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[2021] ZAGPJHC 425
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Da Conceicao v Milheiro N.O. and Another (2020/16410) [2021] ZAGPJHC 425 (15 September 2021)
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IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE NUMBER:
2020/16410
REPORTABLE: NO
OF INTEREST TO OTHER
JUDGES: NO
REVISED: NO
15 SEPTEMBER 2021
In the matter between:
MARY
MAGDELAN ANN DA CONCEICAO
Applicant
and
ALIPIO
AFONSO MILHEIRO N.O.
First Respondent
VANDA
MARIA CAQUEIRO ASSUNCAO N.O.
Second Respondent
JUDGMENT
This judgment is
handed down electronically by circulation to the parties or their
legal representatives via email and by uploading
same onto CaseLines.
The handing down of this judgment is deemed to be 15 September 2021.
KHAN
AJ
:
INTRODUCTION
[1]
On the 4 November 2019, the Applicant
entered into an Agreement for the sale of the business known as A &
A Café and
Tavern (“the Business”), with the V.M
Investment Trust, who were represented herein by the First and Second
Respondents,
(“the Respondents”), both of whom are
Trustees of the V.M Investment Trust.
[2]
The Applicant seeks return of the Business,
alleging that the Respondents have breached the Agreement of Sale
(“The Agreement”)
by the failure to pay the balance of
the purchase consideration of R250 000.00. The Applicant alleges
that she has cancelled
the agreement as a result of the Respondents
breach, alternatively cancels the agreement, further alternatively
that the Respondent
has repudiated the agreement, which repudiation
is accepted.
[3]
The Respondents argue as follows, firstly,
that the Applicant did not cancel the Agreement, can accordingly not
claim return of
the business or an entitlement to retain the R500,000
deposit, secondly the Respondents allege that they cancelled the
agreement
on the 17 August 2020 as a result of the Applicant’s
breach of the warranty clause contained in paragraph 16.3 of the
Agreement
and lastly the Respondents contend that there are
substantial and real disputes of fact not capable of being resolved
in motion
proceedings. The Applicants claim should accordingly be
dismissed with costs and the Court should grant the Respondents’
the relief claimed in their counter application.
[4]
At this point I pause to mention that the
Respondent has a counterclaim in the amount of R618 520,532,
together with interest
and a claim for rental paid from the 1
September 2020, until the termination of the lease concluded with
Hentiq 1096 (Pty) Ltd.
[5]
The general rule when dealing with disputes
of fact in motion proceedings is as set out in
PLASCON
EVANS PAINTS LTD V VAN RIEBEECK PAINTS (PTY) LTD
[1984] ZASCA 51
;
1984
(3) SA 623
(A),
where the court referred to
Stellenbosch
Farmers’ Winery Ltd (Pty) Ltd
v
Stellenvale Winery (Pty) Ltd
,
1957
(4) SA 234
(C) at 235 E-G,
held as
follows:
‘…
Where
there is a dispute as to the facts a final interdict should only be
granted in notice of motion proceedings if the facts as
stated by the
respondent together with the admitted facts in the applicant’s
affidavits justify such an order…In certain
instances the
denial by the Respondent of a fact alleged by the Applicant may not
be such as to raise a real, genuine or bona fide
dispute of fact
(Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949 (3) SA
1155
(T) at pp 1163-5). 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 amongst
those upon which it determines whether the applicant is entitled to
the final relief which it seeks…. Morever,
there may be
exceptions to this general rule, as for example where the allegations
or denials of the respondent are so far-fetched
or clearly untenable
that the court is justified in rejecting them merely on the papers.”
[6]
Our courts are required to robustly
approach disputes of fact. In
SOFFIANTINI V MOULD
1956
(4) SA 150
(E),
the court outlined this
approach and stated as follows:
“
In
the case of Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
,
1949 (3) SA 1155
T at 1165
Murray, then
AJP, said,
‘
A
bare denial of the applicant’s material averments cannot be
regarded as sufficient to defeat the applicant’s right
to
secure relief by motion proceedings in appropriate cases. Enough must
be stated by respondent to enable the Court to conduct
a preliminary
examination… and to ascertain whether denials are not
fictitious intended merely to delay the hearing.
Soffiantini
v Mould,
at 154 E-H.
[7]
THE NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS V ZUMA
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA)
Harms, JP recorded at (26) and (27) that:
“
the court may
not impose an onus on the respondent to prove a negative….In
motion proceedings the question of onus does not
arise and the
approach set out in the Plascon Evans-matter governs irrespective of
where the legal or evidential onus lies. The
more serious the
allegation or its consequences, the stronger must be the evidence
before a court before it will find the allegation
established. A
person claiming relief acts at his peril in proceeding by motion
action, he cannot by electing to proceed by motion
deprive his
opponent of a number of procedural advantages. The flip side is that
the respondent may not sabotage the proceedings
that is established
law for expeditious and cost-efficient resolve of civil cases.”
[8]
MOUTON V PARK 2000 DEVELOPMENT 11 (PTY) LTD
2019 (6) SA 105
(WCC)
at 85:
“
At the same time,
it is equally well established that where a dispute of fact is not a
‘real, genuine or
bona fide
’ one the
Court will be justified in ignoring it and may proceed to find on the
applicant’s version thereof. So
too, where the
respondent’s version is clearly or palpably far-fetched or
untenable, the Court may take a robust approach
and decide the matter
on the basis of the applicant’s version. As always, in
evaluating the contents of the affidavits the
Court must have due
regard for the treatment which the respondent has given to the
averments under reply. In this respect a respondent
has a duty to
engage with the facts which are put up by the applicant, and to deal
with them fully and comprehensively. Any
‘skimpiness’ and
improbabilities in his version may thus count against him.”
[9]
Having regard to the affidavits filed
herein, I do not believe that this court is precluded from dealing
with this matter. There
is no dispute regarding the terms of the
agreement and the parties’ duties in terms thereof, the
Agreement is relied on by
both parties. The dispute effectively turns
on which party cancelled the agreement and the warranty clause at
paragraph 16.3. I
proceed to deal with each issue accordingly.
THE APPLICANT’S
CANCELLATION
[10]
The Respondents argue that the Applicant
has not complied with the notice requirements that are peremptory in
terms of the Agreement,
prior to cancellation. That in order to prove
that the Agreement was legitimately cancelled, it is incumbent upon
the Applicant
to prove that she gave notice in writing, by prepaid
registered post or hand delivered a notice, to the Respondents’,
at
their chosen
domicilia
,
wherein she called upon them to remedy the breach within 10 days.
[11]
The first issue the court has to consider
is whether or not the Applicant has cancelled the Agreement. The
Applicant relies on the
following breaches of the Agreement:-
11.1
The first breach pertaining to the early
closure of the business, which was communicated to the Respondent on
the 9
th
of December 2019. The Respondents undertook on the 11 December 2019
to rectify the breach and keep the premises open, no more need
be
said about this.
11.2
The second breach in respect of the
Respondents’ failure to make payment of the installment due on
the 1 January 2020, communicated
to the Respondents’ on the 2
January 2020. The Respondents were requested to rectify the breach
and make payment into the
designated account, this the Respondents
failed to do. On the 9 January 2020, the Respondents’ Attorney
addressed an email
to the Applicant recording that the Respondents’
had been unable to obtain a trade license, as the business is zoned
industrial
1, that the Respondents are unable to lawfully carry on
business and that the installments would not be paid until the
Respondents
are able to do so.
11.3
On the 29 January 2020, the Applicant
advised the Respondents’ that the trade license is valid and
has not been revoked, that
the Respondents were in breach of the
agreement, by failing to make payment of the installment of
R20 000,00 on the 1 January
2020, despite receiving proper
notice and despite the lapsing of 10 days from the date of such
notice. That in terms of clause
15.2 the Applicant is entitled to
claim specific performance and demand payment of the balance of the
purchase price in the sum
of R250 000.00, on or before the 5
February 2020, failing which the Respondent is advised of the
Applicant’s election
to cancel the contract and retake
possession of the business.
11.4
On the 7 February 2020, the Respondent
again claimed payment of the balance of the purchase price on or
before the 10 February 2020,
failing which the agreement would be
formally cancelled and the Applicant would launch proceedings to
retake the business.
[12]
The Applicant alleges that the letters of
the 29 January 2020 and 7 February 2020, evidence a clear intention
to cancel the contract,
if the balance of the purchase price was not
paid. The Respondents’ disputes this and argues that the
Applicant made an election
to claim the balance of the purchase
price, thus to claim specific performance and not cancellation. The
specific paragraphs in
the letters aforesaid reveal the following:
12.1
29 January 2020,-
“
As a direct
result of your clients beach, our client is entitled, in terms of
clause 15.2 of the agreement to claim specific performance
from your
client and demand payment of the balance of the purchase price in the
sum of R250 000,
alternatively
cancel the agreement
.
(my
emphasis).
In the event the agreement is
cancelled as aforesaid, our client will retake possession of the
business.”
12.2
7 February 2020,- “
consequently
we repeat our clients demand for payment of the balance of the
purchase price on or before close of business on Monday,
10 February
2020, failing which
we will
formally cancel the agreement and launch proceedings to retake
possession of the business
.”
(my
emphasis).
[13]
The relevant clauses in the Agreement
dealing with Default, are paragraphs 15.1 to 15.3 which reads as
follows:-
“
15.1
Should the purchaser fail to comply with any of his obligations in
terms of this agreement, the seller shall, without prejudice
to any
other rights he may have, give the purchaser notice in writing by
prepaid registered post or hand-delivered to the purchaser,
calling
upon the purchaser to remedy such breach within 10 (ten) days of
posting of such notice.
15.2
In the event of the purchaser
failing to remedy such breach, the seller shall be entitled to cancel
this agreement, to reclaim and
to retake possession of the business
and the assets sold in terms thereof and to retain all monies paid to
him by the purchaser
in respect of the purchase price as a genuine
pre-estimate of damages which he may have sustained by reason of such
cancellation.
Alternatively, the seller shall be entitled to demand
payment of the full balance of the purchase price.
15.3
It is specifically recorded that in
the event of the seller having given the purchaser notice on two
occasions as contemplated in
clause 15.1 above within the period of
any calendar year, then, and in the event of any subsequent breach by
the purchaser of the
terms and conditions of this agreement, the
seller shall have the rights as set out in clause 15.2 above without
the necessity
of giving the purchaser any further notice whatsoever.”
[14]
I do not read the letters of the 29 January
2002 and 7 February 2020 as an election to claim specific performance
and nothing else.
Clause 15 affords the Applicant the option to
cancel the contract in the event of a breach, alternatively to claim
payment of the
full balance of the purchase price. The Applicant
called upon the Respondent to make payment of the instalment of
R20 000.00
on the 2 January 2020, on the 29 January 2020, the
Applicant called for payment of the balance of the purchase price,
failing which
the Applicant recorded its intention to cancel the
contract, this demand was made again on the 7 February 2020.
[15]
The Respondents’ were given 3 Notices
in the 2020 calendar year to remedy the breach. The Respondents did
not effect payment
and the Respondents’ letter of the 9 January
2020 made it clear that payment would not be effected. The Applicant
views this
as a repudiation of the contract.
[16]
I now turn to the complaint that the breach
notices that were sent by the Applicant did not comply with clause
15.1, in that, there
is no demand that the beach be remedied within
10 days, no evidence that there has been compliance with service on
the Respondents’
domicilia
,
and these notices are not in the same calendar year.
[17]
The Domicilium and Notices Clause in the
Agreement record as follows:-
“
20.
The parties choose as their
respective domicilium citandi et executandi for all purposes under
this contract, whether in respect
of payments, court processes,
notices or other documents or communications of whatsoever nature the
following address:-
20.1
The Seller, [….] F[....] Street, Hazel Park Germiston,
Tel 084 583 2863,
e-mail:
anndaconceica063@gmail.com.
20.2
The Purchaser: At the business, Tel: 0732835181
email:
vassuncao@gmail.com.”
[18]
Clauses 20.5 and 20.5.1 to 20.5.3, provide
that service by telefax and email is competent and that,
“
Notwithstanding anything to the
contrary, a written notice or communication actually received by a
party shall be an adequate written
notice or communication to it,
notwithstanding that it was not sent to or delivered at its chosen
domicilium citandi et executandi”.
[19]
Having regard to the aforesaid, I am not
persuaded that it was necessary for the notice to be sent by prepaid
registered post or
hand delivered to the Respondents’ at their
chosen
domicilia
,
which, as is apparent from the aforesaid, includes the parties email
addresses. The Respondents’, in addition, have never
alleged
that the letters of demand were not received and have in fact
responded thereto.
[20]
The ten (10) day period from the 2 January
2020, would have elapsed by the time the second demand was made on
the 29 January 2020,
I am satisfied that this constitutes a second
notice, in the same calendar year. In terms of clause 15.3 of the
Agreement, no further
notice to the Respondent would be required.
Despite this the Applicant made a third demand for payment on the 7
February 2020 and
then proceeded to institute action for the return
of the business.
[21]
On the 7 February 2020, the Respondents
indicated that the instalments for January 2020 and February 2020
were paid into the Trust
account of its Attorneys. Attempts by the
Applicant’s Attorney to ascertain if any additional payments
were made subsequent
to February 2020 failed to elicit a response.
These payments were never paid over to the Applicant and there is no
indication that
additional payments were made by the Respondents to
their Attorneys after February 2020.
[22]
The Agreement does not make provision for
payment to any other party except the Applicant, the payments by the
Respondents into
the Trust account of its Attorneys, in the absence
of the Applicants agreement does not constitute compliance with the
Agreement.
BOUWER NO v SAAMBOU BANK BPK
1993 (4) SA 492
(T), “
It
can be safely accepted that payment to a person other than the
creditor does not discharge the debt or obligation, even though
payment is made to the creditor of the creditor, unless he has
consented thereto.”
[23]
I am not persuaded that the Applicant has
not complied with the provisions set out in clause 15 or that this is
a matter where the
Applicant has adopted a method of communication
other than that provided for in the agreement. T
he
Applicant made it clear that if payment was not effected, the
Agreement would be cancelled. The Applicant then instituted motion
proceedings, the Notice of Motion is dated the 25 June 2020 and was
served on the Respondents’ on the 22 July 2020.
[24]
Even if the argument that the agreement was
not cancelled before the institution of motion proceedings could be
sustained, the service
of the Notice of Motion puts this argument to
rest,
THELMA COURT FLATS (PTY)LTD V MC
SWIGIN
1954 (3) SA 457
(C) 462C-D
:
“
There
is ample authority for the proposition that the issue and service of
a summons in cases of this nature is a formal intimation
to the
lessee of the lessor's contention that the contract has been broken
and of the fact that he has elected to treat the lease as
cancelled…. (see Noble v Laubscher,
1905 T.S. 125
,
and the other cases referred to in Alpha Properties (Pty.) Ltd v
Export Import Union (Pty.) Ltd .,
1946 W.L.D. 518
……..
there is no substance in this distinction…between a summons
and a notice of motion. … I am fortified
in my view that
the filing and service of a notice of motion by a lessor claiming the
ejectment of a lessee from the leased
premises is a sufficient notice
of the intention of the lessor to cancel the lease, by the decision
in the Alpha Properties case, supra,
which decision
was approved of by the Full Bench of the Transvaal Provincial
Division in van Achterberg v Walters,
1950
(3) SA 734 (T)
.
[25]
I accordingly find that on a reasonable
reading of the emails sent by the Applicant and her Attorneys, the
Notice of Motion and
Founding affidavit, that the Applicant has
cancelled the Agreement by reason of the Respondent's failure to pay
the balance of
the purchase price. I am accordingly satisfied that
the Applicant cancelled the Agreement before the Respondent did on
the 17 August
2020.
THE
RESPONDENTS’ DEFENCE
[26]
The Respondents main defence turns on the
breach of the warranty clause at paragraph 16.3, of the Agreement and
forms the basis
of the Respondents’ opposition as well as their
counterclaim, Clause 16.3 reads as follows:
“
The
Seller hereby warrants that, up to the effective date, all licenses,
permits and authorities of and relating to the business
will remain
in full force and effect and the seller has not done anything or
matter which could affect or prejudice the validity
and existence of
such licenses permits and authorities
.”
[27]
The Respondents letter of the 9 January
2020 records that they had applied for a trade licence and were
advised that same cannot
be issued as the property upon which the
business is situated is zoned as Industrial 1. That they find
themselves in a position
where it has purchased a business, but is
unable to run it despite being given a warranty by the Applicant that
all licenses, permits
and authorities of and relating to the business
were correctly in place as at 1 November 2019. That they will not be
paying the
instalments referred to in paragraph 3.3.2 until such time
as it can lawfully carry on the business in terms of the agreement.
[28]
In a letter dated the 5 February 2020, the
Respondents’ Attorneys advised the Applicant that it did not
wish to cancel the
Agreement and proposed that the Applicant attends
to the rezoning of the property by the 15 March 2020, failing which
the Respondents
reserved their rights to cancel the agreement and
claim restitution. It is then submitted that the Applicant failed to
rezone the
property and after attempts at settling the dispute the
Respondents cancelled the sale of business on the 17 August 2020.
[29]
The Respondents’ allege that the
Applicant breached clause 16.3, as the trade license was unlawful and
thus not in full force
and effect as at the effective date of the
sale or before then, the license has accordingly always been
unlawful. In explanation,
the Respondents indicate that the second
page of the Applicant’s trade license is specifically granted
on the condition,
“
that all the
requirements in terms of the provisions of any other legislation must
be complied with.”
[30]
The Respondents do not identify what
legislature must be complied with in their affidavit save to state
that the Applicant took
no steps to attend to the rezoning of the
property.
[31]
The Applicant’s trade license was
granted on the 23 October 2001. The Respondents argue that when this
trade license was granted
in 2001, the Applicant was already in
breach of the Germiston Town Planning Scheme of 1985. Reliance is
placed on a letter dated
the 3 October 2000, (the year before the
license is issued to the Applicant) addressed to the owner of the
business premises, recording
that the existing use of shops on the
property was in conflict with the zoning requirements and thus
illegal. It is alleged that
the Applicant knew of this when she was
provided with her trade license in 2001 and despite this took no
steps to ensure that the
owner of the property attended to the
rezoning of the property in order to ensure that her trading license
was lawful and valid.
[32]
On the 13 March 2020, 19 years after the
Applicant’s license was issued, the Respondents are advised
that the property is
zoned Industrial 1 by the City of Ekurhuleni,
City Planning Department, Germiston and that the shops and pub being
operated on
the Erf does not comply with the zoning. That the
department cannot consent to the issuing of a trading license for the
pub until
such time as a rezoning application has been positively
considered by the appropriate delegated authority.
[33]
It is necessary to note that the letter
dated the 3 October 2000, is addressed to the owner, Hentiq 1096, by
the South Germiston
Planning and Development Directorate, and records
that the property is zoned Industrial 2, that in terms of the
Germiston Town
Planning Scheme of 1985, the Existing use Right
expired on the 25 September 2000. The owner, must apply for suitable
rezoning or
an application for an extension of time to legalise the
existing use and that if suitable arrangements are not made by the 25
October
2000, the existing lease will lapse and render
the
owner
(my emphasis) liable for
prosecution.
[34]
There is no evidence before this court that
the Applicant was aware of the breach of the Town Planning Scheme (as
evidenced by the
letter of the 3 October 2000) or aware of the letter
of the 3 October 2000, when the Applicant applied for her trading
license
in 2001, in fact the Applicant specifically disputes this in
her Replying Affidavit.
[35]
The Applicant argues that the trading
license was valid and legal as at the effective date and remains
valid until revoked. That
clause 16.3 does not warrant the validity
of previously issued licences, permits and authorities, what is
warranted is that all
such licenses will remain in full force and
effect and the seller has not done anything or matter which could
affect or prejudice
the validity and existence of such licenses,
permits and authorities.
[36]
That the Applicant is not the owner of the
business premises and it is only the owner of the land who can apply
for the rezoning
of the property. The Applicant argues that the
Respondent conflates the obligations of the landlord/owner of the
property with
that of the tenant and business owner selling the
business. Further that the Respondents have a perfectly competent
claim to force
the landlord to procure the necessary rezoning to
allow for the permitted use of the premises. That the correct
interpretation
of clause 16.3 warranted the license, permits and
authorities relating to the business sale agreement and not the
zoning of the
landlords’ premises.
[37]
There is no disagreement between the
parties that the Respondent would have had to obtain a trade license
in its name. I do not
read clause 16.3 as warranting to the
Respondents that they would obtain a trade license, simply that
whatever license, permits
and authorities of and relating to the
business that were in place at the effective date would remain so
.
[38]
We know that the Applicant provided its
liquor license and trading license to the Respondent and that the
Respondent is currently
trading on those licenses. From the
Respondents supplementary affidavit, we know that the Respondent
continued to trade up the
2 November 2020 and that at the date of the
hearing this was still the case, no information was provided to the
contrary. We further
know that the zoning of the property is
something that only the owner of the property can attend to.
[39]
From the affidavits and heads of arguments
of both parties it appears that the Germiston Town Planning Scheme of
1985, was replaced
by
the Ekurhuleni Town
Planning Scheme of 2014. It further appears that between the 3
October 2000 and the 13 March 2020, the zoning
on the property
changed from Industrial 2 to Industrial 1, no explanation is provided
for this.
[40]
Both parties rely on the Town Planning and
Township Ordinance, 15 of 1986, but for different reasons. The
Applicant to indicate
that the license was valid and will continue to
remain so and the Respondent to indicate that the landlord had not
taken steps
to rezone the property.
[41]
The Respondent asserts that it is a known
fact that the property was not rezoned and no steps were taken to
legalise the use of
the property to permit a business to trade
therefrom because of the letter dated 13 March 2020. The Respondents
do not provide
any evidence to support this assertion and base this
conclusion on the letter written by the South Germiston Planning and
Development
Directorate on the 3 October 2000. Nothing is known of
what transpired in the 19 years since the letter was written, neither
has
an explanation been offered as to how the Applicant would be
issued with a trade license on the 23 October 2001, in the absence
of
the property being rezoned.
[42]
What we do know is that the Applicant was
issued with a trade license in 2001. We also know, based on the
letter sent to the Respondent
on the 13 March 2020, that if there was
a problem with the zoning at the time, the trade license would not
have been issued in
2001.
[43]
The Respondent has entered into a lease
agreement with Hentiq 1096, the owner of the property, it would seem
a relatively simple
task to obtain confirmation from the owner as to
what transpired in those 19 years, the Respondent has not opted to do
this. What
the Respondent does is use the objection raised in 2000 to
the property as justification for why a license is refused in 2020,
19 years later, ignoring that a license was issued in 2001.
[44]
The Respondents indicate in their Answering
Affidavit that the Applicant is in breach of the Germiston Town
Planning Scheme, in
that she failed to comply with the condition
attached to the trade license that required all relevant legislature
to be complied
with.
[45]
A closer inspection of the license is
warranted:-
45.1
On the first page, the following appears,
“
this
license is issued subject to the following conditions, namely P.T.O.
(which presumably means “Please Turn Over”).
45.2
On the following page the following words
appear:-
SALES OR SUPPLY
OF MEALS OR PERISHABLE FOODSTUFFS:
Restricted to the sale
or supply of any foodstuff in the form of meals for consumption on or
off the premises.
NB:
All
requirements in terms of the provisions of any other legislation must
be complied with.
(NB is a Latin
phrase, meaning, note well).
[46]
In the Respondents heads of argument,
counsel for the Respondents, for the first time refers to the
Business Act, No 71 of 1991
(“Business Act”) and makes
the submission that the Applicants trade license is a license issued
in terms of section
6(b)(i) of such Act. That a license may be issued
subject to a condition therein specified in terms of which the
license holder
shall in connection with the business comply with a
specific requirement contemplated in subsection 4(a) or aA (there is
no 4(aA)
in the Act) as the case may be.
[47]
Subsection (4a)
provides
that a licensing authority shall, subject to the provisions of
subsection (6), issue a license which is properly applied
for unless,
“in the case of a business referred to in item 1(1) or 2 of
schedule 1, the business premises do not comply with
a requirement
relating to town planning or the safety or health of the public of
any law which applies to those premises.
[48]
“
Argument by counsel, does not
constitute evidence on oath
and is
merely a persuasive comment made by the parties or legal
representatives with regard to questions of fact or law.
MABOHO
AND OTHERS V MINISTER OF HOME AFFAIRS (833/2007 (2011) ZALMPHC 4 (28
NOVEMBER 2011).”
The reference
to the Business Act, however, makes it clear that
a licensing authority must issue a license, which has been properly
applied for
unless, the business
premises do not
(my emphasis) comply
with a requirement relating to town planning or the safety and health
of the public. Subsection 6(a), provides
that “
a
licensing authority may grant the application on condition that the
business premises shall,
before
the license
(my emphasis)
is
issued comply with a requirement referred to in subsection 4(a).”
[49]
The Business Act thus makes it clear that 2
things must happen before a license will be issued:
49.1
The business premises must comply with a
requirement relating to town planning or the safety and health of the
public in terms of
subsection 4(a);
49.2
The license will be only be issued after
compliance with a requirement relating to town planning or the safety
and health of the
public in terms of subsection 6(a).
[50]
The Applicant was granted a trade license,
the Business Act makes it clear that this would only occur after the
necessary requirements
were complied with.
[51]
Section 6(b) of the Business Act, makes it
possible for a license to be issued subject to a condition:
“
a
licensing authority may
issue the
license subject to any condition therein specified, in terms of which
the license holder shall in connection with the
business premises-
i.
comply with a specific
requirement
contemplated in
subsection 4(a) or
ii.
within a specific period comply with
such requirement.”
[52]
I do not believe that the licensing
authority would impose a condition to the effect that, “
All
requirements in terms of the provisions of any other legislation must
be complied with
”, when section
6(b) refers to compliance with a specific requirement, within a
specific time. I am further not convinced
that such condition would
be prefixed by the words “Note well”. I even question
whether this is the condition that
the license is subject to and
whether the condition is not in fact, the words “
SALES
OR SUPPLY OF MEALS OR PERISHABLE FOODSTUFFS:
Restricted
to the sale or supply of any foodstuff in the form of meals for
consumption on or off the premises
.”
The parties have however not raised this and I will leave it there.
[53]
The Respondents, apart from making a
statement to the effect that the Applicant has not complied with any
other legislation, has
failed to provide proof that the Applicants
trade license is invalid. The Respondents have not tendered an
explanation as to why
the license was not revoked if it is invalid,
or an explanation as to how it is that the Respondents continue to
operate the Business
despite this invalidity. I am not persuaded that
the Applicant’s trade licence is invalid or that the warranty
clause has
been breached. I accordingly find that the Respondents, by
their failure to
pay the balance of the
purchase consideration of R250 000.00 have breached the
Agreement.
EFFECT
OF THE APPLICANT’S CANCELLATION
[54]
The
effect of the cancellation imposes a duty on both parties to restore
what they have received in terms of the agreement,
CASH
CONVERTERS SOUTHERN AFRICA (PTY) LTD V ROSEBUD WESTERN PROVINCE
FRANCHISE (PTY) LTD
2002
(1) SA 708
(C)
, “
it
is incumbent on both contracting parties to restore each to the other
what has respectively been received thereunder. De
Wet and Van
Wyk Kontraktereg en Handelsreg 5th ed at 220 - 1; Joubert
(ed) The Law of South Africa vol 5 1st
re-issue para 256.
The rule applies equally to contracts cancelled by reason, for
example, of misrepresentation and to contracts
cancelled by reason of
breach of their contractual provisions. The duty applies to both the
'innocent' party and the 'guilty' party.
TWEEDIE
AND ANOTHER v PARK TRAVEL AGENCY (PTY) LTD t/a PARK TOURS
1998 (4) SA
802
(W), “
So
far as the refund of the tour price is concerned, a claim for
restitution of performance upon cancellation of a contract for
breach
is a distinct contractual remedy: Baker v Probert
1985
(3) SA 429
(A)
at
438I--439B.”
[55]
By reason of the Applicant’s
cancellation, the Applicant is entitled to return of the Business.
The Respondents would be entitled
to return of the R500 000,00
deposit paid in respect thereof, however clause 15.2 of the Agreement
stipulates that in the
event of the Respondents breach, the Applicant
is entitled to cancel the agreement, to reclaim and take possession
of the business
sold and to retain all monies paid by the
Respondents.
[56]
There is some debate between the parties as
to whether Clause 15.2 is a rouwkoop provision or a penalty clause
and whether the Conventional
Penalties Act, No 15 of 1962 should
apply. Whichever it is, it does not detract from the fact that the
parties agreed, in the event
of the Respondents’ breach, that
the Respondent would return the business and forfeit the deposit
paid. There is a long standing
principle in our jurisprudence, which
stresses the importance of the principle of
pacta
sunt servanda
(agreements, freely and
voluntarily concluded, must be honoured) and the need for certainty
in the law of contract.
BEADICA 231 CC
AND OTHERS V TRUSTEES FOR THE TIME BEING OF THE OREGON TRUST AND
OTHERS
2020 ZACC 13
;
2020 (5) SA 247
(CC).
"If
there is one thing that more than another public policy requires, it
is that men of full age and competent understanding
shall have the
utmost liberty of contracting, and that their contracts when entered
into freely and voluntarily shall be held sacred
and shall be
enforced by courts of justice. Therefore you have this paramount
public policy to consider, that you are not lightly
to interfere with
this freedom of contract.”
THE
RESPONDENTS COUNTERCLAIM
[57]
The Respondents have filed a counterclaim,
in terms of which they claim that they cancelled the contract on the
17 August 2020 and
demand payment of various amounts from the
Applicant:-
57.1
R500,000, in respect of the deposit paid to
the Respondent for the purchase of the business;
57.2
R840.50 in respect of pest control services
rendered at the property;
57.3
R91,430.02 in respect of essential plumbing
and renovating repairs to the property;
57.4
R26,215.00 in respect of administering the
liquor license;
57.5
Interest on the aforesaid amounts
a
tempore morae
;
57.6
Directing the Applicant to reimburse the
Respondents’ the monthly rental amount paid to Hentiq 1096
(Pty) Ltd for the rental
of the property with effect from 1 September
2020.
[58]
The Respondents counter application is
conditional upon the court not dismissing the main application and is
premised on the fact
that if the court entertains the main
application then it does on the basis of a finding that there are no
real disputes of fact.
The Applicants claim pertains to the sale of a
business, breach of contract and damages flowing from such breach.
[59]
The part of the Respondents counterclaim
that pertains to the Agreement is the return of the R500 000,00
deposit paid and the
costs of the liquor license, which the agreement
does not make provision for. The amounts claimed for improvements and
renovations
to the property and the rental, do not form the basis of
the sale agreement. The Agreement was subject to a suspensive
condition
at Clause 10 thereof and provides that, “
the
sale recorded herein shall be subject to the suspensive condition
that the purchaser becoming entitled to occupy the premises
in terms
of a lease granted to him by the owner thereof…….”
.
In the event that the Respondents were unable to secure a lease
agreement with the owner, the agreement would have dissolved and
the
parties would have been restored to the pre-agreement position.
[60]
No evidence has been tendered, as to what
basis the improvements, pest control and renovations were undertaken,
presumably based
on discussions with the Landlord/ owner and with his
consent. It is the Landlord who warranted in terms of paragraph 6 of
schedule
A to the lease agreement, ‘
that
the permitted use of the premises is commercial purposes only, i.e.
for food and beverages’
, at
paragraph 8.2, “
that he does not
warrant that the leased premises are fit for the purpose for which
they are let or that the lessee be granted a
license in respect of
the leased premises, for the conduct of the business of the lessee or
that any license will be renewed. There
shall be no liability on the
Lessor to do any work on make any alterations or repairs to the
leased premises to comply with the
requirements of any licensing
authority.”
[61]
The work done on the property pertains to
the lease agreement and does not arise from the sale of business, the
Respondents’
recourse would be to the owner of the property and
not the Applicant. I accordingly do not find in favour of the
Respondents in
respect of the counterclaim.
[62]
In the circumstances, I make an order in
the following terms:
1.
The Respondents are to return the business
trading under the name and style of A & A Café and Tavern
at the Business
premises of 102 Refinery Road, Refinery Complex,
Germiston Industries West, to the Applicant within 7 (seven) days
from date of
this Order;
2.
The Applicant will retain the amount of
R500 000,00 paid by the Respondents;
3.
The Respondents to pay the costs of this
application.
J.L. KHAN
Acting Judge of the
High Court
Gauteng Local
Division, Johannesburg
Heard:
24 May 2021
Judgment:
15 September 2021
Applicant’s
Counsel:
Adv. J.C. Viljoen
Instructed by:
Stupel & Berman Inc.
Respondent’s
Counsel: Adv. P. Cirone
Instructed by:
Kokkoris Attorney