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[2013] ZAFSHC 13
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Royal Anthem Investments 16 (Pty) Ltd v MEC: Free State Department of Public Works and Rural Development (4336/2010) [2013] ZAFSHC 13 (19 February 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 4336/2010
In the matter between:-
ROYAL
ANTHEM INVESTMENTS 16 (PTY) LTD
.......................
Plaintiff
and
THE MEC: FREE STATE
DEPARTMENT OF
PUBLIC WORKS AND
RURAL DEVELOPMENT
..................
Defendant
_____________________________________________________
HEARD ON:
14-17 AUGUST & 8-12 OCTOBER 2012
_____________________________________________________
DELIVERED ON:
19 FEBRUARY 2013
_____________________________________________________
JUDGMENT
_____________________________________________________
MOCUMIE, J
[1]
The plaintiff, Royal Anthem Investments 16 (Pty) Ltd, is a company
registered in terms of the South African law. The plaintiff
has
properties in the Free State and leases same to different entities
including government departments. The defendant is the Member
of
Executive Council
(“MEC”)
for
the Free State, Department of Public Works & Rural Development
(“the department”)
.
The plaintiff claims from the defendant certain amounts under three
heads. Claim 1 is for payment of R361 500,00 plus interest
and costs.
Claim 1 has previously been settled and paid. Only Claim 2 and 3 are
of relevance. Claim 2 is for cancellation of the
lease agreement, in
the alternative, confirmation of the cancellation of the lease
agreement; payment of the sum of R 806 075,56
plus interest at 15, 5%
pa
a tempore morae
and
costs. Claim 3 is for payment of R1 426 720,00 plus interest and
costs.
[2] The following issues
had to be determined by this Court:
“
[1] Whether the
lease contract has been extended between the parties for the further
option period as alleged by the plaintiff;
[2] secondly whether the
defendant was entitled to cancel alternatively to repudiate the
contract;
[3] thirdly whether the
defendant is liable for the alleged damages to the property; and
[4]
lastly the
locus standi
of
the plaintiff.”
[3]
Two witnesses Messrs Jacque Faure
(“Faure”)
and Johan Wolmarans
(“Wolmarans”)
testified on behalf of the plaintiff. They are
both directors and shareholders in the plaintiff company. Both
testified that on
12 October 2005 the plaintiff entered into a
written lease agreement with the department
in
respect of the 1
st
,
2
nd
, 3
rd
and 4
th
floors
of the Old Saambou Building situated at the corner of Maitland and
Aliwal Streets in Bloemfontein, Free State
(“the
leased property”)
.
In
terms of this agreement,
the commencement of the
lease agreement was 1 August 2005 and the termination date was 31
July 2008.
A copy of the lease agreement was
appended as Annexure “BB”. When the lease agreement was
concluded the plaintiff was
represented by both Messrs Faure and
Wolmarans whilst the Department was represented
“
by
the Head of the Department in the alternative a duly authorized
employee”
.
[4]
They further testified that the department took occupation of
the property on 1 August 2005. During 2007 the department complained
about some defects which the plaintiff repaired in the same year. In
February 2010 the department moved out of the leased property.
When
it moved out, its employees left without handing over the keys as per
agreement and without leaving the leased property in
the same
condition they found it at the commencement of the lease. As a result
of leaving the building without any security systems
put in place to
safeguard the property or informing Faure/Wolmarans of the exact date
of departure, the leased property was left
unsecured and consequently
got vandalised by unknown people. After the vandalism Faure/Wolmarans
identified a number of items on
each floor, i.e 1
st
to 4
th
floor, which they alleged were damaged by the department and its
employees during the occupation of the property. They also included
the 6
th
floor. The 6
th
floor was originally not
included in Annexure “BB”. It was not in dispute that the
department also occupied part of
6
th
floor. Photos
depicting the damage after the vandalism were handed in as Bundle “A”
and “C”.
[5]
Faure/Wolmarans sought quotations from service providers and stores
selling
inter
alia
tiles,
ceilings, toilet sets, burglar doors floor mats, window panes, blinds
in order to claim such damages from the department.
The quotations
indicated how much it would cost to return the leased property to the
condition and the state it was in at the commencement
of the lease
agreement.
[6]
They testified further that during May 2008 they approached the
department for a renewal of the lease agreement. They met with
Mr DM
Kgosietsile
(“Kgosietsile”)
the then Director of
Directorate Property Administration who, on behalf of the department,
exercised the option to extend the lease
agreement for a further
three years following the lapse of the initial lease term of three
years on 31 July 2011. A copy of the
alleged written acceptance and
confirmation of the renewal of the lease agreement by the parties,
dated 28 May 2008, was appended
as Annexure “CC” to the
papers.
This
renewed lease agreement would have commenced on 1 August 2008 and
terminated on 31 July 2011.
[7] Subsequently in a
letter dated 17 February 2010, Annexure “DD”, the
department notified the plaintiff in writing
of its intention and
decision to repudiate the extended lease agreement with three months
notice as the initial agreement, Annexure
“BB”,
stipulated. The department also paid the monthly rental due and
payable by it to the plaintiff up and until May
2010. On 22 July
2010, the plaintiff, demanded payment by the department of all arrear
rentals to the amount of R 241 000,00 for
the months June and July
2010, which the department refused to pay. The plaintiff accepted
such failure to constitute a breach
of the terms and conditions of
the lease agreement and thus a repudiation of the extended or
re-newed lease agreement. The plaintiff
thereafter elected to
terminate the lease agreement with effect from August 2010 as per
Annexure “FF”. The arrears
were calculated to include
August 2010, which brought the whole amount to R 361 500,00. As
indicated earlier on, this amount was
subsequently settled between
the parties and paid by the department.
[8] During cross
examination Faure and Wolmarans were constrained to admit that they
had not seen Kgosietsile’s authority
to act on behalf of the
department to extend the disputed lease agreement. It also became
clear that contrary to clause 4.2 and
5.3 of Annexure “BB”
the plaintiff did not inform the department in writing of the rental
payable for the option period
i.e. for another three years. Neither
did the plaintiff give the department a written notice of the tenant
exercising the option
to extend the lease agreement for an optional
period of three years. As they said they had been working with the
department and
took Kgosietsile’s word that the lease agreement
would be extended. They were also constrained to admit that they were
not
sure that Annexure “CC”, the letter which contained
the agreement to exercise the option which they wrote was ever
delivered to or received by the department or brought to its
attention by fax or email as they alleged. Instead they gave
contradictory
evidence on this aspect. Faure testified that the
letter was in one instance either emailed or faxed and in another
instance the
same letter was left with a secretary in Kgosietsile’s
office and she undertook to put it on his desk. Wolmarans on the
other
hand testified that he personally took the letter and pushed it
under Kgosietsile’s office door. They were again constrained
to
agree that without expert evidence led on the assessment of the
reasonableness of the alleged damages in the sum of R806 075,56
under
the head “Diverse Costs” it could not be said with
conviction that such damages were reasonable. Moreso the usual
wear
and tear deductions were not included. They also could not explain
how and when the plaintiff became the owner of the leased
property.
Neither did they produce any documentary proof to the Court about the
alleged registration of the plaintiff which would
entitle the
plaintiff to institute these proceedings.
[9] At the close of the
plaintiff’s case, the defendant, in terms of Rule 39(6) of the
Rules of Court Practice, applied for
absolution from the instance on
the basis that the plaintiff on whom the burden of proof was to
establish its case that the defendant
was liable for any damages or
that all the facts set out above, had failed to do so.
[10] It is trite that the
test to be applied by the Court at this stage of the trial is:
Whether there was evidence upon which a
Court might reasonably find
for the plaintiff. (See
Gordon Lloyd Page & Associates v
Rivera and Another
2001 (1) SA 88
(SCA) 92H - 93A.) Another
approach is to enquire whether the plaintiff had made out a prima
facie case. (See
Gascoyne v Paul & Hunter
1917 TPD 19
;
McCarthy Ltd v Absa Bank Ltd
2010 (2) SA 321
(SCA) 328H.)
[11] In my view
absolution from the instance must be granted in favour of the
department on the following grounds:
The
plaintiff failed to prove that it was a registered company in terms
of the laws of South Africa. A company comes into existence
on
incorporation. It is only after proper incorporation that a company
becomes a body corporate capable of exercising all the
functions of
an incorporated company. The Registrar must issue a certificate of
incorporation signifying the fact of proper
incorporation. The
certificate of incorporation, upon its mere production, is made
conclusive evidence that all the requirements
of the Act for
registration have been complied with and that the company is a
company duly incorporated under the Act.
1
At the end of its case,
the plaintiff had not put proper documentary proof before the
Court. On this leg alone absolution from
the instance in favour of
the department ought to be granted;
The plaintiff failed to
prove its claim for “Diverse costs” excluding
reasonable wear and tear for
inter alia
carpets, blinds, and
painting of walls by leading expert evidence on what percentage
should be subtracted for wear and tear
from the claimed amount.
Both Faure and Wolmarans acknowledged that they were no experts in
that area thus, making it virtually
impossible for any court to
make a calculated assessment of the alleged damages. These damages
are capable of precise calculation.
In such a case, it is incumbent
upon a plaintiff to produce sufficient evidence substantiating the
exact amount of his or her
damages. (See
Hersman v Shapiro
1927 TPD 367.)
As
Tindall, J
in
Mkwanazi v Van der Merwe
and Another
1970 (1) SA 609
(AD) at 631F - H aptly stated:
“ …
when a
plaintiff is in a position to lead evidence which will enable the
Court to assess the figure he should do so and not leave
the Court to
guess the amount…”;
The
plaintiff failed to prove that Kgosietsile was authorised to act on
behalf of the department to enter into the option lease
agreement
either for the further three years or for the rental allegedly
agreed upon for the option period especially taking
into account
that Kgosietsile was an administrative officer of no higher
appointment to bind the provincial government in a
contract of such
magnitude.
2
The departmental
procurement procedure provides a more stringent and accountable
process for contracts in this bracket to be
signed off by an
officer of much higher status than Kgosietsile. The plaintiff
failed to produce documentary proof that Kgosietsile
was authorised
to act as Faure purported that he did. Neither did the plaintiff
lead the evidence of Kgosietsile, despite an
indication earlier
that Kgosietsile was available to give evidence. Compounding the
matter further, the plaintiff did not even
rely on estoppel;
The
plaintiff failed to prove that the defendant breached any of the
terms and conditions of the lease agreement which entitled
it to
cancel the agreement. Annexure “BB” (clause 16)
provided that in the event that the plaintiff wished to cancel
the
agreement it was obliged to give a tenant which failed to comply
with any provision of the lease, written notice of the
alleged
breach and of the landlord’s intention to cancel the lease
because of such failure and only if the tenant after
receiving such
notification, is still in default thirty days after receipt of the
notice, the landlord shall be entitled to
cancel the lease in
writing. It was not in dispute that the plaintiff did not do so. It
is trite that if the contract lays
down a procedure for
cancellation, that procedure must be followed failing which the
cancellation would be ineffective
3
.
It goes without saying then that the department ,due to failure on
the part of the plaintiff to comply with the procedure
for
cancellation, was entitled to repudiate the lease agreement under
the circumstances highlighted; and
Lastly,
the agreement between the parties was clear that Annexure “BB”
contained the whole or all of the terms and
conditions of the lease
agreement entered into between the parties and any amendment
thereof shall be in writing and signed
by both parties thereto. It
is trite that a non-variation clause is binding and enforceable.
Oral variation of the lease would
be of no legal effect.
4
Faure and Wolmarans’
contradictory evidence on how or even whether the department ever
got to know about the option purportedly
exercised on its behalf by
Kgosietsile ever reached the department failed to pass the test
that there was an amendment to Annexure
BB and in writing, if there
ever was one;
[12] The issues that had
to be determined must then be answered as follows:
“
[1] Whether the
lease contract has been extended between the parties for the further
option period as alleged by the plaintiff.
A: No.
[2] Secondly, whether the
defendant was entitled to cancel alternatively to repudiate the
contract. A: Yes
[3] Thirdly, whether the
defendant is liable for the alleged damages to the property. A: No
[4]
Lastly, the
locus standi
of
the plaintiff. A: The plaintiff had no
locus
standi
to institute this action.”
[13] When judgment was
reserved, it was reserved with the proviso that both parties file
Heads of Arguments within specified dates
ending October. The
defendant filed Heads of Argument and the plaintiff failed to do so
up until the date of delivery of this judgment
without any
explanation. Except that in October 2012, the plaintiff’s
instructing attorneys withdrew as attorneys of record.
The Notice was
brought to the Court’s attention in January 2013 upon enquiry
why Heads of Arguments were not filed. This
inevitably caused more
delay to dispose of the matter speedily. This is an old age standing
practice rule which is hardly ever
ignored deliberately or overtly by
any party.
[14] In the result I make
the following order:
ORDER
“
Absolution
from the instance is granted with costs against the plaintiff.”
_______________
B C MOCUMIE, J
For the plaintiff: Adv D
M Grewar
Instructed by: Vermaak &
Dennis
Bloemfontein
For the defendant: Adv JY
Claasen, SC
Instructed by: State
Attorney
Bloemfontein
BCM/sp
1
LAWSA
(1
st
Re-issue)
Vol 4,
Part 1, par 58.See also
Schmidt:
(Bewysreg, 4de Uitgawe),
345.
2
“
A
party who wishes to rely on an agency must allege and prove the
existence and scope of the authority of the alleged agent, whether
express or implied. The fact that the alleged agent purported to act
as agent does not assist in proving an agency. A denial
of authority
must be specifically and unambiguously pleaded. The authority of an
agent is a question of fact-i.e. I must be actual.
If reliance is
placed on an ostensible authority ,the elements of estoppel must be
alleged, including a representation by the
alleged principal and the
necessary causation…”(
Harms:
Amler’s Precedents of Pleadings
(6
th
ed,21-22)
3
Christie:
Law of Contract in South Africa
(6
th
ed,562)
4
Cooper:
Landlord & Tenant
2
nd
ed, 76.