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[2016] ZAKZPHC 29
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Sunshine Foods v Chen (AR86/15) [2016] ZAKZPHC 29 (18 March 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
KWA-ZULU
NATAL DIVISION, PIETERMARITZBURG
CASE
NO.: AR86/15
DATE:
18 MARCH 2016
In
the matter between:
SUNSHINE
FOODS
..................................................................................................................
Appellant
(Applicant
in the Court a quo)
And
H
CHEN
..................................................................................................................................
Respondent
(Respondent
in the Court a quo)
Coram:
Koen, Henriques
et
Olsen JJ
Heard
: 1 February 2016
Delivered:
18 March 2016
ORDER
On
appeal from the High Court of South Africa, KwaZulu-Natal Local
Division, Durban (D Pillay J)
:
1.
The appeal is upheld with costs, such costs
to include the employment of two counsel where applicable.
2.
The order of the court
a
quo
granted on the 11 December 2014
under Case No. 4240/2013 (KZD) is hereby set aside and replaced with
the following order:
(a)
The Respondent and all and any other
persons purporting to hold title to the leased premises, being two
shops Unit 1 and Unit 2
known as Johanna Centre, Main Road, Jozini,
District Ubombo, KwaZulu-Natal through or under her, be and are
hereby directed to
vacate the premises within 14 days of the granting
of this order;
(b)
Failing due compliance with the order in
para (a) above, the Sheriff for the area in which the premises are
situate, be and is hereby
ordered to eject the Respondent and all or
any persons purporting to hold title through her from the premises;
(c)
The Respondent is directed to pay the costs
of this application including the costs of two counsel where
applicable.
J
U D G M E N T
KOEN
J
(HENRIQUES et OLSEN JJ
concurring):
[1]
This is an appeal
[1]
against the
refusal by the court
a
quo
to
grant the following relief sought in motion proceedings:
That
it is declared that the Applicant be and is hereby entitled to sole
occupation and possession of the premises which includes
2 (two)
shops being Unit 1 and Unit 2 known as:
Johanna
Centre
Main
Road
Jozini,
District Ubombo
KwaZulu-Natal
[hereinafter
‘the premises’].
[2]
That
the Respondent and all and any other persons holding title to the
premises or purporting to hold title to the premises through
or under
her, be and is hereby ordered forthwith to vacate the premises.
That
failing due and immediate compliance with the order in paragraph 2
hereof, the Sheriff for the area in which the premises are
situate,
be and is hereby ordered to eject the Respondent and all and any
persons holding title or purporting to hold title through
her from
the premises.
Ordering
the Respondent to pay the costs of this application
That
the Applicant be granted such other or alternative relief as may be
deemed meet.’
[2]
The court
a quo
dismissed the application for the aforesaid relief with costs.
[3]
The Applicant is the Lessee of respectively units 1 and 2, which
constitute the premises, pursuant to two written lease agreements,
respectively annexures SF2 and SF1 to the founding affidavit.
[3]
These two leases are largely in similar terms save for the amount of
the rental and the commencement dates of the respective lease
periods. The lease in respect of Unit 2
[4]
commenced on 1 May 2007 and would continue for 5 years. The lease in
respect unit 1
[5]
commenced on 1
November 2005 and similarly would be for 5 years. Each lease afforded
the Applicant the right to renew the lease
upon the same terms and
conditions applicable to the initial period for a further period of 5
years. It is common cause that
the lease in respect of unit 1
was timeously renewed to endure until 1 November 2015. At the
time judgment was delivered
in the court
a
quo
on 5 December 2013, this lease was therefore still extant, but when
the appeal was argued on 1 February 2016 it had terminated
by
effluxion of time. The renewal of the lease in respect of unit 2 will
be dealt with in more detail later in this judgment. That
lease would
have to be renewed by notice in writing being given by the Applicant
and received by the lessor not later than 30 days
[6]
prior to the date on which the renewal period was to commence, and
would lapse if not so exercised.
[7]
The initial period of 5 years was due to expire on the 30 April 2012.
If properly renewed, that lease would endure for a further
period of
5 years until 30 April 2017.
[4]
The following terms were common to both leases:
(a)
All rentals must be paid monthly in arrear on or before the first day
of each and every succeeding month for the duration of
the lease and
any extension thereof;
[8]
(b)
The Applicant is not allowed to use or permit the premises to be used
for any illegal or improper purpose; contravene or permit
the
contravention of any statutory law or regulation or a requirement of
any competent authority or any provision of the title
deeds under
which the premises are held, or of any servitude or town planning
scheme applying to or affecting the premises, or
of any measure
having the force of law with which the owner of the premises is
obliged to comply, and shall at all times comply
therewith; do or
omit to do or permit any act or omission which may be or become an
annoyance, nuisance, disturbance or hazard,
or cause damage to the
owners and/or occupiers of neighbouring premises or properties or to
the public in general;
[9]
(c)
The Applicant is not entitled, except with the prior written consent
of the Lessor, to cede all or any of its rights under the
lease or to
sublet or give up possession of the premises in whole or part.
The Lessor would not, however, unreasonably withhold
its consent to a
subletting of the whole of the premises to any third party;
[10]
(d)
Should the Applicant default in any payment due under the lease, the
Lessor shall be entitled, without prejudice to any alternative
or
additional right of action or remedy available to the Lessor, to
cancel the lease with immediate effect, be repossessed of the
premises, and recover from the Applicant damages for the default or
breach and the cancellation of the lease.
[11]
The aforesaid would not be construed as excluding the ordinary lawful
consequences of a breach of the lease by either party (save
any such
consequences as are expressly excluded by any of the other provisions
of the lease) and in particular any rights of cancellation
of the
lease on the ground of a material breach going to the root of this
lease;
[12]
(e)
The validity of the lease would not in any way be affected by the
transfer of the premises from the Lessor pursuant to a sale
thereof.
It shall accordingly, upon registration of transfer of the premises
into the name of purchaser, remain of full force
and effect save that
the purchaser shall be substituted as Lessor and acquire all the
rights and be liable to fulfil all the obligations
which the Lessor,
as lessor, enjoyed against or was liable to fulfil in favour of the
Applicant in terms of the lease.
[13]
[5]
The two units are adjoining shops in the Johanna Centre, Main Road,
Jozini. The wall which previously separated them has
since been
demolished resulting in the two units now forming a single shop from
which the Applicant previously conducted business.
[6]
The Lessor in the two lease agreements, Vernon Adams, was entitled to
occupy the premises in terms of a written Permission to
Occupy.
[14]
That Permission to Occupy dated 28 May 1999 at Ulundi was issued
under the signature of the Secretary: Traditional and Environmental
Affairs pursuant to the provisions of ‘…the KwaZulu Land
Affairs (Permission to Occupy) Regulations 1994 as amended’.
[7]
All the rights, title and interest in and to the premises in terms of
that permission to occupy were transferred from Vernon
Adams to
Quinton Jerome Adams pursuant to a deed of donation, by an
endorsement dated the 10 April 2000 at Ulundi and signed by
the Head:
Traditional & Local Government Affairs.
[15]
[8]
Towards the end of 2011 a written ‘Deed of Sale of Occupational
Rights Jozini Trading Site’
[16]
was concluded between Quinton Adams and the Respondent for a
consideration of R1 800 000.00.
[17]
The Applicant maintains that Quinton Adams has cancelled that sale
agreement. The Respondent denies that Quinton Adams has cancelled
the
sale agreement and moreover that he is entitled to do so. Whether the
sale has been validly cancelled is irrelevant. Indeed
the Applicant
encapsulates its cause of action in the following allegations in the
founding affidavit:
‘
The
Applicant submits that the Respondent has no right to possession or
occupation of the premises arising from the sale agreement
and
whether the cancellation of the sale agreement was valid or not is
irrelevant. What cannot be contradicted is the fact
that the
leases in favour of the Applicant supercede any sale, and as a matter
of law, “Huur gaat voor koop”, both
leases take
precedence over any sale. This is especially so considering
clause 17 of both of the lease agreements which provide
that the
validity of each lease shall not in any way be affected by the
transfer of the premises from the Lessor pursuant to any
sale
thereof’.
[18]
The
Applicant further states that:
‘
It
is on this basis that there is no genuine dispute of fact envisaged,
hence the Applicant’s proceeding by way of motion
and not
action’.
[19]
[9]
The Respondent concedes that throughout the negotiations regarding
the sale to her she was aware that the Applicant was in occupation
of
the premises and conducted its business from there. She and her
husband had however not been given copies of the lease agreements
and
were not informed of the contents of the lease agreements.
Nevertheless, they were happy to honour the lease agreements for
their duration.
[20]
At best
then for the Respondent she stepped into the shoes of the Lessor
[21]
and would be bound by the lease unless the leases had terminated.
[10]
The Respondent alleges that everything changed towards the end of
2011. The Applicant had remained in occupation of the premises
up and
until approximately the end of November 2011 to mid-December 2011.
Thereafter its store which conducted business from the
premises
closed and there was no activity for some time. At the
beginning of January 2012
[22]
she and her husband noticed that there were new occupants in the
premises, being people of Chinese origin, who not only started
trading from the premises but also lived, bathed, cooked and washed
in the premises. These new occupants advised her that
they had
bought the business from the Applicant and asked to enter into a long
term lease with her as the ‘owner’ of
the premises. The
Respondent informed them that she would not be willing to enter into
a long term lease agreement with them.
[11]
On 19 January 2012 the Respondent and her husband were approached by
Mr Henderson of the Applicant who wanted to extend the
Applicant’s
later lease (that is annexure SF1 which would lapse by 30 April 2012
but could be renewed for a further period
of 5 years by notice in
writing given to the Lessor and received not later than 30 days prior
to the date on which the renewal
period was to commence).
[23]
[12]
On 20 January 2012 the Applicant addressed a letter to the
Respondent’s husband enclosing a copy of the lease agreement
as
per their discussion.
[13]
On 23 January 2012, the Respondent’s attorneys replied to this
letter advising that the Respondent’s husband
[24]
had purchased the premises subject to the lease agreement from Mr
Vernon Adams (the Lessor in the agreement) and expressing her
belief
that the Applicant was in the process of selling its business in
Jozini. Certain terms of the lease were referred
to,
particularly clause 10.1 which was quoted only in part, the part
quoted being restricted to the prohibition against any cession
or
assignment of the lease except with the prior written consent of the
Lessor, without any reference being made to such consent
not being
capable of being withheld unreasonably. The Respondent’s
attorney recorded that the Applicant could not cede its
rights to
renew the lease to any third party. The letter concluded with the
confirmation that:
‘…
our
client shall honour the existing lease with Sunshine Foods until its
expiry on 30 April 2012, or any earlier date if agreed
upon by both
parties. Our client shall not enter into a lease agreement with
any third party.’
The
letter did not seek to invoke any legal remedy on behalf of the
Respondent.
[14]
In reply to the Respondent’s attorney’s letter of 23
January 2012, the Applicant on the same day addressed a letter
to the
Respondent’s attorneys stating:
‘
We
wish to confirm that we have cancelled the sale of our business in
Jozini and that we will resume trading from the premises shortly.
We
accordingly also give notice of our intention to exercise our right
of renewal of the lease in terms of clause 3.2 of the lease
agreement
noting that the lease will expire on 31 April 2017.’
[15]
This letter resulted in a reply from the Respondent’s attorneys
dated 26 January 2012 recording their instructions in
the following
terms:
‘
1.
At the beginning of January 2012, Sunshine Foods CC handed possession
of the premises over to the prospective purchaser of their
business,
without the Lessee having complied with Section 10.1 of the Lease
Agreement. The Lessee thereby ceded its rights
under the lease
to a third party, thereby materially breaching the agreement.
2.
The prospective purchaser occupied the premises until 25 January
2012. They traded for approximately three weeks from the
premises, where after they stopped trading for approximately a week,
while remaining in occupation of the premises.
3.
They also physically resided in the shop, meaning that they slept,
cooked and ate there. This constitutes a breach of Section
7 of
the lease agreement (“Use of Premises”).
4.
Our client regards the above breaches of the lease agreement as
material breaches, going to the root of the lease, whereby the
Lessee
repudiated the contract.
5.
Mr Chang offered to reinstate the lease, on condition that it expires
on 30 April 2012.
6.
In your letter dated 23/01/2012, Mr Chang’s offer was
rejected. The Lessee tendered to remedy his breach, by resuming
occupation of the premises.
Mr
Chang
[25]
hereby gives notice:
1.
That he does not accept your tender of
performance;
2.
That he deems the lease agreement to be
cancelled with immediate effect.’
[16]
The purchasers of the Applicant’s business vacated the leased
premises on or about 25 January 2012.
[26]
Thereafter the Respondent or her husband apparently padlocked the
door to the premises and subsequently took occupation of the
premises
and commenced trading from the premises.
[27]
[17]
In the application which came before the court a quo the Respondent
in addition to her contentions in the aforesaid correspondence
also
alleges that the Applicant had not tendered payment of the rental of
the property to her since she had ‘taken over the
ownership,
despite the Applicant being aware of that fact …’. In
response to that contention the Applicant however
replied that the
Respondent has to date not become the owner of the rights to the
premises and therefore is not the Lessor, and
that the Applicant has
tendered payment of all the rentals to the de jure Lessor i.e.
Quinton Adams. The Applicant asserted in
its founding affidavit that
the lease evidenced by Annexure SF1 with an initial period to 30
April 2012 and a renewal period to
30 April 2017 was indeed renewed
with Quinton Adams, and this was confirmed by the confirmatory
affidavits of Vernon and Quinton
Adams.
[18]
Unless the Respondent could show that she had indeed become the owner
of the right to occupy with a title superior to that
of Quinton Adams
which would have entitled her to have stepped into the shoes of the
Lessor:
(a)
any renewal of that lease for a further period of five years would
have been required to have been concluded with Adams, and
rentals
pursuant thereto, or in respect of the unexpired balance of the
initial period of the lease, be paid to Adams;
(b)
She would not have acquired any rights to cancel the lease
agreements.
[28]
[19]
The mere conclusion of the sale by Quinton Adams to the Respondent
did not per se confer any rights in terms of the lease agreements
upon the Respondent. Clause 17 of the leases is very specific; it was
only upon registration of transfer that ‘the purchaser
shall be
substituted as Lessor and acquire all rights and be liable to fulfil
all the obligations which the Lessor, as Lessor,
enjoyed against or
was liable to fulfil in favour of the Lessee in terms of the lease.’
This contractual provision
prevails, but in any event simply seems to
echo what would be the common law position in accordance with the
principle of ‘huur
gaat voor koop’, which although
referring to ‘koop’ only comes into operation upon
transfer when the purchaser
becomes the owner of the leased
premises.
[29]
[20]
The question which then arises, and particularly arose in the appeal,
was whether and when the Respondent became the owner
or lawful holder
of the rights to occupy the leased premises, because failing that and
her stepping into the shoes of the Lessor
the issue whether the
Applicant’s rights to occupy the premises were validly
cancelled, would be premature.
[21]
The Respondent in her answering affidavit simply asserted that she
had become the owner and had been recognised as such, at
least
impliedly by being approached by the Chinese occupiers who asked her
for a long term lease of the premises and by the Applicant
when it
approached her/her husband regarding the renewal of the more recent
of the two leases. Her assertion of ownership of those
rights is,
however, a conclusion of law and not conclusive. Such facts as she
advanced, of her own volition but which she in any
event would be
required to advance to persuade the court that she had indeed become
the owner of the rights of occupation in law,
need to be examined
more closely.
[22]
It is in this respect that much controversy and opposition were
encountered.
[23]
Mr Kemp SC, with him Mr Crots, for the Applicant argued with
reference to the provisions of the KwaZulu Land Affairs Act No.
11 of
1992 and the regulations thereto issued in terms of KwaZulu
Government Notice No. 32 of 1994, that the requirements relating
to
registration of transfer of the right to occupy the premises,
specifically the requirement that the Minister’s prior approval
(given after consultation with the tribal authority to any transfer
of right to occupy), had on the Respondent’s version
not been
satisfied. Accordingly, that meant that the Respondent could not have
acquired any rights of ownership in terms of that
legislation.
Reference was also made to the provisions of the KwaZulu-Natal
Ingonyama Trust Act No. 3 KZ of 1994 not being
satisfied. It was
argued that such documentation as was presented by the Respondent as
annexures to her answering affidavit, notably
annexure HC3 (a
traditional council consent), HC4 (the Ingonyama Trust 10 year option
application form) and a handwritten endorsement
signed before a
commissioner of oaths and seemingly bearing a stamp of the
traditional council (although it was not clear), fell
short of the
statutory requirements and hence that any alleged ‘transfer’
of any rights to occupy to the Respondent
was a nullity and/or of no
legal force or effect. Strict compliance with statutory requirements
are generally required failing
which no rights accrue.
[30]
In summary, it was argued that there had been non-compliance
with
inter-alia:
(a)
The provisions of s 25(4) of the KwaZulu-Natal Land Affairs Act of
1992;
(b)
The provisions of regulation 6(1) and 7(1) of the regulations
thereto;
(c)
The relevant provisions of the Ingonyama Trust read with the
resolution of the Ingonyama Trust Board dated 5 October 1998
delegating the trust functions and duties pertaining to permissions
to occupy to the Secretary to the Department of Traditional
and
Environmental Affairs.
[24]
Mr Combrink, with him Mr Hattingh, for the Respondent objected to
these arguments being advanced, contending that the issue
of the
legality or otherwise of the transfer of rights to the Respondent had
not been raised squarely on the papers for proper
adjudication.
[31]
[25]
The specific legislation which should find application and the import
thereof, particularly whether a transfer of rights equating
to
ownership held in terms of a permission to occupy premises can only
be effected in accordance with the provisions of the legislation
by
endorsement, or also underhand, are complex issues which might
necessitate evidence being led. They would certainly require
full
investigation and detailed argument. On what has been presented on
the papers before the court
a quo
and this court, I am unable to express any definitive and considered
view.
[26]
What is however significant is that the defence which the Respondent
advanced was that the Applicant had no right to claim
her ejectment
from the leased premises, because the leases the Applicant held
entitling it to occupation had been validly cancelled
by her. Any
right that might have accrued to her to cancel the leases, could
however only have arisen upon her legally stepping
into the shoes of
the Lessor, because short of that eventuality, the Respondent would
be a party extraneous to the legal relationship
created by the two
lease agreements with no right to cancel the lease agreements.
It was therefore incumbent on the Respondent
to establish the legal
basis which would have entitled her to step into the shoes of the
Lessor and which would then have entitled
her to cancel the lease
agreements. This she failed to do. The mere statement of a legal
conclusion that she had become the ‘owner’
is woefully
insufficient. The documents she had provided as annexures to
her answering affidavit
prima facie
do not seem to support that conclusion either. Her complaint
that this issue was not raised squarely by the Applicant therefore
rings hollow. She was required to have dealt with this issue. But in
any event, although perhaps not pertinently brought to her
attention
in express terms by the Applicant, the replying affidavit did
suggest, albeit with reference to hearsay evidence regarding
an
alleged communication from the Ingonyama Trust Board to the
Applicant’s attorney,that the Applicant would contend that
the
transfer of the rights had not been registered.
[27]
The Respondent’s failure to raise and deal with this issue
squarely, is fatal to her defence. However, even if I was
wrong in
that regard, I am not persuaded assuming that the Respondent had
lawfully acquired the right to terminate the lease agreements,
that
she validly cancelled the lease agreements.
[28]
In the correspondence resulting in the application before the court
a
quo
, she purported to cancel the lease agreements on the basis of
the Applicant’s alleged repudiation of the agreements.
Specifically
her contentions were that:
(a)
the Applicant had at the beginning of January 2012 handed possession
of the premises over to the prospective purchasers of
the business
without any prior agreement from the Lessor;
(b)
that the Applicant allowed the premises to be occupied by the
prospective purchasers;
(c)
that these purchasers physically resided in the shop in breach of
clause 7 of the lease agreement;
and
that she,
‘
regards
the above breaches of the lease agreement as material breaches, going
to the root of the lease, whereby the Lessee repudiated
the
contract’.
[32]
In
argument Mr Combrink also relied on the failure of the Applicant to
pay any rental to the Respondent (which I have also alluded
to
briefly earlier in this judgment), as a ground for cancellation. I
shall deal with this aspect first before dealing with cancellation
on
the grounds of the alleged acts of repudiation.
[29]
As regards the failure to pay rental argument as a ground for
cancellation, the Respondent failed to prove that she had become
lawfully entitled to the rental, which is fatal to her contention in
this regard. However, even leaving aside the issue whether
the
Respondent had shown that she was legally entitled to any rental from
the Applicant, the alleged non-payment of the rent was
never advanced
as a ground for cancellation in the Respondent’s attorney’s
letter of 26 January 2012. The answering
affidavit is devoid of
allegations as to when any rentals would allegedly have become
legally payable to her. The onus establishing
when she would have
become entitled to any rental and the amount thereof would be on the
Respondent.
[33]
Cancellation on that ground accordingly need not be considered any
further. The acts of repudiation, relied upon by the Respondent
to
cancel the leases, did not include the failure to pay rental, and
that cannot be relied upon later to justify a cancellation
if the
original basis for claiming cancellation cannot be sustained.
[34]
The issue of non-payment of the rental appears to be an afterthought.
[30]
The Respondent was also not entitled to cancel the lease agreements
on the basis of an alleged repudiation. For this part of
the judgment
I shall assume in favour of the Respondent, but without making any
finding to that effect, that she had acquired some
rights which would
have resulted in her legally stepping into the shoes of the Lessor
and which would entitle her to have cancelled
the leases if valid
grounds for such cancellation existed in law.
[31]
The right of a party to a contract to cancel it on account of
malperformance by the other party in the absence of a
lex
commissoria
depends on whether or not
the breach, objectively evaluated, is so serious as to justify
cancellation by the innocent party.
[32]
In
Singh
v McCarthy Retail Limited t/a McIntosh Motors
[35]
the test to be applied was explained as follows:
‘
[13]
When is a breach, in the form of malperformance, so serious that it
justifies cancellation by the innocent party? Van der
Merwe
et
al Contract, General Principles
1st ed
(1993) at 255 summarises the position as follows, with reference to
decided cases and various writers:
“
The
test for seriousness has been expressed in a variety of ways, for
example that the breach must go to the root of the contract,
must
affect a vital part or term of the contract, or must relate to a
material or essential term of the contract, or that there
must have
been a substantial failure to perform. It has been said that the
question whether a breach would justify cancellation
is a matter
of judicial discretion. In more general terms the test can be
expressed as whether the breach is so serious that
it would not be
reasonable to expect that the creditor should retain the defective
performance and be satisfied with damages to
supplement the
malperformance.”
[14]
As long ago as 1949 it was said by this Court in
Aucamp v
Morton
1949 (3) SA 611
(A) at 619 with regard to the
relevant question that it was not possible to find a simple general
principle which can be applied
as a test in all cases because
contracts and breaches of contract take so many forms. In deciding,
in that case, whether the respondent
was entitled to cancel the
contract, the Court said (at 620)
“
.
. . nor were the obligations which were broken so vital or material
to the performance of the whole contract that respondent
could say
that the foundation of the contract was destroyed”.
[15]
I perceive the correct approach to be as follows: The test, whether
the innocent party is entitled to cancel the contract
because of
malperformance by the other, in the absence of a
lex
commissoria
, entails a value judgment
by the Court. It is, essentially, a balancing of competing interests
- that of the innocent party claiming
rescission and that of the
party who committed the breach. The ultimate criterion must be one of
treating both parties, under the
circumstances, fairly, bearing in
mind that rescission, rather than specific performance or damages, is
the more radical remedy.
Is the breach so serious that it is
fair to allow the innocent party to cancel the contract and undo all
its consequences?’
[33]
Repudiation is a disavowal of the existence of an agreement or its
material terms. As was remarked in
Du
Preez v Tornel Props (Pty) Limited
:
[36]
‘
[17]
…The test for repudiation is objective and not subjective. The
test as to whether conduct amounts to repudiation of
a contract is
whether fairly interpreted, it exhibits a deliberate and unequivocal
intention no longer to be bound by the terms
of the contract
…
[18]
…
In
Datacolor
International v Intamarket (Pty) Ltd
[2000] ZASCA 82
;
2001
(2) SA 284
para 1, Nienaber JA, observed that:
‘
Repudiation
has sometimes been said to consist of two parts: the act of
repudiation by the guilty party, evincing a deliberate and
unequivocal intention no longer to be bound by the agreement, and the
act of his adversary, “accepting” and thus completing
the
breach’.
In
addition as pointed out at 294E-H:
“
The
emphasis is not on the repudiating party’s state of mind, on
what he subjectively intended, but on what someone in the
position of
the innocent party would think he intended to do; repudiation is
accordingly not a matter of intention, it is a matter
of perception.
The perception is that of a reasonable person placed in the position
of the aggrieved party. The test is whether
such a notional
reasonable person would conclude that proper performance (in
accordance with a true interpretation of the agreement)
will not be
forthcoming. The inferred intention accordingly serves as the
criterion for determining the nature of the threatened
actual
breach.”’
[34]
The Respondent placed particular reliance for its argument of
materiality on the statement by Potgieter JA in
Otarian
Property (Pty) Ltd v Maroun
[37]
where it was held:
‘
It
is important to bear in mind that the contract under consideration is
one of letting and hiring and according to the common law
the use in
which the lease premises is to be put is of real and substantial
importance.’
[35]
Pothier in his
Treatise on the Contract of Lease
also states:
‘
22
It is of the essence of the contract of lease that there be a certain
enjoinment or
a certain use of the thing which the Lessor
undertakes to cause the Lessee to have during the period agreed upon.
And it is actually
that which constitutes the subject and substance
of the contract. The kind of enjoyment which is conferred by the
lease either
is or is not stated therein. When it is stated, the
Lessee may not put the thing to a use other than that stated in the
lease.’
[36]
In communicating her acceptance of the alleged acts of repudiation in
the letter of 26 January 2012 the Respondent stated that
she regarded
‘the above breaches of the lease agreement as material
breaches, going to the root of the lease, whereby the
Lessee
repudiated the contract.’ That statement however conflated
breach with repudiation. What the Respondent’s case
indeed was,
as recorded in paragraph 6 of her answering affidavit was that ‘it
has always been the contention of both my
husband and I that the
Applicant repudiated the lease agreements, which I accepted …’
[37]
However, objectively viewed the Applicant had not repudiated the
lease agreements.
[38]
By the 23 of January 2012 the Respondent knew of the occupation of
the premises by the proposed purchasers of the Applicant’s
business. There was no indication in the Respondent’s
attorney’s letter of the 23 January 2012 that the occupation
and manner in which the proposed purchasers occupied the premises
contrary to the terms of the leases by living and washing there,
or
that they were occupying as a sub-lessee without the required prior
consent, were viewed as a repudiation of the Applicant’s
obligations in terms of the leases. Indeed, there was not even
a complaint by the Respondent that it amounted to a breach,
which
clearly it might be. On the contrary, the Respondent in her
attorney’s letter expressed her intention to ‘honour
the
existing lease with Sunshine Foods CC until the expiry on 30 April
2012 …’
[39]
In the Applicant’s letter of the 23 January 2012 which followed
on the aforesaid letter, the Applicant advised that it
had cancelled
the sale of its business and that it would resume trading from the
leased premises shortly. The occupation by the
proposed purchaser and
the unauthorised use to which that purchaser had put the lease
premises were thereby, at least impliedly
recognised by the
Applicant, even in the absence of any demand for remedying any such
breach, as conduct which would be rectified.
There is nothing to
suggest that it was not rectified, at least before the Respondent
sought to cancel on the basis of any alleged
repudiation. That letter
from the Applicant indeed went further and also gave notice of
renewal of the lease to expire then on
‘31 (sic) April 2017’,
conduct inconsistent with an intention to repudiate the terms of the
leases.
[40]
It was only thereafter on the 26 January 2012 that the non-compliance
with clause 10.1 of the lease agreements and the unauthorised
use to
which the premises had been put were sought to be relied upon as
‘material breaches, going to the root of the lease,
whereby the
Lessee repudiated the contract’.
[41]
It might very well be, as the Applicant contended, that faced with
the Applicant’s undeniable right to claim a renewal
of the
second lease that the Respondent now sought to ‘craft’ a
repudiation to escape the renewal period. But
even leaving the
motive of the Respondent aside, the conduct sought to be invoked as
indicative of a repudiation is on probability
more consistent with
the Applicant wishing to uphold the leases. The validity of a main
lease is precisely what a Lessee who requests
a Lessor’s
consent to a subletting would rely upon to secure such consent. It is
the very kind of conduct contemplated by
the provisions of the lease.
[42]
To the extent that there were possible action able breaches on the
part of the Applicant, I am not persuaded that these breaches
were
necessarily material. They were in any event also not preceded by any
demand calling for their rectification. Even if a demand
was
unnecessary, the conduct possibly constituting breaches were
recognised by the Applicant with a tender to remedy them by resuming
occupation of the premises before there had been any intimation that
the lease agreements might be cancelled, or any election to
cancel
the leases having been communicated to the Applicant. In those
circumstances Respondent’s and her husband’s
response
could not be that they did not ‘…accept your
(Applicant’s) tender of performance’, as stated
in the
concluding paragraph of the Respondent’s attorneys letter of 26
January 2012. Such breaches as there were, were not
material and
certainly not consistent only with an unequivocal intention no longer
to be bound by the terms of the lease agreements.
Indeed, the
contrary was the case. The Respondent could therefore not have
cancelled the leases validly.
[43]
The Applicant has asked in the event of the appeal being decided in
its favour that an order be granted in the following terms:
‘
1.
The appeal is upheld with costs, such costs to include the employment
of two counsel.
2.
The order of the court
a quo
granted on 11 December 2014 under
Case No. 4240/2013 (KZD) is hereby set aside and replaced with the
following order:
“
1.
It is declared that the Applicant be and is hereby entitled to the
sole occupation and possession of the premises which includes
two
shops being Unit 1 and Unit 2 known as Johanna Centre, Main Road,
Jozini, District Ubombo, KwaZulu-Natal (hereinafter
referred to as “the premises”).
2.
The Respondent and all and any other persons holding title to the
premises or purporting to hold title to the premises through
or under
her, be and is hereby ordered forthwith to vacate the premises.
3.
Failing due and immediate compliance with the order in para 2 hereof,
the Sheriff for the area in which the parties are situate
be and is
hereby order to eject the Respondent and all and any persons holding
title or purporting to hold title through her from
the premises.
4.
Ordering the Respondent to pay the costs of this application.”’
[44]
Although Messrs Vernon and Quinton Adams supplied confirmatory
affidavits, in the absence of their formal joinder as interested
parties, I am not prepared to grant declaratory relief that the
Applicant is entitled to sole occupation and possession of the
premises, even if such declaration was confined to the position as at
11 December 2014. Furthermore, since then the agreement,
Annexure
SF2, has lapsed by effluxion of time and the declaratory relief would
to that extent in any event be partly academic.
Implicit in any order
directing the Respondent to vacate the premises is in any event a
finding that the Respondent has not demonstrated
a better right to
occupation of the premises than the Applicant. In the exercise of my
discretion regarding the claim for any declaratory
relief I am not
disposed to granting the relief proposed in paragraph 1 of the Draft
Order.
[45]
It further also seems to me, the leased premises being occupied and
used for a business, that reasonableness dictates that
the order
directing the Respondent to vacate should allow her 14 days to do so.
[46]
Regarding the costs of the appeal specifically the costs of two
counsel, both parties employed two counsel. The matter was
not unduly
complex but it is a matter of importance to the parties. I consider
it appropriate that the costs award should provide
for the costs of
two counsel, where applicable.
[47]
The order shall therefore be as follows:
1.
The appeal is upheld with costs, such costs
to include the employment of two counsel where applicable.
2.
The order of the court
a
quo
granted on the 11 December 2014
under Case No. 4240/2013 (KZD) is hereby set aside and replaced with
the following order:
(a)
The Respondent and all and any other
persons purporting to hold title to the leased premises, being two
shops Unit 1 and Unit 2
known as Johanna Centre, Main Road, Jozini,
District Ubombo, KwaZulu-Natal through or under her, be and are
hereby directed to
vacate the premises within 14 days of the granting
of this order;
(b)
Failing due compliance with the order in
para (a) above, the Sheriff for the area in which the premises
are situate, be and
is hereby ordered to eject the Respondent and all
or any persons purporting to hold title through her from the
premises;
(c)
The Respondent is directed to pay the costs
of this application including the costs of two counsel where
applicable.
KOEN
J
HENRIQUES
J
OLSEN
J
DATE
OF HEARING: MONDAY, 1 FEBRUARY 2016.
DATE
OF DELIVERY: FRIDAY 18 MARCH 2016.
APPELLANT’S
COUNSEL: ADV K J KEMP SC with ADV E S CROTS
INSTRUCTED
BY: PEARCE DU TOIT & MOODIE
c/o
STOWELL & COMPANY
Ref.:
Mr P Firman
Tel.:
033 8450500
RESPONDENT’S
COUNSEL: ADV L E Combrink with ADV C HATTINGH
INSTRUCTED
BY: WEICH & KRIEL INC
c/o
WESSELS & HATTINGH ATTORNEYS
Ref.:
Mrs K Hattingh
Tel.:
033 3451770
[1]
The
parties shall for convenience be referred to as in the court
a
quo
,
i.e. the Appellant shall be referred to as ‘the Applicant’
and the Respondent as ‘the Respondent’.
[2]
The same description shall be followed in this judgment in referring
to the leased premises.
[3]
SF1
was concluded during or about April 2007 and SF2 during or about
July 2005.
[4]
Annexure SF1.
[5]
Annexure
SF2.
[6]
That
is
on
or before 1 April 2012.
[7]
Clause
3.2.3.
[8]
Clause
5.2.
[9]
Clauses
7.1 to 7.3.
[10]
Clause
10.
[11]
Clause
12.1.
[12]
Clause
12.2.
[13]
Clause
17.
[14]
It is of course not a requirement of our law that the lessor must be
the owner of the premises or the right to occupy. The lessor
simply
warrants undisturbed use and enjoyment of the leased premises to the
lessee.
[15]
A
copy of the endorsement was Annexure HC2 to the answering affidavit.
[16]
A copy was annexed as
Annexure
HC5 to the answering affidavit. Since 5 October 1998 the Ingonyama
Trust Board delegated all its functions and duties
pertaining to
permissions to occupy to the Secretary of the Department of
Traditional and Environmental Affairs.
[17]
R300 000.00
was payable in cash on 24 October 2011 and the balance when
requested by the seller, with all the costs of the
transfer being
payable by the Respondent.
[18]
Paragraph
16.
[19]
Paragraph
17 of the founding affidavit.
[20]
In
the absence of any formal assent from the Applicant amounting to a
variation of the terms of the lease agreements, which did
not occur,
the sale of the occupational right to the premises in terms of the
deed of sale concluded between Quinton Adams and
the Respondent
could not afford any better rights to occupation of that site to the
Respondent than that held by the Applicant
in terms of the two lease
agreements.
[21]
On that however see paragraphs [17] to [19] below.
[22]
Paragraph
19 of the answering affidavit wrongly refers to ‘January
2013’.
[23]
The earlier lease had been renewed and would endure until 31
November 2015.
[24]
This appears to be simply an inaccurate recordal of the
de
jure
position. The Respondent was probably represented by her husband in
providing instructions to her attorney from time to time,
but it was
common cause that she was indeed the purchaser of the trading rights
to the premises. The letter should therefore
be construed as
referring to her as the purchaser.
[25]
Again, the reference should be to the Respondent and not her
husband.
[26]
Paragraph
25 of the answering affidavit, which was not disputed in reply,
incorrectly refers to it as ‘25 January 2013’.
That is
clearly a typographical error.
[27]
Spoliation
proceedings were instituted by the Applicant against the Respondent
but remain unfinalised due to a dispute of fact
regarding whether
the Applicant had undisturbed possession of the premises.
[28]
Leaving
aside the issue whether she did in fact legally cancel the lease
agreements.
[29]
See
Genna-Wae
Properties (Pty) Ltd v Medio-Tronics (Natal) (Pty) Ltd
[1995] ZASCA 42
;
1995 (2) SA 926
(A) at 928I-J where Corbet CJ held: ‘
Whilst
it is clear that, assuming there to be an election vested in the
tenant, the effect of the tenant electing to remain in
occupation is
that from the date of transfer of the property to the new owner the
lease binds the new owner as landlord’.
See also
Metcash
Seven Eleven (Pty) Ltd v Pollev Property Holding and Investment CC
2013 (4) SA 506
(GSJ) and
Spearhead
Property Holdings Ltd v E&D Motors (Pty) Ltd
2010 (2) SA 1 (SCA).
[30]
Red
Dunes of Africa v Masingita Property Investment Holdings (159/2014)
[2015] ZASCA 99
(1 June 2015).
[31]
A court will not allow the introduction of new matter in reply if
the new matter amounts to the abandonment of the existing claim
and
the substitution therefor of a fresh or completely different claim
based on a different cause of action. Nor will a court
permit an
Applicant to make out a case in reply when no case was made out in
the original application –
Triomf
Kunsmis (Edms) Bpk v AE&CI Bpk en Andere
1984 (2) SA 261
(W) at 270H;
Poseidon
Ships Agencies (Pty) Ltd v African Coaling and Exporting Co (Durban)
(Pty) Ltd and Another
1980 (1) SA 313
(D) 316A. A party who relies on illegality is duty
bound to plead such reliance with reference to the number of the
section and
the statute he relies on –
Yannakou
v Apollo Club
1974 (1) SA 614
(A) 623G.
[32]
As
per the Respondent’s attorney’s letter of 26 January
2012.
[33]
At
best, the Respondent would only have become entitled to the rentals
from the date she acquired ownership of the rights to occupy.
As alluded to earlier, this legal issue was never pertinently raised
and cannot be decided on what was placed before the court
a
quo
.
The failure to do so must be placed before the door of the
Respondent. Her failure to do so means that she has not
discharged the onus of proving the non-payment of any rent legally
due to her.
[34]
Mr
Kemp argued that where reliance is placed on a repudiation its
consequences cannot be avoided by the later invocation of another
“valid” ground for cancellation. In
Telcordia
Technologies Inc v Telkom SA Ltd
2007 (5) SA 266
(SCA) it was held:
‘
[166]
In any event Telkom's argument is unsound in law. Telkom prayed
in aid the
falsa causa non nocet
principle laid down in cases such as
Putco
Ltd v TV & Radio Guarantee Co (Pty) Ltd
1985
(4) SA 809
(A) and
Datacolor
International (Pty) Ltd v Intamarket (Pty) Ltd
[2000] ZASCA 82
;
2001
(2) SA 284
(SCA) ([2001]
1 All SA 581).
Those cases hold that:
“
Where
a party seeks to terminate an agreement and relies upon a wrong
reason to do so he is not bound thereby, but is entitled
to take
advantage of the existence of a justifiable reason for termination,
notwithstanding the wrong reason he may have
given.”
But
this principle has no application in a case such as the present,
where it is the other party who has cancelled the contract.
In such
a case, the party who repudiated cannot put the clock back and undo
the valid cancellation by relying on a ground
that he legitimately
could have, but did not, advance, in substitution for the ground
that he did advance and which resulted
in the cancellation of the
contract. Once cancelled, the contract is irrevocably at an end. The
rule exists for the protection
of an innocent party and does not
enure to the benefit of a party guilty of a breach of contract: it
does not entitle the
latter to claim that,
since
it could have done something similar without breaching the contract,
its breach had no adverse legal consequences.’
(footnotes
removed)
Effectively,
the repudiation precludes a party which persists in it, from
invoking the contract in his favour –
Comwezi Security
Services v Cape Empowerment Trust
[2014] ZASCA 22.
In the light of
the conclusion I have reached it is unnecessary to consider this
argument further.
[35]
2000
(4) SA 795 (SCA).
[36]
[2015]
ZASCA 134.
[37]
1973
(3) SA 779
(AD) at 785G – H.