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[2016] ZAGPPHC 679
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Beaux Lane (S.A.) Properties Limited v The Minister of Public Works (A647/2015) [2016] ZAGPPHC 679 (28 July 2016)
IN THE HIGH COURT
OF SOUTH AFRICA
(GAUTENG DIVISION,
PRETORIA)
CASE
NO:
A647/2015 DATE:
28
JULY 2016
NOT
REPORTABLE
NOT OF INTEREST
TO OTHER JUDGES
REVISED
IN
THE MATTER BETWEEN
:
BEAUX
LANE
(S.A.)
PROPERTIES
LIMITED
..........................................................................
APPELLANT
……………………………………………………………
(Plaintiff in the
Court
a
quo)
AND
THE
MINISTER OF PUBLIC
WORKS
N.O
………………………………………………….
FIRST RESPONDENT
………………………………………………
(First defendant in
the Court
a
quo)
THE
EXECUTIVE AUTHORITY
OF
THE
DEPARTMENT
OF
PUBLIC
WORKS
…………………………………………
SECOND
RESPONDENT
……………………………………………
..
(Second defendant in the Court
a quo)
JUDGMENT
KOLLAPEN
J:
I.
This appeal comes before this Court following the dismissal of an
action for damages instituted by the appellant against the
respondent in the Court
a quo.
Leave to appeal was sought and
granted by the trial Court in respect of the order as well as
paragraphs 17 and 18 of the judgment
of the Court
a
quo.
2.
Paragraph 17 and 18 of the
judgment of the Court
a quo
read as follows:
17.
This situation clearly concerns the causal link between the
damages claimed
and the breach. It
therefore
also begs the question how
it can be said,
in the circumstances
of the case,
that
the selling
of the property
at a so
called
"reduced" price could have been
reasonable foreseeable as a realistic possibility.
18.
Accordingly it has to befound that there is nofact before this
Court substantiating a causal link between the breach of
the agreement and the damages claimed.
The
issues
before
the
Court
a quo
and
the
issues
on
appeal
3.
By way of background the matter served before the Court a quo
in terms of a stated case in terms of Rules 33(1) and (2) and the
following facts are relevant for the purposes of this appeal:
i. During 2000, the
Department of Public Works ('the Department') entered into a written
lease agreement with a company known
as Leopont 163 Properties (Pty)
Ltd ("Leopont") for the period 1 September 2000 to 31
August 2010. During 2007, Leopont
sold the property to the plaintiff
and in doing so, ceded, assigned and transferred Leopont' s rights
and obligations in terms
of the lease
agreement to the plaintiff. Clause 23 of the lease agreement
expressly contemplated such a sale
of the
property.
ii Subsequent to
the sale of the property to the plaintiff, the plaintiff and the
Department extended the period of
the lease until 30 April 2011.
iii The material terms of the lease agreement were that:
a. The Department would use the property only
for the purposes of "official residence";
b. Upon termination of the lease agreement
the Department would immediately vacate the property and
restore
free and undisturbed possession of the property to the
plaintiff.
iv. The property was leased by the Department of Public
Works to provide residence to officers of the
Department of Correctional Services ('the DOC'), which
officers occupied the property from the commencement of the
lease agreement in accordance with the
terms and conditions that were applicable to their employment
with the DOC.
During
November 2009, the DOC gave
the
officers notice to vacate the property on or before 31 August
2010, pursuant to a decision taken by the DOC that the
lease
agreement would not be renewed. Despite such notice and by 20
January 2011, approximately 70 families of the relevant officers
had
not yet vacated the property.
vi.
On March 2011, the plaintiff gave the Department one month's
written notice of termination of the lease agreement with
effect from 30 April 2011, and simultaneously informed the
Department that it had sold the property and that in the
event
that the Department failed to provide vacant possession
of the property by 30 April 2011, the plaintiff
would suffer damages.
vii.
On 24 January 2011, the property was sold by the plaintiff to
Midnight Storm pursuant to a written agreement of sale
concluded on 24 January 2011 in terms of which:
a.
The purchase price for the property was the amount of 40
million Rand;
b.
Vacant occupation and possession of the property would be
given to Midnight Storm on 11 April 2011 and should the
plaintiff fail to give vacant occupation to Midnight Storm on
that date, Midnight Storm would have the right to cancel
the sale
agreement;
viii.
Pursuant to a first addendum to the agreement of sale
concluded on 3 March 2011, in terms of which vacant
occupation
of the property would be given to Midnight Storm
on 11 May 2011 and should the plaintiff fail to give vacant
occupation to Midnight Storm on that date, Midnight Storm
would have the right to cancel the sale agreement;
ix.
Pursuant to a second addendum to the agreement of sale
concluded on 12 May 2011, in terms of which vacant occupation
of the
property would be given to Midnight Storm on 1 June
2011 and should the plaintiff fail to give vacant occupation
to Midnight Storm on that date, Midnight Storm would have the
right to cancel the sale agreement.
x.
On 24 May 2011, the plaintiff was granted an order evicting
the Department and the officers of the DOC from the
property,
with effect from 1 June 2011 ("the eviction
order").
xi.
On 28 June 2011, 54 officers of the DOC who had remained in
possession and occupation of the property from at least August
2010 to July 2011, successfully procured the reconsideration
and setting aside of the eviction order, on the grounds
inter
alia
that they were involved in an unresolved labour
dispute with the DOC and also that their occupation of the
property
after the termination of the lease agreement rendered
them 'unlawful occupiers of the property' as contemplated by the
Prevention of Illegal Eviction from and Unlawful Occupation
of Land Act 19 of 199\8 ('the PIE Act'), the procedure
specified in the PIE Act not having
been followed at the time the eviction order was granted.
xii. On 26 July 2011, the plaintiff and Midnight Storm
concluded a third addendum to the agreement of sale in terms
of which:
a. Midnight Storm would take occupation and possession of the
property whilst the Department remained
in
occupation of the property;
b. In return for Midnight Storm taking occupation and possession
of the property whilst still occupied by the Department,
the
purchase price for the property would be reduced to an amount of
32,5 million Rand.
xiii.
When the third addendum to the agreement of sale was signed on 26
July 2011, at least 54 units on the property remained
occupied by
officers of the DOC.
xiv.
Subsequent to the conclusion of the agreement of sale and the three
addendums, Midnight Storm paid the amount of 32,5
million Rand to
the plaintiff and the property was transferred into the name of
Midnight Storm.
4.
In dismissing the appellants claim, the Court a quo however
was satisfied and concluded that the nature of the damages sought
were
general damages and not special damages as the respondent
sought to contend. In addition the court
a
quo
concluded that the respondent, by failing to restore vacant
possession of the property to the appellant, committed a breach of
the lease agreement.
5.
The
Court
a quo
however in dismissing the claim concluded that it
could not be said that the selling of the property at a reduced
price could have
been reasonably foreseeable as a realistic
possibility within the contemplation of the parties. Having made
such a finding the
Court then went on to find that there was no
causal link between the breach of the agreement and the damages
claimed.
6.
That
is the crisp issue that this appeal relates to, namely whether the
damages suffered by the appellant, constituting a reduction
in the
sale price of the property, were damages that were reasonably
foreseeable as a realistic possibility.
7.
This question of legal causation has been the subject of
numerous judgments of our Courts and a particular approach has
crystallised
over time.
The
Supreme Court of Appeal in
THOROUGHBRED BREEDERS' ASSOCIATION
v PRICE WATERHOUSE
2001 (4) SA 551
(SCA),
dealt with
the issue of foreseeability within the context of general damages as
follows:
'
That approach, postulating as it does not a likelihood (at the upper
end of the scale) of the harm complained of occurring
but (at the
lower end) a realistic possibility thereof appears to me to be
sensible and sound. Parties cannot contemplate
what they cannot
foresee. In the end it will usually turn on the degree of
foreseeability of the kind of harm incurred (compare
McElroy Milne
v Commercial Electronics Ltd [1993] I NZLR 39 (CA) at 43-5). What
matters to the law is, of course, not infinite
but reasonable
foreseeability. Leaving aside a typical situation (such as, for
instance, a circumstance which was foreseeable
by only one of the
parties or only at the time of breach and not also at the time of
contract, what is required to be reasonably
foreseeable is not that
the type of event or circumstance causing the loss will in all
probability occur but minimally that its
occurrence is not
improbable and would tend tofollow upon the breach as a matter of
course.'
9.
In
TRANSNET LTD TIA NATIONAL PORTS AUTHORITY v OWNER OF
MV SNOW CRYSTAL
[2008] ZASCA 27
;
2008 (4) SA 111
(SCA),
the
Supreme Court of Appeal said the following in the context of whether
damages flow naturally and generally from the breach:
'To
sum up therefore, to answer the question whether damages flow
naturally and generally from the breach one must inquire whether,
having regard to the subject matter and terms of the contract, the
harm that was suffered can be said to have been
reasonablyforeseeable
as a realistic possibility.'
10.
In
SANDLUNDLU (PTY) LTD v SHEPSTONE AND WYLIE
INCORPORATED
[2011] (3) All SA 183
(SCA),
SNYDERS JA
stated that a plaintiff who enforces a contractual claim arising
from the breach of a contract needs to prove, on a
balance of
probability, that the breach was a cause of a loss. The learned Judge
furthermore stated that:
'In
International Shipping Co (Pty) Ltd v Bentley 1990 (I) SA 680 (A)
at
700F-G
Corbett CJ
explained
the
practical enquiry in
thefollowing
terms:
'The
enquiry as to factual causation is generally conducted by applying
the so-called 'but-for' test, which is designed to determine
whether a postulated cause can be identified as a
causa
sine qua non
of the loss in question. In order to apply this
test one must make
a hypothetical
enquiry
as to what probably would
have
happened
butfor
the wrongful conduct of the defendant.
This enquiry may involve the mental elimination of the wrongful
conduct and the substitution
of a hypothetical course of lawful
conduct and the posing of the question as to whether
upon
such
an
hypothesis plaintiff's loss
would
have
ensued
or
not. If it would in any event have ensued, then the wrongful
conduct was not a cause of the plaintiff's loss;
aliter,
if it would not so have ensued
'.
Nugent
JA in Minister of Safety and Security v Van Duivenboden
2002 (6)
SA 431
(SCA) at paragraph 25 pointed to the conceptual
difficulties that
arise when the enquiry is made:
'There
are conceptual hurdles to be crossed when reasoning along these
lines for, once the conduct that actually occurred is
mentally eliminated and replaced by hypothetical conduct,
questions
will immediately arise as to the extent to
which consequential events would have been influenced by the
changed circumstances.
Inherent in
that form of
reasoning is thus considerable scope for speculation which
can only broaden as the distance between the [breach] and
its alleged effect increases. No doubt a stage will be reached at
which the distance between cause and effect is so great that the
connection will become altogether too tenuous, but, in my view,
that
should not
be permitted to be exaggerated unduly. A
plaintiff is not required
to establish the causal
link with certainty, but only to establish that
the
wrongful conduct was probably a cause of the loss, which calls for
a sensible retrospective analysis of what would probably
have
occurred, based upon the evidence and what can
be expected to occur in the ordinary course of human affairs rather
than an
exercise
in metaphysics.'
11.
Thus
even though it is settled law that the measure of damages claimable
pursuant to holding over is the market rental value of
the property,
an aggrieved party however is entitled to claim other damages
provided that they are foreseeable and not too remote.
(See
HYPROP
INVESTMENTS
LTD
AND
ANOTHER
v
NCS
CARRIERS
AND
FORWARDING
CC
AND ANOTHER
2013
(4) SA 607
(GSJ)).
In
arguing that the damages were not too remote but in fact reasonably
foreseeable as a realistic possibility, the appellant
contends that
the lease agreement did in fact contemplate a sale which is what
happened when Leopont sold the property to the
plaintiff in 2007.
In addition it argues that the parties must have contemplated the
realistic possibility that the sale of
the property, which was
occupied without there being a lease agreement in place, will
result in a seller achieving a lower price
than it would have
achieved had it been in a position to sell the property with vacant
possession. On this basis it contends
that the harm (a lower
purchase price) would have been reasonably foreseeable as a
realistic possibility.
The court
a
quo
in dealing with this submission took the view that after the
termination of the agreement in December 2010, both parties would
have become aware of the uncompromising attitude of the occupiers
and that the problem of their continued occupation would
only be
resolved in terms of legal steps that would be required. It
concluded that there was no indication or even a suggestion
that
this situation was reasonably foreseeable by either of the parties
at the time the agreement was concluded.
14.
In my view a useful starting point would be the position
adopted in
HYPROP
that the measure of damages
claimable for holding over is the market value of the premises but
that other damages may well be
claimed provided they are foreseeable
and not too remote.
15.
Having regard to the legal principles set out above, can it be
said that the damages that the appellant suffered were of the type
or event that would follow a breach as a matter of course?
16.
The appellant's stance is that it must merely prove the extent of
its damages and not that it was foreseeable as the law presumes
such
foreseeability. I understand this argument to be premised on the
assertion that the damages flowed naturally and generally
from the
breach of the lease agreement. However it cannot simply be assumed
that the damages flowed naturally and generally from
the breach.
While it may well be so that but for the breach the damages would
not have resulted, that cannot be the end of the
matter as it only
satisfies the requirements of factual causation. The requirements of
legal causation are what I understood the
court
a
quo
found was lacking.
17.
Ordinarily, holding over would deprive the owner of property
of the market value of rental that would be obtained for the
property.
Such deprivation would clearly ground an action for
damages. On the other hand the contemplated sale of a property under
such
circumstances may stand on a different footing. When one has
regard to the Lease Agreement then the sale contemplated therein was
one that would occur during the currency of the lease. That sale in
fact took place during 2007. The second sale which is the
subject of
this action occurred In January 2011 after the written lease had
terminated and took place while the property was the
subject of a
monthly lease and the addendum to that sale reflecting a lower
purchase price, occurred in July 2011.
18.
While a breach and holding over could have consequences, to
suggest however that it could result in a sale at a reduced or lower
price, may well extend beyond the scope of what is reasonably
foreseeable as a realistic possibility. In
THOROUGBRED
BREEDERS' ASSOCIATION
(supra)
the Court observed that
one cannot contemplate what one cannot foresee and that very often
the question is the degree of foreseeability.
In my view the damages
resulting in a lower purchase price for the property certainly would
fall outside what the parties would
have reasonably foreseen as a
realistic possibility and fall within that category of instances
where the distance between cause
and effect simply becomes too
tenuous as was described by NUGENT JA in
VANDUIVENBODEN
(supra).
19.
In this regard the consequence of a breach accompanied by
holding over could well be a factor in the efforts to alienate the
property
but on the facts in the stated case it hardly appears that
a reduction in the purchase price is what was foreseen as a
realistic
possibility. In this regard even though a sale with the
promise of vacant possession by the 11th of April 2011 was concluded
on
the 24th of January 2011, the plaintiff continued to lease the
property to the Defendant on a monthly basis until at least the
end
of April 2011. In addition when the agreement was amended on the
12
th
of May 2011 to provide for occupation on the 1st of
June 2011, it would have been known to the parties to the sale
agreement that
there were unlawful occupants on the property.
Despite this there appears to have been no reason to adjust the
purchase price
at that stage. Even though it is arguable that the
continued occupation of the property would impact on the plaintiff s
ability
to give vacant possession what at best would have been
foreseeable as a reasonable possibility was a delay in doing so.
Such
a delay would be occasioned by the steps necessary in law to
secure vacant possession. Such a delay could well have been
contemplated
as being reasonably foreseeable as a realistic
possibility. I would not however accept the proposition that a
breach caused by
holding over would give rise to the reasonable
foreseeability that a sale already concluded would then have to
proceed at a reduced
price.
In
this regard a contract of sale is a voluntary act between parties
whom the law recognises as operating on an equal footing.
To
suggest that the parties would have contemplated a sale at a
reduced price simply on account of a breach resulting in holding
over is a suggestion that seeks to stretch and extend the concept
of reasonable apprehension to unacceptably wide parameters
inconsistent with the
dicta
of our Courts.
In
this regard it is trite that a legal framework exists that provides
appropriate remedies to secure vacant possession as against
unlawful occupiers and that ordinarily speaking an owner or person
in charge would be able to utilise such remedies. Under
such
circumstances a breach in the form of holding over may well give
rise to a reasonable foreseeability of some delay in securing
vacant
possession but in my view this would hardly extend as far as a
reasonable foreseeability that such a sale would have
to proceed on
different terms and conditions in relation to the purchase
consideration.
In
the context of the facts in the stated case the following would be
of relevance:
a) The
property was leased for the purposes of providing official residence
to officers of the Department of Correctional Services;
b)
Upon expiry of the written lease in December 2010, there were still
members of the DCS in occupation notwithstanding a request
by the
DCS as far back as November 2009 that they vacate the property;
c)
The sale of the property on 24 January 2011 for 40 million Rand was
effected after the expiration of the lease and at the
time, vacant
possession was undertaken to be given by 11 April 2011;
d)
It follows that it must have been within the contemplation of the
plaintiff at the time that it would be able to secure vacant
possession by 11 April 2011;
e)
Despite an order for eviction being obtained by the appellant
on the 24
th
of May 2011, the occupiers were able to
successfully challenge the eviction on the basis that the
provisions of the Prevention
of Illegal Eviction from and Unlawful
Occupation of Land Act 19 of 1998 were not complied with.
f)
Clause 23 of the Lease Agreement upon which the appellant
relies in support of its stance that a sale of the property was one
of the options the lease contemplated, refers to a sale that
occurs during the currency of the lease and not a post-lease sale,
which is what occurred here. The property was sold after the
termination of the written lease. Thus a reference to the sale of
the property in Clause 23 of the Lease does not to the extent that
the appellant suggests, bolster the argument that a sale
without
vacant possession would fetch a lower price and this was a
realistic possibility.
21.
It could in my view hardly have been reasonably foreseeable that
even in the event of a breach and an unlawful holding over,
the
eviction process would take as long as it did or be delayed and/or
reversed for the reasons given and that a sale of the
property at a
reduced price was reasonably foreseeable as a realistic possibility
and that it would follow from the breach as
a matter of course.
22.
While the law does not require the event or occurrence to be
reasonably foreseeable as a certainty, at the same time it does not
suffice if it is only reasonably foreseeable as a mere possibility.
What is required is for that possibility to be realistic
which
CORBETT JA (as he then was) in
HOLMDENE BRICKWORKS (PTY) LTD
v ROBERTS CONSTRUCTION CO. LTD
1977 (3) SA
670
(A)
at 687 referred to as 'a probable result of the breach '
23.
In
Christie 's
Law of Contract of South Africa 61
Edition
at page 575 the
authors offer the comment that the phrase 'a probable result of the
breach' should not be taken as requiring a
strong probability but
something more like a realistic possibility. They however do not
represent separate or different approaches.
What is probable and
what is realistically possible is in essence what is likely to flow
naturally and generally from the breach
of contract.
24.
In the context of the facts in the stated case it does
constitute stretching the idea of what is natural and general to
contend
that a likely result of the breach (as in a realistic
possibility) was that post the lease agreement, a sale of the
property would
be concluded and that as a result of the holding
over, the appellant would be forced to sell at a reduced price.
25.
For these reasons I am unable to conclude that the prospect
of the plaintiff having to sell the property for a reduced price was
reasonably foreseeable as a realistic possibility or that it could
be said that such an outcome flowed as a matter of course
from the
breach. In my view such an occurrence was not only improbable but
would certainly not follow from the breach as a matter
of course.
26.
What may well have been reasonably foreseeable as a realistic
possibility in the face of a contemplated sale was that the sale
would be delayed, that proceedings for eviction would be initiated
and finalised, after which the sale would be proceeded with.
Under
such circumstances damages for holding over would be payable on the
basis of the market rental and the sale would proceed
at the price
originally agreed upon.
27.
In the circumstances the conclusion reached by the court
a
quo
is not assailable and it must follow that the appeal must
fail.
ORDER
21. I
make the following order:
I.
The appeal is dismissed with costs including the costs of senior
counsel which costs are to include the costs of the application
for leave to appeal.
N
KOLLAPEN
JUDGE
OF THE HIGH COURT
I
AGREE,
RG
TOLMAY
JUDGE OF THE HIGH
COURT
I AGREE,
D
MAKHO
BA
ACTING
JUDGE OF THE HIGH COURT
IT
IS SO ORDERED.
A647/2015
HEARD
ON: 08 JUNE 2016
FOR THE APPELLANT: ADV. A
J EYLES SC
INSTRUCTED BY: BOWMAN
GILFILLAN INC (ref.:F Bhayat/6103935) FOR THE FIRST & SECOND
RESPONDENTS: ADV. J A MOTEPE SC
INSTRUCTED BY: THE STATE
ATTORNEY (ref.: D P Burger/2339/13/23/nk)