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[2016] ZAGPPHC 426
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Ultimate Sports Nutrition (Pty) Limited v Capital Property Fund (56141/12) [2016] ZAGPPHC 426 (4 April 2016)
SAFLII
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Certain
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IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
Date:
4/4/ 2016
CASE
NO: 56141/12
(
1)
REPORTABLE: YES
(2)
OF INTEREST TO OTHER JUDGES: YES
In the matter between:
ULTIMATE
SPORTS NUTRITION
(PTY)
LI
M
I
TED
Plaintiff
and
CAPITAL
PROPERTY
FUND
Defendant
JUDGMENT
Tuchten J
:
1 This case arises
from a written lease concluded between the parties on 30 March 2007.
For reasons which will become apparent,
I shall call the lease
between the parties the old lease. Under the old lease, the plaintiff
occupied an entire building and adjacent
ground at […] (the
premises).
2 The old lease ran
for five years and terminated on 30 April 2012, subject to an option
on the part of the plaintiff to extend
its term. The plaintiff
elected not to exercise its option and was obliged to vacate the
premises on 30 April 2012.
3 The dispute between
the parties relates to the deposit paid under the lease. The deposit
was not paid in cash but was secured
by a demand guarantee issued by
a bank. The defendant called up the guarantee in a sum assessed by
the defendant at R449 276,34,
all of which the defendant asserted it
was entitled to retain. The plaintiff contends that the whole or
alternatively a portion
of the deposit so paid to the defendant
should be refunded to the plaintiff.
4 On 25 April 2012,
in anticipation of the departure of the plaintiff from the premises,
the defendant entered into a lease over
the premises (the new lease)
with SA Fence and Gate Investment Holdings (Pty) Limited. Under the
new lease, although SA Fence was
entitled to occupy the premises from
1 May 2012, the obligation of SA Fence to pay rental to the defendant
for the premises only
began to run on 1 June 2012. But SA Fence was
obliged to pay to the defendant its proportionate share of the rates
and taxes levied
on the premises from the occupation date, ie 1 May
2012 "or as soon as possible thereafter." The effect of
these provisions
was that SA Fence was entitled to a month's rental
holiday from 1 to 31 May 2012. The purpose of the rental holiday was
to give
SA Fence time to settle into the premises.
5 The plaintiff was
obliged to reinstate the premises upon the expiry of the old lease.
Clause 33.2 deals with this aspect of the
relationship:
At
all times during the
currency
of this
l
ease
the TENANT shall
care
for
and
maintain
in
good
order
and
repair
the
interior of the premises
(including
adjacent
yards), the electrical, gas,
drainage
and
sanitary
works, the
thermostats
and
air
conditioning appliances and
the
appurtenances
therein,
and
at
the
termination
or
expiry
of
the
lease
for
whatever
reason return and redeliver
the
same
to
the
LANDLORD
in
good
order
and
repair
at
i
ts
own
cost
on demand any damage,
breakages or, in
the
alternative,
reimburse
the
LANDLORD
for
the
cost
of
replacing,
repairing
or
making good
any
broken,
damaged
or
missing
articles
howsoever
caused
subject
to
clause
11.2.
If the appurtenances and/or
electrical,
gas,
drainage and sanitary
works,
stoves,
thermostats,
geysers
and
air
conditioning
appliances are
or
become
defective (for
any
reason
including
by
reason
of
fair
wear
and
tear),
the
TENANT
shall
be obliged
to replace them at the
TENANT'S expense. Without
detracting
from
the
generality
of the
above,
the TENANT
shall repair
any damage caused to
the premises, which may
be occasioned by any cause,
including
forcible
entry.
6 The defendant's
managing agent was JHL One of JHl's duties to the defendant was to
manage the transition as tenant of the premises
from the plaintiff to
SA Fence. For this purpose, employees of JHI undertook inspections of
the premises and compiled reports and
snag lists. It became apparent
that the plaintiff could not comply with its reinstatement
obligations by the date upon which the
old lease expired, ie 30 April
2012. The plaintiff needed an extension to enable it to attend to
these matters. For this purpose,
the plaintiff preferred to remain in
the premises. The plaintiff apparently obtained permission from SA
Fence to remain in occupation
for a short period while it addressed
its reinstatement obligations. But the plaintiff did not obtain the
permission of the defendant.
And ultimately, the plaintiff vacated on
14 May 2012. So the plaintiff remained in occupation for 14 days
longer than provided
for in the old lease.
7 The evidence shows
that the defendant and SA Fence then agreed that the month's rental
holiday would begin on 15 May 2012 instead
of on 1 May 2012. But for
reasons not explained in the evidence, the two transition
arrangements, ie the plaintiff's 14 day extended
occupation and the
deferral for the same period of the start of SA Fence's rental
holiday, were bilateral and not tripartite agreements.
This meant
that the plaintiff could not assert as against the defendant a right
to occupy from 1to 14 May 2012 and could thus in
principle not resist
the claim for damages for holding over which was one of the items
which the defendant relied upon when it
called up the demand
guarantee. There was moreover no suggestion in the evidence that the
defendant was made aware by the plaintiff
or by SA Fence that they
had agreed between them that the plaintiff would remain in occupation
for the additional 14 days.
8 The evidence further
shows that while the plaintiff acted towards compliance of its
reinstatement obligations in the period up
to 14 May 2012, in several
respects the reinstatement was not complete when the plaintiff
ultimately vacated. This emerges from
the evidence of JHl's
operations manager, Ms Bennett, who compiled several reports and a
comprehensive snag list in this regard.
I found Ms Bennett to be a
reliable witness on the matters she noted in her report and snag list
which were before me, subject
however to the qualification that Ms
Bennett in some instances included in her documents a general
complaint, on which she was
unable to be specific. Miss Bennett was
also very vague about the arrangements between the plaintiff and the
defendant in regard
to the deferred vacation date and the like. This
latter is not surprising and is not intended as a criticism because
these arrangements
were not part of Ms Bennett's field of
responsibility.
9 For this reason, I
do not think I can attach any weight to Mis Bennett's evidence as to
the inwardnesses of these arrangements.
They remain obscure because
no witness testified directly to the arraignments even though
witnesses were available in this regard
to both sides. Indeed only Ms
Bennett and JHl's portfolio manager, Ms Veldsman, testified for the
defendant and the plaintiff closed
its case without adducing any
evidence.
10 Despite these
shortcomings in the evidence, it has in my view been established that
on the date the plaintiff ultimately vacated
the premises, 14 May
2012, the plaintiff was in a number of respects in breach of its
reinstatement obligations.
11 When the plaintiff
vacated the premises, the defendant or JHI on its behalf took steps
to quantify the plaintiff's breaches,
as Ms Bennett saw them. Ms
Bennett retained a number of contractors to attend to the
reinstatement. In addition SA Fence undertook
work on the premises
which included both the enclosure within the premises of spaces by
the use of dry walling and work which could
properly be described as
reinstatement.
12 By 30 May 2012,
the defendant must have quantified its claim for damages against the
plaintiff for holding over and failing
fully to reinstate, because on
that date the defendant made demand on the plaintiff's banker under
the guarantee and the plaintiff's
banker paid over to the defendant
under the guarantee the sum of R449 276,34. As far as I can gather
from the evidence, which was
in this respect as in many others less
than comprehensive, the defendant made no demand on the plaintiff (as
opposed to its banker)
for this sum and did not account to the
plaintiff for the sum paid to it under the guarantee until it
responded to the plaintiff's
application for summary judgment against
it in this very action.
13 The plaintiff
instituted the present action on 27 September 2012. The summons was
served on the defendant on 3 October 2012.
The sheriff's return shows
that the summons was served on a manager of the defendant at its
principle place of business in Sandton.
I mention this last because
of a point taken by the defendant in relation to its citation, with
which I shall deal later.
14 Counsel for the
defendant laid considerable emphasis in argument on the form of the
pleadings. I shall therefore refer to them
in some detail.
15 The plaintiff has
a main and an alternative claim. In the main claim, the plaintiff
alleges a full compliance with the provisions
of clause 33.2 of the
old lease. On this basis, the plaintiff claims in paragraph 9 of the
particulars of claim that because of
its full compliance with clause
33.2, the defendant was not entitled to withhold from the plaintiff
payment of the amount so paid
by its bankers; in other words that the
plaintiff is entitled to a full refund of the deposit in effect paid
by it to the defendant
when the plaintiff s banker paid out under the
demand guarantee.
16 The defence raised
in paragraph 9 of the plea is that the plaintiff had not complied in
full with these provisions. Although
paragraph 9 of the plea begins
with a general denial, the plea proceeds, in paragraph 9.2 as
follows:
The
defendant was entitled in terms of clause 8.2 of the [old lease] to
apply and/or to set off the whole or portion of the deposit
towards
payment of rental, municipal charges, any other liability of the
Plaintiff to the Defendant of whatsoever nature including
the costs
incurred by the Defendant to reinstate the leased premises to the
condition in which it was when the Plaintiff took occupation,
and
damages incurred by the Defendant as a result of the Plaintiff
holding over the leased premises.
17 The plea
continues, in paragraph 9.3, to allege that the defendant applied
alternatively set off the deposit against payment
of the Plaintiff's
liability to the Defendant as follows: firstly, holding over damages
for May 2012 of R266 888,65; secondly,
municipal charges for April
2012 of R53 656,56; and thirdly reinstatement of R132 324,05. In all,
therefore, the defendant pleaded
that it had been entitled to apply
or set off from or against the deposit paid by the plaintiff when the
plaintiff's banker paid
out under the guarantee a sum slightly in
excess of that actually paid. There was no counterclaim for that
small excess.
18 Counsel for the
defendant submitted that the main claim could not succeed because the
main claim was based on a full compliance
by the plaintiff with the
provisions of clause 33.2 of the old lease and the evidence showed
that the plaintiff had not fully complied
with its obligations under
clause 33.2. The evidence demonstrates that this submission is
correct.
19 The plaintiff's
alternative claim, however, is prefaced by a statement that the
alternative claim was brought on the assumption
that the court might
find that the plaintiff was liable upon vacation of the premises for
payment of an amount in respect of damages
which the defendant might
lawfully have set off against the amount paid under the guarantee.
20 On this assumption,
the plaintiff alleged that such damages did not exceed R50 000. The
plaintiff then claimed in the alternative
the amount paid under the
guarantee less this sum of R50 000.
21 The defence to the
alternative claim, pleaded in paragraph 12 of the plea was, after a
general denial amplified by a complaint
that the plaintiff had not
"properly set out" the allegation that the defendant's
damages did not exceed R50 000, an
express repetition of paragraph
9.3 of the plea, the contents of which I summarised in paragraph 17
above of this judgment.
22 On these pleadings,
to my mind, the issues raised by the alternative claim and the plea
to that claim are in effect the quantification
of the defendant's
damages claim against the plaintiff arising from the plaintiff's
assumed breaches of clause 33.2 of the plea.
The plaintiff's case was
that damages for these breaches, properly quantified, amounted to R50
000 or less, while the defendant
said that its damages amounted to an
amount in excess of that paid out under the guarantee.
23 I should mention
that although the pleadings limited the defendant's case as to the
damages it had suffered through breaches
of the provisions of clause
33.2, the defendant sought to lead evidence of additional, unpleaded
breaches. I ruled that the defendant
was not entitled on the
pleadings as they stood to lead this evidence. No application was
made by the defendant to amend its plea.
24 Although the
defendant assumed the burden of first adducing evidence, the
incidence of the onus was in dispute. I hold that the
onus was on the
plaintiff to prove the facts alleged by it in its alternative claim.
Plainly the plaintiff was required to prove,
on these pleadings, the
quantum of the damages it alleges the defendant suffered by virtue of
the plaintiff's breaches of clause
33.2. This conclusion is also
consistent with the rule laid down in
BK
Tooling
(Edms) Bpk v Scope Precision Engineering
(Edms) Bpk
1979 1 SA 391
A that a plaintiff who claims a reduced contract
price must prove the amount of the reduction.
25 Counsel for the
defendant submitted that this onus required actual proof by the
plaintiff of the reduction. On these pleadings,
I do not think that
this is correct. The issue raised by the particulars of claim read
with the plea in this regard was circumscribed:
the upper limit of
the potential reduction was that pleaded by the defendant. This
means, in my view, firstly that the breaches
pleaded by the defendant
unless demonstrated by the evidence to be without substance should
for present purposes be taken as justifying
in principle a deduction
from the deposit. And secondly, the amounts claimed by the defendant
as damages for such breaches must,
unless proved to be lesser
amounts, be taken as the amounts the defendant was entitled to
allocate or set off against the deposit.
26 The defendant
particularised its damages as alleged by it in the plea in a schedule
to an affidavit submitted on its behalf resisting
an application by
the plaintiff for summary judgment. During the course of the trial,
several of those claims as particularised
were abandoned by the
defendant or modified. At the conclusion of oral evidence, counsel
jointly submitted a minute of matters
agreed upon by the parties. The
minute recorded agreement that an amount of R50 000 should be applied
from the deposit toward payment
of municipal charges for the month of
April 2012 and that a further amount of R50 000 should be similarly
applied toward the payment
for certain electrical work. Both these
items featured in the quantification by the defendant of its damages
in its plea as read
with the schedule to the summary judgment
affidavit.
27 The minute proceeds
to record that the remaining items contended for by the defendant as
legitimately having been appropriated
by the defendant from the
deposit were certain items on the schedule totalling in all R34
574,75 plus the quantum of the defendant's
claim for holding over.
28 I concluded that
the plaintiff bore the onus of showing that it was not liable for the
claims totalling R34 574,75. The plaintiff
adduced no evidence in
this regard but counsel submitted that the fact that most if not all
the invoices supporting these claims
were dated some months after the
plaintiff ultimately vacated the premises proved that the work
evidenced by the invoices had not
been carried out as part of the
reinstatement of the premises but because of defects which arose
after the plaintiff vacated.
29 I do not agree with
this submission. The evidence of Ms Bennett, which I found reliable,
was that she had identified the defects
in question during
inspections she carried out before the plaintiff vacated. I therefore
hold that the plaintiff has failed to
prove that the amount of R34
574,75 did not fall to be appropriated from the deposit.
30 Counsel for the
defendant submitted that the defence of
exceptio non adimpleti
contractus
was available to the defendant. With reference to
BK
Tooling,
counsel argued that the defendant was not obliged to
refund the balance of the deposit while the plaintiff remained in
breach of
its clause 33.2 obligations under the old lease. I agree
that the present case is analogous to that which arose for decision
in
BK Tooling.
The defendant could, if it had taken a cash
deposit have said, in effect, that while the plaintiff remained in
breach of these obligations,
the defendant would not allocate any of
the deposit toward remedying the alleged breaches and would thus hold
the plaintiff to
its obligation to remedy.
31 But that is not
what happened in this case. The defendant cashed in the guarantee and
allocated
the deposit so paid toward remedying the alleged
breaches. One the defendant did this, the breaches were remedied. No
performance
was thereafter required from the plaintiff and the
defendant could not withhold counter-performance. I therefore
conclude that
the
exceptio
is not available to the defendant.
32 The remaining item
for consideration is the defendant's claim for damages for holding
over. I find that the plaintiff did indeed
hold over for the period
1to 14 May 2012. The fact that the plaintiff occupied by agreement
with SA Fence does not render the plaintiff's
occupation for this
period lawful as against the defendant, which was not a party to the
agreement in question.
33 It remains to
quantify those damages. The contention on behalf of the defendant was
that the measure of damages was the rental
which the defendant would
have earned for rental during the holding over period but for the
holding over.
Hyprop Investments Ltd and Another v NCS Carriers
and Forwarding CC and Another
2013 SA 607
GSJ. The defendant then
used as a measure in this regard the rental paid by the plaintiff
during the· last month of the
old lease, ie R224 638,17,
adjusted for the fact that the plaintiff only held over for 14 days.
34 In my view,
however, the quantum of the defendant's damages in this regard is
regulated by clause 27 of the old lease:
While
for any reason or on any grounds the TENANT occupies the leased
premises and the LANDLORD disputes its right to do so, then
until the
dispute is resolved whether by settlement or litigation, the TENANT
shall (notwithstanding that, without prejudice to
its rights the
LANDLORD may contend that this lease is of no force) continue to pay
an
amount equivalent to the total rent provided for in this lease
monthly in advance on the first day of each month, and the
LANDLORD shall be entitled, notwithstanding that the TENANT may
categorise
such payment as rental, to accept and recover such
payments, and such payments and the acceptance thereof shall be
without prejudice
to and shall not in any way whatsoever affect the
LANDLORD's claim then in dispute. If the dispute is resolved in
favour of the
LANDLORD, the payments made and received in terms of
this lease shall be
deemed to be amounts paid by the TENANT on
account of damages suffered by the LANDLORD by reason of the unlawful
occupation or holding
over by the TENANT.
[own emphasis]
35 There was indeed a
dispute as contemplated in clause 27. This dispute has been resolved
in favour of the defendant in this litigation.
The amount of the
deposit received by the defendant, to the extent that I find its
retention to be justified, is an payment made
and received under the
old lease. Clause 27 prescribes that such an amount is deemed to have
been paid on account of the defendant's
damages for holding over. It
follows then, in my view, that the damages to be awarded to the
defendant in this regard for loss
of rental must be calculated in
accordance with the following formula:
Total
rent provided for in old lease + number of days of old lease x 14
36 So quantified, the
damages to be awarded under this head, I was told in argument, amount
to R89 898,67. In addition, the evidence
established that the
plaintiff is liable to the defendant for municipal charges incurred
by the defendant during the holding over
period in the sum of R20
435,79. Counsel for the plaintiff suggested that SA Fence might have
paid these charges. My finding on
the onus disposes of this
submission. It is highly unlikely that SA Fence would have paid
charges relating to a period in which
it did not have occupation.
37 It was submitted on
behalf of the plaintiff that the defendant was required to show
actual damages suffered by it as a result
of the holding over. In my
view the evidence shows that the defendant suffered actual damages.
The defendant could not fulfil its
obligation to give SA Fence vacant
possession of the premises on 1 May 2012. The defendant was therefore
obliged to concede to
SA Fence that its rental holiday would begin 14
days later, ie on the day the plaintiff vacated the premises. The
defendant therefore
lost the rental which it would have been entitled
to receive from SA Fence for the period of 14 days beginning on 1
June 2012 and
the contribution to its expenses from SA Fence in the
form of rates and taxes for the holding over period. Had I quantified
the
defendant's damages on the basis contended for by the plaintiff,
I would have awarded an amount slightly in excess of R89 898,67,
based on the first month's rental under the new lease.
38 In the result, the
amounts legitimately appropriated by the plaintiff from the deposit
are as follows:
38.1
Loss of rent (holding over period) . . . . . . . . . . . . . 88
898,67
38.2
Municipal charges (holding over period) . . . . . . . . 20 435,79
38.3
Municipal charges for April 2012 (agreed) . . . . . . 50
000,00
38.4
Electrical reinstatement items (agreed) . . . . . . . . . 50 000,00
38.5
Sundry reinstatement items . . . . . . . . . . . . . . . . .
34
574.75
TOTAL
…............................................................................................R243
909,21
39 Subject to the
question with which I shall immediately proceed to deal, then, the
plaintiff is entitled to succeed for the refund
of the deposit paid,
ie R449 276,30, less R243 909,21 = R205 367,09. Counsel were agreed
that this amount should carry interest
at the then applicable
mora
rate, 15,5%, from date of service of the plaintiffs summons, ie 3
October 2012.
40 Counsel for the
defendant submitted that the plaintiff had not proved an entitlement
to sue the defendant. The plaintiff cited
the defendant in paragraph
2 of its particulars of claim as
...
a firm and/or partnership and/or unincorporated syndicate of which
the full and further particulars are to the Plaintiff unknown.
41 To this allegation,
the defendant in paragraph 2 of the plea pleaded a denial, adding the
allegation that the defendant was not
a firm, partnership or
unincorporated syndicate. This prompted a notice in terms of rule
14(5) on the part of the plaintiff, calling
for the names of the
"co-partners in the Defendant firm" at the time of the
accrual of the plaintiffs cause of action.
42 The defendant
responded that it was not a firm
...
but a portfolio within the Capital Property trust scheme, a
collective investment scheme in property in terms of the
Collective
Investment Schemes Control Act No. 45 of 2002
. It therefore does not
have partners.
43 As defined in
s 1
of the
Collective Investment Schemes Control Act, "portfolio
"
means
a
group of assets including any amount of cash in which members of the
public are invited or permitted by a manager to acquire,
pursuant to
a collective investment scheme, a participatory interest or a
participatory interest of a specific class which as a
result of its
specific characteristics differs from another class of participatory
interests.
44 Although under
s
102
of the Act certain portfolios may be wound up, I find nothing in
the Act that bears upon the question of juristic personality. For
purposes of litigation, therefore, such a portfolio is nothing more
than a division of its owner or owners. The identity or identities
of
the owner or owners of the defendant was not addressed in evidence.
45 Under
rule 14(1)
,
"firm" means a business, including a business carried on by
a body corporate, carried on by the sole proprietor thereof
under a
name other than his own. Under
rule 14(2)
, a firm may sue or be sued
in its name. Under
rule 14(3)
, a plaintiff suing a partnership need
not allege the names of the partners.
Rule 14(4)
provides that the
provisions of
rule 14(3)
shall apply
mutatis mutandis
to
a plaintiff suing a firm.
46 There is no doubt
that the defendant is a business. The facts of this case show that it
is a rental enterprise, renting out the
premises to tenants. It
appointed agents, JHI, to administer this rental enterprise. The
defendant has according to the sheriff's
return of service on the
summons a principal place of business. The summons was served there
on a manager of the defendant. Because
the defendant is a business,
it is a firm as contemplated in
rule 14(1).
It may therefore under
rule 14(2)
be sued in its name. The plaintiff has therefore
established an entitlement to sue the defendant as so cited.
47 I turn to the
question of costs. Counsel for the plaintiff sought costs on the high
court scale including the costs consequent
upon the employment of
senior counsel, together with the qualifying fees of its expert
witness, Mr Cruickshank, and a declaration
that a certain Mr Tyrannis
was a necessary witness. Neither of these prospective witnesses
ultimately testified. Counsel for the
defendant submitted that any
order against the defendant should carry costs on the appropriate
magistrate's court scale.
48 In my view, the
matter was sufficiently complex to justify both high court costs and
the employment of senior counsel. A summary
of the proposed evidence
of Mr Cruickshank was submitted under
rule 36.
However, very little
indication was given of the evidence which it was contemplated Mr
Tyrannis could give. I therefore propose
to allow the qualifying fees
of the expert but I shall not declare the lay witness necessary.
49 Finally, I think
that it is possible that I have patently erred in my arithmetical
calculations of the damages I have awarded
to the defendant. I shall
provide in the order for these arithmetical calculations to be
revisited in chambers, should either party
feel aggrieved in this
regard.
50 I make the
following order:
1
There will be judgment for the plaintiff against the defendant for
payment of the sum of R243 909,21.
2
The judgment debt will carry interest at the rate of 15,5% from 3
October 2012 to date of payment.
3
The defendant must pay the plaintiff's costs, including the costs
consequent upon the employment of senior counsel and the qualifying
fees of Mr Cruickshank.
4 The monetary amount
of the order in 1 above will be provisional for a period of ten days.
During that period, either party may,
without prejudice to its other
rights, apply informally on notice to the other party to a judge in
chambers to vary that monetary
amount to correct any error arising
from an incorrect arithmetical calculation. After the expiry of that
period and subject to
any such application, the order in 1 will
become final.
__________________
NB Tuchten
Judge of the High
Court
23 February 2016