
: 20
July 2021 – The ‘virtual hearing’ of
the
application was conducted as a videoconference on the
Microsoft
Teams
digital platform.
Delivered:
27
July 2021 – This judgment was handed down electronically by
circulation to the parties' representatives by email, being
uploaded
to the CaseLines system of the GLD and by release to SAFLII. The date
and time for hand-down is deemed to be 15:00 on
27 July 2021.
Summary:
Application
for summary judgment – defence being a denial of particular
averment in the particulars of plaintiff’s claim
and the
annexures thereto – requirements for summary judgment and for
defences raised discussed – knowledge required
of deponent to
affidavit in support of application for summary judgment –
summary judgment granted.
ORDER
Summary
Judgment is granted in favour of the plaintiff against the first and
second defendants, jointly and severally, the one paying
the other to
be absolved, for: -
(a)
Payment
of the amount of R204 320.97.
(b)
Payment
of interest on the amount of R204 320.97 at the prevailing prime
rate, as from time to time, plus 2%, per annum, calculated
from the
due date (30 November 2018) to date of actual payment.
(c)
Cost
of suit.
JUDGMENT
Adams
J:
[1].
This
is an opposed application by the plaintiff for summary judgment
against the first and second defendants.
[2].
The
plaintiff’s cause of action against the first defendant is
based on a written commercial lease agreement (‘the lease
agreement’) concluded between the parties on the 10
th
April 2017 in terms of which lease agreement the first defendant let
from the plaintiff premises in Rosebank, Johannesburg, for
the period
from 15 March 2017 to 31 March 2022 – therefore for a period of
approximately five years. The monthly rental payable
by the first
defendant to the plaintiff was agreed upon in the written lease
agreement. On the 29
th
of November 2018, the plaintiff and
the first defendant amended the lease agreement by concluding a
written addendum in terms of
which
inter alia
the lease
agreement was cancelled. The plaintiff’s claim is in fact in
the main grounded on the provisions of the addendum
to the lease
agreement. The plaintiff’s cause against the second defendant
is based on a guarantee by the second defendant
in favour of the
plaintiff, guaranteeing the first defendant’s proper
performance in terms of the lease agreement.
[3].
The
addendum to the lease was in the nature of a compromise and a
settlement agreement
in terms of which the plaintiff and first
defendant agreed to the cancellation of the agreement of lease with
effect from the 30
th
of November 2018. The first defendant
also undertook to vacate the commercial leased premises by the 30
th
of November 2018, and, in consideration for the early termination of
the fixed term agreement of lease, the first defendant agreed
to make
payment to the plaintiff of all amounts then outstanding and payable
to the plaintiff, which was expressly agreed upon
in the sum of R56
690.01. Furthermore, as an early termination penalty, the first
defendant expressly agreed to pay to the plaintiff
an amount of R147
630.96 (inclusive of VAT).
[4].
Pursuant
to and in terms of the addendum, the first defendant vacated the
leased premises on the 30
th
of November 2018, but it however failed to make payment of the sums
of R56 690.01 and R147 630.96. The plaintiff’s claim
is
therefore for payment of these amounts, totalling R204 320.97, which,
so the plaintiff avers, the first defendant is liable
to pay to it in
terms of the addendum.
[5].
In
their plea, the first and second defendants admit that the first
defendant entered into the lease agreement. The defendants however
deny that they are bound by the lease agreement because, so it is
pleaded in the plea, they have no knowledge regarding the capacity
of
the person who signed the lease agreement and the addendum on behalf
of the plaintiff, to sign same on plaintiff’s behalf.
The
defendants in particular placed in dispute the authority of the
plaintiff’s representative to represent the plaintiff.
[6].
As
regards the plaintiff’s case against the second defendant, the
defendants plead that ‘[t]he suretyship was …
hidden,
alternatively not apparent by reason of the way in which it is
incorporated in the Master Rental Agreement; was not clearly
presented; was unusual; and would not normally be found in the Master
Rental Agreement presented for signature.’
[7].
The
second defendant therefore alleges that the suretyship and the terms
thereof were never pointed out to him and that he never
had the
deliberate intention to enter into a suretyship contract. This means,
so the second defendant alleges, that the conclusion
of the
suretyship amounts to
iustus error
,
in addition to it not complying with the provisions of the General
Law Amendment Act, Act 50 of 1956. Importantly, the defendants
admit
that the first defendant signed the lease agreement and the addendum
thereto, which incorporate the guarantee.
[8].
With
reference to the penalty amount payable by the first defendant in
terms of the addendum, the defendants plead that the plaintiff
is not
entitled to payment of same as it constitutes a penalty in terms of
Section 3 of the Conventional Penalties Act, Act 15
of 1962. The
penalty stipulation represents, so the defendants aver in their plea,
all future rental payments the plaintiff would
have been entitled to
and it is therefore out of proportion to the prejudice suffered by
the plaintiff. The amount of the penalty
therefore stands to be
reduced.
[9].
Moreover,
so the defendants plead, the plaintiff could and should have
mitigated its damages. This the plaintiff failed to do, which
means
its damages have not been properly quantified.
[10].
I
interpose here to demonstrate the fallacy in the contention by the
defendants that the penalty stipulation in the addendum agreement
is
disproportionate to the damages which the plaintiff would potentially
have suffered as a result of the breach of the contract
by the first
defendant and the subsequent cancellation. The lease agreement was
cancelled with effect from the 30
th
of November 2018. That means that the lease agreement would have had
another forty more months to run before its expiration. The
average
monthly rental, inclusive of the other ancillary charges, (based on
the rental payable during 2021), was R32 194.15 per
month, which
translates into total rental payable over the remaining period of the
lease agreement amounting to R1 287 766. I am
therefore at a loss to
understand how it can be alleged by the defendants that the penalty
of R147 630.96 is disproportionate to
the potential damages which the
plaintiff would have suffered as a result of the cancellation of the
lease.
[11].
The
defendants also plead that the plaintiff is in possession of a
deposit paid by the first defendant to the plaintiff in the sum
of
R84 809.68, which, so the defendants allege in a Contingent
Counterclaim, should be set-off against any claims by the plaintiff.
[12].
In
its affidavit resisting summary judgment the defendants repeat these
defences to the plaintiff’s claim. Additionally, the
defendants
raise the point
in limine
to the effect that the deponent to
the affidavit in support of the application for summary judgment does
not have
the requisite
knowledge to depose to that affidavit. I now deal briefly with this
legal point.
[13].
It
is the case of the defendants that Ms Charlene Gray, who is the
portfolio manager in the employ of the plaintiff’s managing
agent, does not have the requisite knowledge of the matters in issue,
despite her say-so to the contrary, and therefore she is
not, so the
defendants contend, a person as contemplated in Rule 32(2) as she
cannot ‘swear positively to the facts verifying
the cause of
action and the amount, if any, claimed’.
[14].
The
starting point as regards this issue is the fact that Ms Gray, under
oath, confirms that she has the necessary knowledge of
the issues in
this matter. She swears positively to the facts and verify the causes
of action of the plaintiff. In addition, she
confirms that she had
been mandated by the plaintiffs to depose to the affidavit in support
of the application for summary judgment.
She corroborates the
aforegoing by explaining that she, in her capacity as the portfolio
manager, deal with the day to day running
of the affairs of the
plaintiff’s business in relation to the property where the
leased premises are situated. The plaintiff’s
claims against
the defendants, so Ms Gray Avers, fall under her control and she has
personal knowledge of facts and records relating
thereto and the
amounts owing by the defendants.
[15].
The
defendants, as I indicated, dispute that Ms Gray is a person with the
necessary knowledge of the facts in issue in this matter.
The
defendants in particular take issue with the fact that Ms Gray was
not the person who signed the lease agreement or the addendum
thereto.
[16].
There
is no merit in this point, especially considering that the defendants
admit that the lease agreement and the addendum were
concluded
between the plaintiff and the first defendant.
[17].
Furthermore,
this point should be dismissed on the basis of the authority in
Kurz
v Ainhirn
[1]
,
in which a liquidator made application for summary judgment for
repayment of monies that had been misappropriated from a company
some
two years before his appointment as liquidator. The sole point in the
opposing affidavit was that the liquidator could not
have knowledge
of the facts in question. I can do no better than to quote from the
judgment in which Howard JP held as follows:
‘
In
his opposing affidavit the defendant takes one point only: that
inasmuch as the alleged causes of action arose out of events
which
occurred during the period 1990-1991 and the plaintiff had nothing to
do with the affairs of the close corporation prior
to his appointment
as liquidator on 12 January 1994, he is not a person “who can
swear positively to the facts” as
required by Rule 32(2). He
says that under these circumstances he is not obliged to satisfy the
Court that he has a
bona fide
defence to the action, and indeed he makes no attempt to do so. He
does not even deny the allegation that he misappropriated and
stole
the amount of R440 000.
...
… …
I
have to be satisfied that the plaintiff can and does swear positively
to the material facts, not that he has complied with a given
formula.
In this case he not only asserts that he can swear positively to the
facts, he does so and indicates the reason why he
is able to do so,
namely that he is a liquidator of the close corporation, having been
duly appointed as such some nine months
ago. As such he clearly had
both the opportunity and the duty to obtain knowledge of the relevant
facts from,
inter alia
, the documentary records of the close
corporation and interrogation of the defendant. It is inconceivable
that the plaintiff, who
is an officer of the Court, would have
instituted this action, based on serious allegations of
misappropriation and theft of moneys,
without establishing the facts
through examination of the documentary records under his control and
exercising his statutory power
to interrogate the defendant and
others involved in the transactions in question. Evidence of this
nature would be admissible against
the defendant and the plaintiff
would obviously be able to swear positively to the facts thus
established. There are accordingly
good grounds for believing that
the plaintiff can swear positively to the relevant facts and fully
appreciated the meaning of his
assertion to that effect in the
verifying affidavit.
In
his opposing affidavit the defendant states the obvious, that the
plaintiff was not a witness to transactions involving the close
corporation before liquidation, and draws from that fact alone the
inference that the plaintiff cannot swear positively to the
relevant
facts. He thus excludes one possible source of knowledge which was
never open to the plaintiff anyway, but does not even
mention, let
alone attempt to exclude, the obvious sources from which the
plaintiff as liquidator could acquire sufficient knowledge
to enable
him to swear positively to the facts. This disingenuous affidavit
does not serve to cast doubt on the plaintiff's averment
that he can
swear positively to the facts or his opinion that there is no bona
fide defence.
I
accordingly grant summary judgment against the defendant ...’
[18].
On
the basis of this authority, with which I agree, the defendants’
first preliminary point stands to be rejected. The point
is that
in
casu
Ms
Gray not only asserts that she can swear positively to the facts, but
also does so and indicates the reason why she is able
to do so,
namely that she on a daily basis deals with the business of the
plaintiff relating to the property in question.
[19].
As
for the other defences raised on behalf of the first defendant,
namely that the addendum, which provides for a penalty which
is
disproportionate to the potential damages which would have suffered
by the plaintiff, I have already demonstrated the fallacy
in that
argument. The Conventional Penalties Act therefore does not, in my
view, assist the defendants. There is no merit in that
defence.
[20].
As
regards the claim by the defendants that the deposit should be
set-off against the plaintiff’s claim. On a proper
interpretation
of the addendum, there is no room for this contention
by the defendants. The addendum, which was concluded between the
parties,
provides that the settlement amounts to be paid by the first
defendant to the plaintiff would have been in full and final
settlement
of all amounts due by the first defendant to the
plaintiff. The defence of the first defendant on this basis is
accordingly bad
in law.
[21].
As
far as the second defendant’s defence of
iustus error
is
concerned, t
he gist of his argument is that he was
unaware that he was signing as a guarantor or as a surety.
Ex
facie
the lease agreement, a Guarantee
is clearly and unequivocally provided by the second defendant, and
the terms and conditions of
the guarantee are provided for in clause
11 of the lease. In a separate page the second defendant also
specifically signed as a
guarantor.
[22].
The
second defendant contends that he was misled by the plaintiff. He
further argued that the guarantee clause is inconspicuously
recorded
in the body of the agreement and not eye-catching, as it should be.
The plaintiff had failed to draw his attention to
the guarantee
clause and he would not have bound himself had he been alerted to it.
He did not expect that the guarantee would
be embodied in the lease
agreement and he did not notice it. His mistake, he claimed, which
had been induced by the plaintiff,
would have misled any reasonable
person similarly circumstances.
[23].
The
decisive question in a case such
as
the present was laid down in
Sonap
Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v
Pap
padogianis
[2]
as
follows:
'.
. . [D]id the party whose actual intention
did
not conform to
the common intention expressed, lead the other party, as a reasonable
man, to believe that his declared intention
represented his actual
intention? . . . To answer this question, a three-fold enquiry is
usually necessary, namely, firstly, was
there a misrepresentation as
to one party's intention; secondly, who made that representation; and
thirdly, was the last party
misled thereby? . . . The last question
postulates two possibilities: Was he actually misled and would a
reasonable man have been
misled?
Spes
Bona Bank Ltd v Portals Water Treatment South Africa (Pty) Ltd
1983
(1) SA 978
(A) at 984D - H, 985G - H.'
[24].
Applying
these principles
in casu
,
I am not persuaded that the second defendant made out a case on the
basis of
iustus error
.
In my view, there is nothing inconspicuous about the guarantee clause
and the guarantee itself, which is referenced on no less
than three
occasions in the lease. There is no evidence before me or an
assertion that pressure was exerted upon the second defendant
to
sign. There is also no evidence to suggest that he was required to
sign the document in haste and under duress. He probably
had ample
opportunity to study the concise document and could not have
overlooked the guarantee clause.
[25].
In
my view, it was open to the second defendant, having perused the
lease agreement,
to
delete the guarantee clause if he was not amenable to its terms
or to make an appropriate endorsement at the foot of the document to
signify his protestation.
[3]
This he did not do.
Whether
the plaintiff brought the guarantee clause to his attention or not is
of no consequence regard being had to the simplicity
of the lease
agreement.
In my view, t
he
duty to inform
the
second defendant d
id
not arise.
In
Slip
Knot Investments 777 (Pty) Ltd v Du Toit
[4]
it was held:
'A
contracting party is generally not bound to inform the other party of
the terms of the proposed agreement. He must do so, however,
where
there are terms that could not reasonably have been expected in the
contract. The court below came to the conclusion that
the suretyship
was "hidden" in the bundle, and held that the respondent
was in the circumstances entitled to assume that
he was not
personally implicated. I can find nothing objectionable in the set of
documents sent to the respondent. Even a cursory
glance at them would
have alerted the respondent that he was signing a deed of suretyship
. . . Slip Knot was entitled to rely
on the respondent's signature as
a surety just as it was entitled to rely on his signature as a
trustee. The respondent relied
entirely on what was conveyed to him
by his nephew through Altro Potgieter. Slip Knot made no
misrepresentation to him, and there
is no suggestion on the
respondent's papers that Slip Knot knew or ought, as a reasonable
person, to have known of his mistake.'
[26].
In
my view, the second defendant has not demonstrated
that
the plaintiff knew or ought to have reasonably known of his mistake,
if there was one. The plaintiff was entitled to rely on
the second
defendant’s signature as guarantor as it did on his signature
as the representatives of the first defendant.
He
signed the guarantee as a manifestation of his assent to it.
He
is therefore bound as such. His
iustus
error
defence is not sustainable.
[27].
I
am not satisfied that in their resisting affidavit the defendants
have demonstrated a
bona fide
defence the plaintiff’s claim. Summary judgment should
therefore be granted against the defendants.
Costs
[28].
The
general rule in matters of costs is that the successful party should
be given his costs, and this rule should not be departed
from except
where there are good grounds for doing so, such as misconduct on the
part of the successful party or other exceptional
circumstan
ces.
See:
Myers
v Abramson
[5]
.
[29].
On
first principles the plaintiff is entitled to his costs. It was,
however, argued on behalf of the defendants that the amount
involved
herein does not warrant the plaintiff having instituted the action in
the High Court as the claim falls squarely within
the monetary
jurisdiction of the Magistrates Court. The plaintiff should therefore
be awarded costs, so the defendants argue, on
the Magistrates Court
scale.
[30].
The
flipside of the coin is that the agreement provides that the
plaintiff, in the event of it instituting legal action against
the
defendants, are entitled to costs on the scale as between attorney
and own client.
[3].
All
things considered, I am of the view that an order on the High Court
Scale as between party and party, shall be fair, reasonable
and just
to all concerned. Therefore, in the exercise of my discretion I
intend granting such an order.
Order
[31].
Accordingly,
I make the following order: -
(1)
Summary
Judgment is granted in favour of the plaintiff against the first and
second defendants, jointly and severally, the one paying
the other to
be absolved, for:
(a)
Payment
of the amount of R204 320.97.
(b)
Payment of
interest on the amount of
R204 320.97 at the prevailing prime rate, as from time to time, plus
2% per annum, calculated from due
date (30 November 2018) to date of
actual payment.
(c)
Cost
of suit.
L R
ADAMS
Judge of the High
Court
Gauteng Local
Division, Johannesburg
HEARD
ON: 21
st
July 2021 – in a ‘virtual hearing’ during a
videoconference on the
Microsoft Teams
digital platform
JUDGMENT
DATE: 27
th
July 2021 – judgment handed down electronically
FOR
THE PLAINTIFF: Advocate
J G Dobie
INSTRUCTED
BY: Rooseboom
Attorneys, Johannesburg
FOR THE FIRST AND
SECOND Adv H Van der
Vyver
DEFENDANTS:
INSTRUCTED
BY: Trevor
Swartz Attorneys, Johannesburg
[1]
Kurz
v Ainhirn
1995
(2) SA 408 (D)
[2]
Sonap
Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd)
v Pappadogianis
[1992] ZASCA 56
;
1992 (3) SA 234
(A) at 119.
[3]
Steenkamp
v Webster
fn 5 a
t
529G-H.
[4]
Slip
Knot Investments 777 (Pty) Ltd v Du Toit
[2011] ZASCA 34
;
2011
(4) SA 72
(SCA) para 12.
[5]
Myers
v Abramson
,
1951(3) SA 438 (C) at 455