About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2019
>>
[2019] ZAGPPHC 157
|
|
Enyuka Prop Holdings (Pty) Ltd v Delport Van Den Berg Inc and Another (41143/18) [2019] ZAGPPHC 157 (10 May 2019)
IN THE HIGH COURT OF SOUTH
AFRICA
GAUTENG LOCAL DIVISION,
PRETORIA
CASE
NUMBER: 41143/18
9/5/2019
In
the matter between:
ENYUKA
PROP HOLDINGS (PTY) LTD
Applicant
and
DELPORT
VAN DEN BERG INC
First Respondent
GEDEELTE
1 VAN ERF 3887 BARBERTON (PTY) LTD
Second Respondent
JUDGMENT
AE
ANDREWS, AJ
[1.]
This is an application for an order that first respondent, a firm of
attorneys, be compelled
to release the amount of R2 500 000 to the
applicant, together with all interest accruing thereon. The funds are
currently being
held in a Section 78(2A) trust account by the first
respondent.
[2.]
The background to this matter is as follows. On or about 26
th
August 2015 the applicant entered into a written sale agreement ("the
agreement") with the second respondent. It purchased
a rental
enterprise known as Jock of the Bushveld Shopping Centre situated at
portion 1 Erf 3887 Barberton, for R62 250 000 including
VAT. The
enterprise consisted of the immovable property situated on this erf,
together with all fixed assets, moveable assets and
the second
respondent's rights in terms of the then extant lease agreements. The
first respondent was appointed conveyancer for
this transaction.
The Pick n Pay Project
[3.]
The parties recorded in clause 23.3 of the agreement that the second
respondent had an
existing liability to undertake certain renovation
works ("the works") for Pick n Pay in terms of their lease
agreement,
and that Pick n Pay had agreed to pay an increased monthly
rental on completion of the works referred to in clause 23.3.1.1. of
the agreement. It was recorded that the second respondent anticipated
that these works would be completed prior to the date of
transfer to
the applicant.
[4.]
However the agreement provided for the possibility that this might
not take place, setting
out a contractual structure in clause
23.3.1.3 to cater for the event that the completion of the works to
the satisfaction of Pick
n Pay and consequent increase in the monthly
rentals had not taken place prior to transfer. In terms of this
structure the second
respondent undertook in clause 23.3.2.1 that in
these circumstances it would pay to the applicant the difference
between the anticipated
increase in rental and the current rental
payable by Pick n Pay. In this regard the applicant was required to
provide the second
respondent with appropriate VAT invoices.
[5.]
The parties also agreed that R5 000 000 (the "retention amount")
would be deposited
by the applicant into the first respondent's trust
account and held there on its behalf. The funds would only be
released to the
second respondent if the following events took place:
[5.1]
50% of the retention amount would be released on the issue of a
certificate by both the applicant
and second respondent's quantity
surveyors, confirming that not less than 50% of the works had been
completed, and
[5.2] The
remaining 50% of the retention amount plus interest would be paid to
the second respondent on
the issue of a certificate jointly by the
same parties confirming that not less than 100% of the works had been
completed; a certificate
of compliance in respect of the electrical
installation in the Pick n Pay premises had been issued; an
occupational certificate
had been issued by the local authority in
respect of the Pick n Pay premises; and that Pick n Pay had confirmed
in writing that
the works and all snags had been dealt with to their
satisfaction.
[6.]
The agreement also provided for the retention amount to be payable to
the applicant under
certain circumstances. Clause 23.3.3 reads:
"In the event that the
completion of the works contemplated in clause 23.3.1.1. above, to
the satisfaction of Pick n Pay, and
consequent increase in the
monthly Pick n Pay rentals have not taken place within 12 months from
date of transfer the retention
amount (or portion thereof if a
payment has been made in terms of clause 23.3.2.3) plus interest
shall be paid to the purchaser
and the purchase price shall
automatically be reduced by an amount equal to the retention amount
or portion thereof. After the
purchase price has been reduced by an
amount as provided for in this clause 23.3.3 the seller shall have no
further liability of
whatsoever nature in respect of the Pick n Pay
works."
[7.]
Transfer of the property took place on or about 14th November 2016,
however the works had
not been completed by this date. During or
about April 2017 R2 500 000 was released by the first respondent to
the second respondent.
Summary of issues
[8.]
Applicant seeks the release of the funds pursuant to the alleged
non-occurrence of an event
contemplated in the sale agreement between
it and the second respondent. It avers in its founding affidavit that
by 14
th
November 2017 the works had still not been
completed and Pick n Pay was not paying the increased rental. Hence,
in terms of the
agreement the first respondent was obliged to return
to it the remaining R2 500 000 to it together with interest accrued.
However
despite demand the first respondent has failed to release the
funds to the applicant.
[9.]
The second respondent argues that the only time the first respondent
will be obliged to
release the funds to the applicant is if the Court
holds that the purchase price has been reduced in terms of clause
23.3.3.
[10.] In
its answering affidavit the second respondent states that the
renovation works had been completed
during June 2017 as confirmed by
the occupation certificate, as well as the second respondent's
failure to provide VAT invoices
for the difference between the
increased and actual rentals as was its obligation in terms of clause
23.3.2.1.
[11.] In
its replying affidavit the applicant changes its version on the issue
of payment of the increased
rental. It states that Pick n Pay has
been paying this amount since June 2017, thus commencing some six
months before the final
date for the completion of the works as
contemplated in clause 23.3.3, however not because it was satisfied
with the works, but
because the applicant and Pick n Pay had entered
into an agreement. Part of the agreement included an undertaking that
the applicant
would attend to the relevant snags, and incomplete and
defective works.
[12.] The
second respondent contends that there is a dispute of fact regarding
the question of whether the
works had been completed timeously, which
dispute is not capable of being decided on the papers. The gist of
the dispute according
to second respondent is that it maintains that
the works were completed to Pick n Pay's satisfaction by June 2017 ,
whilst applicant
maintains that they were still not completed by 14th
November 2017.
Interpretation of the agreement
[13.] The
application hinges on the interpretation of the sale agreement
between the applicant and the second
respondent.
[14.]
Clause 23.3.2.4 sets out the conditions for return of the balance of
the retention amount to the seller.
Clause 23.3.3 sets out the
conditions for payment of the retention amount to the purchaser.
These clauses are different. The condition
that approval by Pick n
Pay should be in writing is required in the former, but not the
latter clause. Pick n Pay therefore did
not have to give its approval
in writing under clause 23.3.3 for fate of the retention amount to be
determined in terms of this
clause.
[15.] In
order for the applicant to succeed in its claim for a reduction in
the purchase price it must establish
that prior to 14 November 2017 -
[15.1] The renovation works
(the works) had not been completed to the satisfaction of Pick n Pay;
and
[15.2] The consequent
increase of the month rentals had not taken effect. The second
requirement for a reduction in the purchase
price is fulfilled, (in
the event that prior to 14 November 2017 Pick n Pay was paying the
increased rentals), if such increased
payments were not as a
consequence of Pick n Pay being satisfied that the works had been
completed.
Was Pick n Pay satisfied with
the works?
[16.]
Clearly, as Pick n Pay did not have to give its written approval of
the completion of works in terms
of clause 23.3.3 - its approval
could also legitimately have been inferred from relevant facts.
[17.] The
founding affidavit refers to correspondence between the applicant's
attorneys and the first respondent
dated 3rd April 2018 complaining
that Pick n Pay had failed to confirm in writing that all works and
snags have been dealt with
to their satisfaction as required in terms
of clause 23.3.2.4.4 of the contract. It states that "moreover,
de facto,
the works and all snags have not been completed or
dealt with in a satisfactory manner." Secondly this letter of
demand states
emphatically that "it is a
matter of
record
that the increased monthly rentals anticipated from Pick n Pay have
not been effected." It advises the first respondent
that it is
duty bound to release the retention amount to the applicant, plus
interest thereon. To date the first respondent has
failed to do so.
[18.]
Paragraphs 1.5 and 1.6 of its replying affidavit contradict this
letter in two material respects.
Applicant states that Pick n Pay
ceased to render VAT invoices to the second respondent in June 2017
as it had "started paying
an increased rental." The next
paragraph refers to Pick n Pay paying
the
increased rental.
The VAT invoices were for the increased rental reflected in the
agreement, and according thereto would only cease
to be rendered if
the increase was being paid by Pick n Pay.
[19.]
Applicant also annexes to its replying affidavit a snag list
presented in June 2017 by Pick n Pay
to the second respondent which
shows that all snags have been addressed, save for a query regarding
a tear in a soft duct. There
are therefore major factual
discrepancies between the applicants founding and replying
affidavits.
[20.]
Applicant states in its replying affidavit that Pick n Pay has been
paying the increased monthly rentals
from June 2017, but not because
the construction works were complete. It refers to it having entered
into an agreement with Pick
n Pay, without giving the date of the
agreement, and states that it had undertaken to attend to relevant
snags and incomplete and
defective works, which are not specified. It
states that the increased payments were as a result of the applicant
"commercially
negotiating with Pick n Pay for the payment of the
increased rental notwithstanding that Pick n Pay was not happy with
the construction
works". Pick n Pay started paying the increased
rental in June 2017.
[21.] No
explanation is given by the applicant for this change in its version
presented under oath in its
founding affidavit. It appears to have
been prompted by the second respondent's affidavit which states that
no VAT invoices requesting
increased rentals had been tendered as of
June 2017.
[22.]
Apart from not explaining the factual contradictions , the applicant
also provides no documentary
evidence of it having attended to the
repairs, and when it did so. It baldly states that as late as March
2018 it was still attending
to certain incomplete and defective
works. The only documentary evidence tendered is a quote dated 13t h
March 2018 from Magic
Plumbers.
[23.]
Notwithstanding the snag list which represent the snags, bar one
query regarding a tear in a soft
duct, as having been resolved in
June 2017 to the satisfaction of Pick n Pay, the applicant also
attaches to its replying affidavit
two further letters dated 2nd
August 2017 and 15
th
November 2017 from Mr Webb of Pick n
Pay to the second respondent indicating that
inter alia
the
roof is leaking, there are problems with the air conditioning as well
as disintegrating floor surfaces.
[24.] The
Oxford English Dictionary definition of snagging is "the process
of checking a new building
for minor faults that need to be
rectified." The applicant, though by now the lessor of the
premises to Pick n Pay does not
shed any light on how it had come
about that two months after the snag list had recorded the snags as
resolved, there were significant
problems being raised by Pick n Pay.
The terms of the renovation works agreed upon initially between Pick
n Pay and the second
respondent in the main agreement are not spelt
out at all, and as a result hence is it not possible to ascertain
from the application
whether the subject matter of these two letters
falls under these works or not.
[25.]
There is a further discrepancy in the applicant's case. Applicant's
explanation inreply is irreconcilable
with these two letters, as they
indicate that Pick n Pay was still looking to the second respondent
,to attend to the works right
up to 17
th
November 2017,
notwithstanding the alleged agreement where applicant would attend
thereto against payment of the increased rentals
by Pick n Pay.
[26.] The
second respondent denies the applicant's averments that Pick n Pay
was not satisfied with the
works before the end of the 12 month
period, and refers to several facts and circumstances, from which it
contends the inference
can be drawn that the works had indeed been
completed to Pick n Pay's satisfaction.
[27.]
Firstly the answering affidavit refers to a certificate of occupation
that had been issued on 6th
June 2017 by the local authority, that
indicates that the building had been erected and finished according
to approved building
plans and the relevant legislation.
[28.]
Secondly it refers to the fact that the applicant had failed to
provide VAT invoices for the difference
between the increased and
actual rentals as was the applicant's obligation in terms of clause
23.3.2.1. it stated that upon a proper
interpretation of 23.3.1.3 and
23.3.1.2 the monthly rentals could only be increased upon Pick n
Pay's indication to the applicant
that the works had been completed
to its satisfaction and until such indication had been given the
applicant had a contractual
obligation to provide the second
respondent with VAT invoices for the difference between the increased
monthly rentals and the
actual rentals payable by Pick n Pay.
[29.] The
second respondent argues that on a proper interpretation of clause
23.3.3 the purchase price would
only be reduced if the monthly Pick n
Pay rentals had not been increased by 14
th
November 2017,
and that payment of the increased rentals, (which were only disclosed
to it in he replying affidavit) had indicated
that the works had been
completed to the satisfaction of Pick n Pay.
[30.] In
argument the second respondent contends that if the applicant is to
be believed it had decided
to effect the works itself before the end
of the 12 month period and in so doing has precluded the second
respondent from doing
so. It contends that a compelling argument can
be made that the applicants alleged completion of the works
constituted fictional
fulfilment of the condition that the purchase
price would not be reduced unless the works be completed by 14
November 2017.
[31.]
Finally it contends that the existence of the snag list as annexed to
the replying affidavit implies
that the works had been completed in
June 2017.
Discussion
[32.]
It is trite that in application proceedings the applicant must set
out the facts necessary to establish
a
prima
facie
case in as
complete a way as the circumstances demand in its founding affidavit.
The stating of a bald allegation of fact is done
at the applicant's
own risk since it will usually not be permitted to set out a more
complete case in reply. (see Harms, D
Civil
Procedure in the Superior Courts
[1]
)
Introducing new
material in replying affidavits is likewise problematic. As stated in
Riddle v Riddle
[2]
"Undoubtedly, it is a general
rule of our practice that all allegations necessary to establish the
applicant's cause of action
must appear in the petition and/or the
supporting affidavits and that the petitioner cannot cure a deficient
case or fortify one,
inadequately set forth, by introducing new
matter in his replying affidavits, and that if he attempts to do so
the offending paragraphs
in the latter affidavits will be struck
out."
[33.] The
facts on which applicant relies in this matter are that Pick n Pay
did not indicate that it was
satisfied with the works prior to
November 2017. It has been paying the increased rentals but not as a·
consequence of being
so satisfied. The latter averment is however
contained in the applicant’s replying affidavit not its
founding affidavit,
and contradicts what is averred in the founding
affidavit. The applicant does not take the court into its confidence
by providing
an explanation for the discrepancy in its affidavits
regarding its failure to mention at the outset that Pick n Pay was
paying
the increased rentals.
[34.]
Given the terms of the founding agreement Pick n Pay's payment of the
increased rentals is indicative
of it having approved the works. The
applicant was aware of these payments when it drafted the founding
affidavit and had a duty
to disclose this fact therein. The failure
to explain why it failed to do so do so leads to the conclusion that
the applicant was
culpably remiss in preparing this application.
[35.] As
the applicant fails to set out the essential averments of fact for
its cause of action in its founding
affidavit the respondents as a
result have been deprived of an opportunity to respond thereto. The
applicant's averments of fact
are scanty, and documentary evidence in
support thereof, which must have been at its disposal is not
tendered. The absence of any
detail in the evidence of the alleged
agreement between Pick n Pay and the applicant, and how applicant
complied therewith results
in respondents not being able to determine
the case they have to meet.
[36.]
Finally, on .the facts presented the applicant's version is
implausible. In its heads of argument
second respondent raises a
number of pertinent questions that suggest the improbability of
applicant's explanation for the increased
rental. These include
querying why Pick n Pay would opt to pay the increased rental if they
could have insisted on the seller paying
it, and why would they
entrust the completion of the works and snags to the applicant at a
stage when the seller still has five
months to complete the works. I
consider it implausible that after entering into an agreement
effectively shifting the obligation
to attend to the works to
applicant, Pick n Pay would still continue to hold second respondent
accountable for repairs to its premises.
Conclusion
[37.] The
applicant seeks to prove that Pick n Pay was not satisfied with the
works prior to November 2014
by relying on the fact that Pick n Pay
has not stated as much in writing, and on the existence of two
letters annexed to its replying
affidavit. Pick n Pay did not need to
indicate its satisfaction in writing for the purposes of clause
23.3.3. The documents referred
to in clause 23.3.2.4 have no bearing
on the question of the reduction of the purchase price.
[38.] The
second respondent disputes that Pick n Pay was not satisfied with the
works prior to November
2014 based on three facts: it had paying the
increased rental, had completed a snag list where all issues were
resolved (save for
one query), and the fact that an occupation
certificate had been issued which indicated that the building was fit
for purpose and
had been completed according to plan. These events
pre-date the two letters that applicant relies on.
[39.] The
applicant has failed to establish the factual basis for the relief it
seeks in its founding affidavit.
The facts tendered by it in the
replying affidavit contradict the founding affidavit, and for the
most part consist of bare allegations,
unsupported by evidence, that
are improbable.
[40.] The
version that Pick n Pay accepted the snag list and occupation
certificate and began paying the
increased rentals as a consequence
of being satisfied with the works has the ring of truth about it
although I make no findings
in this regard.
[41.] The
requirements for the reduction of the purchase price in terms of
clause 23.3.3 have not been proved
by the applicant to have been met.
The application must therefore fail.
[42.] The
first respondent, although instructed by the applicant, holds the
funds in trust pending the outcome
of the two different scenarios,
envisaged in clauses 23.3.2.4 and 23.3.3 of the agreement. Applicant
is bound by this agreement
and may not lawfully instruct the first
respondent to act in a manner which frustrates the proper carrying
out of its terms, and
the resolution of the issues reflected in these
clauses. As the requirements of the reduction of the purchase price
have not been
proved by the applicant to have been met it follows
that the court will not order the first respondent to pay the funds
demanded
(R2 500 000 plus interest accrued thereon) to the applicant.
[43.] I
make the following order:
[43.1] Condonation is
granted for the late filing of the replying affidavit;
[43.2] The application is
dismissed;
[43.3] The applicant is
ordered to pay the second respondent's cos
AE ANDREWS, AJ
ACTING JUDGE OF THE HIGH COURT,
PRETORIA
APPEARANCES
DATE
OF HEARING
5
th
February 2019
DATE
OF JUDGMENT
10
th
May 2019
APPLICANT'S
COUNSEL
Adv J M Hoffmann
APPLICANT'S
ATTORNEYS
Nochumsohn
& Teper
2
nd
RESPONDENT'S COUNSEL
Adv A F Arnoldi SC
1
st
and 2
nd
RESPONDENTS'ATTORNEYS
Delport van den Berg
Attorneys
[1]
Lexis Nexis, February 2019 at 96.25
[2]
(1956) 3 All SA 9
(C) at page 17