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[2015] ZAKZDHC 11
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Outdoor Network Ltd and Another v Strawberry Worx Pop (Pty) Ltd and Another (9531/2014) [2015] ZAKZDHC 11 (24 February 2015)
In
the High Court of South Africa
KwaZulu-Natal
Local Division, Durban
Case
No : 9531/2014
In
the matter between :
Outdoor
Network
Ltd
.......................................................................................................
First
Applicant
Autumn
Storm Investments 362 (Pty)
Ltd
...................................................................
Second
Applicant
and
Strawberry
Worx Pop (Pty)
Ltd
...................................................................................
First
Respondent
The
Passenger Rail Agency of South
Africa
...........................................................
Second Respondent
Judgment
Lopes
J
[1]
This is an application for an interdict. The facts giving rise
to the application may be summarised as follows :
(a)
the second respondent, the Passenger Rail Agency of South Africa
(‘PRASA’) is the legal successor to the South African
Commuter Corporation Ltd and holds all the assets and operations
which that entity received originally from the South African
Transport Services, together with Metrorail and others;
(b)
PRASA accordingly became the owner of a number of immovable
properties (‘the sites’) situated throughout the country
including bus stations, railway stations, and areas of land adjacent
to railway lines both in built-up and rural areas, where the
sites
are visible from railway lines and major roads and highways;
(c)
in order to capitalise on the use of the sites PRASA and its
predecessors leased them to various companies which used the sites
for advertising purposes. The various companies would erect an
advertising structure on the site leased to them, and flight
different adverts for their clients on the advertising structure from
time to time;
(d)
on the 17
th
May 2002 the applicant, Outdoor Network Ltd
(‘Outdoor Network’) concluded an agreement of lease in
respect of a number
of properties belonging to PRASA’s
predecessor in title. In terms of those lease agreements
Outdoor Network was entitled
to erect advertising structures and
flight adverts thereon from time to time in exchange for the payment
of a monthly rental to
PRASA. The advertising structures were
built and maintained by Outdoor Network at its own expense. The
lease agreements
provided that, upon termination, Outdoor Network
would remove the advertising flights and structures from the sites
within seven
days from such termination, failing which PRASA would be
entitled to employ a contractor to remove those items and be
reimbursed
by Outdoor Network for the expense in doing so;
(e)
The second applicant is Autumn Storm Investments 362 (Pty) Ltd
(‘Autumn Storm’). Autumn Storm is a subsidiary
of
Outdoor Network and as their interests completely coincide in this
application, where I refer to Outdoor Network Ltd, I intend
it to be
a reference to both Outdoor Network and Autumn Storm wherever
necessary;
(f)
the relationship between PRASA and Outdoor Network continued until
2010 when PRASA invited tenders to be submitted by advertising
companies to allow them to advertise from all of its sites;
(g)
Outdoor Network was unsuccessful in the tender process which was
awarded to a third party. The existing lease agreements
were
terminated, and a dispute then arose between PRASA and Outdoor
Network as to the removal of the advertising structures.
I
understand that this dispute is the subject of litigation before
another court. It appears that as Outdoor Network did
not
initially remove the advertising structures, PRASA indicated that
they would do so themselves. They removed two structures,
but a
dispute arose over this because Outdoor Network regarded the cost of
them having done so, which PRASA sought to recover from
Outdoor
Network, as exorbitant. At a further stage PRASA indicated to
Outdoor Network that as it had not continued to pay
all the rentals
due, PRASA would retain the advertising structures in the exercise of
a lien over those structures for the unpaid
rentals and/or
holding-over damages;
(h)
The first respondent in this application, Strawberry Worx Pop (Pty)
Ltd (‘Strawberry Worx’) is a subsidiary of the
successful
tenderer for the PRASA sites. Outdoor Network then became aware
that PRASA was allowing Strawberry Worx to advertise
on the sites
using the advertising structures of Outdoor Network;
(i)
in its application papers, Outdoor Network put up an email addressed
by Strawberry Worx to PRASA recording that it was unable
to provide
advertising structures because of a shortage of steel due to a strike
by steel workers. The suggestion was then
made that the
advertising material would be flighted upon the advertising
structures of Outdoor Network and an indemnity would
be provided to
both the client on whose behalf the advertising was put up and,
presumably, PRASA. Part of the justification
was that PRASA’s
view was that those advertising structures had been abandoned by
Outdoor Network. The affidavits in
this application and the
ongoing litigation make it clear that this is a claim strenuously
denied by Outdoor Network;
(j)
it is common cause that the advertising structures erected by Outdoor
Network and which it claimed still belonged to it, are
being used by
Strawberry Worx with the acquiescence of PRASA for the purpose of
flighting adverts of the clients of the successful
tenderer;
(k)
in its opposing affidavit, the respondents claimed that PRASA was
entitled to allow these structures to be so used, even if
they still
belonged to Outdoor Network, because PRASA had a lien over the
structures for unpaid rental and/or holding-over damages.
Mr
Kemp
SC, who appeared for the respondents together with Mr
Naidu,
disavowed any reliance on that defence. In my view they were
correct to do so, because a lien for unpaid rental (and, if
one
existed at all for holding over damages) would not have entitled
PRASA to use the advertising structures of Outdoor Network.
[2]
Mr
Kemp
,
however, submitted that the presence of the structures belonging to
Outdoor Network constituted a diminution of the ownership
rights
which PRASA had in and to the property on which those structures were
constructed. His submission was that as compensation
for the
damages inevitably suffered by PRASA as a result of such diminution,
PRASA could allow others to use the structures to
flight
advertisements.
[3]
Mr
Kemp
cited various examples, primarily based on the rental of property
which would entitle a lessor to make use of a structure left
behind
by a lessee after the lease between them had terminated.
The problem with the examples cited by Mr
Kemp
is that each one depended on the particular facts of the example,
seen in the light of the lease agreement concluded between the
lessor
and the lessee. I do not believe it is helpful to consider all
those examples in order to understand the legal
position in
this matter. Each case will depend on its own facts, and it is
necessary for me therefore to examine the facts
of this case.
[4]
On the papers before me it is not possible for me to decide the
dispute concerning whether Outdoor Network should have removed
its
structures from PRASA’s property, or whether PRASA was entitled
to remove the structures and claim the cost of doing
so from Outdoor
Network. That dispute is the subject of litigation elsewhere
and does not form part of what I am required
to decide in this
matter, nor is it necessary for me to do so to resolve this
application.
[5]
What remains to be considered is what PRASA could legally do with the
advertising structures which remained after the termination
of the
leases. There is no doubt that Outdoor Network was obliged to
remove the structures within a certain period after
the termination
of the lease agreements. If they did not do so it was open to
PRASA to remove the structures from the sites,
store them and tender
their return to Outdoor Network upon the payment to PRASA of the cost
of removal and storage.
[6]
If Outdoor Network did not pay those charges in order to regain their
structures PRASA, would no doubt have been able to approach
a court
for permission to sell the structures in order to offset the damages
which they had suffered in having to remove and store
them.
[7]
Not having followed that legal course, PRASA had no right to allow
third parties to flight adverts on the advertising structures
which
belonged to Outdoor Network, in order to gain financially from so
doing. The advertising structures remained the property
of
Outdoor Network. Given the correspondence between the parties
which is contained in the papers in this application I do
not believe
that Outdoor Network intended to, or did, abandon its rights of
ownership in and to the advertising structures.
It may even be
suggested that they were left there deliberately by Outdoor Network
in order to exercise some form of pressure upon
PRASA. Even if
that is so, and it is not shown to be so on the papers, that would
not have entitled PRASA to behave as it
has done.
[8]
In my view Outdoor Network has established that it has a clear right
not to have its advertising structures used by the successful
tenderer to flight adverts of third parties for the financial benefit
of the successful tenderer, its subsidiary Strawberry Worx
and PRASA.
[9]
Mr
Pillemer
SC, who appeared for the applicants together with Mr
Tager,
submitted that the real reason why PRASA allowed the successful
tenderer and Strawberry Worx to advertise for their clients on
the
advertising structures belonging to Outdoor Network, was because they
could not obtain the necessary steel in order to have
their own
advertising structures built and put into place. There is no
suggestion by PRASA or Strawberry Worx that there
was insufficient
place on the sites concerned to build new advertising structures,
because of the presence of the advertising structures
of Outdoor
Network. Nor is it alleged that the advertising structures of
Outdoor Network occupied the only place on the immovable
property
where the advertising flights on structures could be optimally
viewed. In those circumstances there is no reason
why the
successful tenderer and Strawberry Worx could not have constructed
their own advertising structures on the property.
I agree with
the submissions by Mr
Pillemer
that the unfortunate email of the 29
th
July 2014 is ample evidence of PRASA’s motivation for allowing
others to use the advertising structures owned by Outdoor
Network.
[10]
Mr
Kemp
quoted various cases in support of his argument. He referred me
to
Bourbon-Leftley v
Turner
1963 (2) SA
104
(C), a case in which the right of a lessee to cancel his lease
was challenged, and the lessor sought payment of rental until the
premises were vacated. The court found that the fact that the
lessee had left behind a large stove meant that the premises
had not
be vacated, and the lessee was held liable for further rental.
[11]
In my view
Bourbon-Leftley
does nothing more than confirm our law that a lessee is obliged to
pay rental (or holding-over damages) until the premises are
properly
vacated. The case does not purport to deal with the situation
with which we are faced here, where the lessor makes
use of the
lessee’s equipment for financial reward. The fact that
Outdoor Network may have left advertising structures
on the various
sites belonging to PRASA may have entitled PRASA to various legal
remedies, none of which would have, according
to our law, entitled it
to use the advertising structures for financial gain.
[12]
I was also referred to
Chapmans
Peak Hotel (Pty) Ltd and Another v Jab and Annalene Restaurants CC
t/a O’Hagan’s
[2001]
4 All SA 415
(C), an appeal against the refusal of an interdict
sought because the respondents had erected an unlawful structure on
their property.
The interdict had been denied in the court a
quo because the applicant had not demonstrated that it had no
alternative relief.
The Full Court found that once the right in
question was a public right, then for continuing infringements of
that right the only
effective remedy was an interdict, which was all
the more so when the infringement amounted to an offence.
[13]
Insofar as the defence of an ‘alternative remedy’ is
applicable in this case, Outdoor Network is unable to remove
its
structures because of the lien claimed over them by PRASA. The
resolution of that dispute is the subject of litigation.
I do
not believe that any alternative remedy was available to Outdoor
Network other than the relief which it seeks in this application.
[14]
In my view nothing that was dealt with by Boruchowitz J in the
previous litigation between the parties in respect of the judgment
handed down on the 30
th
May 2014, precludes Outdoor Network from obtaining the relief
which it seeks in this application. The issue of peaceful
and
undisturbed possession is not one which is relevant in this matter.
Indeed, Mr
Pillemer
eschewed any reliance upon it. The case of Outdoor Network is
simply that it owns the advertising structures currently on
the PRASA
sites, and is entitled not to have them used by PRASA and others for
financial gain.
[15]
Mr
Kemp
submitted that the presence of the advertising structures owned by
Outdoor Network constituted a significant detraction from PRASA’s
ownership of the sites. In this regard he relied upon
Willow
Waters Homeowners’ Association (Pty) Ltd v Koka NO and Others
(
768/2013)
[2014]
ZASCA 220
(12 December 2014).
[16]
In
Willow Waters
a home owners’ association sought to rely upon a condition of
title of immovable property which prohibited the transfer of
the
immovable property without a clearance certificate or the consent of
the home owners’ association. The trustees
of the owners
of the property who were sequestrated, sought to sell and transfer
the property to a third party. The home
owners’
association successfully argued that the restrictive condition of
title was a real right in favour of the association
and the
association was entitled to repudiate the trustees’ claim
that they could pass transfer of the property without
the
association’s consent. Mr
Kemp
relied on this case, as I understand it, to demonstrate the extent to
which the ownership of PRASA was interfered with by the presence
of
the advertising structures of Outdoor Network.
[17]
I do not agree. Each case depends upon its own facts and PRASA
has not demonstrated in its papers that it is unable to
use the sites
concerned to allow Strawberry Worx or other successful tenderers to
erect advertising structures on the sites.
Indeed, the very
fact that they are able to do so has necessitated the interdict
application by Outdoor Network. In my view
there is no
detraction from the ownership rights of PRASA which could not be
dealt with by the construction of other advertising
structures, or
alternatively, the removal of the advertising structures belonging to
Outdoor Network by a process recognised in
law, which is clearly
available to PRASA.
[18]
In all the circumstances I am satisfied that the applicant is
entitled to the order which it seeks. With regard to the
question of costs, there would appear to be a lot more to this
dispute than is evidenced in the papers. There seems to have
been a complete reluctance by either party to reach what I would have
viewed as a sensible commercial settlement of their dispute
when the
matter cried out for reasonableness on the part of both parties.
No doubt each had commercial strategies which they
wished to
implement in order to create the best advantage for their respective
competing positions in the advertising market.
It seems
probable that Strawberry Worx suggested an indemnity for PRASA
because it viewed the costs of inevitable litigation as
being a
worthwhile cost of the advertising flights they erected for their
clients. That the conduct of both parties lacked such
reasonableness,
disinclines me from making any punitive award of costs in favour of
Outdoor Network. I accordingly make the
following order :
1.
The first respondent is interdicted and restrained from using, for
any purpose whatsoever, the advertising structures of the
applicants
which are situated on the sites on Annexures ‘FA1’ and
‘FA 2’ to the founding affidavit of William
Thomas
Basson;
2.
the second respondent is interdicted and restrained from using, for
any purpose whatsoever, or permitting the first respondent
or any
other third party from using for any purpose whatsoever, the
advertising structures of the applicants situated on the sites
listed
on Annexures ‘FA 1’ and ‘FA 2’ to the
founding affidavit of William Thomas Basson;
3.
the respondents are directed to pay the applicants’ costs of
the application, including the costs of two counsel and all
reserved
costs in the various hearings, jointly and severally, the one paying
the other to be absolved.
Date
of hearing : 12
th
February 2015
Date
of judgment : 24
th
February 2015
Counsel
for the Applicant M Pillemer SC with S Tager (instructed by
Fluxmans)
Counsel
for the Respondents : KJ Kemp SC with R Naidu (instructed by Maraj
Attorneys)