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[2018] ZAGPPHC 884
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Acacia Leasing (Pty) Ltd v JP Krugerrand Deals CC (0001018/2017, 1019/2017) [2018] ZAGPPHC 884 (16 March 2018)
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISON, JOHANNESBURG
(1)
REPORTABLE:
YES/
NO
(2)
OF
INTEREST TO OTHER JUDGES: YES/
NO
(3)
REVISED.
CASE NUMBER: 0001018/2017
& 1019/2017
In
the matter between:
ACACIA
LEASING (PTY) LTD
Applicant
And
JP
KRUGERRAND DEALS
CC
Respondent
JUDGMENT
SARDIWALLA
J:
[1]
This is an application brought on notice
of motion. The applicant seeks leave to terminate the water and
electricity supply to the
respondent.
[2]
The Respondent opposes the application
on the following grounds; that there are legal proceedings pending
between the parties, it
is in business rescue and invokes
Section
136(2)
of the
Companies Act 71 of 2008
to suspend performance of its
obligations in terms of the Lease Agreement.
[3]
The issues before me raised by the
applicant are the following:
5.1
The status of pending legal proceedings;
5.2
The respondent's breach of contract in
terms of the Lease Agreement;
5.3
The applicant's right to cancel the
Lease Agreement;
5.4
The respondent's unlawful occupation of
the premises;
5.5
The effect of business rescue on the
Applicant's claim;
5.6
The
Section 136(2)
of the Act;
5.7
Applicant’s right to terminate
water and electricity supply to the premises;
5.8
The summary judgment proceedings in the
Magistrate's Court;
5.9
Conflicting versions by the
respondent.
[1]
PENDING LITIGATION
[4]
The applicant instituted an action in
the in Regional Magistrates Court for the region of Gauteng, held at
Kempton Park, under case
number GP/KP/RC 999/16, seeking an order for
payment of arrear rental and additional charges in the sum of R339,
545.23. The summons
was served on respondent on 30 August 2016. The
applicant avers that the lease agreement entitles the applicant to
cancel the lease
agreement for material breach of non-payment and
that the cancellation of the lease agreement has not been
disputed by the
respondent or that it remains in occupation of the
leased premises. The applicant is seeking the termination of water
and electricity
in the current application and is therefore not the
same as the relief sought in the regional court proceedings. It
accordingly
cannot be considered to be vextatious
[2]
.
[5]
The respondent opposes the current
application and raises the defence of
Lis
Alibi Pendens
in that the causes of
action in both applications are of the same subject matter. It
further alleges that the applicant's right
to cancel the agreement on
grounds of a material breach is still in dispute. The onus to prove
the above rests on the respondent.
In
Keyter
NO v Van Der Meulen and Another NNO
[3]
Plasket
J held the following relevant principles were applied when the
defence of
lis pendens
was
raised:
"[10]
The defence of /is alibi pendens arises when four requirements are
met. They are
that: (a) there is litigation pending (b) between the
same parties (c) based on the same cause of action and (d) in respect
of
the same subject-matter. Lis alibi pendens does not, if
successfully invoked, put an end to the plaintiff's or applicant's
case.
Rather, it allows for the staying of the latter matter pending
the final determination of the earlier matter. Once the earlier
proceedings have been finalised, however, the later proceedings will
be struck by, and terminated by, the defence of res judicata."
[6]
It is common cause that there is pending
litigation between the same parties. What is therefore left to be
determined is whether
the cause of action and subject matter are the
same. The respondent submits that the underlying cause of action is
arrear rental
payment which has resulted in the applicant's alleged
right to cancel the lease agreement and ejectment of the respondent.
In matters
were some of the requirements to the defence have been met
the Court still has the discretion to determine on what is just and
equitable on balance of convenience as held in Roper J
Ltd
dealt with this aspect when he said:
Loader v Dursot Bros (Pty)Ltd
[4]
'It is clear on the authorities that
a
plea of lis alibi pendens does not
have the effect of an absolute bar to the proceedings in which the
defence is raised. The Court
intervenes to stay one or other of the
proceedings, because it is prima facie vexatious to bring two actions
in respect of the
same subject matter. The Court has a
discretion which it will exercise in a proper case, but it is not
bound to exercise it
in every case in which
a
lis alibi pendens is proved to exist
.
. . .'
[7]
In applying the discretion granted to
the Court to determine what is just and equitable it is important to
determine whether the
proceedings are
prima
facie
vexatious while also taking
into consideration the rights afforded to a litigant in terms of
Section 34 of the Constitution
[5]
.
In
Trevor B Giddey NO v J C Barnard
and Partners
[2006] ZACC 13
;
2007 (5) SA 525
(CC),
the Constitutional Court held as follows:-
"[15] Section 34 of the Constitution
provides that everyone has the right to have a dispute that can be
resolved by the application
of law decided by
a
alleged gross negligence it alleges. I am of the opinion that the
respondent cannot place the burden of its existence and continued
operations at the feet of the applicant by suggesting that
terminating the electricity and water supply would place the
respondent
in a position of incurring unnecessary expenditure during
business rescue proceedings. The applicant cannot be expected to
finance
the respondent without mitigating the risks and costs to
itself. The respondents version is therefore contradictory and I am
of
the view that to afford the respondent the continued right to
receive supply of water and electricity which is an expense necessary
to conduct business in the ordinary scope of any business at the
applicants cost, pending the litigation in the Magistrate's Court
cannot be deemed to be just and equitable in terms of the above law.
I am also not persuaded that the applicant's intention is
to harass,
annoy or abuse the court process and no proof hereof has been
presented before this Court. Therefore in the absence
of proof to the
contrary, to stay the proceedings would be infringing on the
applicant's right in terms of Section 34.
BREACH OF CONTRACT AND RIGHT TO CANCEL
AGREEMENT
[11]
The applicant contends that failure to
pay the arrear rental and additional charges is a material breach of
the contract as set
out in terms of
clause
30
which states that:
"30 .1 If
30.2 The [Respondent]
fails to pay any amount due by the [Respondent] in terms of this
Agreement;
…
[6]
30.13
Then the [Applicant] may, without
prejudice to any other rights and remedies it may have:
30.13.1
cancel this Agreement by written
notice given to the [Respondent] and may retake possession and
occupation of the Premises' and/or
30.13.2
claim any damages which it
suffered from the [Respondent]
30.13.3
A
certificate,
signed by any manager of the
[Applicant] or of the [Applicant's] agent, whose appointment need not
be proved, hall be first instance
proof of any amounts owed to the
[Applicant] by the [Respondent] in respect of this Agreement, as may
be amended from time to time."
[emphasis
added]
[8]
[12]
On 16 April 2013 the applicant and the
respondent concluded a written agreement of lease of the premises
which commenced on 1 November
2012 and terminated on 31 October 2017.
The respondent was indebted to applicant in the amount of R331 271.77
including and up
to December 2016 in respect of its utility
consumption and municipality charges in terms of the agreement of
lease.
[13]
On 17 November 2017 applicant’s
attorneys addressed a letter to respondent informing it that it was
in breach of the agreement
of lease, by failing to make payment of
the rental and additional charges due to applicant as set out in
clause 6 and 30
of
the lease agreement respectively. Respondent was informed in this
letter that respondent was indebted to it in the amount of
in respect
of rental and additional charges and that applicant reserved the
right to cancel the agreement.
[14] The
applicant instituted an action in the Regional Magistrates Court for
the region of Gauteng,
held at Kempton Park, under case number
GP/KP/RC 999/16
[9]
in which it claimed an order ejecting respondent from the property
and payment of the sum of R R339'545.23 for arrear rental and
additional charges up to and including August 2016
[10]
.
The summons was served on respondent and the proceedings at the
regional court are currently pending.
[15] The
Applicant further relies on
clause
7.
1
[11]
of the Lease Agreement which
provides that the Respondent must pay
"...
the rental and all other amounts
due in terms of the Agreement on or before the first day of each
month,
without deduction or set off for any reason
whatsoever
and free of bank commission or charges during
office hours..."
[16]
The respondents defence is that there is
a counter-claim for gross negligence and consequently has an action
for the breach of contract.
Further, the respondent challenges the
validity and lawfulness of the cancellation of lease agreement. The
respondent contends
that
Clause 17.1
takes precedence over
clause
7.
1
and clause 30. Clause 17.1
states
that;
"Notwithstanding any provision in this
Agreement, same shall not limit or exempt liability attributable to
gross negligence:'·
[17]
In the matter of
Arbour
Town (Pty) Ltd v Sunny Skies Investments CC t/a Chimney & Sabah
Collection (aka Pearl of India) and Another
[12]
the plaintiff's claim against the
defendants was for an amount due in terms of a written lease
agreement. The plaintiff alleged
that the first defendant breached
the lease agreement by failing to pay an amount equivalent to the sum
of rental and other charges.
The respondents averred in an affidavit
that the parties had a compromise agreement which was entered into
after entering into
the lease agreement and that the compromise
agreement as such altered the terms and conditions of the lease
agreement entered into.
Shishi J Held that;
"[36] The respondents alleged that the
applicant committed
a
material
breach of the agreement in that it failed to effect repairs to the
ceiling of the shop when the roof of the building leaked
so badly
that the rain poured into the restaurant and onto the customers food
on many occasions, causing customers to become disillusioned
with the
restaurant and thereby causing harm to first respondents reputation.
Eventually the ceiling became so sadden with rain
water that the
entire ceiling fell down during the Easter holiday season of 2012,
resulting in huge loss of income for the respondents.
[37] The applicant, despite numerous
requests refused to effect the necessary repairs for many weeks. The
respondents eventually
effected the repairs in terms of clause 21.1.2
of the written lease agreement in the amount of R18 900.00 which
amount the applicant
is liable. But despite demand the applicant has
failed or neglected to pay. No invoice has, however, been annexed to
the affidavit
in support of this claim.
[38] The respondents contended that there is
nothing preventing the respondents from using defences of "set-off
' and "breach"
of the agreement as the parties are governed
by the compromise agreement which does not exclude same."
[18]
The Court held further, at para 32,
that;
"The defendant must consequently put up
a
defence
honestly, disclose fully the nature and grounds of it and in so far
as he relies upon facts lay before the Court, facts
which if proved
will be
a
good
defence."
[19]
Applying the principles of the case
supra
to
this application, the respondent in its affidavit states that its
defence to the breach of the agreement is a counter claim.
The
respondent alleges that clause 17.1 overrides clause 7.1 which makes
provision for a set-off or deduction and therefore makes
the
respondent's claim liquid
[13]
.
The applicant contends, and correctly so in my view that such defence
was not raised in its plea and has not provided proof of
a valid
liquid claim against the applicant for gross negligence. It is clear
that the intention of the parties was that no set-off
or deduction
would operate between them. In the absence of a compromise agreement
or valid liquid counter claim the defence raised
is not
bona
fide,
and is no defence at all. In
circumstances where there is no agreement varying the terms of the
agreement, the parties are governed
by the terms of the written lease
agreement the applicant is entitled to cancel the lease agreement. It
was held in
Win Twice Properties
(Pty) Ltd v Binos and Another
[14]
that a party may terminate an
agreement by delivery of a summons or an application. The right to
cancel the lease agreement was
accordingly lawful.
UNLAWFUL
OCCUPATION
[20]
I have already found as dealt with above
that the applicant's right to cancel the lease agreement was lawful.
In the absence of
a valid defence the respondent is accordingly in
unlawful occupation of the leased premises.
EFFECTS
OF BUSINESS RESCUE
[21]
The business rescue practitioner opposed
the application on behalf of respondent. Mr Johan Louis Klopper
deposed to the main answering
affidavit on behalf of respondent. The
respondent commenced business rescue proceedings on 20 January 2017
and contends that such
action is stayed in terms of the moratorium
provided for in terms of Section 133(1) of the Companies Act, No 71
of 2008 (the Act).
[15]
[22]
In their answering affidavit and in
argument the business rescue practitioner raised a number of defences
in
limine.
They
are as follows:
"(a) ,
that
there are pending legal proceedings, where the Applicant's rights to
cancel the Lease Agreement, to seek an Eviction Order
resulting
therefrom and to seek relief as per the Notice of Motion in the
present Application, are in issue
(b),
the Respondent is in Business
Rescue;
the third
ground of opposition, is that I have elected to invoke the rights
conferred upon me in terms of Section 136(2) of the
Act, which I
hereby do, to suspend the Respondent's performance in respect of the
Lease Agreement (being an Agreement contemplated
in Section
136(2)(a)(i)), for the duration of the Business Rescue
Proceedings."
[16]
[23]
The respondent's defence is that the
applicant is precluded by the provisions of
sections 133(1)
and
134
(1)(c) of the
Companies Act
[17
]
to bring the present proceedings. The relevant provisions read as
follows:
"133 General moratorium on legal
proceedings against company
(1)
During
business rescue proceedings, no legal proceeding, including
enforcement action, against the company, or in relation to any
property belonging to the company, or lawfully in its possession, may
be commenced or proceeded with in any forum...
"134 Protection of property
interests
(1)
Subject
to subsections (2) and (3), during
a
company's business rescue proceedings
…
…
(c) despite any provision of an agreement to
the contrary, no person may exercise any right in respect of any
property in the lawful
possession of the company, irrespective of
whether the property is owned by the company, except to the extent
that the practitioner
consents in writing."
[24]
The Act clearly infers that the property
in question must be within the lawful possession of the person or
entity wanting to seek
refuge under these provisions. In my view the
Applicant has correctly averred to in its heads of argument that the
respondent can
only rely on such moratorium provided for in terms of
the Act where it is proven that the cancellation of the lease was
invalid.
I have already found that the cancellation of the lease
agreement was valid and was terminated prior to the institution of
the
business rescue proceedings. The respondent cannot rely on the
provisions of the Act as the cancellation of the lease agreement
is
valid and the respondent is in unlawful possession of the premises.
The applicant is therefore not precluded from pursuing the
present
application.
SECTION 136(2) OF THE ACT
[25]
As indicated in my finding above the
sections of the Act do not apply to the respondent and therefore the
respondent’s performances
in terms of its obligations under the
lease agreement are accordingly not suspended.
SUMMARY JUDGMENT PROCEEDINGS IN THE
MAGISTRATES COURT
[26]
I do not find it necessary to deal with
this aspect in light of the above findings and it is therefore
irrelevant.
TERMINATION
OF SERVICES
[27]
I have already found that the right to
cancel the lease agreement was valid and therefore the respondent is
unlawfully occupying
the premises. I accordingly agree with the
decision
in Anva Properties CC v.
End Street Entertainment Enterprises
[18]
and find that there is no legal
basis on which the respondents should have the use and enjoyment of
the supply of water and electricity
at the expense of the applicant.
CONFLICTING
VERSIONS
[28]
The respondent has not provided this
Court with proof of a valid liquid claim against the applicant nor
proof that such defence
was raised in the regional court proceedings
or that the applicant is indeed the actual debtor.
CONCLUSION
[29]
The respondent cannot invoke
section
133(1)
and
134
(1)(c) of the
Companies Act as
the concept is the
lawful possession
of
the company. After the cancellation of the lease agreement the
respondent is no longer in lawful possession of the property.
The
applicant
in casu
cannot
be deprived of its power to exercise its ownership whilst respondent
in casu
would
be unable to use it as such use would be
unlawful.
[30]
In my view it could not have been the
legislature's intention that the company in business rescue invoke
Section 136 (2) of the
Act to suspend its obligations in terms of a
lease agreement by utilising assets to which it has no lawful claim.
[31]
I accordingly find that applicant is not
precluded by the provisions of
sections 133(1)
,
134
(1)(c) and
136
(2)
of the
Companies Act from
asserting its right of ownership in the
property and terminating the water and electricity to the respondent.
COSTS
[32]
In light of finding that the written
lease agreement is valid and that the respondent is in unlawful
occupation of the property,
the terms of the agreement arising out of
breach of the agreement is clear and is set out in
Clause
32.2
[19]
which provides that the defaulting party shall be liable for all
legal costs on an attorney and own client scale.
ORDER
I
hereby order that:
Claim
A:
1.
The
Applicant is hereby authorised terminate the supply of electricity to
the premises which the Respondent occupies, situated at
CS
011, Modderfontein Industrial
Complex, Modderfontein, measuring approximately 2035 square metres
(“the premises”), unless
the Respondent makes payment of
the full arrear electricity figure in the amount of R322'012.03;
2.
In
the event of the electricity being reconnected as
a
result of payment in terms of
paragraph 1 above: the Applicant is authorised to terminate the
supply of electricity to the premises
which the Respondent occupies,
in the event of the Respondent falling in arrears with its
subsequently electricity payments, unless
the Respondent makes
payment of the full arrears of such subsequent electricity figures in
respect of the premises;
3.
That
the occupant(s) of the premises grant an electrician, appointed by
the Applicant, access to it in order to disconnect the electricity
supply to the premises;
4.
The Sheriff of the Honourable
Court is authorised to grant an electrician, appointed by the
Applicant, access to the premises in
order to disconnect the
electricity supply to the premises;
5.
That the Respondent is prohibited
from tampering with anything installed or removed by the electrician,
so as to reconnect the power
supply to the premises;
Claim
B:
6.
The
Applicant is authorised to terminate the supply of water to the
premises, unless the Respondent makes payment of the full arrear
water figure in the amount of
R9'259.74
;
7.
In
the event of the electricity being reconnected as
a
result of payment in terms .of
paragraph 1 above: The Applicant is authorised to terminate the
supply of water to the premises which
the Respondent occupies, in the
event of the Respondent falling in arrears with its subsequently
water payments, unless the Respondent
makes payment of the full
arrears of such subsequent water figures in respect of the premises;
8.
That
the occupant(s) of the premises grant an plumber, appointed by the
Applicant, access to it in order to disconnect the water
supply to
the premises;
9.
The
Sheriff of the Honourable Court is authorised to grant
a
plumber, appointed by the Applicant,
access to the premises in order to disconnect the water supply to the
premises;
10.
That
the Respondent is prohibited from tampering with anything installed
or removed by the plumber, so as to reconnect the water
supply to the
premises;
Claim
C:
11.
That the Respondent is ordered to
pay the costs of this application on the scale as between Attorney
and Client;
Order
: Case number 1019/2017
1.
The
Respondent and all persons occupying by, through or under the
Respondent be immediately evicted from the immovable property
situated at
CS 011, MODDERFONTEIN
INDUSTRIAL COMPLEX, MODDERFONTEIN ("the Premises.").
2.
Authorizing,
mandating and directing the Sheriff of the above Honourable Court,
alternatively his deputy, to do and take all necessary
steps to give
effect to the order in par graph 1 hereinabove, in the event of the
Respondent not forthwith vacating the Premises.
3.
That
the Respondent pay the costs of this application on the scale as
between Attorney and Client.
C
M SARDIWALLA
JUDGE
OF THE GAUTENG LOCAL DIVISION,
JOHANNESBURG
APPEARANCES
Date
of Hearing
:
28 November 2017
Date
of Judgment
:
16 March 2018
Counsel
for the Plaintiff
:
ADV RJ
BOUWER
Applicant's
Attorneys
:
CRAIG
BERG INC
Counsel
for the Respondent :
ADV M NOWITZ
Respondent's
Attorneys
:
HIRSCHOWITZ FLIONIS ATTORNEYS
[1]
Applicants Heads of Argument, paragraph 1.3
[2]
Applicant' s Heads of Argument, paragraph 2
[3]
2014 (5) SA 215
(ECG) at 217 F- 220 B
[4]
1948 (3) SA 136
T
[5]
Act 200 of 1993
[6]
[7]
[8]
Founding Affidavit, paragraph 7.9
[9]
Founding Affidavit, paragraph 19
[10]
Founding Affidavit, paragraph 16 and 17
[11]
Founding Affidavit, paragraph 3.4
[12]
(5066/2012) [2012] ZAKZDHC 97
[13]
Respondent's Heads of Argument, paragraph 5, 6 and 7
[14]
2004 (4) SA 436 (WLD)
[15]
Answering Affidavit, paragraph 4.4
[16]
Answering Affidavit, paragraph 4.5 and 4.6
[17]
Act 71 of2008
[18]
CC (22109 /2014)
[2015] ZAWCHC 66
(14 April 2015)
[19]
Founding Affidavit, paragraph 7.1