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[2019] ZAGPPHC 299
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Greyvenstein and Another v Mbombela Golf Club (1080/19) [2019] ZAGPPHC 299 (3 April 2019)
REPUBLIC OF
SOUTH AFRICA
IN THE
HIGH COURT OF SOUTH AFRICA,
MPUMALANGA DIVISION (FUNCTIONING AS
GAUTENG DIVISION, PRETORIA – MBOMBELA CIRCUIT COURT)
CASE NO: 1080/19
In the matter
between:
ROHAN
GREYVENSTEIN
First
Applicant
EXECUGOLF (PTY)
LTD
Second Applicant
and
MBOMBELA
GOLF CLUB
Respondent
JUDGMENT
Roelofse
AJ:
[1]
The first applicant is in possession of and the proprietor of
the Pro Shop and an area known as “
the Hall
”
situated at the Clubhouse of the Mbombela Golf Club. The operation is
run by an entity referred to as ExecuGolf. ExecuGolf
runs the Pro
Shop and rents golf carts to members of the public visiting the Golf
Club. ExecuGolf ostensibly does so in terms of
a written lease
agreement that was entered into between the first applicant (trading
as Execugolf Pro Shop Nelspruit) and the respondent
on
1 December
2015 (“
the agreement”
).
[2]
The agreement grants the first applicant the exclusive right
at the Golf Club to: give lessons and coaching in the game of golf;
trade in golf equipment and golf clothing; repair and service golf
equipment; purchase and sell second hand golf balls reclaimed
on the
golf course; hire out golf equipment; and to hire out motorised golf
carts. The lease agreement commenced 1 December 2015
and was set to
end on 30 November 2020.
[3]
It a clear from the papers that the first applicant conducts
the business through ExecuGolf. Whether or not the parties formally
refer to the second respondent when reference is made by the
respondent in the correspondence to ExecuGolf is unclear. I deem this
issue of no consequence for the adjudication of this application save
for what I set out below regarding the respondent’s
first
preliminary defence.
[4]
Clause 19.1 of the agreement and a breach notice directed to
ExecuGolf by the respondent take centre stage in this application. I
therefore recite them in full.
[5]
Clause 19.1 of the agreement reads as follows:
“
Should the Lessee default in any payment due under this
lease or be in breach of its terms in any other way, and fail to
remedy
such default or breach within 14 (Fourteen) days after
receiving a written demand that it be remedied, the Lessor shall be
entitled,
without prejudice to any alternative or additional right of
action or remedy available to the Lessor under the circumstances
without
further notice, to cancel this lease with immediate effect,
be repossessed of the Premises, and recover from the Lessee damages
for the default or breach and the cancellation of this lease.”
[6]
On 4 May 2018, the respondent directed a “
FINAL
NOTICE
” to ExecuGolf and for the attention of the first
applicant (“
the notice”
). The notice reads as
follows:
“
Good day Rohan
Following the most recent Management Committee meeting which
unfortunately you did not attend, it was resolved that a Final Notice
be formally sent to ExecuGolf noting the following:
1.
As per
the lease agreement clause 6.1. all monies owed to the club be paid
on or before the 7
th
of each month.
2.
The
premises are adequately stocked with merchandise and properly staffed
with personal at all times (per clause 9.12)
3.
Procure
that the premises is maintained at a level which is in keeping with
the standard of the building club (clause 9.13)
4.
Appoint
a qualified person to be in attendance at the premises and attend all
meetings including the Jock Committee meetings (clause
9.16.2)
5.
Promote
the game of golf through operational structures that provide a fist
class environment for members and guests. (clause 9.17.2)
The Management Committee believe you are in breach of the above
clauses of the lease agreement and therefore give you formal notice
and 14 (fourteen) days to rectify the situation. (by 18
th
May 2018)
The condition of the golf carts also must be considered and
reviewed as golfers have recently experienced numerous breakdowns and
technical issues during their game. A proposal on the way forward in
this regard should be submitted to the Management committee
within
the above time period.
Mbombela Golf Club prides itself in the standard of the facilities
and services that it offers its members, their guests and visitors
and must ensure that all service providers maintain this same level.
I trust you find the above in order and should you wish to discuss
this please feel free to contact me.”.
The
respondent alleges that it acted under clause 19 of the agreement in
addressing the notice to ExecuGolf.
[7]
Various meetings were held, and correspondence flowed between
the parties subsequent to the notice. The respondent granted
ExecuGolf
an extension to make payment of amounts due to the
respondent to the end of May 2018. On 28 January 2019, the respondent
informed
the applicant in writing that it terminated the agreement
with effect on 31 March 2019 (“
the termination”
).
The first applicant acknowledged receipt of the termination but
disputed what the first applicant considered an “unilateral
cancellation” of the agreement. The first applicant informed
the respondent that he will revert to the respondent as soon
as
possible.
[8]
On 21 February 2019, the respondent sent out a notice to its
members. In terms of this notice, the respondent informed its members
that the current Pro Shop duties will be taken back by the club
including the golf cart fleet rental and management and an on-course
store offering golf equipment, merchandise and club apparel. The
respondent also informed its members that with time to come the
applicant’s Pro-Shop area will be earmarked for an indoor
conference and banqueting area. Overall and properly considered,
this
notice communicated that the respondent would be taking over the
first applicant’s exclusive rights in terms of the
agreement.
[9]
On 13 March 2019, the first applicant’s attorney sent a
letter to the respondent. In this letter, the first applicant’s
attorney recorded that the purported cancellation of the agreement
was unlawful and that the first applicant did not intend vacating
the
premises on 31 March 2019. The first applicant’s attorney also
recorded that the applicant denied having received the
notice of
breach and that no notice was sent as required in terms of
Section 14
of the
Consumer Protection Act 68 of 2008
. The first applicant’s
attorney alleged that prejudice was being suffered by the applicant
due to the purported cancellation
of the lease. A demand was directed
to the respondent: to retract the purported cancellation; to give
notice to members that the
lease would not terminate; that the
respondent will honour the lease agreement with the first applicant
and that the respondent
would not obstruct the first applicant’s
business. The undertaking was sought by the close of business on 15
March 2019 failing
which the first applicant threatened to approach
court.
[10]
On 15 March 2019, the respondent answered the first
applicant’s attorney’s letter. In this letter, the
respondent recorded
that it believed that it followed due course to
terminate the contract; that the
Consumer Protection Act does
not
apply; that the respondent would not heed the demand; that the
respondent would resort to legal assistance if ExecuGolf does
not
vacate the premises and requested the applicant to comply with the
cancellation.
[11]
The applicants allege that subsequent to the aforesaid letter,
the respondent commenced making alterations to its reception area
to
accommodate a Pro Shop. The respondent was also informed by the
applicant’s attorneys on 27 March 2019 that thirty new
golf
carts were delivered to the respondent that morning but that the
carts were taken elsewhere. The applicant’s attorneys
informed
the respondent that it has been established that the respondent
intends using the golf carts in direct opposition with
the
applicant’s business.
[12]
The applicants approach this court for urgent interim relief
aimed at protecting their rights flowing from the agreement pending
finalization of proceedings to be instituted by the respondent for
the confirmation of the cancellation of the lease agreement
within
thirty days failing which, the interim relief would become final.
[13]
The applicants, in the founding affidavit denies that the
first applicant was in breach of the lease agreement that would
justify
a cancellation. It is the applicants’ case that the
respondent’s cancellation of the agreement is unlawful. The
applicants
allege that the respondent should have instituted legal
proceedings for the confirmation of the cancellation of the agreement
and
that its actions amounted to self-helpful. In paragraph 7.6 of
the founding affidavit, the first applicant alleges as follows:
“
I
also deny that the Applicants are in breach of the lease and that the
cancellation is justified, even if the cancellation was
procedurally
in order.”
[14]
The respondent raises two preliminary defences. The respondent
alleges that the second respondent is mis-joined as the agreement
was
entered into between the first applicant and the respondent. This
defence has merit as the first applicant himself alleges
that the
agreement was between him and the respondent and that the business of
the Pro Shop “…
.is operated under the auspices of the
Second Applicant.
” This allegation is not enough to
establish the second applicant’s
locus standi
. The
dispute concerns the lease agreement and the rights and obligations
flowing therefrom. The second applicant may have an interest
in the
application. A mere interest is not sufficient – a direct and
substantial legal interest that may be prejudicially
affected by the
court’s order is required (See: Snyders and Others v de Jager
[2016 ZACC 54).
This requirement the applicants have not established.
The second applicant is mis-joined. An appropriate costs order will
be made
to address this defect.
[15]
The second preliminary challenge the respondent raises relates
to urgency. The respondent alleges that the applicants have created
their own urgency and that the applicants have not complied with this
court’s directives relating to urgent applications.
I first
deal with the allegation of self-created urgency.
[16]
The first applicant knew unequivocally on 15 March 2019 that
the respondent would not give an undertaking as requested and that
the respondent intended to stand by the cancellation subsequent to
the respondent’s rejection of the first applicant’s
proposal on 1 March 2019. Surely the first applicant was entitled to
attempt resolve the dispute prior to approaching court. In
any event,
the first applicant was only informed that golf cart bookings were
redirected to the respondent on 28 March 2018.
[17]
With regards to the respondent’s contention that the
applicants have failed to comply with court’s practice
directive
regarding urgent applications concerns the requirement that
exceptional circumstances must be shown if the an applicant in an
urgent
application does not comply with the requirement that the
application must be ready by the Thursday at noon prior to the
Tuesday
when the application is to be heard. In this matter this
requirement was not complied with. The respondent was granted until 1
April 2019 to deliver its answering affidavit. The application was
enrolled for 2 April 2019. It is not in dispute that a golf
tournament is arranged for 5 April 2019 and that the applicant
derives substantial income from golf cart rentals. To this extent
I
find that these circumstances are sufficiently exceptional for the
applicants to have approached the court in the manner they
did. The
respondent’s challenge to urgency fails.
[18]
The first
in limine
defence succeeds. The second
in limine
defence is dismissed.
[19]
The respondent’s defence to the merits application is
that it had lawfully cancelled the agreement between the parties as a
result of ExecuGolf’s breach of the agreement and ExecuGolf’s
failure to remedy the breach. The respondent denies that
it has ever
interfered with the applicant’s business, that the reception
area of the respondent was used as a Pro Shop and
that it acquired
golf carts. The respondent admits that the first applicant had
exclusive rights to do business as a Pro Shop on
the golf course and
to operate the letting of golf carts but alleges that the rights
seized on 31 March 2019 by virtue of the cancellation
of the
agreement.
[20]
The applicants deny that the agreement was lawfully cancelled
in terms of the Consumer Protection Act 68 of 2008 (“the
Consumer Protection Act&rdquo
;). In his argument Mr Smith, who
appeared for the applicants, argued that due to the non-compliance of
the respondent with the
provisions of
Section 14
of the
Consumer
Protection Act, in
that the breach notice gave the applicant only
fourteen days to remedy the breach whereas the section provides for
twenty days
for the remedying of a breach, such notice was unlawful
and therefore the ultimate cancellation also. There is no force in
this
argument.
Section 14(2)(b)(ii)
of the
Consumer Protection Act
provides
as follows:
“
the supplier may cancel the agreement 20 business days
after giving written notice to the consumer of a material failure by
the
consumer to comply with the agreement, unless the consumer has
rectified the failure within that time;”
The clear
meaning of this section is that it entitles a supplier to cancel an
agreement after twenty days have elapsed subsequent
to a notice of
breach.
[21]
The respondent relies on clause 19 of the agreement in
its defence that it validly cancelled the agreement on 28 January
2019. Clause
19 of the agreement constitutes a
lex commissoria
.
In order for the respondent to lawfully rely upon
clause 19 for the valid cancellation of the agreement, the court must
be satisfied
that the first applicant was sufficiently aware of his
obligation and the consequences of not fulfilling his obligation.
This must
appear from the notice itself. It is not the wording that
is decisive. What is decisive is whether the notice communicates the
breaches, what is required and what is the effect of non-compliance.
[22]
Put differently, a creditor who
intends to cancel the contract on the ground of the
debtor’s
mora
must
also warn the debtor that, in the event of his failure to rectify his
default within the stipulated period, the creditor
reserves the right
to cancel the contract - see:
Nel v Cloete
1972
2 SA 150
(A) 159H.
The exact
wording is immaterial provided it clearly and unequivocally informs
the debtor that his failure to perform timeously may
result in the
cancellation of the contract – see:
Kragga Kamma Estates
CC v Flanagan
1995
2 SA 367
(A) 375C-F.
[23]
It is not in dispute that the first
applicant received the notice. The notice informs ExecuGolf and the
first applicant what performance
is required by the respondent. What
the notice does not communicate is what the consequence would be if
the alleged breaches are
not remedied. The respondent does not say
that a failure to remedy the alleged breaches will result in a
cancellation of the agreement.
As a matter of fact, the notice
invites ExecuGolf or the first respondent to submit a proposal on the
way forward.
[24]
Having regard to the notice and the
conduct of the parties subsequent to the notice, I find that the
“FINAL NOTICE”
sent on 4 May 2018 did not entitle the
respondent to cancel the agreement on 28 January 2019. I am able to
make this finding on
the papers alone as the notice, on the mere face
of it, suffers from a material defect.
[25]
The applicant is seeking interim relief. In order to be
granted interim relief the applicant had to establish the
requirements for
an interim interdict being a
prima facie
right, a real apprehension of irreparable harm, the absence of a
satisfactory alternative remedy and the balance of inconvenience.
[26]
The applicants rely upon their rights flowing from the
agreement for the relief they seek. If the agreement still subsists,
the
first applicant continues to have those rights which include
those exclusive rights afforded to the first applicant in terms of
the agreement. In light of the findings I made regarding the
cancellation, the first applicant’s rights in terms of the
agreement still subsist. The first applicant has established a
prima
facie
right.
[27]
The respondent’s conduct threatens the first applicant’s
rights in terms of the agreement. This is apparent from what
the
respondent communicated to its members on 21 February 2019. The first
applicant established the apprehension of irreparable
harm
requirement.
[28]
The respondent challenges the applicant’s allegation
that it does not have an alternative remedy by stating that the
respondent
has not violated any of the applicants’ rights. The
only basis upon which the respondent can make this allegation is that
the agreement was validly cancelled on 28 January 2019. In light of
my finding regarding the cancellation, there is no substance
in the
respondent’s denial that the applicants’ do not have an
alternative remedy.
[29]
In respect of the balance of convenience requirement, the
applicants state that they are in peaceful possession of the
facilities
and that the respondent has spoliated their rights. The
respondent meets this allegation with an admission that the
applicants
are in possession of the facilities and a denial that the
respondent has spoliated the applicants’ rights. Yet again the
respondent’s founds its denial of spoliation upon the validity
of its cancellation of the agreement. In light of the finding
I have
made regarding the cancellation, the respondent’s contentions
are not sustained.
[30]
I conclude by saying that
had the notice
not suffered from defect I might not have come to the applicants’
assistance because the first applicant has
not raised any real
challenge to the alleged breaches and the first applicant has not
established that any of the breaches were
purged within the period
afforded by the respondent. A right of cancellation accrues to a
creditor in terms of a
lex commissoria
when the debtor
fails to remedy the breach within the time afforded by the creditor.
The remedy of a breach by a debtor after the
time afforded by the
creditor does not deprive a creditor of such right – see:
Boland Bank Limited v Pienaar
1988
(3) SA 618
(A). See also Van Wyk v Botha &
Others
2005
(2) All SA 320
(C) paras 53-55; Galaxias Properties CC
v Georgiou 2013 ZAGPJHC 399 para 38. Absent the defect in the
notice, the
applicants may should have been non-suited.
[31]
I make the following order:
1.
The respondent is interdicted and refrained from conduct
that
infringes the rights of the first applicant in terms of the lease
agreement dated 1 December 2015 in respect of the Pro-Shop
premises
on the respondent’s property (“
the agreement”
),
and in particular the respondent is interdicted and restrained from:
1.1 Interfering with the
first applicant’s golf cart bookings by players or by
re-directing or taking golf cart bookings;
1.2 Engaging in the letting
of golf carts to its members in competition with the first
applicant;
1.3 Establishing of a
Pro-Shop on the premises in competition with the first applicant;
1.4 Distributing circulars
or other communication indicating that the first applicant’s
lease of the Pro-Shop has terminated;
1.5 Engaging in any other
contact which is an infringement of the first applicant’s
rights in terms of his lease.
2. The
orders above in paragraphs 1 to 1.5 shall operate as an interim
interdict pending the valid termination of the agreement.
3.
The respondent is ordered to pay the first respondent’s
costs
in the application.
Roelofse AJ
Acting Judge of the High Court
DATE
OF HEARING:
2
April 2019
APPEARANCES
FOR THE
APPLICANTS:
Mr Smith
Christo
Smith Attorneys
FOR THE
RESPONDENTS: Mr
Kruger
Instructed by Du Toit Smuts Attorneys
DATE OF
JUDGMENT:
3 April 2019