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[2016] ZAGPPHC 1152
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Redefine Properties Limited v Tip Top Nails CC t/a Colour Harmony (86043/2015) [2016] ZAGPPHC 1152 (25 October 2016)
INTHE REPUBLIC OF SOUTH
AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
25/10/2016
CASE
NO: 86043/2015
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
REDIFINE
PROPERTIES LIMITED APPLICANT
and
TIPTOP
NAILS CCT/ACOLOUR HARMONY RESPONDENT
JUDGMENT
KHUMALO
J
[1]
In this Application the Applicant, Redefine Properties is seeking an
order against the Respondent whom it described in its particulars
of
claim to be Tip Top Nails CC ("the Respondent") for:
[1.1] Payment of an
amount of R671 311.24 (Six Hundred and Seventy One Thousand Three
Hundred and Eleven Rand and Twenty Four Cents);
[1.2] Interest thereon at
the rate of prime plus 2% per annum a
tempora morea
;
[1.3] The immediate
ejection of the Respondent and all persons claiming occupation under
it from the premises.
[2]
Applicant alleges that:-
[2.1] the claim arose as
a result of the Respondent's failure to comply with a lease agreement
which was concluded on 11 June 2015
supposedly between Applicant and
Respondent represented by one Carl Antonie Reichman ("Reichman")
in terms of which the
property situated at corner 399 George Street
and l6th Road, Randjiespark,
Midrand ("the
property") was let to the Respondent for a period of 5 ·years
commencing from 1 June 2015 to 31 May
2020 for a monthly rental
payable as set out in the agreement.
[2.2] On 25 June 2015
Applicant entered into a Portfolio Transfer Agreement with
Fountainhead Property Trust ("Fountainhead")
and
Fountainhead Property Trust Management Limited. Applicant is the
owner of the property.
[2.3] The Respondent duly
took occupation pursuant to the agreement and notwithstanding demand,
has failed to pay rental that is
due and payable for the period June
2015 to October 2015.
[3]
The Respondent is opposing the Application. In its Answering
Affidavit deposed to by its sole member Joan Yvonne Kahn ("Kahn"),
it raises 2 points
in limine
in accordance to which it
contests the locus standi of the Applicant to sue and or Respondent
to be sued, stating that:
[3.1] Applicant
lacks
the required locus standi
to bring the Application since it is
neither the owner nor does it have authority in respect of the
property, as certain conditions
had to be met for fulfilment of the
Portfolio Transfer Agreement. Applicant had failed to attach any
resolution or approval to
establish its alleged ownership, authority
or any rights over of the property.
[3.2] It
has not cited
the correct party (misjoinder)
since Kahn is the sole member of
the Respondent and she has not signed a lease agreement with either
the Applicant or Fountainhead
nor is her signature appearing In any
of the documents the Applicant relies upon. Reichman, the signatory
to the relevant documents
had no authority to act on behalf of the
Respondent as Kahn has not signed a resolution authorising Reichman
to do so.
[3.3] Reichman signed the
resolution authorising the conclusion of the lease agreement together
with the lease agreement. Therefore
the correct party against whom
relief is to be sought is Reichman trading as Colour Harmony.
Respondent is not the party liable
in terms of the lease agreement.
[4]
In Reply to the first point
in limine
, Applicant refers to a
clause in the Portfolio Transfer Agreement which reads:
"
Fountain Head
is, on and with effect from transfer date, substituted by Redefine
as
Lessor in respect of the leases. For the sake of clarity, it is
recorded that Redefine shall obtain all rights in and to the
Leases
on the implementation date and any income that accrues in respect of
the Asset Portfolio from the accounting Effective Date
accrues to the
benefit of Redefine and shall be paid over to Redefine on the
Redefine Consideration Shares Issue Date or so soon
thereafter as it
may be received by Fountainhead."
Also
to a clause in the lease agreement that reads:
"Should the landlord
at any time during the currency of this agreement sell the property
of which the leased premises form
part or....then it is specifically
agreed that In any of the foregoing circumstances the tenant shall
not be entitled to elect
not to be bound to the new landlord, and
that this lease shall continue in full force and effect.”
[5]
The Applicant then attached a letter from a conveyancing firm that
alleges that transfer took place on 1 October 2015, and on
that basis
asserted, to have complied with its obligations, its ownership and
locus standi
.
[6]
On the second point
in limine,
regarding Respondent's capacity
to be sued, it pointed out that
the Respondent's full names and
registration number is reflected in the lease agreement as a tenant
of the property that the Respondent
has occupied since 7 March 2015
and for which it had paid rental from
its
bank account since 23 February 2015. A bank guarantee obtained was
also issued on Respondent's behalf.
The Applicant
alleges that from all these goings-on, it is evident that Reichman
was authorized to act on behalf of the Respondent.
[7]
The Applicant argued on the basis of the
Turquand rule
argued
that the exercise of authority by Reichman depended on an internal
act of the Respondent. Accordingly, the Respondent as
a bona fide
Third Party may assume that the Respondent had complied with its
internal act, the resolution in this particular instance;
see
One
Stop Financial Services {Pty) Ltd v Neffensaan Ontwikke//ngs ( Pty)
Ltd and Another (20028/14)
[2015] ZAWCHC 89.
THE
ISSUES IN DISPUTE
[8] The court has to
determine:
[8.1] whether the
Applicant sufficiently established its locus standi or authority
entitling it to sue on the basis of the lease
agreement?
[8.2] Whether or not
Reichman's signing of the lease agreement and the resolution, which
documents were specifically prepared for
the sole member of the
Respondent's signature, binds the Respondent to the lease agreement.
LEGAL
FRAMEWORK
LOCUS
STANDI
[9]
The duty to allege and prove
locus standi in judicio
, rests on
the party instituting the proceedings.
The persona or facts that
confers locus standi, described in the Application or Summons must be
in existence at the date of Issue,
otherwise the Application or
Summons is a nullity. It must therefore
appear
ex facle
the founding pleadings that the parties thereto have the necessary
legal standing to sue or be sued
; See
Mars Incorporated v
Candy World (Pty) Ltd
[1990] ZASCA 149
;
1991 (1) SA 567
(A) at 575H-I;
Trakman
NO v Livshitz
1995 (1) SA 282
(A) at 287B-F;
Friends of the
Sick Association v Commercial Properties (Pty) Ltd
1996 (4) SA
154
(D) at 157H. An objection taken
in limine
to the locus
standi of a plaintiff or applicant, like an exception, must be dealt
with on the assumption that all the allegations
of fact relied upon
are true; see
Kuter v South African Pharmacy Baard
1953 (2)
307.
APPLICANT'S
[10]
Applicant seeks to prove its
locus
standi
relying on its
ownership of the property. The evidence submitted in that regard is
found in its Founding Affidavit, which is only
an allegation that it
signed the Portfolio Transfer Agreement with Fountainhead and is the
owner. It does not refer to the terms
in the Transfer Portfolio
Agreement that confers upon it the legal standing required to sue on
the lease the Respondent. It therefore
does not deal with question
posed whether or not the suspensive conditions were fulfilled,
[11]
Applicant also went further and alleged that the lease agreement was
entered into between itself and the Respondent when in
fact it was
concluded by Fountainhead Property Trust supposedly with the
Respondent. Attached to its Replying Affidavit, was a
letter from the
conveyancing attorneys advising it that the registration of the
property into its name took place on 1 October
2015. No confirmatory
affidavit from the conveyancing attorneys is attached confirming the
contents of the letter that what is
written is factually correct.
Neither did the Applicant annex an extract from the Deeds Office or a
copy of the Title Deed to its
Reply; see
Goudini Chrome (Pty) Ltd
v MCCContracts ( Pty)
Ltd
[1992] ZASCA 208
;
1993 (1) SA 77
(A) at p82.
[12]
Amler'
s Precedents of Pleadings on page 277 provides that in
accordance with an abstract theory of the transfer of property, the
requirements
for the passing of ownership in immovable property are
twofold, namely delivery- which in the case of immovable property is
by
registration of transfer in the Deeds Office - coupled with the so
called real agreement or "saaklike ooreenkoms". The
essential elements of a real agreement (alienation of land)
fulfilled. Therefore ownership in immovable property is proved by
producing a title deed or the register of the registrar of deeds (or
an extract or affidavit authorised by statute); see
MCF Pick n Pay
Stores Ltd v Teazers Comedy and Revue CC
[2000] 2 All SA 604
(W)
2000 (3) SA 645
(W). However ownership will not pass, despite
registration if there is a defect in the real agreement; see
Mckenna
v Shea & Others
[2008] ZASCA 144
;
2010 (1) SA 35
(SCA) at
para 22 per Brand JA.
[13]
It is inacceptable that the Applicant has not attached any of the
aforesaid documents to prove its ownership of the property,
when it
would have been very easy to get an extract from the Deeds Office.
More so the Application was launched on 26 October 2015,
long after
the alleged transfer had taken place.
[14]
The Respondent has referred also to certain conditions precedent that
the Applicant was to fulfill before the transfer of the
property
could take place that it alleges were not fulfilled in respect of the
approval of all resolutions required to implement
the sale of the
property through the Portfolio Transfer Agreement. The Applicant has
not attached such resolutions to its replying
affidavit or dealt with
the contention, so failed to show that the conditions for alienation
of the property were fulfilled. It
had instead tendered a bare
allegation that it has met the suspensive conditions of the contract.
RESPONDENT'S
& TURQUAND RULE
[15]
I must mention that from all the documents that have been furnished
by the parties nothing is straight forward. The lease agreement's
title reads "Agreement of Lease between Fountainhead Property
Trust and Tip Top Nails CC trading as Colour Harmony."
The
Applicant sent to the Respondent under cover of a letter Applicant
had signed off. Both the letter and lease agreement were
written on
Fountainhead's letterhead. On the line for tenant's signature, only
Reichman's signature Is appended with an inscription
"
on
behalf of Colour Harmony
" added next to his signature,
Indicating the entity he was representing or on whose behalf he was
signing the lease. Reichman
then put his signatory capacity to be as
"Funder/Partner". There is no indication whose Funder or
Partner is Reichman.
[16]
The lease agreement as prepared by Fountainhead further states that
the tenant, Tip Top Nails CC Is represented by Kahn. If
the tenant is
not a natural person, the tenant shall provide, on the date of
signature of the lease agreement, a resolution authorizing
the
signatory to the lease, to sign the lease on the tenant's behalf.
Reichman appears to be the signatory to the lease, as already
indicated that his signature is appended to the lease agreement. The
resolution to be signed is set up as part of the agreement
and
referred to as "Annexure D". It details Kahn's particulars,
her full names and identity number, in her capacity as
sole director/
member of the Respondent / tenant, to be the intended signatory to
the lease agreement whose actions that she had
already taken on
behalf of the Respondent were to be ratified by the resolution.
Reichman had signed the resolution, and in obvious
deviation from its
objective he was also the signatory to the lease agreement.
[17]
To justify holding the Respondent liable under these circumstances,
the Applicant has alleged that Kahn provided the Applicant
with her
Identity document and a Telkom Utility Bill and with regard to the
signing of the documents by Reichman it relies on the
Turquand Rule
to bind the Respondent.
[18]
Unfortunately the fact that the Applicant was furnished with a copy
of Kahn's personal documents or particulars does not advance
the
Applicant's case, since it is the lease agreement upon which the
Applicant's claim is founded and it soughts to enforce its
rights
that determines if there is a relationship between the parties, any
rights or obligations. The party that is being sued
is the Respondent
not its sole member, Kahn.
[19] The Turquand rule
(also known as the indoor -management rule), according to the recent
case of
One Stop Financial Services (Pty) Ltd v Nejfensaan
Ontwikkelings (Pty) Ltd and Another
2015 (4) SA 623 (WCC) at
[28], propagates that an outsider transacting with a company may
assume that its officers have the powers
ordinarily associated with
their positions, thus relieving the outsider from having to
investigate whether the company's acts of
internal management were
regular.
[20]
The rule is said to have an ameliorative effect, from the perspective
of an outsider, which was initially based on the rule
of constructive
notice, under which knowledge of the contents of the company's
articles was imputed to the outsider. The rule of
constructive notice
was abolished by s19 (4) of the Act Section 20 (7) of the Companies
Act 71 of2008 provides that
an outsider may presume that the
company has complied with any 'formal and procedural' requirements
unless he knew or ought to have
known of a failure to do so.
[21] The lessor
(Fountainhead) was aware that the resolution authorising any action
on behalf of the Respondent that would be legally
binding could only
be signed by Kahn as the sole member/director of the Respondent as a
Close Corporation could only authorise
any other person to sign or
act on its behalf through its member/s. The requirements that
Fountainhead or lessor put in the lease
agreement and the contents of
the resolution, in respect of the Respondent, are evidence of
Fountainhead's knowledge of also the
procedures that where to be
complied with in the case of the Respondent. It therefore knew or
ought to have known that Reichman
could not sign the resolution on
behalf of the Respondent nor did he have authority to ratify actions
that Kahn had already taken
on behalf of the Respondent. He was
neither a director nor a member of the Respondent. There was also no
resolution authorising
him to do so whether as Funder or partner.
[22]
It is clearly set out in the lease agreement and very explicitly in
the resolution as to who is the representative and the
signatory to
the lease agreement Failure to sign the lease agreement as required
by the law and agreement was apparent from the
documents. Besides the
absence of a resolution authorising Reichman to act on behalf of the
Respondent, he also made it clear in
the lease agreement that he was
signing Oil' behalf of Colour Harmony not on behalf of the
Respondent. Applicant therefore has
the onus to show that,
notwithstanding Reichman's apparent lack of actual authority which
Fountainhead was evidently aware of when
the agreement was
purportedly concluded and considering Reichman's declaration that he
was signing on behalf of a different entity
"Colour Harmony',
Respondent must be bound to the agreement, or Reichman's authority
should be inferred.
[23]
it was argued on behalf of the Respondent that for it to be bound by
Reichman's actions, ostensible authority must be Inferred
from its
own conduct. A representation by it not by Reichman that justifies
the founding of ostensible authority bestowed on Reichman,
the
purported agent that he was acting on behalf of the Respondent (the
Company). Reference was made to One Stop Financial Services
where it
was held on ( [56] that:
"Another
way of looking at this question is by giving due weight to the
requirement in s 20 (7) that the third party should
have been dealing
with the 'company'. The section does not state that the third party
may make any assumptions when dealing with
a purported representative
per se. This reinforces the view that In order for s 20 (7) to apply
the third party must establish that he was dealing
with someone who had actual or ostensible authority to bind the
company,
because only In
those circumstances can he say that he was he was dealing with the
'company'. This was the first of the two fundamental
questions
Claasen J posed in Wolpert, ie, 'when does one deal with or contract
with a company? (at 265A). The answer he gave (at
265D-267A) was that
one deal with or contract with a company when the latter is
represented by a person having actual or ostensible
authority. Once
the third party has established the actual or ostensible authority of
the representative, he cannot be non-suited
because of non-compliance
on the part of the company with some formal or procedural requirement
which would have been necessary
to make the ostensible agent's
authority complete.
[24]
Failing actual authority as indicated, the Applicant had, in an
attempt to establish ostensible authority to bind the Respondent
to
the lease agreement, alleged that (1) the Respondent's full names and
registration number ls reflected in the lease agreement
signed by
Reichman, (2) the Respondent has occupied the property since 7 March
2015 and for which Respondent has paid rental
from its bank
account from 23 February 2015
and (3)
a bank guarantee
obtained was Issued onbehalf of the Respondent and signed by
Reichman.
The Applicant alleges that Reichman's authority to act
on behalf of the Respondent can be inferred from these events, more
so the
payment of rental it alleges by the respondent and the
provision of a guarantee by the Respondent.
[25]
The bank guarantee for the deposit that Applicant is referring to
dated 6 March 2015 is signed by Reichman. In the guarantee,
the bank
confirms to hold a deposit as security at the disposal of
Fountainhead
in respect of the agreement of lease between Elite
Oil Management (Pty) Ltd
, on behalf of the Respondent and
Fountainhead (referred to as the landlord) over the property. The
guarantee instead introduces
another entity to the equation to have
been the one that had entered into an agreement of lease with
Fountainhead on behalf of
Respondent. Reichman's signature is affixed
on the guarantee without indicating which entity he represents or in
what capacity.
Whilst in the lease agreement he indicated to be
acting on behalf of Colour Harmony. It therefore cannot be concluded
that the
signing of the guarantee by Reichman establishes a
representation/conduct by the Respondent from which Reichman's
ostensible authority
can be inferred, to bind the Respondent to the
lease agreement. It is not a representation by the Respondent and
therefore does
not amount to conduct from which ostensible authority
can be imputed.
[26]
In addition, the Applicant reliant on the Tenant/Debtor Transaction
Statement it issued for the period March-October 2015 annexed
to its
Replying Affidavit, alleged that the rental payments indicated in the
statement were received from Respondent's bank account.
The payments
according to it created an appearance that Reichman's had authority
to enter into the lease agreement on Respondent's
behalf. However the
statement shows the name of the tenant to be "Colour Harmony•,
with no mention of the name of the
Respondent anywhere in the
statement. According to the statement Colour Harmony is in arrears in
the amount of R 671311.24, the
amount claimed from the Respondent. No
payment is indicated to have been made by the Respondent or to be
owed by the Respondent.
The statement also fails to establish the
alleged conduct that establishes ostensible authority.
[27]
It is also of significance to note that Reichman has signed the lease
agreement on behalf of Colour Harmony, the tenant that
is evidently
reflected in the statement of account. The Applicant then goes and
cites the Respondent as Tip Top Nails trading as
Colour
Harmony. However nothing is said in its founding affidavit about
Colour Harmony nor does the Applicant explain the reason
for citing
the Respondent in that way, also why Reichman's actions on behalf of
Colour Harmony would be ascribed to the Respondent.
[28]
Consequently, the court cannot find that the Applicant successfully
established conduct or representation from which ostensible
authority
could be inferred, that is representation or conduct by the
Respondent that could have misled the Applicant into believing
that
the purported agent Reichman had authority to bind the Respondent.
Applicant
in that case has failed to establish a contractual claim against the
Respondent.
[29]
The Applicant has furthermore not succeeded in establishing
sufficiently its locus standi to bring a claim in respect of, or
to
exercise any right over the property let. As a result likewise the
eviction claim cannot stand on the facts proffered by it.
[30]
Under the circumstances I make the following order:-
THE ORDER
[30.1] The Application is
dismissed with costs.
N V KHUMALO J
JUDGE
OF THE HIGH COURT
GAUTENG
DIVISION: PRETORIA
For
the Applicant: Adv J VORSTER
Instructed
by: Maree
Attorneys
Tel:
012 993-1205
Ref:
GM103/15
For
the Respondent: B C CRAFFORD
Instructed
by Crafford
Inc Attorneys
Tel:
0861272 336
Ref:
TIP2/0003/RH