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[2012] ZAFSHC 32
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Loch Logan Waterfront (Pty) Ltd v Carwash 4 U (Pty) Ltd and Another (3618/2011) [2012] ZAFSHC 32 (1 March 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 3618/2011
In the matter between:-
LOCH LOGAN
WATERFRONT (PTY) LTD
….........................
Applicant
and
CARWASH 4 U (PTY)
LTD
….....................................
First
Respondent
STEPHANUS JACOBUS
LE ROUX
….................
Second
Respondent
_____________________________________________________
HEARD
ON:
26 OCTOBER 2011
_____________________________________________________
JUDGMENT
BY:
RAMPAI, J
_____________________________________________________
DELIVERED
ON:
1 MARCH 2012
_____________________________________________________
[1] The matter came to
court by way of motion proceedings. The applicant applies for the
eviction of the respondents from certain
business premises. The
respondent resists the relief which applicant seeks.
[2] A synopsis of the
undisputed facts appears to be necessary. The parties concluded a
five year lease agreement in Bloemfontein
on 27 November 2009. The
leased premises were described as the interior of unit mezzanine 1 in
the building popularly known as
Loch Logan Waterfront, Henry Street,
Bloemfontein. The building is situated on portion 3 of erf 26408
measuring in extent approximately
126,29 square metres.
[3] The first respondent
was entitled to occupy the leased premises and during its occupation
thereof to operate the business of
a carwash. That was the purpose
for which the premises were leased.
[4] The first respondent
was obliged to pay rental to the applicant at the rate of R34 000,00
per month as well as a proportionate
monthly contribution towards
certain levies.
[5] The applicant was
entitled to receive regular payment of rental from the first
respondent throughout the duration of the first
respondent’s
occupation of the leased premises. Moreover, the applicant was also
entitled to look up to the second respondent,
as surety and
co-principal debtor, for the payment of rental in the event of the
first respondent’s default.
[6] The primary
obligation of the applicant was to give the first respondent free,
undisturbed and beneficial occupation and enjoyment
of the leased
premises. Such duty necessarily entailed maintaining the leased
premises and continuously keeping them in a good
state of repair.
[7] The effective date of
the agreement was 27 November 2009. The lease agreement was signed on
behalf of Blonde Trading 24 (Pty)
Ltd on 1 August 2009. On 28 October
2009 that co-operate entity underwent a name change and became known
as: Carwash 4 U (Pty)
Ltd, the first respondent.
[8] The first respondent
has made no regular payments of the rental as agreed upon. The first
respondent last made a payment to
the applicant on 3 January 2011 in
the amount of R34 000,00. At the time these proceedings were set in
motion the accumulated arrears
were approximately R600 000,00. The
figure equated about eighteen months worth of outstanding rental and
other related charges
levied against the first respondent in terms of
the lease agreement.
[9] The first respondent
was still in occupation of the leased premises when the application
was launched. The carwash operations
of the first respondent were
still in full swing. The first respondent was still trading on the
leased premises and generating
income from there. In brief, it was
still business as usual.
[10] On 22 June 2011 the
applicant caused its attorneys to formally address a letter of demand
to the first respondent. The letter
was sent to the first
respondent’s
domicilium citandi et executandi
. The
letter was delivered per manu. By then the first respondent had paid
no rental for the period of six months immediately preceding
the
written demand. The applicant averred that the first respondent had
committed a breach of a material clause of the lease agreement.
[11] The first respondent
was then called upon to remedy the breach by making payment of the
sum of R185 292,05. The first respondent
was afforded three days to
do so after the written demand or notice in terms of paragraph 16 of
annexure “a” to the
lease agreement. The annexure
embodied the conditions of the lease. The lease agreement was
attached to the founding affidavit
as annexure “b”.
Notwithstanding such demand, the first respondent did not make the
required payment. Moreover, the
first respondent did not reply. On 26
July 2011 the applicant gave the first respondent notice of
cancellation of the lease agreement.
[12] In its founding
affidavit the applicant contended that the first respondent was in
breach of the lease agreement; that the
applicant had the right to
cancel the lease agreement forthwith and to retake possession of the
leased premises without prejudice
to its rights to claim damages and
to recover all such sums of money as might be due to it arising out
of the breach.
[13] In its answering
affidavit, the first respondent admitted that it had not paid rental
since 1 February 2011, but averred that
it was entitled to withhold
payment thereof. The first respondent averred that the leased
property had certain structural defects
which materially frustrated
its full use and enjoyment of such leased premise. When it rained,
the first respondent explained,
the property leaked. Such leaks
affected the electrical equipment. All this had an adverse impact on
the first respondent’s
core operations. Notwithstanding
repeated demands the applicant neglected to remedy such material
breach.
[14] In its replying
affidavit the applicant denied that it had committed the alleged
breach of the lease agreement. It specifically
denied the first
respondent’s allegations: that the leased property had the
alleged structural defects; that the first respondent
was deprived of
the full beneficial use and enjoyment of the leased premise and that
the first respondent’s business operations
were adversely
affected by the alleged structural defects. The applicant maintained
that the first respondent had no right, whatsoever,
to withhold
payment of any rental.
[15] The crisp issue in
the case was whether the first respondent was entitled to withhold
payment of rental. Mr. Van Rhyn’s
principally submitted that
the answer was in the negative whereas Mr. Benade principally
submitted that the answer was in the affirmative.
The issue is a
narrow one.
[16] The learned author
A.J. Kerr:
The Law of Sale and Lease
, Third Edition p. 300/1
comments as follows on the remedy available to a lessee in case of a
lessor’s breach of the lease
agreement:
“
What the
remedy is in the circumstances of a particular case appears to depend
on the seriousness of the lessor’s breach of
contract. If the
breach is a major one cancellation and damages may be claimed. If the
breach is a minor one there is, so far as
I am aware, no decision of
the Appellate Division or of the Supreme Court of Appeal where a
proposition on the point now under
discussion is part of the
ratio
decidendi
of the case. In principle, however, as there is a remedy for a major
breach of contract so also there is one for a minor breach,
and for
minor breaches remission of rent is one of the options. So is
damages.”
[17] The basic
obligations of the lessor are well-known. The lessor is obliged to
deliver the premises to the lessee, to maintain
the leased premises
and to ensure that the lessee has undisturbed use and enjoyment of
the leased property.
“
Since a
lease imposes reciprocal obligations upon the parties, a lessor will
not be entitled to claim the whole rent, and conversely
a lessee will
be entitled to a complete or partial remission of rent (depending
upon the circumstances) if he (the lessor) defaults
in his
obligations.”
W.E. Cooper:
Landlord
and Tenant
, Second Ed p. 200.
[18] At common law, the
legal position is and has always been that an aggrieved lessee is
entitled to rent remission, where through
the lessor’s default,
neglect or omission, the lessee is partially deprived of the use and
enjoyment of the leased property.
Accepting for the moment, that the
leased premises were structurally defective, as the first respondent
contended; that the applicant
had failed to remedy the breach and
that the applicant has thereby neglected its basic obligation to see
to it that the first respondent
has undisturbed use and enjoyment of
the leased premises, the complete withholding of rental was not a
recognised remedy in law.
[19] An apposite course
of action for the first respondent to adopt in such circumstances,
would have been to claim remission of
rental proportionate to the
extent of deprivation and to retain the difference between the agreed
rental and the reduced rental
every month for as long as the
diminished use and enjoyment, occasioned by the lessor’s
default, endured. (
SISHEN HOTEL (EDMS)
BEPERK v SUID-AFRIKAANSE YSTER EN STAAL INDUSTRIëLE KORPORASIE
BPK
1987 (2) SA 932
(AD) at 955 I –
J;
NTSHIQA v ANDREAS SUPERMARKET (PTY) LTD
1997 (3) SA 60
(TkS) at 65 H – 66 A and
SWEETS
FROM HEAVEN (PTY) LTD v STER KINEKOR FILMS (PTY) LTD
1999 (1) SA 796
(W) at 802 I – J)
[20] In
ETHEKWINI
METROPOLITAN UNICITY MUNICIPALITY (NORTH OPERATIONAL ENTITY) v PILCO
INVESTMENTS CC
(320/2006)
[2007] ZASCA
62
; [2007] SCA 62 (RSA) (29 May 2007) par [22] Van Heerden JA said:
“
It follows
that, upon taking occupation of the property in late 1994, the
plaintiff became obliged to pay rent to the defendant,
as stipulated
in clause 1 of the lease. Of course, because the plaintiff was, until
early June 1997,
deprived
of the use of that portion of the property
which was being used by the person making pre-case fencing,
the
plaintiff would be entitled to a remission of rent over the period in
question, proportional to its reduced use and enjoyment
of the
property
.
If the amount to be remitted was capable of prompt ascertainment, the
plaintiff could have set this amount off against the defendant’s
claim for rent; if not, the plaintiff was obliged to pay the full
rent agreed upon in the lease and could thereafter reclaim from
the
defendant the amount remitted.”
(my emphasis)
[21] In a case where the
lessee was, by the share magnitude of the lessor’s default,
completely deprived of the entire gainful
use and beneficial
enjoyment of the leased property, a lessee would be entirely absolved
by the court from the obligation to pay
any rental. Still in the case
of
ETHEKWINI
,
supra
, and at the same
paragraph the learned judge had this to say about the scenario of
absolute deprivation:
“
The
lessee would be entirely absolved from the obligation to pay rental
if he were deprived of or did not receive any usage whatsoever.
”
(my
emphasis)
[22] In
MPANGE AND
OTHERS v SITHOLE
(07/7063)
[2007] ZAGPHC 202
(22.06.2007)
Satchwell J adopted a similar approach. From the authorities cited in
this judgment it can be distilled that the magnitude
of the lessor’s
default, in other words, unjustifiable (neglect or omission or
interference or commission or disturbance)
will almost invariably
give a fair indication of the lessee’s available remedy. The
relative remedy of rental remission applies
to cases of minor
deprivations whereas the absolute remedy of rental withholding
applies to cases of major deprivations. (Kerr,
supra)
[23] The first respondent
has alleged that as a result of the applicant’s wrongful
curtailment of its usage and enjoyment
of the property leased, it has
suffered certain consequential damages. Notwithstanding the first
respondent’s alleged frustration
occasioned by diminished usage
and enjoyment, the first respondent still had not quantified its
damages when the matter came up.
It will be recalled that the first
respondent last paid the rental on 3 January 2011. I take it,
therefore, that not so long afterwards,
the first respondent decided
to withhold further payment. Over a long period of some nine months
the first respondent did not at
all put shoulders to the wheel in
order to have the quantum of its damages assessed.
[24] The first respondent
made no averments whatsoever as to the extent of the wrongful
deprivation of the use and enjoyment of
the leased premises. The
explanation given by the first respondent was that it required the
co-operation of the applicant in order
to have its damages quantified
by mutual agreement between the parties. That was clearly untenable
in law. To date the applicant
was still in the dark as regards the
damages the first respondent had allegedly suffered.
[25] It appeared to me
that the damages allegedly suffered by the first respondent were no
more than a trivial inconvenience. The
disruptive cause complained of
was an infrequent event. It was not a perennial event. By its very
nature, rain is a seasonal natural
occurrence. In the answering
affidavit no precise details of the frequency of the disruptive rain
were given. As a result of the
vagueness of the alleged event, I have
no clue as to how many times prior or subsequent to withholding of
the rental, the first
respondent’s business operations were
wholly or partially disrupted.
[26] The fact that the
first respondent continues to trade on the premises where its optimal
use and enjoyment have been, as alleged,
so drastically diminished,
strongly tends to suggest that whatever deprivation or frustration
there was, did not have materially
adverse impact on the first
respondent’s operation. The salient principle of law is that,
where the lessee’s enjoyment
of the merx is merely reduced but
not completed impaired the appropriate remedy that corresponds with
the degree of reduced enjoyment,
is rental remission. The underlying
rationale of this relative remedy is to restore the balance between
the opposite bargains as
was originally agreed upon.
[27] In the absence of
proven complete deprivation of enjoyment of the merx the absolute
remedy of rental withholding cannot be
sanctioned. The court is
precluded from entirely absolving the lessee, who, upon the slightest
deprivation, withholds the rental.
In this instance there is a
monumental disparity between the relative reduction of enjoyment
allegedly suffered by the first respondent
and the absolute remedy
claimed by the first respondent. Accordingly the withholding of
rental by the lessee in this matter was
unjustifiable. The lessee
went overboard here.
[28] In this instance the
undisputed facts showed that the first respondent was still in
occupation of the leased property; was
still having some
substantially undisturbed use and was still having relatively
beneficial enjoyment thereof. Seeing that the first
respondent is
still trading on the leased premises, the contention that it was
under no obligation to pay any rental whatsoever
to the applicant,
was untenable. On the facts, the absolute remedy is not available to
the first respondent. The alleged breach
of the lessor obviously did
not have such adverse impact on the first respondent’s business
that its whole operations came
to a complete halt. It follows,
therefore, that in this case the first respondent wrongly withheld
payment of rental.
[29] So much about the
general legal position at common law. I now turn to the specific
contractual scenario of the matter. It has
to be borne in mind that
the issue whether the first respondent was contractually entitled to
withhold the rental, as it did, subsequent
to 3 January 2011.
Certainly the issue was not, as Mr. Benade put it:
“
Of die
eerste respondent geregtig is, kontraktueel, om verminderde huur te
betaal.”
Such characterisation of
the issue was incorrect because the first respondent had paid
virtually no rent since the said date.
[30] The crux of the
matter was whether, in the light of the contractual connection
between the parties, the first respondent was
entitled to withhold
payment of the rental on account of the alleged structural defects of
the merx.
[31] The first respondent
withheld the payment of the rental for several months before these
proceedings were launched. It was interesting
to note that the first
respondent merely withheld the rental and sat back. Apart from that,
the first respondent made no serious
attempt to compel the applicant
to repair the exterior structure, roof and gutters in terms of clause
19(A)(a) of annexure “b”.
The applicant was not sued for
specific performance or for the cancellation of the lease agreement
and payment of damages. The
passive attitude of the first respondent
towards applicant’s alleged breach of the contract, fortified
the contention that
the breach, if there was indeed any, was not
material in nature and extent.
[32] It was a defence put
up by the first respondent that it was contractually entitled to
withhold the rental since, as the first
respondent asserted, the
applicant had materially impaired its free, undisturbed and
beneficial usage and enjoyment of the leased
premises. The first
respondent heavily relied on clause “q” of annexure “b”
in other words, the lease agreement.
The clause which,
ex facie
the contract, has been cancelled, stipulates that the lessee shall
not be entitled to withhold or delay any amount due to the lessor
in
terms of the lease agreement and that by appending the signature to
the lease agreement, the lessee thereby abandoned all rights
whatsoever to raise a defence of set-off.
[33] The applicant relied
on the same clause for its contention that the first respondent was
contractually precluded from withholding
the rental. The whole matter
may sound strange. The thing is this: The first respondent’s
contention was that the clause
did not form part of the contract and
never did because it had been mutually deleted. The applicant’s
argument was that the
clause was an integral part of the contract
because it was never mutually deleted as the first respondent
claimed.
[34] Besides clause “q”
which has indeed been deleted, similar deletions, which appear
ex
facie
the contract document can also be found elsewhere in the
same contract (annexure “b”). Upon careful perusal of the
contract I counted no less than nine deletions. All such deletions
were conditions pertaining to the turnover rent (
vide
par. 5
conditions of lease). An important feature between the nine
deletions, on the one hand, and clause “q” deletion,
on
the other hand, was that the former, unlike the latter, have all been
initialled.
[35] The distinctive
feature as vividly distilled from the comparative examination of the
deletions significantly bolstered the
argument of the applicant. Here
the edifice of the first respondent’s case completely
collapsed. On the scale of objectivity
the applicant won the contest
against the first respondent by a huge score of 9 – 1. The
deletion of clause “q”
was not a mutual but rather a
unilateral cancellation by the first respondent. In the law of
contract it counts for nothing.
[36] The learned author
Christie:
The Law of Contract in South Africa
, Fifth Edition
p. 174-5 comments:
“
It is It is
a matter of common knowledge that a person who signs a contractual
document thereby signifies his assent to the contents
of the
document, and if these subsequently turn out not to be to his liking
he has no one to blame but himself.”
In this instance the
applicant did not signify his assent to the deletion of clause “q”.
Therefore the purported deletion
had to be regarded as
pro
non deletio
. By signing the document the
first respondent signified his assent to the nine undisputed
deletions and no other. Accordingly clause
“q” had to
stand and be treated as undeleted.
See
SOUTH
AFRICAN RAILWAYS & HARBOURS v CONRADIE
1922
AD 137.
[37] In the case of
INDUSTRIAL & MERCANTILE CORPORATION v
ANASTASSIOU BROTHERS
1973 (2) SA 601
(W)
at 604 H – 605 A Davidson J said:
“
To my mind
the document is one of sufficient clarity to stand by itself and to
yield from its own printed and written terms the
meaning and import
without the evidence of the circumstances which gave it birth, or the
intention of the parties in signing it.”
That is precisely the
case in the instant matter.
[38] In the case of
BURGER v CENTRAL SOUTH AFRICAN RAILWAYS
1903 TS 571
on
p. 578 Innes CJ eloquently enunciated the legal principle by
commenting:
“
It is a
sound principle of law that a man, when he signs a contract, is taken
to be bound by the ordinary meaning and effect of
the words which
appear over his signature. There are, of course, grounds upon which
he may repudiate a document to which he has
put his hand. But no such
grounds have been shown to exist in the present case. Consider the
circumstances under which this note
was signed. Neither fraud nor
misrepresentation have been alleged; nothing was said by any railway
official which misled the signatory,
the language of the document was
one which the consignor understood: no pressure of any kind was
exercised. All that can be said
is that the consignor did not choose
to read what he was signing, and after he signed did not know the
particulars of the regulations
by which he had agreed to abide.”
[39] The aforegoing
passage applies though not aptly but fairly well to the circumstances
of this case. However, in this instance
unlike in
BURGER
’
s
case the first respondent as the lessee did read what he was signing
and after he signed he knew and understood the precise meaning
of the
particular clause. It was clear and obvious to me that the lessee’s
deponent, in other words the second respondent,
did not like what he
read in the particular clause which was why he unilaterally wished it
away and purportedly endeavoured in
vain to delete it in Bloemfontein
on 1 August 2009. The problem was that he did not solicit the
applicant’s assent to such
deletion before he signed the
document for and on behalf of the first respondent. Therefore the
latter is bound by the undeleted
clause “q”.
[40] Having deleted the
unwanted clause and having signed, the lease agreement was forwarded
to the applicant for signing. The alteration
of the contract by the
first respondent constituted some kind of a counter offer. That
counter offer was obviously rejected by
the applicant. The rejection
was implicit in the applicant’s pertinent and purposeful
omission to sign next to the deleted
clause so as to signify its
positive assent to the deletion of the clause. All that can be said
about the respondent’s conduct
is that the first respondent
signed the contract fully aware that it thereby signed away its right
to withhold any money due to
the applicant in terms of the lease
agreement.
[41] The first
respondent’s contention that since its contractual right to use
and enjoy the leased premises was, as it alleged,
adversely affected
by the applicant’s breach, it was under no contractual
obligation to make any payment of any monies due
to the applicant in
terms of the lease agreement, unless the alleged structural defects
of the leased property were remedied by
the applicant, was untenable
in our law.
[42] Nothing more turns
on the unilateral deletion of clause “q” by the first
respondent. This is so because clause
14 of the schedule, annexed to
the lease agreement, states in no uncertain terms that:
“
..... rental
shall be payable monthly in advance, without any deductions.”
Moreover, clause 17 of
the lease agreement totally nullifies the first respondent’s
alleged contractual right in terms of
clause “q” to
withhold rental. When clause “q” is read in conjunction
with those other two clauses the
uncertainty which Nr. Benade
contended existed as to whether or not the disputed clause “q”
was still part and parcel
of the contract, evaporates into thin air.
[43] The applicant relied
on the terms of the lease agreement in exercising its right to cancel
the contract. Such terms were clearly
set out in the founding
affidavit and the replying affidavit. The respondents tendered
payment of the arrears to the applicant
on condition the defective
premises were first repaired. In my judgment such tender was
irrelevant for the purposes of adjudicating
this application. This
was so because, on respondents’ own version, the tender was
belated. It was made
post ex facto
. By the time it was made
the applicant had already cancelled the lease agreement and had
already notified the respondents about
it. No legal consequence flows
from a tender made
ex post facto
the lawful cancellation of
the lease agreement by the lessor.
[44] The first respondent
continues to trade on the applicant’s property rentalless. The
first respondent remains in occupation
of the premises leased from
the applicant. The first respondent continues to utilise the leased
premises for the carwashing operations.
The applicant’s
premises continue to be used for the precise purpose for which they
were leased. Above all these the first
respondent continues to
gainfully use the leased premises.
[45] No valid grounds
exist to justifying the first respondent’s withholding of the
rental. The first respondent cannot, on
the facts as outlined,
examined and analysed, be absolved from paying the agreed rental. The
absolute remedy, in other words, the
total withholding of the rental,
is not there for the taking upon the slightest breach of a material
term of the lease agreement.
The magnitude of the alleged deprivation
in this matter cannot be said to have been a material breach. The
remedy claimed by the
lessee
in casu
was not commensurate to
the magnitude of the lessor’s alleged breach.
[46] The applicant is the
outright owner of the leased premises. The applicant leased these
premises to the first respondent. The
applicant leased the premises
for the purpose of generating income. The applicant’s business
purpose has been defeated. The
applicant has called upon the first
respondent to remedy the breach. The first respondent steadfastly
withheld the rental, for
at least nine months, and persistently
refused to remedy the breach. The refusal prompted the applicant to
cancel the lease agreement
and to come to court in order to regain
possession of its property by having the first respondent evicted.
[47] In these
circumstances the first respondent is in unlawful occupation of the
leased premises. In my view a proper case has
been made out for the
eviction of the first respondent from the unlawfully occupied
premises. No good argument has been made out
for the withholding of
the rental.
[48] As regards the
costs, I can think of no reason why the general rule should not
apply. Therefore, the costs must follow success.
[49] These then are my
reasons for the
ex tempore
order I made. For the sake of
completeness, the order, as amended, is repeated. It reads:
“
1. The first
respondent and all persons claiming occupation of the leased premises
through the first respondent are hereby ordered
to vacate the
following premises before Tuesday 14 November 2011:
The interior of the unit Mezzanine 1,
in the building known as Loch Logan Waterfront, Henry Street,
Bloemfontein and situated on
Portion 3 of Erf 26408, measuring in
extent approximately 126.29 square metres.
2. The court sheriff is hereby
authorized and directed to take such practical steps as (s)he may
consider necessary to evict the
first respondent and all persons
claiming through such respondent from the aforesaid leased premises
and, for this purpose, to
solicit the assistance of the South African
Police Service, in order to execute this court order, should (s)he
deem it necessary.
3. The first respondent is directed to
pay the costs of this application on the scale as between attorney
and client.
4. The costs referred to in par 3
above shall include the fees occasioned by the employment of two
counsels.
5. Any party aggrieved by this order
can, within 14 calendar days hereof, apply for the written reasons.”
______________
M.H. RAMPAI, J
On
behalf of applicant: Adv. A.J.R. van Rhyn SC
Instructed
by:
E
G Cooper Majiedt Inc
BLOEMFONTEIN
On
behalf of respondents: Adv. H.J. Benade
Instructed
by:
Kramer
Weihmann Joubert Inc
BLOEMFONTEIN
/sp