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[2013] ZAKZDHC 44
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Actebis 319 CC v Bamboo Rock 1115 CC (12237/2012) [2013] ZAKZDHC 44 (28 August 2013)
REPORTABLE
IN
THE KWAZULU-NATAL HIGH COURT, DURBAN
REPUBLIC
OF SOUTH AFRICA
CASE NO: 12237/2012
In the matter between:
ACTEBIS 319 CC
.............................................................................................
Applicant
and
BAMBOOROCK 1115 CC
...........................................................................
Respondent
----------------------------------------------------------------------------------------------------------------
Order:
The application is
dismissed with costs.
JUDGMENT
DATE:28 August 2013
PLOOS VAN AMSTEL J
[1] This is an
application for the ejectment of a business which trades as Westville
Tyre Services. When the application was launched
Mr Frank Goedeke was
cited as the respondent, on the assumption that he was the sole
proprietor of the business. He said in his
answering affidavit that
it was Bamboo Rock 1115 CC, of which he is the sole member, which
traded as Westville Tyre Services. As
a result the close corporation
was by agreement substituted for Mr Goedeke as the respondent and the
applicant was ordered to pay
MrGoedeke’s costs. The application
then proceeded on the basis that Bamboo Rock 1115 CC was the
respondent and the lessee
who was sought to be evicted.
[2] The premises occupied
by the respondent form part of premises leased by the applicant from
a petrol company, on which it operates
a service station. Thesub -
lease is in writing, commenced on 1 September 2011 and is for a
three(3) year period with an option
to renew for a further two (2)
years. Clause 5 provides as follows:
‘
The basic
monthly rent to be paid without any deductions of whatever nature by
the tenant to the landlord from the commencement
date under and in
terms of the lease, shall be the amount of R13 000.00 plus VAT
such sum to be paid by the 5
th
day of each and every month with an escalation of 10% p.a. compounded
on the 1st September of each and every year of the lease
then in
existence.’
[3] The applicant seeks
an ejectment order on the basis that it cancelled the lease agreement
on 7 September 2012. It is common
cause that the respondent withheld
a sum of R4000 from the August rental and did not pay the rental
which was due on 5 September.
These amounts were tendered to the
applicant after the purported cancellation.
[4] There is no
lexcommissoria
in the agreement. Nor was there a notice to the
respondent to put it on terms to rectify the breach. This gave rise
to a debate
as to whether the applicant was obliged to place the
respondent
in mora
before it cancelled the agreement, and, in
any event, whether it was in law entitled to cancel the agreement.
[5] Before I consider the
submissions regarding
mora
and cancellation I must first deal
with another issue, which arises from the fact that the respondent
almost always paid its rental
late. A schedule of its rental payments
shows that in respect of the six months before the lease was
cancelled the rental was paid
on 8 March, 10 April, 23 May, 21 June,
16 July and 13 August. It will be recalled that the rental was
payable on the 5
th
of each month.The applicant accepted
these late payments without complaint.
[6] In
Garlick
Ltd v Phillips
1
Watermeyer
CJ said at 131 that there is no doubt that modification by conduct of
the obligations under an executory contract can
occur. He referred to
Williston
on Contracts,
where
he said the principle was stated with great clarity:
“
Continued
acceptance of a series of defective performances especially if they
are all defective in the same respect may justify
belief, not only
that performance of that character has been satisfactory to the
promiser in the past, but that it will be satisfactory
as a
performance of future conditions. Thus continued acceptance of late
performance without objection may operate as a permission
to make
similarly late performance in the future even where the exact time of
performance is made of the essence of the contract
between the
parties.”
At 132 Watermeyer CJ said
the following:
‘
In the
present case there was a very long continued failure by the lessee
both under the lease of 26
th
September, 1946, and under previous leases to pay his rent on due
date and no objection was taken thereto, consequently an application
of the above principle leads to the conclusion that appellant by its
conduct either gave a revocable permission to respondent to
pay his
rent late or led respondent to believe that such permission had been
given and in consequence thereof respondent continued
to pay his rent
late.
If the first be the true legal
position the tenant’s obligation to pay rent in advance was
temporarily modified or suspended
by the permission to pay late given
by appellant.
If the second be the true legal
position then something in the nature of an estoppel arises which
precludes appellant from denying
that he had given such permission.’
He continued that so long
as the lessor’s attitude remained one of indifference towards
late payments of rent there was no
necessity to speak, but when its
state of mind changed from one of indifference to one of a desire or
intention to take advantage
of late payments of rent in order to
obtain ejectment, then a duty arose to make that changed attitude
known to the tenant. He
concluded that a duty rested on the appellant
if it intended to treat late payments of rent in the future as
breaches of contract
and to take advantage of them, to inform the
respondent of that change of mind.
[7] In the present case
the September rental was overdue by two days when the applicant
cancelled the lease agreement. In the light
of the history of late
payment of rental there was a duty on the applicant to notify the
respondent that it would no longer tolerate
late payment of rental
and that in future a late payment would be regarded as a breach of
the lease agreement. It was common cause
before me that no such
notice was given expressly. Counsel for the applicant however argued
that such notification occurred by
necessary implication. He referred
to a letter which the respondent’s attorney addressed to the
applicant on 24 August 2012.
The attorney recorded that the
respondent had ascertained that the owners of the centre were
intending to renovate the entire building,
including the premises
occupied by the applicant and the respondent. He said it appeared
that the proposed renovations envisaged
that the respondent’s
premises would be converted to a shopping area for use by the Total
franchisee. He recorded that the
respondent intended holding the
applicant strictly to the terms of the sub-lease and should it in
anyway be terminated before it
had run its course such termination
would be vigorously opposed and if necessary an appropriate claim for
damages made against
the applicant. Counsel submitted that when the
respondent said it intended to hold the applicant strictly to the
terms of the sub-lease
it must have realised that the applicant would
in turn hold it strictly to the terms thereof and that consequently
it should have
realised that late payment of rental would in future
be regarded as a breach of the agreement. There is no merit in this
submission.
The statement that the respondent intended to hold the
applicant strictly to the terms of the sub-lease must be seen in the
context
of the letter, which dealt with an apprehension on the part
of the respondent that the proposed renovations would result in it
losing the use of the leased premises. The applicant did not respond
to the letter. If it intended to regard future late payments
of
rental as breaches of the agreement it should in my view have
notified the respondent of this in a clear and unequivocal manner.It
follows that the applicant was not entitled on 7 September to cancel
the lease agreement on the basis of the failure by the respondent
to
pay the September rental on the due date.
[8] That brings me to the
August rental, which was not paid in full. The respondent withheld a
sum of R4000 because Mr Goedeke’s
sunglasses had been broken by
one of the applicant’s employees when he cleaned his car. This
portion of the August rental
was still unpaid when the applicant
cancelled the lease agreement on 7 September. I do not consider that
the principle in
Garlick
Ltd
2
finds application in this
instance. The acceptance of late payments in the past caused the
respondent to believe that the applicant
would not cancel the
agreement on the basis of a late payment without prior warning.
The portion of the August
rental did not remain unpaid as a result of unpunctuality, as was the
case with the September rental.
It was withheld intentionally because
Mr Goedeke felt he was entitled to be compensated for the damage to
his sunglasses. That
was a breach of the lease agreement in respect
of which it is not open to the respondent to say that the past
acceptance by the
applicant of late rental payments led it to believe
that the applicant would not exercise its right to cancel.
[9] This brings me to the
question of
mora
. Counsel for the respondent submitted that as
there was no
lexcommissoria
the applicant was not entitled to
cancel the lease agreement without first placing the respondent
in
mora.
One must be careful here to distinguish between
mora
and a notice of rescission.
[10] In
Christie’s
The Law of Contract in South Africa,
6
th
Edition, the
learned authors say at page 519:
‘
When the
contract fixes the time for performance
mora
is
said to arise from the contract itself (
mora
ex re
)
and no demand (
interpellatio
)
is necessary to place the debtor
inmora
because
,
figuratively,
the fixed time makes the demand that would otherwise have to be made
by the creditor (
dies
interpellat pro homine
).
In
Laws
vsRutherfurd
1924 AD 261
[at] 262 Innes CJreferred to this as the
“
principle
which applies when a debtor undertakes to discharge an obligation on
a specified date; the creditor need make no demand:
dies
interpellat pro homine
,
and the debtor is
inmora
if he fails to pay on the appointed day”.’
[11] The lease agreement
stipulates that the rent was payable on the 5
th
day of each month. When
the respondent failed to do so it was
in
mora
withoutthe
need for any notice to it.The
mora
arose from the contract
itself. It does not follow however that the applicant was entitled to
cancel the agreement.
3
[12] The lease agreement
specifies a time for payment of the rental but does not contain a
lexcommissoria
or
any other provision which regulates the position in the case of a
breach. The question then arises whether the withholding of
portion
of the August rental was so material a breach as to entitle the
applicant to cancel the lease agreement.
4
[13] In
Spies
v Lombard
5
Van den Heever JA said
the tolerant treatment in Roman law of a contract of letting and
hiring has been received in our law and
in the absence of
a
lexcommissoria
neither
party is bound to suffer cancellation merely because he has been to
some extent unpunctual or remiss in his performance.
He said it is
trite law that non-payment of rent is not per se good cause for
cancellation.
[14] Where time is not of
the essence a failure to make a payment when it is due does not
entitle the other contracting party to
cancel the agreement.
He can however make time
of the essence by giving a notice of rescission.
6
The notice must specify a
reasonable time within which the outstanding amount must be paid,and
the consequences of a failure to
do so timeously. If it is not paid
within the period specified in the notice the creditorwill be
entitled to cancel the agreement.
7
These principles also
apply to lease agreements.
8
In
the absence of a notice of rescission the applicant was therefore not
entitled to cancel the lease agreement on the basis of
the
respondent’s failure to pay the August rental in full.
[15] Counsel for the
applicant had one final arrow in his quiver. He submitted that as a
portion of the August rental was withheld
deliberately this
constituted a repudiation of the respondent’s obligations in
terms of the lease agreement, which entitled
the applicant to cancel
it. In particular circumstances conduct of a contracting party can
constitute both a breach of contract
in the form of malperformance
and a repudiation.
9
In
Ankon CC
v Tadcor Properties (Pty) Ltd
10
Van
Deventer AJ (with Howie J concurring) said in the absence of a
lexcommissoria
the repudiation by a
party of only some of his contractual obligations may in certain
circumstances entitle the innocent party to
accept the repudiation as
a breach of contract and to summarily and unilaterally resile from
the contract. He can only do so however
where the obligation
repudiated constitutes a vital or material term of the contract.
11
The learned authors of
Die
Suid-AfrikaanseKontraktereg en Handelsreg
12
say in order to determine
whether the repudiated obligation is sufficiently material to justify
cancellation one applies the same
principles as are used to determine
whether a breach of the agreement justifies cancellation. Also see
Christie’s
Law of Contract in South Africa.
13
[16] The failure to pay
the August rental in full did not justify cancellation of the
agreement in the absence of a notice of rescission,
and a repudiation
of that obligation did not do so either.In those circumstances the
application for ejectment cannot succeed.
It is dismissed with costs.
_______________
Ploos
van Amstel J
Appearances:
For
the Applicant :
Adv M Collins
Instructed
by :
V. ChettyInc
Durban
For
the Respondent :
AdvH A De Beer SC
Instructed
by
:
Patrick Lander Attorney
Durban
Date
of Hearing :
13 August 2013
Date
of Judgment :
28 August 2013
1
1949
(1) SA 121
(AD).
2
Supra.
3
Ponisammy
andAnother v Versailles Estates (Pty) Ltd
1973 (1) SA 372
(AD)
at 387H.
4
Spies
v Lombard
1950 (3) SA 469
(AD) at 485B.
5
Ibid,
at 487.
6
Ponisammy
and Another v Versailles Estates (Pty) Ltd
(supra) at 385G.
7
Microutsicos
and Another v Swart
1949 (3) SA 715
(AD) at 730;
Nel v
Cloete
1972 (2) SA 150
(A) at 162-3.
8
BuytendagBoerderyBeleggings
(Edms) Bpk v Goldberg
1979 (2) SA 172
(TPD) at 176H,
177A.Confirmed on appeal -
1980 (4) SA 775
(AD).
9
South
African Forestry CO Ltd v York Timbers Ltd
2005 (3) SA 323
(SCA)
para [38].
10
1991
(3) SA 119
(CPD) at 121.
11
At
122C-D.
12
De
Wet and Van Wyk, 5
th
edition, volume 1, page171.
13
Supra,
page 539.