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[2017] ZASCA 166
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Roazar CC v Falls Supermarket CC (232/2017) [2017] ZASCA 166; [2018] 1 All SA 438 (SCA); 2018 (3) SA 76 (SCA) (29 November 2017)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 232/2017
In the matter between:
ROAZAR
CC
APPELLANT
and
THE
FALLS SUPERMARKET CC
RESPONDENT
Neutral
citation:
Roazar
CC v The Falls Supermarket
(232/2017)
[2017] ZASCA 166
(29 November 2017)
Coram:
Tshiqi
and Majiedt JJA and Plasket, Mokgohloa and Mbatha AJJA
Heard:
07
November 2017
Delivered:
29
November 2017
Summary:
Contract
– whether contract can be terminated without entering into
negotiations – duty to negotiate in good faith –
appellant not obliged to renew lease agreement – application
for eviction upheld – not competent for court to import
term
not intended by parties simply on the basis of ubuntu.
ORDER
On
appeal from:
Gauteng
Local Division, Johannesburg (Klaaren AJ sitting
as
court of first instance):
1. The
appeal is upheld with costs including the costs of two counsel.
2. The
order of the high court is set aside and substituted with an order in
the following terms:
‘
a)
The respondent and all other persons who occupy through it the
property described as ‘The Spar’, The
Falls Shopping
Centre, corner. Webb and Great North Roads, Northmead, Benoni (‘the
premises’), are directed to be evicted
from the premises.
b)
Should the respondent and persons occupying the premises through it
not vacate the premises within 30 days
of service of the order upon
them, the Sheriff of the Court is authorised to forcibly evict and
eject the respondent and those
who occupy the premises through it
from such premises.
c)
Should the respondent or any person who occupies the property through
it refuse to vacate the premises, the
Sheriff is authorised to take
all steps necessary in evicting such persons who still remain in
occupation on the premises.
d) The
Sheriff is further authorised to utilise the services of the South
African Police Service to give effect
to the orders in a, b and c
above.
e) The
respondent is ordered to pay the costs of this application, including
the costs consequent on the employment
of two counsel.’
JUDGMENT
Tshiqi
JA (Majiedt JA, and Plasket, Mokgohloa and Mbatha AJJA concurring):
[1]
This appeal
arises from an application brought by the appellant, Roazar Close
Corporation (Roazar) in terms of which it prayed for
an order
evicting the respondent, the Falls Supermarket Close Corporation (The
Falls) from the former’s premises, a shopping
centre in
Northmead, Benoni, Gauteng. The Falls leased a part of the centre and
conducts a business known as The Spar Supermarket
from these
premises. There were three separate but linked lease agreements that
regulate the relationship between the parties,
in respect of the same
premises and for the same period and these agreements were concluded
on the same day. In terms of the one
agreement, hereinafter referred
to as the main agreement, rental is payable to the lessor (Roazar)
whilst in terms of the other
two agreements it is payable to the
individual members of Roazar Close Corporation. The Falls alleges
that the reason why the parties
entered into three agreements was to
avoid income tax whilst Roazar alleges that this was for its internal
book-keeping purposes.
[2]
On 2
February 2016 The Falls wrote a letter to Roazar stating that it
wished to renew the lease for a further period of five years,
‘including two successive option period[s] of five years’
commencing on 1 March 2016. It proposed the amount of rental
to be
paid, including escalation rates and further that the assessment
rates and other terms be in accordance with the terms and
conditions
of the existing lease agreement. On 31 March 2016 Roazar’s
attorneys responded and said that the lease had terminated
through
the effluxion of time on 29 February 2016. It alleged that in terms
of clause 3.5 of the agreement The Falls was required
to give one
month’s written notice of its intention to exercise the right
of renewal, which it failed to do, as the letter
dated 2 February
2016 did not constitute timeous notice. It further alleged that The
Falls had breached the lease agreement by
its failure to pay full
rental. It then gave The Falls notice to vacate the premises on or
before 30 April 2016, failing which
it would proceed with an
application for eviction. It also stated that it would institute
legal proceedings for the payment of
arrear rentals. Further
correspondence exchanged between the parties did not resolve the
dispute between them.
[3]
On 24 May
2016 Roazar filed the application for eviction in the Gauteng Local
Division, Johannesburg and also instituted a separate
action claiming
certain amounts for alleged arrear rental. The Falls opposed the
eviction application denying that it owed any
arrear rental and
alleging that the two ancillary agreements were sham agreements. It
alleged that these agreements were a means
of avoiding tax, and
termed the cash payments to the individual members in terms of these
agreements as ‘kick-backs’.
The Falls highlighted that
from 2011 to April 2016 it was only invoiced for the amounts payable
in terms of the main agreement
and that it paid these amounts
promptly. It stated that it had not paid the cash payments to the two
individual members since March
2012.
[4]
Regarding
the exercise of the option to renew the agreement, The Falls stated
that it had, on various occasions, since at least
2014, advised
Roazar that it wished to exercise the right of renewal provided for
in the main agreement. It alleged that in January
2016 it, again, had
several meetings with one of the individual members in which the
possible renewal of the lease was discussed.
In reply, Roazar denied
that the ancillary agreements were sham agreements and that the cash
payments were kick-backs. It further
stated that in the light of what
it called vitriolic and defamatory allegations by The Falls that it
had committed fraud, it had
no intention of ever leasing its property
to The Falls.
[5]
Although
one of the grounds cited by Roazar for the eviction is the alleged
failure by The Falls to pay arrear rentals which were
allegedly due
in terms of the two ancillary agreements, the eviction dispute may be
disposed of by determining whether Roazar was
entitled to terminate
the contract by invoking the terms of the main agreement. I will thus
assume, for the purposes of the eviction
application, that all three
agreements are valid. A further consideration in this regard is that
there is still an action pending
in the high court for payment of the
arrear rental.
[6]
However, it
bears mentioning that it cannot be open to The Falls to choose which
of the agreements must be enforced and which ones
must be
disregarded. If its version concerning the two ancillary agreements
is accepted, then it follows that all three agreements
are tainted.
This must be so because according to The Falls the rental reflected
in the main agreement was understated in order
to perpetuate a scheme
with which to defraud the Receiver of Revenue. However, as stated
above, it is not necessary to traverse
this issue in any further
detail. Suffice it to say that if the three agreements are invalid,
once the notice was given to The
Falls, it had no right to remain in
occupation of the premises.
[7]
This takes
me to the main dispute between the parties. The first issue that
arises is whether The Falls exercised its pre-emptive
right of
renewal within the time period provided in the agreement
(interchangeably referred to as the contract).
[8]
Clauses 3.2
to 3.7 of the main agreement provide as follows:
‘
3.2
The lease shall be for the period stated in Section 4 of the
Schedule.
3.3
The Tenant shall, if applicable, as indicated in item 5 of the
Schedule, and provided the
Tenant is not in breach of any of the
terms of this lease at the time, be entitled to renew this lease for
the period set out in
item 5 of the Schedule (“the renewal
period”) on the same terms and conditions as herein contained,
save that the rental
for the renewal period shall be set out in item
5 of the Schedule and to be negotiated at the stipulated time.
Clause
3.4
Initial period
3.4.1
The Tenant shall pay the Landlord as of 28 February 2011, the sum of
R72 305.71 plus VAT of R10 122.80
in advance on or before
the 1
st
(first) day of each and every month free of
deduction, set-off and bank charges in respect of rental for the
premises and parking
bays which payment shall be made by the Tenant
at the Landlord’s address, unless otherwise stipulated by the
Landlord.
3.4.2
The monthly rental payable by the Tenant to the Landlord in terms of
clause 3.4.1 above will escalate by 8% (eight
per cent) on 1 March
2012 for the remaining duration of the initial period irrespective of
the commencement date.
3.5
The renewal period is to be negotiated and discussed at least 1 (one)
calendar month prior
to the expiry of the lease period stated in
Section 6 of the Schedule. The Landlord and Tenant shall endeavour to
reach agreement
on the monthly rental which shall apply during the
renewal period and the escalation in respect of such rental.
3.6
In the event that the renewal of the lease is not negotiated prior to
the expiry of the
lease, the Lessee will be liable for the rental on
the same terms and conditions of this lease.
3.7
In event of the situation envisaged in 3.5 above, the lease will then
continue on a month
to month basis, subject to 1 (one) calendar
months written notice by either party for the cancellation thereof.’
[9]
These
clauses must be interpreted by having regard to the language used in
the light of the ordinary rules of grammar and syntax;
in the context
of each other and the agreement as a whole, and their apparent
purpose so as to give them a commercially sensible
meaning. If more
than one meaning is possible each possibility must be weighed in the
light of all these factors. The process is
objective and not
subjective. (
See
Ekurhuleni Metropolitan Municipality v Germiston Municipal Retirement
Fund
2010 (2) SA 498
(SCA) para 3;
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18).
[10]
The bone of
contention between the parties in this regard is whether the one
month period referred to in clause 3.5 relates to the
time within
which the option to renew the lease should have been exercised as
submitted by The Falls, or whether the renewal terms
had to be
negotiated and agreed in writing one month prior to the expiration of
the lease period as contended for by Roazar. The
latter contends that
at the time the letter dated 2 February 2016 was sent to it, the time
for the agreement and negotiations had
lapsed because the option to
renew had to be exercised by no later than 29 January 2016 and that
by this date the parties were
required to have reduced into writing
an agreement with renewal terms. The Falls submit that if an
agreement had to be concluded
one month prior to the expiration of
the lease period, the reference to ‘and negotiated’ would
be redundant and contradictory.
[11]
I agree
with the interpretation contended for by The Falls. If the parties
envisaged that a written contract would be concluded
by 29 January
2016, Clause 3.7 would have been superfluous. There would have been
no need to provide for a term to regulate their
relationship whilst
they were still negotiating, because the contract would have come to
an end. A sensible interpretation of the
agreement is the following.
The Falls had to notify Roazar at least one month before the expiry
of the current lease period that
it wished to exercise its right of
renewal. It did not have to do so in writing. In that event, and
whilst the parties were negotiating
the renewal terms, the provisions
of Clause 3.7 would be invoked if necessary. In that event the lease
agreement would continue
on a month to month basis, subject to one
month’s notice by either party, until an agreement was reached
or negotiations
failed and notice was given by one of the parties. In
the event The Falls elected not to exercise its right to renew the
lease
at least one month before the expiry of the lease period, the
lease would terminate on 29 February 2016. If an agreement was
reached
to renew the lease, that agreement had to be in writing.
[12]
Roazar
chose to invoke the terms of clause 3.7 and in its letter of 31 March
2016 terminated the contract by giving one month’s
notice. That
should have been the end of the matter, but The Falls contends that
the contract could not be terminated until the
good faith
negotiations had taken place. For that reason it contends that the
notice of termination and the application for eviction
were
premature. It contends further that until the good faith negotiations
have been undertaken, the existing lease agreement should
be allowed
to continue.
[13]
As a
general rule an agreement that the parties will negotiate to conclude
another agreement is not enforceable because of the absolute
discretion vested in the parties to agree or disagree (see
Premier,
Free State & others v Firechem Free State (Pty) Ltd
2000 (4) SA 413
(SCA) para 35;
Southernport
Developments (Pty) Ltd v Transnet Ltd
2005 (2) SA 202
(SCA)). However, the courts have been prepared to
enforce the terms of a contract that require parties to negotiate in
good faith
in instances where there is a deadlock-breaking mechanism.
In
Southernport
Developments
this
court said in paras 11, 12, 15 and 16:
‘
The
contract under consideration in
Firechem
contained no deadlock-breaking mechanism. In the present case, the
agreement prescribes what further steps should be followed in
the
event of a deadlock between the parties. The engagement between the
parties can therefore be analysed as requiring not merely
an attempt
at good faith negotiations to achieve resolution of any dispute but
also the participation of the parties in a dispute
resolution process
that they have specifically agreed upon.
The
duty to negotiate in good faith is known to our law in the field of
labour relations. There, as well, because of the public
interest in
ensuring harmony in the workplace, deadlock-breaking mechanisms exist
to ensure that the negotiating process is legally
meaningful. The
analogy between ordinary contract negotiations and collective
bargaining in our labour law regime is, to be sure,
less than
perfect. In ordinary contract negotiations, there is usually no
public interest in a successful outcome or in the process
of
good-faith negotiations itself that is comparable to the interest in
preventing labour strife.
.
. . .
Certainty,
it would appear, is the touchstone of enforceability of agreements to
negotiate in good faith in Australia.
In Coal Cliff Collieries
(Pty) Ltd v Sijehama (Pty) Ltd
(1991) 24 NSWLR 1
, Kirby P stated
at 26E-27B:
“
From
the foregoing it will, I hope, be clear that I do not share the
opinion of the English Court of Appeal that no promise to negotiate
in good faith would ever be enforced by a court. I reject the notion
that such a contract is unknown to the law whatever its term.
I agree
with Lord Wright’s speech in
Hillas
that, provided there was consideration for the promise, in some
circumstances, a promise to negotiate in good faith will be
enforceable
. . . . Nevertheless, I believe that the proper
approach to be taken in each case depends upon the construction of
the particular
contract . . .”
Kirby
P then adverted to three situations. He stated of the first:
“
In
many contracts, it will be plain that the promise to negotiate is
intended to be a binding legal obligation to which the parties
should
be held. The clearest illustration of this class will be cases where
an identified third party has been given the power
to settle
ambiguities and uncertainties . . . But, even in such cases, the
court may regard the failure to reach agreement on a
particular term
as such that the agreement should be classed as illusory or
unacceptably uncertain . . . . In that event the court
will not
enforce the agreement.”
Of
the second:
“
In
a small number of cases, by reference to a readily ascertainable
external standard, the court may be able to add flesh to a provision
which is otherwise unacceptably vague or uncertain or apparently
illusory . . .”
And,
of the third
:
“
Finally,
in many cases, the promise to negotiate in good faith will occur in
the context of an ‘arrangement’ (to use
a neutral term)
which, by its nature, purpose, context, other provisions or otherwise
makes it clear that the promise is too illusory
or too vague and
uncertain to be enforceable . . . .”
The
principles enunciated in
Coal
Cliff Collieries
accord
with our law. The first and third situations alluded to by Kirby P
are covered, respectively, by
Letaba
Sawmills
and
Firechem
.’
(See also
Letaba
Sawmills (Edms) Bpk v Majovi (Edms) BPK
[1992] ZASCA 195
;
1993 (1) SA 768
(A)).
[14]
In
Makate
v Vodacom Ltd
2016 (4) SA 121
(CC) para 101 the Constitutional court said:
‘
Happily,
here the agreement to negotiate in good faith the amount of the
compensation payable contained a deadlock-breaking mechanism.
The
parties had agreed that in the event that they disagreed on the
amount to be paid, Vodacom’s CEO would determine the
amount.
While choosing the CEO may not be regarded as a delegation of power
to a third party, the choice still constitutes a deadlock-breaking
mechanism. It is how the parties in their wisdom formulated the
relevant clause, and their choice must be respected and given effect.
This is what they have bargained freely, and consequently they must
be held to it.’
[15]
The
fundamental problem with the main agreement is that it has no
deadlock-breaking mechanism. However, counsel for The Falls submitted
that the contract contains what is akin to a deadlock breaking
mechanism in that any deadlock would be resolved by maintaining
the current rental and if it turned out to be unacceptable to either
of the parties, either one could terminate the contract. This
submission is not sustainable because the payment of current rental
and the option to terminate are not aimed at the resolution
of the
impasse between the parties. Payment of the rental is a quid pro quo
for the use of the premises and the termination does
not resolve
anything. It simply terminates the relationship between the parties.
There was thus no obligation on Roazar to continue
to negotiate with
The Falls.
[16]
In the
alternative The Falls has submitted that the common law should be
developed to recognise the validity of an agreement to
negotiate in
circumstances where there is no deadlock-breaking mechanism. For this
contention it relies on s 39(2) of the Constitution
of the Republic
of South Africa and it referred to P
aulsen
& another v Slip Knot Investments 777 (Pty) Ltd
2015 (3) SA 479
(CC) where the Constitutional Court held that it is
implicit in s 39(2) read with s 173 that where the common law as it
stands
is deficient in promoting the s 39(2) objectives, the courts
are under a general obligation to develop the common law
appropriately.
Specific reference was also made to
Everfresh
Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd
2012 (1) SA 256
(CC) where the lease agreement contained a right of
renewal clause which read:
‘
Provided
that the Lessee has faithfully and timeously fulfilled and performed
all its obligations under and in terms of this Lease,
the Lessee
shall have the right to renew same for a further period of four years
and eleven months commencing on 1
st
April 2009, such renewal to be upon the same terms and conditions as
in this Lease contained save that there shall be no further
right of
renewal, and save that the rentals for the renewal period shall be
agreed upon between the Lessor and the Lessee at the
time. The said
right of renewal is subject to the Lessee giving written notice to
the Lessor of its intention so to renew, which
notice shall reach the
Lessor not less than six (6) calendar months prior to the date of
termination of this Lease. In the event
of no such notice being
received by the Lessor, or in the event of notice being duly received
but the Parties failing to reach
agreement in regard to the rentals
for the renewal period at least three (3) calendar months prior to
the date of termination of
this Lease, then in either event this
right of renewal shall be null and void.’
[17]
The
minority judgment (per Yacoob J) would have upheld the appeal and
would have referred the matter to the high court for consideration.
It said in paras 36-37:
‘
The
High Court’s construction of the clause, without reference to
public policy or to s 39(2), is not free from difficulty.
It was
necessary to consider whether to develop the common law and whether
the detailed provisions of the clause carry the necessary
implication
that the renewal was not to be regarded as null and void in every
respect. The proposition that a common-law principle
of contract
provides meaningful parameters to render an agreement to negotiate in
good faith enforceable is decidedly more consistent
with s 39(2) than
a regime that does not. A common-law principle that renders an
obligation to negotiate enforceable cannot be
said to be inconsistent
with the sanctity of contract and the important moral denominator of
good faith. Indeed, the enforceability
of a principle of this kind
accords with and is an important component of the process of the
development of a new constitutional
contractual order. It cannot be
doubted that a requirement that allows a party to a contract to
ignore detailed provisions of a
contract as though they had never
been written is less consistent with these contractual precepts:
precepts that are in harmony
with the spirit, purport and objects of
the Constitution.
Suffice
it to say that Everfresh has reasonable prospects of success in its
quest to develop the common law in terms of s 39(2)
of the
Constitution. And it should not be denied this opportunity because
the High Court did not consider s 39(2) when it ought
to have done
so. The fact that the development of the common law was not expressly
raised by Everfresh in its interpretation argument
in the High Court
cannot serve to deprive Everfresh of the opportunity to raise it
here. I have already said that the Supreme Court
of Appeal in
Southernport
approved a principle laid down by an Australian court that a promise
to negotiate in good faith that occurs in a context of an
arrangement
which makes it clear that the promise is too illusory or too vague
and uncertain to be enforceable is not enforceable.
This cannot be
gainsaid. But the determination whether a promise is too illusory or
too vague and uncertain must be made against
the backdrop of an
understanding that good faith should be encouraged in contracts and a
party should be held to its bargain. The
question to be answered is
whether the common law as developed requires the enforcement of the
bargain in this case.’
[18]
The
majority (per Moseneke DCJ) dismissed the application for leave to
appeal, not on the basis that it would not consider the development
of the common law in this regard, but did so on the basis that the
constitutional issue had not been raised in the high court and
that
the applicant had not shown exceptional circumstances as to why it
should be allowed to raise the issue for the first time
in the
Constitutional Court. The thinking of the court was expressed obiter
in paras 69-72:
‘
I
am prepared to accept that there could be more than one plausible
interpretation of the clause and that Everfresh’s argument
may
therefore not be without some prospect of success. When two
contracting parties conclude a bargain that a certain state of
affairs will come into existence between them, provided only that the
terms of a necessary condition “shall be agreed”,
a court
called upon to interpret that provision may find itself required to
develop the common law. It may find that “shall”
imports
a duty to negotiate and that parties would at least try to reach
agreement on those terms. Counsel for the lessor sought
to argue that
“shall be agreed” in clause 3 implies no more than a
conditional futurity – in other words, that
a right of renewal
would come into existence only if at some future point the parties
were to reach agreement on rental. However,
I accept in Everfresh’s
favour that there is at least a reasonable prospect that a court
would find that “shall”
imports the imperative and not
merely the future tense.
If
that were so, then the parties’ bargain was that they would try
to agree, and the age-old contractual doctrine that agreements
solemnly made should be honoured and enforced (pacta sunt servanda)
would bolster Everfresh’s case that the law should be
developed
to make an agreement of this kind enforceable.
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”.
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. Where there
is
a contractual obligation to negotiate, it would be hardly imaginable
that our constitutional values would not require that the
negotiation
must be done reasonably, with a view to reaching an agreement and in
good faith.’
[19]
A
development of the common law in order to compel parties to negotiate
in good faith even in circumstances where there are no
deadlock-breaking mechanisms is not without complications. In
Bredenkamp
& others v Standard Bank
of South
Africa Ltd
2010 (4) SA 468
(SCA) this court found it difficult to countenance
the fairness of imposing on a Bank the obligation to retain a client
simply
because other banks are not likely to accept that entity as a
client. The appellants were unable to find a constitutional niche
or
other public policy consideration justifying their demand. It found
that there was no ‘unjustified invasion of a right
expressly or
otherwise conferred by the highest law in our land’. The court
said that the Bank had a contract, which was
valid, and that gave it
the right to cancel. It further said that the termination did not
offend any identifiable constitutional
value and was not otherwise
contrary to any other public policy consideration. The court
highlighted important considerations that
militate against tampering
with the notion of sanctity of a contract between two parties. It
said in para 65:
‘
I
do not believe it is for a court to assess whether or not a bona fide
business decision, which is on the face of it reasonable
and
rational, was objectively ‘wrong’ where in the
circumstances no public policy considerations are involved. Fairness
has two sides . . .’
In
para 56 it said:
‘
The
appellants’ argument is in many respects circuitous,
self-destructive and, in any event, without merit. They accept that
in terms of the valid agreement the bank was entitled to terminate
without any cause, but they ask for an order that the bank may
only
terminate on good cause. This would require a tacit term or the
development of the common law, both of which they eschew.
But, they
say, in this case the Bank cannot close the account with a bona fide
reason because of consequences to them that cannot
be laid at the
door of the bank.’
[20]
Carole
Lewis, a member of this court, but wearing the academic cap in ‘The
uneven journey to uncertainty in contract’
(2013) 76 THRHR 80
highlights some of the fundamental difficulties that a high court
would have to deal with if asked to determine whether a party
has
negotiated in good faith. She says on page 92:
‘
What
would a high court, faced with parties who cannot agree on a material
term of their contract, do to determine the dispute?
It cannot make a
contract for them. It cannot decide what future rental should be. Can
it even decide whether their bargaining
power is equal, given that
they may be large corporate entities? And does equality of bargaining
power depend on the parties’
monetary worth or their
negotiating skills or their political or business influence?’
With
reference to
Everfresh
Lewis says:
‘
How
could a court develop the common law in this regard? How would it
enforce a duty to negotiate in good faith and precisely what
does
that mean? Does a failure even to discuss future rental amount to bad
faith? I think not. If a court were to order parties
to agree on a
term, and they could not, would they be in contempt of court? And how
would one determine who, if anyone, was at
fault? How could
Everfresh, in this matter, even rely on the expectation of renewal of
the lease where there was no basis upon
which to proceed? If it means
simply talking, what is the point, given that Shoprite had decided
that it did not wish to renew
its lease with Everfresh? And that it
had commercial reasons not do so, including a necessary renovation of
the premises.
Perhaps
Everfresh could have shown that it had taken steps to add to the
value of Shoprite’s property such that it was entitled
to a
claim based on unjustified enrichment. That, in my view, is probably
the only avenue available to a court in assessing whether
the
enforcement of the right to terminate the lease is contrary to public
policy, assuming that the term embraces fairness and
reasonableness,
the values most commonly referred to when dealing with constitutional
issues in relation to contract.’
On
page 94 Lewis concludes by saying:
‘
[T]
he
principle that agreements should be honoured is but one of the values
that must be assessed in determining whether a contract
does not
conform to public policy. “Reasonable people”,
irrespective of any philosophical or political bent, might
disagree
whether any particular value judgment was “correct”. But
the primacy of different principles may differ in
each case. There
is, however, one principle that I would suggest is always paramount.
The parties should know what their bargain
is. That is invariably
just and fair.
In
my view, while there may be different understandings of what is fair
or reasonable, and their importance may differ depending
on the
particular parties, there is little room for doubt that parties
should know what their contract says. Each should be entitled
to rely
on it unless it offends any of the tenets of public policy, including
the values embedded in the Constitution. No one can
rely on a general
duty to bargain in good faith. It is illusory’
[21]
The facts
in the present matter are a clear illustration of the complications
highlighted by this court in
Bredenkamp
and by Lewis in her article.
[22]
The Falls
does not state how long the negotiations were required to take place
and the contract is silent on this issue. It also
does not state what
criterion would be used to determine whether either of the parties
was negotiating in good faith. What it says,
however is that the
negotiations to conclude renewal terms of the agreement commenced as
early as 2014, but that the negotiations
did not bear fruit because
it refused to pay the rental due in terms of the two ancillary
agreements. This version seems to suggest
that the period of
approximately two years was not long enough and that the fact that
Roazar wished to be paid money due in terms
of the two ancillary
agreements must be said to show bad faith on its part. It is however
not clear how the court should have determined
what period of
negotiations would have been fair and what criterion should have been
used to measure whether Roazar was indeed
negotiating in bad faith as
alleged.
[23]
What is
however clear is that the parties consciously bound themselves to a
contract that provided that each party could terminate
it on one
month’s notice in the event that there was no agreement on the
renewal terms. If the version of The Falls that
the negotiations had
been going on since 2014 is accepted, it must also be accepted that
Roazar on the one hand persistently wished
to enforce the terms of
the two ancillary agreements whilst The Falls on the other, has
persisted in its refusal to align itself
with the two ancillary
agreements. In that instance it would have to be concluded that the
parties have been at loggerheads for
a period of approximately two
years on a material term of the contract. It is not clear, in the
absence of a deadlock-breaking
mechanism how much longer the impasse
would have to continue before the parties would be held to have
negotiated in good faith.
In this case it is clear, however that the
negotiations have come to an end without an agreement having been
reached.
[24]
Another
concern is that there is presently litigation pending between the
parties concerning the legal status of the two ancillary
agreements.
In its replying affidavit Roazar has objected to what it considers to
be a vitriolic and defamatory attack by The Falls
and the allegations
that it is complicit in committing crime. It unequivocally states
that it has no intention of ever leasing
its property to The Falls. I
find myself in agreement with Roazar that it would be against public
policy for a court to coerce
a lessor to conclude an agreement with a
tenant whom it does not want to have as a tenant any longer. In
instances of breach, there
are adequate legal remedies available. It
is difficult to conceive how a court, in a purely business
transaction, can rely on ‘ubuntu’
to import a term that
was not intended by the parties, to deny the other party the right to
rely on the terms of the contract to
terminate it.
[25]
For all
those reasons the appeal must be upheld. I make the following order:
1.
The appeal
is upheld with costs including the costs of two counsel.
2.
The order
of the high court is set aside and substituted with an order in the
following terms:
‘
a) The
respondent and all other persons who occupy through it the property
described as ‘The Spar’, The
Falls Shopping Centre,
corner. Webb and Great North Roads, Northmead, Benoni (‘the
premises’), are directed to be evicted
from the premises.
b)
Should the respondent and persons occupying the premises through it
not vacate the premises within 30 days
of service of the order upon
them, the Sheriff of the Court is authorised to forcibly evict and
eject the respondent and those
who occupy the premises through it
from such premises.
c)
Should the respondent or any person who occupies the property through
it refuse to vacate the premises, the
Sheriff is authorised to take
all steps necessary in evicting such persons who still remain in
occupation on the premises.
d) The
Sheriff is further authorised to utilise the services of the South
African Police Service to give effect
to the orders in a, b and c
above.
e) The
respondent is ordered to pay the costs of this application, including
the costs consequent on the employment
of two counsel.’
___________________
Z L L Tshiqi
Judge
of Appeal
APPEARANCES
For
the Appellant:
W Symon
Instructed
by:
Glynnis Cohen Attorneys
Lovius
Block Attorneys, Bloemfontein
For
the Respondent:
A de Kok SC
Instructed
by:
Christelis Artemides Attorneys, Johannesburg
E G
Cooper Majiedt Attorneys, Bloemfontein