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[2019] ZAWCHC 71
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A.S and Another v J.C and Others (A63/2017) [2019] ZAWCHC 71; [2019] 3 All SA 425 (WCC) (19 June 2019)
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Certain
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IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
no: A63/2017
In
the matter between:
AS
First
Appellant
ANS
Second
Appellant
v
JC
First
Respondent
THE
CITY OF CAPE
TOWN
Second
Respondent
THE
OCCUPIERS OF THE PREMISES KNOWN AS
[...],
L ROAD,
WOODSTOCK Third
Respondent
Coram:
Justice J I Cloete
et
Justice M K Parker
Heard:
17 May 2019
Delivered:
19 June 2019
JUDGMENT
CLOETE
J
:
Introduction
[1]
This is an appeal against the order of the acting magistrate at Cape
Town handed down on 6 September 2018 dismissing the
appellants’
application to evict the first and third respondents from a
residential unit situated at […], L Road,
Woodstock. In the
appeal
Mr Gess
appeared
pro amico
for the appellants
and
Mr Brown
, together with
Ms Khan
,
pro bono
for the first and third respondents. We are indebted to them for
their considerable assistance, including their input both prior
to
and during the appeal, which resulted in the disputed issues becoming
crystallised.
[2]
The second appellant is the registered owner of the unit which the
first appellant was at all material times duly authorised
to let to
tenants on her behalf. During March 2013 the first appellant (“AS”)
concluded a written lease agreement (“the
lease”) with
the first respondent (“JC”) who had already taken
occupation of the unit.
[3]
The date of commencement of the lease was 1 April 2013. Clause 5
provided that the lease would continue indefinitely
‘…
with
both the lessor and the lessee being entitled to terminate the same
on two clear calendar months’ written notice to this
effect’.
The other occupants of the unit are Mr EC and Mr TL. Only
Messrs JC and EC opposed the application and persist
with their
opposition in this appeal. Mr TL indicated that he would be able
to find alternative accommodation and thus abided
the decision of the
court
a quo.
[4] At
the heart of this appeal is whether or not AS lawfully cancelled the
lease on 3 October 2017. Regrettably in his judgment
the acting
magistrate failed to make any specific finding that JC (and thus EC)
were unlawful occupiers for purposes of the Prevention
of Illegal
Eviction From and Unlawful Occupation of Land Act 19 of 1998 (“PIE”),
which is a statutory prerequisite
for determination of the second and
third stages of an enquiry under PIE, namely whether it is just and
equitable to evict and,
if so, the fixing of a just and equitable
date for this purpose.
[5]
From what can be gleaned from the judgment it appears that, because
the acting magistrate found that a particular clause in
the lease
(clause 16.4) offended against the Constitution, was contrary to
public policy and therefore unenforceable, the lease
was not validly
cancelled. The acting magistrate then proceeded to find that, because
JC had subsequent to the cancellation settled
what the acting
magistrate described as ‘
the arrear rental’
, it
would not be just and equitable to evict. This was not necessary
given his implicit finding that JC and EC could not be unlawful
occupiers, and no more need be said about it.
[6]
During the appeal counsel were
ad idem
that neither the
Consumer Protection Act 68 of 2008 (in particular s 14(2)(b)(ii)
thereof) nor the
Rental Housing Act 50 of 1999
find application,
given that the lease in question is not a fixed term lease, despite
the acting magistrate having placed his own
particular interpretation
thereon in order to bolster his finding that AS was required to
furnish JC with one month’s notice
to vacate in circumstances
where the latter was alleged to have breached the lease.
Relevant
Clauses of the Lease
[7]
Clause 4.3 provides that rental ‘
must be paid monthly in
advance on or before the first day of each month’.
Clause
7.2 stipulates that:
‘
If the rental is paid
after the 7
th
day of the month in which it is due, the Lessee must on demand pay to
the Lessor an amount of R100.00… to cover collection
fees
and/or additional administration costs.’
[8]
Clause 7.1.3 provides that the lessee must on demand pay to the
lessor ‘
all charges for electricity (including electricity
service charges) consumed on the Premises’.
[9]
Clause 16 is the breach clause and reads in relevant part as follows:
‘
BREACH
16.1 Despite any other clause
in this agreement, should –
16.1.1 the Lessee fail
to pay the Deposit or any Rental on the relevant due date; or
16.1.2 either one of
the parties (“
the
defaulting party”
)
breach any of the other terms of this agreement and fail to remedy
such breach within 14 (fourteen) days after receipt of a written
notice from the other party (
“the
aggrieved party”
)
demanding that the breach be rectified;
then the aggrieved party
(which includes the Lessor for the purposes of clause 16.1.1) may
without affecting any other legal rights:
●
either claim specific
performance; or
●
cancel this agreement
immediately, without further notice, and recover damages from the
defaulting party,
provided that if the Lessee
commits a breach of the provisions of this agreement three times in
any calendar year, then upon the
third breach, the Lessor may
immediately implement either of the remedies referred to above,
without first having to give the Lessee
written notice to rectify the
breach…
16.4 Should this Agreement be
cancelled by the Lessor for any reason whatsoever, the Lessee and/or
any other person occupying the
Premises on the Lessee’s behalf,
must immediately vacate the Premises and allow the Lessor to take
occupation thereof.’
[10]
Finally, clauses 19.4 and 19.10 read as follows:
‘
19.4 No amendment of
this agreement or of any clause thereof and no agreement to cancel
this agreement will have any effect unless
reduced to in writing and
signed by the parties or their authorised representatives.’
‘
19.10 No
indulgence granted by a party (including, without limitation,
acceptance by the Lessor of any payment after the due
date, whether
on one or more occasions) shall constitute a waiver of any of that
party’s rights under this agreement; accordingly,
that party
shall not be precluded, as a consequence of having granted such
indulgence, from exercising any rights against the other
party, which
may have arisen in the past or which may arise in the future.’
Background
Facts
[11]
The pertinent background facts, which are either common cause or not
materially disputed, are as follows. AS is an attorney.
JC is a
refugee from Southern Cameroon who was initially granted refugee
status in South Africa in 2000. He is employed as a seasonal
worker
in the film industry and accordingly does not receive a regular
monthly income.
[12]
JC commenced residing in the unit in 2010 under title of the lessee
at the time. During 2013 the previous lessee vacated and
the lease
was then concluded between AS and JC. EC has resided under JC’s
title as lessee since 2014. He too has been granted
asylum in South
Africa. He is employed as a sailor as and when he is able to secure
such employment and tries to supplement his
earnings by tutoring
mathematics. His income is thus also neither regular nor consistent.
[13]
Kedjom is JC’s first language but he understands basic English.
When the lease was concluded there were some clauses
which, not being
in plain language, he did not fully understand and which were not
explained to him.
[14]
Subsequent to conclusion of the lease JC initially resided alone in
the unit. However, due to the irregular nature of his income,
it
became increasingly difficult for him to meet his rental obligation
timeously. He accordingly found others to stay with him
to help cover
the rent. He believed that he was permitted to do so since JC had
himself previously resided in the unit with the
former lessee on the
same basis. Furthermore AS was aware of JC’s arrangement and
did not object.
[15]
JC did not always make timeous payment of the rental. AS regularly
and without voicing any disagreement accepted his late payments.
For
the most part, JC managed to make payment of the full monthly rental
during the course of each month. Despite late payment
AS did not
invoke his right to charge the additional fee in terms of clause 7.2
of the lease.
[16]
He also did not always make timeous payment of the electricity
charges. When the lease was concluded AS did not explain to
him how
the charges would be demanded or how, or to whom, JC should make
payment thereof. He accordingly adopted the same modus
operandi as
the previous lessee by effecting payment of what he understood to be
owing as soon as possible after receipt of invoices
delivered via
post by the City to the unit. However he did not receive regular
monthly invoices from the City and it often occurred
that the City
invoice received would have large amounts of accumulated charges as a
result, making it difficult for JC to settle
these immediately.
[17]
During May 2015 the City disconnected the electricity supply to the
unit. JC alerted AS to this and also approached the City
in an
attempt to resolve the issue.
[18]
Through his engagements with the City it was determined that the
electricity had been disconnected due to arrear charges and
rates. AS
had failed or neglected to change the property ownership details with
the relevant City department and the account for
the unit was still
in the name of the previous owner, Mr Alexander Erwin. The issue
could only be resolved by AS who was required
to attend on the City
accounts department in order to rectify this. The electricity was
subsequently reconnected on 5 June
2015, approximately 22 days
after it had been disconnected.
[19]
AS informed JC telephonically that he had settled the account with
the City. It was agreed that JC would repay him the money
owing in
respect of the arrears. AS did not provide him with proof of the
exact outstanding amount, but JC recalls that AS advised
him that it
was approximately R5 000. It was agreed that JC would pay this
off as soon as he could (‘
the 2016 agreement’
).
[20]
On or about 2 February 2016, when JC was out of Cape Town, he
was informed by EC that a notice had been delivered to the
unit
indicating that the electricity would be disconnected, again owing to
arrear rates and electricity charges (it is common cause
that JC was
not responsible for the rates in terms of the lease, but that this
was the lessor’s responsibility). At that
stage JC had not
received any invoice for approximately three months. He accordingly
despatched EC to the City to pay R2 000
in order to prevent the
immediate disconnection of the electricity supply; ascertain the
amount of arrear electricity charges;
and make arrangements to pay
off the balance. JC attached proof of payment of the amount of
R2 000.
[21]
Again JC contacted AS to advise him of this, and to ask for guidance
as to how the issue could be resolved and whether a pre-paid
electricity meter could be installed. He addressed an email to AS
dated 12 February 2016 in this regard. JC does not recall
AS
responding to this email. Again in February 2016, alternatively at
the beginning of March 2016, another invoice was delivered
to the
unit by the City indicating that an amount of R4 712.83 was
owed.
[22]
At the time JC believed that the invoice was for the arrear
electricity charges consumed at the unit. He was unable to pay
the
full amount at once, but made two payments to the City totalling
R2 460 on 12 March 2016 and 16 March 2016.
Again he
annexed proof of these payments.
[23]
Towards the end of March, alternatively at the beginning of April
2016, a further invoice from the City was delivered to the
unit
reflecting a balance due of R2 460. JC made a payment of R760,
and thereafter continued to pay the City invoices as he
received them
in the post.
[24]
On 29 September 2016 JC received a letter from AS wherein for
the first time he provided him with a schedule of amounts
allegedly
owing in terms of the lease totalling R16 457.02. Disputing the
amount, JC requested a meeting to discuss and resolve
the issue. On
or about 30 September 2016 AS responded in an irritable and
hostile manner, informing JC that he had ‘
no intention of
continuing this debate and for many more months to come. We will
either in the next week come to an agreement as
to what is owing by
you, and how you intend to settle your arrears, alternatively I will
be left with no option to leave it to
the courts to determine what is
actually owing by you’.
AS subsequently refused to meet
with JC until January 2017. According to JC, in the interim he
continued to pay rental as well
as the invoices from the City when
same were received in the post.
[25]
Both EC and JC were present at the January 2017 meeting. They were
not legally represented and were not fully aware of their
rights. It
was at this meeting that JC first found out that the payments he had
made amounting to R3 220 (i.e. R2 460
+ R760) had in
fact been appropriated to the account of the previous owner of the
unit, Mr Erwin; and that they were not credited
to the
electricity charges for the unit. It was AS who established this but
informed JC that this was not his (i.e. AS’s)
problem. AS
advised JC that, going forward, he would email the City’s
invoices to him and that payment in respect of electricity
charges
for the unit must be made into AS’s account.
[26]
Although JC accepted that he still owed AS money in terms of the 2016
agreement, he did not understand the breakdown of amounts
that AS
showed him at the meeting. He did not know how to challenge these
amounts or that he had the right to do so. AS stated
that unless JC
paid the arrears he would take him to court, the lease would be
cancelled and he would need to vacate the property.
Both JC and EC
experienced AS’s demeanour as intimidating and believed that as
an attorney, he was in a position of power.
[27]
Without a proper understanding of his rights, or the situation, and
with fear of legal action being taken against him, including
that the
lease would be cancelled and that he would be evicted, JC agreed to
acknowledge that the amount he owed AS was R10 000
and that he
would pay it off over time. There was no agreement regarding the date
by when he was required to settle this amount,
nor how much he would
need to pay every month. He explained to AS that he would pay as soon
as he could. His version was confirmed
by EC under oath.
[28]
On 23 January 2017 AS wrote to JC as follows:
‘
I refer to our meeting
on Friday last week and attach hereto an updated schedule of the
arrears regarding the rental payments.
I confirm that we agreed on
Friday last week that the arrears would be reduced to R10 000
and that you agree that that amount
is owing by you for the period
ending 31 January 2017. It was furthermore agreed on Friday last
week that you would attempt
to reduce the arrears by making
additional payments every month as to ensure that the rental payments
are up to date in the near
future.
Kindly reply to this email to
confirm your agreement with the content thereof.’
[29]
There is no indication on the papers that JC confirmed his
“agreement” with the content of that email. However,
on
its plain language, it supports JC’s version to the extent that
there was no agreement as to a specific date by which
the so-called
arrears would be settled; and indeed, the high water mark was that JC
‘
would attempt to reduce’
the arrears by making
additional payments every month so as to ensure that the ‘
rental
payments’
were up to date ‘
in the near future’.
In the replying affidavit AS did not contend that the contents of his
email were in any way incorrect. However he maintained that
JC’s
allegation that he was ‘
put under duress to agree to
something he would otherwise not have agreed to’
was
‘
bizarre’
given his offer during that meeting to
reduce what he considered to be the arrears then owing from
R12 311.37 to R10 000.
[30]
After consulting with his legal representatives JC was advised that
the January 2017 agreement was void due to lack of consensus
as well
as a conflation of his obligations under the lease and the 2016
agreement (in relation to the arrear electricity charges).
[31]
Subsequent to the January 2017 meeting JC continued to make payment
of rental but struggled to make payments over and above
the rent and
electricity charges, since he did not have any regular work for over
a year and was surviving primarily on support
from friends and
stipends from ad hoc work for community organisations. He was
expecting to receive income from some work he had
done as well as a
tax refund from SARS, and alerted AS to this.
[32]
JC did not receive a schedule or statement from AS for the months of
February and March 2017. Accordingly, he did not know
what the
electricity charges were for those months and was unable to make
payment. AS started emailing him schedules reflecting
the rent and
electricity charges due, according to him, from April 2017. Sometimes
he would attach the invoice from the City as
proof of electricity
charges owed, and at other times not.
[33]
On 23 May 2017 AS wrote to JC enclosing what he referred to as ‘
the
latest rental schedule’
and advising him that:
‘
You will note that the
overdue amount increases from month to month instead of decreasing.
That state of affairs is no longer acceptable.
Unless we see a determined
effort during the next two to three months to reduce the arrears
significantly we will be left with no
option but to give you notice
of termination of the lease agreement.’
[34]
This was followed by a further email dated 31 July 2017 to
similar effect but JC was also informed that:
‘…
Unless a
significant payment is received by us during the course of next week
to reduce the arrears we will commence with the necessary
steps to
replace you with a tenant who is actually able to pay the monthly
rental and related charges.’
[35]
The schedule annexed to that email reflects that, save for the
“agreed amount” of R10 000 at 31 January
2017,
JC was in fact ahead with his rental payments, with the total amount
allegedly owing in respect of electricity charges for
the period
February 2017 to July 2017 being R4 322.76.
[36]
What is important about these emails is that: (a) on AS’s
own version, they constituted an attempt to unilaterally
vary the
terms of the January 2017 agreement which he maintained was valid and
binding; and (b) in respect of electricity
charges, no demand
was made as envisaged in clause 7.1.3 of the lease; instead AS
regarded them simply as accrued arrears.
[37]
On 21 August 2017 AS arrived at the unit and handed JC a letter
dated 16 August 2017 which read as follows:
‘
Attached hereto is a
schedule of the arrear rental payable by you which amounts in total
to R12 623.99. Not included in that
amount is the electricity
for the month of August 2017.
Your failure to pay the
amount of R12 623.99 [of which an amount of R10 000 has
been overdue since January 2017] constitutes
a breach of the
agreement of lease. In the premises you are hereby given notice that
unless the amount of R12 623.99 is deposited
into the lessor’s
bank account by no later than close of business on 26 August 2017,
the lessor will proceed to cancel the
agreement of lease and the
lessor will then make application for your eviction from the
premises.’
[38]
It will immediately be apparent that the aforesaid demand,
particularly insofar as the “agreed” amount of R10 000
is concerned, constituted a further attempt by AS to unilaterally
vary the terms of the January 2017 agreement upon which he relied.
Moreover, AS classified the amount allegedly owed as arrear
rental
whereas in the lease itself a clear distinction is drawn between
rental and electricity payments. At the risk of repetition,
electricity
charges were payable by JC on demand and the email of
16 August 2017 itself specifically stated that electricity
charges for
the month of August 2017 were not included. It is thus
fair to accept that no demand for payment of electricity for the
month of
August 2017 was made. In any event, AS did not comply with
clause 16.1.2 of the lease because he failed to put JC to terms to
remedy
the alleged breach within 14 days after receipt of the notice.
He also placed no reliance on the “third breach in any one
calendar year” in clause 16.1, either in his correspondence to
JC or the founding affidavit.
[39]
Despite his demand, AS took no further steps at that stage. According
to him, on 20 September 2017 JC paid an amount of
R4 000
and by 9 October 2017 a further amount of R6 300. In the
interim, on 3 October 2017 AS addressed an
email to JC,
referring to the previous demand and informing him that:
‘
1. Our client confirms
receipt of your payment of R4 000 on 20 September 2017;
2. You have failed to pay to
our client the balance of R8 623.99 of the arrears of R12 623.99
referred to in our client’s
letter of demand dated 21 August
2017;
3. You have furthermore
failed to pay to our client the rental for the month of October 2017
in the amount of R6 285.46 which
was due and payable on
1 October 2017.
In the premises our client
has elected to cancel the agreement of lease pursuant to which you
are in occupation of the abovementioned
premises. You are accordingly
required to vacate our client’s property within twenty-four
hours of receipt of this notice,
failing which our client will make
application for your eviction from the premises.
[40]
Accordingly on AS’s version JC was indebted to him on 3 October
2017 in a total sum of R14 909.45. However in the
founding
affidavit he alleged that JC owed him R17 586.47 at that date of
which the disputed amount of R10 000 in terms
of the January
2017 “agreement” comprised the major portion.
[41]
Not only is the validity of that agreement disputed by JC but, on
AS’s own version, its terms do not support any entitlement
to
cancel, given the clear wording of his email dated 23 January 2017
stating that what was agreed was that JC
would attempt
to
reduce the arrears by making additional payments every month so as to
ensure his
rental
payments were up to date in the near future.
The content of that email also contradicts what AS alleged in the
founding affidavit
that JC ‘
would pay an additional amount
to me so as to ensure that the rental arrears in the amount of
R10 000 would be paid off in
a period of a few months from 1
February 2017’.
[42] I
have set out the background facts in some detail, not only for the
purpose of demonstrating that it is not possible to determine
with
any clarity what was in fact owed by JC at any given time and more
particularly 3 October 2017, but also to set out the
manner in
which AS has gone about complying with his obligations as lessor,
because the latter is relevant to the arguments advanced
during the
appeal.
Discussion
[43]
Mr Gess
correctly submitted that clause 16.1 of the lease
requires notice to be given to remedy a default only when the lessee
is in arrears
for amounts other than rental. He accordingly argued
that, even if JC was notionally up to date with rental payments at
21 August
2017, he was certainly in arrears with rental for
October 2017 by 3 October 2017, and in terms of the lease AS was
thus entitled
to cancel without giving notice.
[44]
Having applied payments by JC (provided by AS) to the common law
principles pertaining to appropriation thereof, he submitted
that JC
was in any event in arrears with rental as at 21 August 2017, and
that accordingly AS was entitled to cancel by reason
of that
additional breach. AS was not required to give any notice before
cancellation, but in fact afforded JC 5 days to remedy
that breach.
[45]
Mr Gess
further argued that, pursuant to the demand delivered
on 21 August 2017, AS was in addition entitled to cancel due to
JC’s
failure to pay the electricity charges that were set out
in the schedule attached to that demand.
[46]
Insofar as clause 16.1.2 requires that 14 days notice be given for
breaches other than a failure to pay rental timeously,
Mr Gess
accepted that the demand dated 16 August 2017 (delivered on
21 August 2017) afforded JC less than 14 days notice, but
submitted that this did not assist JC. He relied on
Lurlev (Pty)
Ltd v Unifreight General Services (Pty) Ltd & Others
1978 (1)
SA 74
(D) where the court dealt with the situation where a clause in
the lease provided for written notice of 14 days to remedy a breach
before the landlord was entitled to cancel, and where notice to the
tenant had been given affording it less than 14 days to pay
the
unpaid rent. The court held that the period for compliance was fixed
by the clause in the lease, and not by the notice. When
the
prescribed period had passed, the landlord was entitled to cancel,
and cancellation after the expiry of 14 days was lawful.
[47]
He thus argued that the short period contained in the demand
delivered on 21 August 2017 did not preclude AS from cancelling
the lease (as he did) once the stipulated 14 day period stipulated in
the lease had expired without the electricity charges having
been
settled.
[48]
Mr Gess
also relied on
Paradyskloof Golf Estate v
Stellenbosch Municipality
2011 (2) SA 525
(SCA) where a deed of
sale contained a “non-waiver” clause similar to clause
19.10 of the lease in the present matter.
The Supreme Court of Appeal
held that where such a clause exists, the reasonableness of a delay
in enforcing rights under the contract
is rendered irrelevant.
[49]
He pointed out that JC did not assert that AS’s contractual
right to cancel was waived or lost on the ground of a failure
to
exercise that right, which moreover, in terms of
Paradyskloof
,
could not be lost. He argued that each successive breach by JC would
have afforded AS an accrued right to cancel, which he might
choose to
exercise or not. In the case of a failure to pay rental, this right
accrued whenever it was not paid timeously in full.
In the case of
another breach, such as a failure to pay electricity, the right
accrued after notice of default was given, a period
of 14 days had
elapsed, and the default was not remedied.
[50]
He submitted that it would be incorrect to suggest that JC was lulled
into the belief (or for that matter a reasonable belief)
that it was
acceptable not to pay rental strictly in terms of the lease, or that
AS would not exercise his right to enforce its
terms strictly in the
event of future breaches which established fresh accrued rights to
cancel. He contended that the correspondence
shows that JC was warned
of the entitlement to cancel on a number of occasions.
[51]
Finally
Mr Gess
submitted that in the present case there are
no factual circumstances or public policy considerations established
by JC that would
render the enforcement of clause 16.1 of the lease
against him contrary to public policy or unconscionable.
[52]
Mr Brown
aptly summarised the two grounds asserted by the
appellants for valid cancellation of the lease as follows: first,
that notice
to remedy a default in the payment of a “mixed
debt” was properly given but not complied with; secondly, in
any event,
rental for October 2017 was due on the first day of the
month and had not been paid by 3 October 2017, which entitled AS to
cancel
without notice.
[53]
As far as the first ground is concerned he submitted, correctly in my
view, that on AS’s version the “agreed”
amount of
R10 000 at January 2017 related not only to pure rental but also
to electricity. Given that it was not comprised
purely of rental, for
non-payment to constitute a basis for cancellation AS was obliged to
follow the procedure set out in clause 16.1.2
of the lease.
[54]
In support of this submission
Mr Brown
relied on
Hano
Trading CC v J R 209 Investments (Pty) Ltd and Another
2013 (1)
SA 161
(SCA) at paras [31] to [34]. In that judgment the Supreme
Court of Appeal held that where a contract provides that, in the
event
of the one party committing a breach of any of the terms of the
agreement and failing to remedy such breach within a stated number
of
days after receipt of a written notice to do so, the party seeking to
rely on such failure in order to cancel the agreement
has to show
that it has complied strictly with the peremptory provisions of the
clause.
[55]
He pointed out that the notice, as in the case of a notice placing a
party
in
mora ex persona
, must indicate clearly what is
expected from the defaulting party in order for the latter to avoid
the consequences of continued
default, including the date for
compliance: see
Kragga Kamma Estates CC and Another v Flanagan
[1994] ZASCA 137
;
1995 (2) SA 367
(A) at 374D-G where it was held that:
‘
However, on the
assumption that the first defendant had to be placed
in
mora
(
ex
persona
), the question
for decision is whether this was done. If the demand for payment did
not have this effect, an essential prerequisite
to the plaintiff’s
right thereafter to cancel would be missing. So we must examine the
terms of the demand…whatever
its form, the demand had to be
unambiguous and indicate a fixed date, reasonable in the
circumstances, for performance (
Nel
v Cloete
1972 (2) SA
150
(A) at 159H). And, of course, it had to indicate that the
creditor wished to receive his money (
Dougan
v Estment
1910 TPD 998
at 1001); that the debtor was required to perform (
Alfred
McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration
1977 (4) SA 310
(T) at
351H); and he must have been placed on terms to do so (
Johannesburg
City Council v Norven Investments (Pty) Ltd
1993
(1) SA 627
(A) at 633E). Whether this has been done is a question of
fact for the decision of the Court (
Wessels’
Law of Contract
2
nd
ed vol II para 2893).’
[See also
Ally
and Others NNO v Courtesy Wholesalers (Pty) Ltd and Others
1996 (3) SA 134
(N) at 149F-J].
[56]
Applying these authorities to the facts of the present matter, I
cannot agree with
Mr Gess
that the correspondence upon which
AS relies to support the first ground met these requirements. To the
extent that
Mr Gess
placed reliance on the decision in
Lurlev
,
we are of course bound by Supreme Court of Appeal authority which
appears to be to the contrary.
[57]
In any event, as submitted by
Mr Brown
, the effect of clause
16.1.2, viewed against the 5 day period afforded to JC to remedy his
default, was that on the sixth day JC
would have had no way of
knowing whether or not the lease was cancelled. He would also not
know whether payment in full on the
sixth day after demand would
remedy the breach or not. Moreover, it is unlikely that AS himself
considered the agreement as cancelled,
whether upon the expiry of the
5 day period or the 14 day period stipulated in clause 16.1.2,
because he not only accepted
JC’s payment of R4 000 on
20 September 2017, but did so without demur until purporting to
cancel on 3 October
2017.
[58]
As far as the second ground is concerned
Mr Brown
advanced an
argument along the following lines. The starting point is s 26(3)
of the Constitution as read with s 8(3)
thereof. The former
subsection provides that no-one may be evicted from their home
without an order of court made after considering
all relevant
circumstances, and no legislation may permit arbitrary evictions
(hence the enactment of PIE on 5 June 1998).
The latter
subsection makes it incumbent on a court, when considering a
provision in the Bill of Rights (such as s 26(3))
to apply, or
if necessary develop, the common law to the extent that legislation
does not give effect to that right.
[59]
In
Barkhuizen v Napier
[2007] ZACC 5
;
2007 (7) BCLR 691
(CC) the issue
concerned the constitutionality of a time limitation clause in a
short-term insurance policy. The appellant contended
that it was
contrary to public policy and therefore unenforceable. Counsel also
submitted on his behalf that public policy considerations
(the legal
convictions of the community) have been codified in the Bill of
Rights and the time limitation clause constituted an
unreasonable and
unjustified limitation of the appellant’s s 34 right, i.e.
access to court. The Constitutional Court
was required to determine
the proper approach of constitutional challenges to contractual
terms.
[60]
The majority of the court rejected the combination of the two
arguments made on behalf of the appellant, warning at para [26]
of
the dangers inherent in testing the constitutionality of a
contractual term directly against a provision in the Bill of Rights,
but continued to set out the proper approach as follows:
‘
[27] What then is the
proper approach of constitutional challenges to contractual terms
where both parties are private parties?
Different considerations may
apply to certain contracts where the State is a party. This does not
arise in this case.
[28] Ordinarily,
constitutional challenges to contractual terms will give rise to the
question of whether the disputed provision
is contrary to public
policy. Public policy represents the legal convictions of the
community; it represents those values
that are held most dear by the
society. Determining the content of public policy was once fraught
with difficulties. That is no
longer the case. Since the advent of
our constitutional democracy, public policy is now deeply rooted in
our Constitution and the
values which underlie it. Indeed, the
founding provisions of our Constitution make it plain: our
constitutional democracy is founded
on, among other values, the
values of human dignity, the achievement of equality and the
advancement of human rights and freedoms,
and the rule of law. And
the Bill of Rights, as the Constitution proclaims, “is a
cornerstone” of that democracy; “it
enshrines the rights
of all people in our country and affirms the democratic [founding]
values of human dignity, equality and freedom.”
[29] What public policy is
and whether a term in a contract is contrary to public policy must
now be determined by reference to
the values that underlie our
constitutional democracy as given expression by the provisions of the
Bill of Rights. Thus a
term in a contract that is inimical to
the values enshrined in our Constitution is contrary to public policy
and is, therefore,
unenforceable.
[30] In my view, the proper
approach to the constitutional challenges to contractual terms is to
determine whether the term challenged
is contrary to public policy as
evidenced by the constitutional values, in particular, those found in
the Bill of Rights.
This approach leaves space for the doctrine
of
pacta sunt
servanda
to operate,
but at the same time allows courts to decline to enforce contractual
terms that are in conflict with the constitutional
values even though
the parties may have consented to them….’
[61]
Mr Brown
correctly did not take issue with the existence of
the “non-waiver” clause in the lease or the
Paradyskloof
decision. He accepted that such a clause is a valid protection
against an argument that the lessor has waived any rights by conduct.
He confirmed that JC did not assert that AS had
waived
his
contractual right to payment of rental in full on the first day of
each month.
[62]
However he submitted, correctly in my view, that it does not
automatically follow that AS is entitled to rely on that right
in
the particular circumstances
of this matter. This was the point
made in
Mahabeer v Sharma NO and Another
1985 (3) SA 729
(A)
at 736G-I:
‘
Depending on the
circumstances, such a failure may, eg, justify an inference that the
right was waived or, stated differently, that
the party entitled to
cancel has elected not to do so (cf
Pienaar
v Fortuin
1977 (4) SA
428
(T) at 433G;
Becker
v Sunnypine Park (Pty) Ltd
1982
(1) SA 958
(W) at 964-5;
Smit
v Hoffman en 'n Ander
1977
(4) SA 610
(O) at 616G-H), or it may open the door to some other
defence. In such cases the lapse of an unreasonably long time forms
part
of the material which is taken into account in order to decide
whether the party entitled to cancel should or should not be
permitted
to assert his right. But
per
se
it cannot bring
about the loss of the right. (CF
Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial
Administration
1977
(4) SA 310
(T) at 325F-G).’
[63]
By way of illustration, in
Paradyskloof
a property developer
and the local authority had been locked in a dispute over a deed of
sale pertaining to 277 hectares of
prime property on the
outskirts of Stellenbosch. The proposed development was to include,
amongst others, the construction of an
international luxury hotel,
250 dwelling units and an international tournament golf course
with ancillary facilities, which
is a far cry from what we are
dealing with in the present case.
[64]
As pointed out by
Mr Brown
, on the undisputed facts JC had
historically not been able to pay the full rental on the first day of
each month, but invariably
during the course of a month as and when
his funds became available. This was historically accepted by AS
without once advising
JC that he was intending to demand that JC pay
in full on the first day of each month under threat of cancelling the
lease without
notice as a result.
[65]
He submitted that whilst neither
Garlick Ltd v Phillips
1949
(1) SA 121
(AD) nor
Edward L Bateman Ltd v Combined Metal and Wire
Works (Pty) Ltd
1975 (3) SA 497
(W) involved a contract where a
“non-waiver” clause had been included, this does not
change the principle set out in
those cases.
[66]
In
Garlick
the following was stated at 132 – 133:
‘
It was contended that
there could be no estoppel in such circumstances because there was no
duty
on
appellant to warn respondent that it was not giving permission to
make late payments, …But I am inclined to think that,
if
breach of a duty be necessary, there was a duty resting on appellant
which was not performed. So long as its attitude remained
one of
indifference towards late payments of rent, there was of course no
necessity to speak, but when appellant’s state
of mind changed
from one of indifference to one of a desire or intention to take
advantage of late payments of rent in order to
obtain ejectment, then
I think a duty arose to make that changed attitude known to
respondent. A reasonable man in appellant’s
position would have
known that a long continued receipt by him of late payments of rent
without protest such as occurred in this
case, would lead respondent
into the belief that he had no objection to late payments and did not
treat them as breaches of contract
and would not, without notice, do
so in the future. A duty therefore rested on appellant if it intended
to treat late payments
of rent in the future as breaches of contract
and to take advantage of them, to inform respondent of that change of
mind.
It was also contended that
appellant had in fact given notice to respondent that it would no
longer accept late payments because
in the three letters quoted above
it had informed respondent that it intended to cancel the lease and
resume possession of the
leased property.
It is no doubt true that
those letters did inform respondent that appellant intended to
terminate the lease and resume possession
of the property, but in
those letters appellant did not rely, as a ground for terminating the
lease, upon the late payment of rent,
which was actually occurring
during the period of time covered by the letters, but relied upon the
notice which had been given
to terminate the lease. This being the
case the letters do not assist appellant; on the contrary they seem
rather to strengthen
respondent’s contention that he was led
into the belief that appellant, by its conduct, gave him permission
to make late
payments of rent.’
[67]
Similarly, in
Edward L Bateman
at 498 the principle is set out
that the lessor cannot in effect ambush the unsuspecting lessee by
relying on strict compliance
without notification of the change in
attitude.
Mr Brown
argued that this principle should not, in
the particular circumstances of this case, be undermined by the
presence of a clause
protecting the right against waiver.
[68]
Mr Brown
also pointed out that the Constitutional Court,
referring to
Garlick
, recognised the obligation of good faith
in contractual performance and enforcement in
Gundwana v Steko
Development and Others
2011 (3) SA 608
(CC) at para [61] and fn
55:
‘
[61] The applicant
alleges that she continued to make payments on the bond over a period
of approximately four years, and that the
Bank accepted those
payments without letting her know that they were inadequate or
unacceptable, or that they had obtained default
judgment against her…
It was argued that this amounted to a compromise that novated the
judgment debt, or, if not, something
less, that at least precluded
execution without giving her some form of a hearing before
proceeding. Alleged abuse of the execution
process after granting the
order is of a different kind from that following upon a
constitutionally invalid process. This is not
an issue for us to
decide, but it may become an issue in the rescission application and
eviction proceedings…
[fn 55] Compare
Garlick
Ltd v Phillips
1949
(1) SA 121
(A). The idea of good faith underlies the acceptance of
many rules of our contract law…’
[69]
In similar vein in
Everfresh Market Virginia (Pty) Ltd Shoprite
Checkers (Pty) Ltd
2012 (1) SA 256
(CC) the Constitutional Court
made the following pertinent remarks:
‘
[71] Had the case been
properly pleaded, a number of interlinking constitutional values
would inform a development of the common
law. Indeed, it is highly
desirable and in fact necessary to infuse the law of contract with
constitutional values, including values
of ubuntu, which inspire much
of our constitutional compact. On a number of occasions in the past
this court has had regard to
the meaning and content of the concept
of ubuntu. It emphasises the communal nature of society and “carries
in it the ideas
of humaneness, social justice and fairness” and
envelopes “the key values of group solidarity, compassion,
respect,
human dignity, conformity to basic norms and collective
unity”.
[72] Were a court to
entertain Everfresh’s argument, the underlying notion of good
faith in contract law, the maxim
of contractual doctrine that
agreements seriously entered into should be enforced, and the value
of ubuntu, which inspires much
of our constitutional compact, may
tilt the argument in its favour. Contracting parties certainly need
to relate to each other
in good faith.’
[70]
Having regard to the aforegoing, and the particular facts in this
case, I am in agreement with
Mr Brown
that JC was lulled into
believing that strict performance was not required by AS when it came
to the payment of rental. Faced with
his purported demand that was
vulnerable to challenge, AS saw fit to rely – without any
warning – on a strict enforcement
of the rental clause, thereby
effectively ambushing an unsuspecting JC. The presence of the
“non-waiver” clause protects
AS’s right from being
extinguished by conduct: it does not follow however that AS is
entitled to use the clause to catch
JC unfairly unawares and gain an
unfair advantage thereby. I would add that, not only am I persuaded
that JC was subjectively lulled
into such a belief, but that a
reasonable person in JC’s position would also have been.
[71]
It must be strongly emphasised however that the conclusion I have
reached in relation to the second ground (the right to cancel
based
on non-payment of rental strictly in accordance with the lease) is
not
intended to set some sort of precedent of general
application. It is only in relation to the specific circumstances of
this case
and in particular where JC (and EC) face the real risk of
being rendered homeless as a direct result of AS’s failure to
adhere
to the principles set out inter alia in
Everfresh.
[72]
Unlike in
Paradyskloof
we are dealing with a PIE appeal and
special considerations thus apply. We are duty bound to adopt an
inquisitorial approach and
to consider ‘
all relevant
circumstances’
for purposes of the three stage enquiry, the
first of which is whether or not the occupation is indeed unlawful.
To my mind, one
of the relevant circumstances is the manner in which
AS has approached his contractual rights and obligations under the
lease.
[73]
To sum up, in the particular circumstances of this case, I am
compelled to conclude that, in relation to the second ground,
to
allow AS to rely at this stage on clause 16.1 of the lease (to cancel
on the basis of non-payment of rental a mere two days
after the
beginning of October 2017) would be contrary to public policy,
inimical to the values enshrined in the Constitution and
unconscionable. This does
not
mean that the clause
itself
is contrary to public policy – it is not necessary to go that
far – or that AS is not entitled to rely upon it in future
if
he puts JC, a vulnerable lessee in every sense of the word, on guard.
But for purposes of the present appeal I am persuaded
that, for the
reasons already given, the lease was not validly cancelled, and
accordingly JC (and thus EC) did not, upon the purported
cancellation, become unlawful occupiers for purposes of PIE.
[74]
The following order is made:
‘
The
appeal is dismissed with no order as to costs.’
__________________
J I CLOETE
PARKER
J
I
agree.
__________________
M K PARKER
For
appellants
: Adv David
Gess
Instructed
by:
For
1
st
respondent
: Adv
Andrew
Brown
, Adv N
Khan
,
Instructed
by: Ndifunda Ukwazi Law Centre, Disha Govender
For
2
nd
and 3
rd
respondents
: not opposing
Instructed
by: