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[2013] ZAGPPHC 207
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Savana Property (Pty) Ltd v Brown and Another (28722/2012) [2013] ZAGPPHC 207 (26 June 2013)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT,
PRETORIA
(REPUBLIC OF SOUTH AFRICA)
CASE
NUMBER: 28722/2012
DATE:26/06/2013
In
the matter between:
SAVANA
PROPERTY (PTY) LTD
…...........................................................................
APPLICANT
AND
DINO
GIDEON FRANCOIS
BROWN
..........................................................
FIRST
RESPONDENT
JOHAN
STEYN
........................................................................................
SECOND
RESPONDENT
JUDGMENT
TLHAPI
J
[1]
In this application the applicant seeks an order in the following
terms:
“
1.
Directing that the first and second respondents make payment to the
applicant in the amount of R371 115.27 being part of rental
owed by
the respondents to the Applicant at date hereof( the one paying the
other to be absolved);
2.
Directing that the first respondent make payment of the amount of R1
218 982.28 being the remainder of the rental owed by the
respondents
to the applicant;
3.
Directing that the first respondent and second respondent make
payment of the interest on the amount R371 115.27 calculated at
the
rate of 15.5% from 1 July 2011 to date of payment (the one paying the
other to be absolved);
4.
Directing that the first respondent make payment of the interest on
the amount R1 218 982.28 ...., calculated at the rate of
15.5% from 7
July 2011 to date of payment;
5.
Confirmation that the lease agreement as defined in the founding
affidavit and annexed thereto as FA2 has been validly cancelled;
6.
To the extent necessary, ejecting the respondents together with all
those persons who occupy through or under the respondents
from the
property known as Shop 19, Sandown Eye building, /
7.
Alternatively to prayer 4 above and to the extent necessary,
directing that the respondents together with all those persons who
occupy through or under the respondents return to the applicant
possession of its property being the premises Shop 30, Sandown
Eye
building /
The
application was opposed by the second respondent only. The first
respondent was the managing director of Humatech (Pty) Ltd
(‘Humatech’).
BACKGROUND
[2]
On 1 October 2009 alternatively 13 January 2010, the applicant and
Humatech concluded a lease agreement over property owned
by the
Applicant. The lease was to commence on 15 March 2010 to terminate on
30 April 2015, at a monthly rental of R61 869.00.
[3]
On 25 November 2009 the first and second respondents bound themselves
as sureties and co-principal debtors, jointly and severally
with
Humatech, for the due performance by Humatech of its obligations
under the lease. The first respondent bound himself with
an unlimited
liability while the second respondent limited himself to an amount of
R371 115.27.
[4]
The applicant averred that Humatech breached the agreement by failing
to pay rent as of June 2010 to date and as at 30 March
2012 when
demand was made. An amount of R1 491 461.36 remained owing. Humatech
failed to remedy the breach within the period stipulated
by the
applicant, consequently the applicant gave notice of the cancellation
of the lease on 18 April 2012 and, as at that date
the outstanding
rentals amounted to R1 590 097.55.
[5]
Humatech remained in occupation of the premises despite cancellation
of the lease agreement. The applicant contended that the
they were
entitled to evict without giving notice in terms of the Prevention of
Illegal Eviction from and Unlawful Occupation of
Land Act, 19 of 1998
because the premises were used for commercial purposes.
[6]
On 23 April 2012 Humatech’s attorneys notified the applicant
that summons had been issued against it on 22 March 2012
under case
number 1068/12 in the South Gauteng High Court. In that matter
Humatech alleged that certain representations were intentionally
and
or fraudulently made to it by the applicant, which representations
induced Humatech to enter into the lease agreement. The
alleged
misrepresentations in the particulars of claim annexed as ‘FA12’
were the following:
31.1
the building had 5000 square meters of retail space, which
would
take up two floors of the building and would be known as Retail 1 and
Retail 2
(b)
the entire 5000 square meters of retail space had been taken up by
tenants (most of which were “well-known” tenants)
who had
concluded valid, binding and enforceable lease agreements with the
applicant; and
(c)
the applicant had in particular, concluded valid and enforceable
lease agreements with a restaurant known as ‘Crystal’
and
a lounge known as ‘Soul Lounge’ both of which would
commence trading at the same time as Humatech, alternatively,
shortly
thereafter;”
[7]
Applicant averred that notification of the action had not been
brought to its attention prior to Humatech’s letter to
them of
23 April 2012. Although the applicant had not pleaded to the action
it contended that it denied the alleged representations
or any not
contained in the agreement and referred instead to paragraph 40 (‘the
WHOLE AGREEMENT clause') and paragraph 13
(‘the WARRANTEES
clause’) of the said lease agreement.
[8]
The applicant averred that it was acting bona fide when it informed
Humatech during the conclusion of the lease agreement that
certain
lease agreements had been/were concluded with Crystal restaurant and
Soul Lounge at the time of negotiating the lease with
Humatech.
Copies of the agreements with these entities concluded on 10 March
2010 and 8 March 2010 were annexed to the papers,
‘FA13’
and ‘FA14’. The applicant also informed Humatech that a
large portion of the retail space had been
taken up by tenants and a
list was annexed ‘FA15’ The applicant contended that
Humatech instituted action for the sole
reason of preventing the
applicant from recovering the rental.
[9]
The second respondent raised two points in limine. The first being
one of lis pendens which related to the action instituted
in the
South Gauteng High Court. The second respondent averred that the
lease agreement was induced by material misrepresentations
and/or
non-disclosures on the part of the representatives of the applicant
and, that these constituted material tacit terms of
the lease
agreement.
[10]
The second respondent contended this court ought not to entertain
this application because ‘matters of fact and questions
of law’
in this matter, were the same as those which the South Gauteng High
Court was called upon to adjudicate. The defence
of lis pendens was
meant to prevent the same parties approaching the court on the same
issues and of avoiding the possibility of
conflicting decisions by
different courts. Furthermore, it would be improper in these
proceedings to make a finding in a dispute
where fraudulent
misrepresentation was alleged in the conclusion of the lease
agreement
[11]
The second point in limine raised was that of non-joinder of Humatech
in that Humatech had a direct and substantial interest
in as far as
prayer 5 of the notice of motion was concerned. The other possibility
was that should this court find that the lease
agreement was not
induced by fraudulent misrepresentation, the applicant could raise a
plea of estoppel in the action instituted
in the South Gauteng High
Court.
[12]
In as far as the merits were concerned the second respondent admitted
the material express terms as stated in the founding
affidavit but
amplified the material tacit terms it relied upon, which were also
the representations which induced it to enter
into the lease
agreement, as the following.
9.2.1
two floors of Sandton Eye would consist of a retail shopping
environment consisting of shops and restaurants aimed at attracting
customers;
9.2.2
5000 sq meters of retail space in Sandton Eye would be let to tenants
in order to create an interactive shopping experience
9.2.3
the premises let to Humatech (t/a Toni & Guy Hairdressin) would
be beneficial to a newly-opened business relying on passing
trade;
[13]
The second respondent contended that since the lease agreement
imposed reciprocal obligations, the applicant having failed
to comply
with its part of the obligations under the lease, that is, the
material tacit terms, the applicant was
not
entitled to relief sought against him. The second respondent also
disputed the amount owing by Humatech in view of the fact
that
applicant had called up a guarantee issued by Nedbank on behalf of
Humatech for the sum of R237, 230.00. Furthermore, the
second
respondent contended that the purported cancellation of the lease
agreement, ‘FA8’ dated 18 April 2012, took
place after
service of the summons upon the applicant which took place on 22
March 2012 and, that at the time the application was
launched,
Humatech was no longer trading from the premises.
[14]
The second respondent denied that the lease agreement contained all
the terms relied upon; the ‘power point presentation’
with extracts annexed as ‘JS6’ and the ‘Sandton Eye
Tenant Criteria Document ‘ annexed as ‘JS7’
were
key representations made to Humatech that the premises would be in an
environment which would ‘attract customers by
way of passing
trade and on which basis the lease agreement was entered into.
[15]
In an e-mail dated 26 November 2009 the applicant informed Humatech
that Crystal Restaurant, described as a flagship restaurant
was
seeking occupancy in a shop next to it’s shop. Instead Crystal
never opened, nor was its intended space occupied. In
as far as Soul
Lounge was concerned it conducted evening trade and had closed down
by January 2011. The other shops on retail level
2 were not occupied
by tenants for purpose of trading.
[16]
E-mails were sent to the applicant about the status of the occupancy
of the retail centre and how this was impacting upon the
business of
Humatech;
• ‘
JS11
’dated 8 June 2010 requested a waiver of rental for period
June
July 2010, “the leased premises were not the marketed
environment which was promised to us to trade from”;
• ‘
JS12’
dated 9 July 2010 “the businesses that were supposed to have
been completed by the 20th of May are still not open...this
is
creating ...an atmosphere where people think the centre is under
construction....a completed centre with open shops is the very
least
we can ask for we have produced every client in the store, there
has
not been one walk in’;,
•‘
JS13’
dated 10 March 2011 “ the decision to enter into the lease
agreement with you was based upon the marketing material
and
representations made by you at the time. It is particularly important
to note that all representations indicated that our hair
salon would
be in a strictly retail environment which is beneficial to a new
business which will be relying on passing trade.....
despite all the
undertakings and representations you have failed to provide the
retail environment as contracted. As a result we
are suffering
considerable losses and damages”.
[17]
The second respondent contended that TA155 confirmed that retail
‘level 2’ did not consist of a retail shopping
environment that would appeal to attract
customers,
and the second respondent went on to comment on the tenancies
mentioned in ‘FA15’.
[18]
The second respondent contended that there were material disputes of
fact which could not be resolved on paper and that in
as far as these
were foreseeable by the applicant, the application had to be
dismissed with costs .
[19]
In its reply the applicant averred that it had abandoned the relief
sought in prayers 5, 6 and 7 of the notice of motion because
Humatech
had vacated the premises in June 2012 after the launching of the
present application. Prior to that, Humatech was still
in occupation,
it also was in possession of the keys to the premises and that its
movable property was still stored on such premises.
The applicant
contended that this application was against the respondents in their
capacities as sureties and did not relate to
the dispute in the South
Gauteng High Court, which was a dispute between Humatech and the
Applicant and, that matter could be adjudicated
independently of each
other. Furthermore, that the claim by Humatech was based on an
alleged fraudulent misrepresentation which
induced it to enter into
the lease agreement.
[20]
The applicant contended that, based on such allegations, which were
denied, Humatech had to make an election to either rescind
or abide
by the lease agreement within a reasonable period of time and, that
remaining in occupation for the period that it did,
constituted an
election to abide by the lease agreement thereby precluding it
(‘Humatech’) from obtaining any relief
against the
applicant. Furthermore, that this court was not called upon to make
any finding on the action instituted by Humatech.
[21]
The applicant contended that the lease agreement precluded Humatech
from withholding rent. It had ‘actively traded’
from the
premises and enjoyed
two
years of occupation without paying ‘a cent of rental’ and
that only when it was threatened with legal action did
it issue
summons and tender to return the premises. In reply to annexures ‘JS
11’, ‘JS12’ and ‘JS13’,
the applicant
stated that there were no tacit terms alleged; there was no threat to
resile from the agreement; there were ‘allegations
of alleged
breaches, which were opposed to allegations that it was induced by
fraudulent misrepresentations. While the applicant
was given time
frames within which to rectify the breach complained about no action
as threatened followed.
[22]
According to the applicant Humatech was required to pay a deposit on
signature of the lease and the guarantee was recalled
in accordance
with clause 10 of the lease agreement and that the amount claimed as
owing were amounts after the guarantee had been
called up.
POINTS
IN LIMINE
[23]
In order to succeed the party raising the defence of lis pendens
bears the onus to establish the following requirements:
(i)
that there was a pending litigation;
(ii)
between the same parties or their privies;
(iii)
based on the same cause of action;
(iv)
was in respect of the same subject matter;
The
requirements of the defence lis pendens overlap with those of res
judicata as was aptly stated in Nestle (South Africa) (Pty)
Ltd v
Mars Incorporated
2001 (4) SA 315
(SCA):
“
[16]
The defence of lis pendens shares features in common with the defence
of res judicata because they have a common underlying
principle which
is that there should be finality in litigation. Once a suit has been
commenced before a tribunal that is competent
to adjudicate upon it,
the suit must generally be brought to its conclusion before that
tribunal and should not be replicated (lis
alibi pendens). By the
same token the suit will not be permitted to be revived once it has
been brought to its proper conclusion
(res judicata). The same suit
between the same parties should be brought only once and finally.
]17]
There is room for the application of that principle only where the
same dispute between the same parties is sought to be placed
before
the same tribunal (or two tribunals with equal competence to end the
dispute authoritatively). In the absence of any of
those elements
there is no potential of duplication of actions.”
[24]
It is in the courts discretion to stay the proceedings pending
determination of the matter in the other court. In Friedrich
Kling
Gmbh v Continental Jewellery Manufacturers; Guthmann and Wittenauer
Gmbh v Continental Jewellery Manufacturers
1993 (3) SA 76
(C) it was
held that:
“
Where
the defence of lis pendens is raised, the onus is on the plaintiff to
satisfy the Court that the second proceedings are not
vexatious. The
defendant, however, has no right to a stay of action. The Court has a
discretion to stay the second proceedings
or to allow them to
continue. The exercise of this discretion will depend on grounds of
convenience and fairness, (my underlining)
[25]
It was submitted for the second respondent that with reference to the
facts of this case that the requirements for res judicata,
which
overlap with those of lis pendens could be relaxed, Janse van
Rensburg & Others N.N.O. v Steenkamp & Another; Janse
van
Rensburg & Others N.N.O. v Myburg & Others
2010 (1) SA 649
(SCA) where Heher JA dealt with the issue with reference to the
dictum by Botha JA in Kommissaris van Binnelandse Inkomste v Absa
Bank Bpk
1995 (1) SA 653
(A))
The
relaxation of the requirements came up where the ‘application
of the principles of res judicata in the form of issue estoppel’
were being dealt with in Boshoff v Union Government
1932 TPD
345
,where it was held that the cause of action need not necessarily
be the same in both actions. Heher JA referring Botha JA in Janse
van
Rensburg supra at 676 B stated:
“
The
common law requirements of res judicata were strictly circumscribed,
precisely to avoid injusticies Consideration of fairness
are also of
decisive importance in the application of issue estoppel in the
English case law..... Consequently the possibility
of extending the
principles of res judicata to any particular case of issue estoppel
must be approached with great circumspection.(my
translation) ”
In
Smit v Porrit
2008 (6) SA 303
at 307 J Scott JA summarized the
position as stated by Botha JA follows:
“
.....Where
the circumstances justify the relaxation of these requirements, those
that remain must be the same (idem actor) and the
same issue (aedem
quastio) must arise. Broadly stated, the latter involves an enquiry
whether an issue of fact or law was an essential
element of the
judgment on which reliance is placed.... The recognition of the
defence in such cases will however require careful
scrutiny.... any
extension of the defence will be on a case by case basis... Relevant
consideration will include questions of equity
and fairness, not only
to the parties themselves but also to others. ”
I
do not find reasons to justify the relaxation of the requirements of
res judicata. Ordinarily the court, in the exercise of its
discretion
must fully scrutinize the facts and the law in order to determine
whether a successful plea of lis pendens is justified.
A stay of
proceedings shall be justified if I find that at any time, one of the
parties was vexatious in approaching the court.
[26]
The matter before the South Gauteng High Court is between Humatech
(Pty) Limited (‘Plaintiff and tenant’) and Savana
Property (Pty) Ltd (‘Defendant and landlord’). This
application is between the applicant (Savana (Pty) Ltd) as creditor
and Dino Gideon Francois Brown and the second respondent (Johann
Steyn) as sureties. It was submitted by Mr Gouws for the second
respondent that the judgement against the principal is binding upon
the suretyship because of the accessory obligation created
by the
suretyship agreement. This in my view loses sight of the true
relationship between the landlord, the surety and the tenant.
The
relationship between the applicant and the respondents is based
purely on the surety agreement and in this regard the respondents
were not privies/ principals/agents to the lease agreement. In
Firstrand Bank Ltd v Carl Beck Estates (Pty) Ltd
2009 (3) SA 384
(T)
Satchwell J stated:
“
[22]...A
surety who has bound himself as a surety and co-principal debtor
remains a surety whose liability arises wholly from the
contract of
suretyship.
Signing
as a suretyship and co-principal debtor does not render a surety
liable in any capacity other than a surety who has renounced
the
befits of excussion and division. As De Villiers CJ stated !‘the
use of the words does not transform the contract into
any other than
Suretyship; Maasdorp \/ Graaf-Reinet Board of Executors (1906 –
1909) 3 Buch A.C 482
at 490; Duplessis v Estate Teich Brothers
1914
CPD 48
at 50;Neon and Cold Cathosde Illuminations (Pty) Ltd v Ephron
1978 (1) SA 463
(A) at 471
[27]
The cause of action in the South Gauteng High Court is based on
‘fraudulent alternatively negligent misrepresentations,’
which allegedly induced Humatech to enter into the lease agreement
and as a result suffered damages in the sum of R2 228 746.07.
This
application concerns rentals owed by the respondents in their
capacities as sureties to the lease agreement, because, Humatech
took
occupation of the premises and traded therein for almost two two
years without paying a ‘single cent of rental’.
In this
application the court is not called upon to decide the merits of the
action by Humatech. However, the allegations of the
fraudulent
misrepresentations, will be examined in as far as they have relevance
to determine whether the action in the South Gauteng
High Court was
vexatious, having regard to the terms of the lease agreement and the
obligations of the respondents arising out
of the surety agreement.
It is my view therefore that the defence of lis pendens should fail.
[28]
In as far as the non-joinder is concerned, applicant has abandoned
prayers 5,6 and 7 of the notice of motion for reasons in
the replying
affidavit. In as far as pursuance thereof is relevant to the defence
of lis pendens, I have already given reasons
why such defence should
fail. There is therefore no point in addressing this issue any
further.
FRAUDULENT
MISREPRESENTATION
[29]
It was common cause that the lease agreement was concluded during
October 2009 alternatively January 2010 and that Humatech
remained in
occupation of the premises till June 2012. It was only in the action
issued in March 2012, where it raised in its particulars
of claim
‘fraudulent, alternatively negligent misrepresentation and
non-disclosures’ intended to induce it to conclude
the lease
agreement.
[30]
The following clauses are relevant to the determination of liability
under the lease agreement:
Clause
13:
“
WARRRANTIES
The
Lessor does not warrant:
13.1
that the premises are or will be fit for the purpose for which they
are let; or
13.2
........
Clause
40 :
“
The
lease agreement incorporates the entire agreement between the Lessor
and the Lessee and no warranties or representations, whether
express
or implied not recorded herein have been given by the Lessor or any
servant or agent of the Lessor to the Lessee or any
servant or agent
of the Lessee. ”
[31]
It was argued for the second respondent that the applicant could not
benefit by hiding behind a ‘no representation’
clause
where fraud was alleged as having induced the contract. Furthermore,
that reliance on the warranty clause was misplaced
because it was not
the leased premises that constituted the offending issue but the
representations prior to the conclusion of
the agreement.
[32]
As I see it, the contents of ‘JS11’, ‘JS12’
and ‘JS13’ which were relied upon by the second
respondent, do not make mention of any fraudulent misrepresentation
made prior to the conclusion of the lease agreement and what
is
communicated is precisely what is covered by the warranty clause. In
‘JS13’ dated 10 March 2011, Humatech registered
its
dissatisfaction with the applicant’s undertakings and
representations and this relates to the issues raised in ‘JS
11’ and ‘JS12’ and concludes by saying: (my
underlining)
“
We
have, therefore, no alternative but to provide you with written
notice to rectify the breach within 14 days of the date of this
letter failing which we will have no alternative but to consider
formal action.
In
the event that you have any alternate suggestions or recommendations
and would like to convene a meeting, please urgently let
us know”
[33]
It does not appear from the papers, that Humatech followed through
with the threat to institute proceedings to enforce its
rights.
Consequently, it is my view that in as far as Humatech was concerned,
the ‘WHOLE AGREEMENT and ‘WARRANTIES’
clauses
should find applicability in this matter. In Hyprop Investments
Limited and Another v NSC Carriers and Forwarding CC and
Another
(2009/12568, 2009/47543) (2010) ZAGPJHC 20 (12 April 2010), the court
considered the fact that none of the communications
between the
parties alleged fraudulent misrepresentation that induced conclusion
of the lease agreement. At paragraph 27 thereof,
the Court went
further to determine whether in the light of the circumstances the
‘purported rescission’ (in this instance
it would be the
cancellation of the lease agreement) was
[34]
At paragraph 33 of Hyprop supra Mokgoatlheng J stated:
“
It
is patent that prior representations, warranty, promises, or the like
do not and cannot bind the applicants, consequently, whatever
representations applicants representatives made the second respondent
as alleged, such are extraneous the lease agreement, and
are not
binding on the applicants, consequently, same cannot entitle the
first respondent to lawfully rescind the lease agreement”
[35]
In responding to the allegations in the summons the applicant
contended that its representations on tenancy and the calibre
thereof
was supported by ‘FA13 ‘FA14’ and ‘FA15’
and that such representations when made, were bona
fide. The second
respondent failed on the papers to elaborate why the representations
in as far as the presentation documents JS6’
and JS7’
were concerned, were incorrect, fraudulent or negligent in nature,
and made to mislead Humatech to conclude the
lease agreement. In my
view more than just a bofd statement was required regarding Crystal
Restaurant to show that representations
about the flagship restaurant
made in a letter of 26 November 2009 were fraudulent. A concluded
lease agreement was annexed and
in my view, there could have been
other reasons not related to Humatech’s allegations why it
never took occupancy, the same
can be said about Soul Lounge and no
confirmatory affidavit from these entities was attached, at least to
confirm the fraudulent
misrepresentation allegation complained about.
The most important factor is that despite problems experienced by
Humatech, which
were communicated to the applicant, Humatech took
occupation, remained on the premises and traded for a period of
approximately
two years without paying rent and without instituting
the threatened legal proceedings. Furthermore there is in my view no
reason
why the applicant should be required to file a counterclaim in
the action to obtain payment that was due in terms of the surety
agreement.
[36]
I agree with the submission by Mr Nowitz for the applicant that on
the papers there was no justification why Humatech should
have
enjoyed use of trading from the premises without paying rent and no
reason why the sureties should as a result have been absolved
of
their obligation towards the applicant, specifically so because the
lease agreement provided that rentals may not be withheld
as provided
in clause 27. Furthermore, that there was no justification in
Humatech continuing to occupy the premises and trading
from them,
while the applicant suffered loss of income and consequential damages
from failure to pay monthly rentals; Port Wild
Props 12 (Pty) Ltd v
Real Time Investments 384 CC South Gauteng High Court case number
A504/108); Hyprop supra paragraphs 52, 53
and 54.
In
my view, by not availing themselves to the remedies available to
address any of the complaints, and by not instituting action
Humatech
made an election to abide by the contract.
[37]
Having regard to the above I am of the view that no bona fide factual
disputes have arisen justifying dismissal of the application
or a
referral thereof to oral
evidence.
[38]
In the result the following order is given:
1.
The first and second respondent are directed to make payment to the
applicant in the amount of R371 115.27 (three hundred and
seventy one
thousand one hundred and fifteen rand and twenty seven cents) being
part of the rental owed by the Respondents to the
Applicant at date
hereof, the one paying the other to be absolved;
2.
The first and second respondent are directed to make payment of
interest on the amount of R371 115.27 (three hundred and seventy
one
thousand one hundred and fifteen rand and twenty seven cents)
calculated at the rate of 15.5% from 7 July 2011 to date of payment,
the one paying the other to be absolved;
3.
The second respondent is ordered to pay costs of this application;
TLHAPI
V. V
(JUDGE
OF THE HIGH COURT)
MATTER
HEARD ON: 11 FEBRUARY 2013
JUDGMENT
RESERVED:13 FEBRUARY 2013
ATTORNEYS
FOR THE APPLICANTSCHINDLERS ATT.
c/o
FRIEDLAND HART SOLOMON & NICOLSON