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[2012] ZAKZPHC 33
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Thuthabantu Properties CC v Summit Warehousing (Pty) Ltd (11500/2011) [2012] ZAKZPHC 33 (4 June 2012)
IN THE KWAZULU-NATAL
HIGH COURT, PIETERMARITZBURG
REPUBLIC OF SOUTH
AFRICA
CASE NO. 11500/2011
In the matter between
:
THUTHABANTU PROPERTIES
C C
…......................................
APPLICANT
and
SUMMIT WAREHOUSING
(PTY) LTD.
…..............................
RESPONDENT
JUDGMENT
Delivered on 04 June 2012
SWAIN J
[1] The applicant seeks
an order confirming the cancellation of a sub-lease, concluded with
the respondent in respect of premises
situated in Durban,
KwaZulu-Natal, as well as an order evicting the respondent from these
premises. The respondent in turn, by
way of a counter-application,
seeks a referral of the dispute to arbitration and a stay of the
present proceedings, pending the
outcome of the arbitration
proceedings.
[2] It is common cause
between the parties that:
[2.1] The respondent is
an incorporated company and at the time of the conclusion of the
sub-lease Guqula Holdings (Pty) Ltd., held
all the issued shares in
the respondent.
[2.2] The shares in the
respondent were transferred to one Kevin Atkins, as the sole
shareholder.
[2.3] The transfer of the
shares in the respondent constituted a breach of the provisions of
Clause 22 of the sub-lease, which provides
as follows:
“
The Lessee
shall not have the right to cede, delegate, assign, sublet, dispose
of, or in any way hypothecate this Lease Agreement
or the Property or
any portion thereof, without the prior written consent of the Lessor,
which should not be unreasonably withheld.
Should the Lessee be a
company, the transfer of any of its present issued shares, unissued
share capital or any future increased
share capital, which results in
a change in the effective control of the Lessee, shall be deemed to
be a cession by the Lessee
of its rights under this Lease Agreement.
In the case of a close corporation any change in the effective
control of the corporation
shall likewise be deemed to be such a
cession”.
The applicant’s
prior written consent to the transfer of the shares, was not
obtained.
[2.4] The applicant as a
consequence of the respondent’s breach of the provisions of
Clause 22, gave notice to the respondent
in terms of Clause 28.1.2 to
remedy the breach within seven days, failing which the applicant
would cancel the lease. Clause 28.1.2
reads as follows:
“
commit any
other breach in any term of this Lease Agreement, whether such breach
goes to the root of this Lease Agreement or not,
and fail to remedy
that breach within a period of 7 (seven) days after the giving of
written notice to that effect by the Lessor”.
[2.5] The response of the
respondent was to request the applicant
“to consent to
the transfer of the issued shares to Kevin Mark Atkins. Bearing in
mind that such consent cannot be unreasonably
withheld, there should
be no reason why the consent is not granted”.
[2.6] The applicant’s
response by way of a letter dated 24 November 2011, was to cancel the
lease on the ground that the respondent
had
“failed to
remedy the breaches requested”
in terms of the
provisions of Clause 28.1.5, which affords to the applicant the right
“
To cancel
this Lease Agreement on written notice thereof to the Lessee and
claim immediate re-possession of the premises”.
[3] Mr. Shepstone, who
appeared for the respondent (applicant in the counter-application),
submits that because the applicant did
not address the respondent’s
request for permission for the transfer of the shares, and summarily
cancelled the sub-lease,
a dispute has arisen between the parties, as
to the validity of the cancellation of the sub-lease, within the
meaning of that term
as contained in Clause 31.1, which reads as
follows:
“
Should any
dispute arise between the parties in connection with –
- the implementation of this Lease
Agreement;
- the interpretation or application of
the provisions of this Lease Agreement;
- the parties’ respective rights
and obligations in terms of or arising out of this Lease or its
breach or termination;
- the rectification, termination or
cancellation, whether in whole or in part of this Lease Agreement;
- any documents furnished by the
parties pursuant to the provisions of this Lease Agreement,
or which relates in any way to any
matter affecting the interests of the parties in terms of this Lease
Agreement, that dispute
shall, unless resolved between the parties to
the dispute, be referred to and be determined by arbitration in terms
of this clause”.
[4] From the
counter-application it appears that the respondent contends that
there are also disputes between the parties, as to
the cleanliness of
the leased premises and whether this arises from the acts or
omissions of the applicant, the rental payments
and whether the state
of the premises has deprived the respondent of the use thereof and to
what extent. Mr. Shepstone however
properly conceded that if I was
satisfied that a resolution of the dispute as to the transfer of the
shares in the respondent,
determined the validity of the cancellation
of the agreement in favour of the applicant, it would not be
necessary to consider
these remaining disputes.
[5] Mr. Shepstone however
contended that because there was an existing dispute, between the
parties as to the cancellation of the
agreement, I should
nevertheless refer this dispute to arbitration and stay the present
proceedings.
[6] It seems to me
however that the merits of the dispute concerning the validity of the
cancellation, on the ground that the shares
in the respondent were
transferred without the prior written consent of the applicant,
should be determined first because if decided
in favour of the
applicant, this will be dispositive of any need to refer the matter
to arbitration. If this dispute is readily
capable of resolution on
the papers before me, there can be no justification in referring its
resolution to arbitration, with the
consequent delay and payment of
additional legal costs by the parties.
[7] In my view, the
conduct of the respondent in transferring all of its shares to a new
owner, without the prior written consent
of the applicant, quite
clearly evinced an unequivocal intention on the part of the
respondent, not to perform its obligation in
this regard. Such
conduct constituted a repudiation by the respondent of its
obligation, to obtain the written consent of the applicant,
before
the shares were transferred. Consequently in law, (aside from the
requirement in the contract that the respondent be given
seven days
notice to rectify any breach, before the applicant would be entitled
to cancel the agreement), the respondent’s
own repudiation
placed it
in mora.
In
this context, the notice which the applicant was obliged to give the
respondent in terms of Clause 28.1.2 of the sub-lease, to
rectify the
breach within seven days, was nothing more than a procedural step,
which the applicant was obliged to comply with in
terms of the
sub-lease, before cancelling the agreement. The effect of the notice
could never have been to afford to the respondent
rights, which it
never possessed in terms of the agreement, namely to obtain the
written consent of the applicant, after the shares
had already been
transferred.
[8] In the result, I am
satisfied that the applicant validly cancelled the sub-lease and
there is accordingly no remaining dispute
between the parties which
should be referred to arbitration. The counter-application must
accordingly fail.
[9] The applicant is
entitled to an order evicting the respondent from the premises. Mr.
Lotz S C, who appeared for the applicant,
together with Mr.
Pretorious, submitted that although the order prayed sought the
eviction of the respondent within seven days
of the grant of the
order, it would be reasonable to afford the respondent a period until
30 June 2012, to vacate the premises.
Mr. Shepstone submitted however
that a period of two months would be required. When regard is had to
the fact that the sub-lease
was cancelled as long ago as 24 November
2011, and the application was opposed on what I regard as tenuous
grounds, it would be
reasonable if the respondent was obliged to
vacate the premises by 30 June 2012. Mr. Lotz also asked for costs to
be awarded on
the attorney and client scale, as provided for in
clause 28.4 of the sub-lease. When regard is had to the nature of the
defence
raised by the respondent, I am satisfied that such an order
is warranted.
I grant the following
order
The cancellation of the
sub-lease, concluded between the applicant and the respondent during
July/August 2009 in respect of the
premises known as Lot 1742
Wentworth, known as 401 Edwin Swales Drive, Durban, measuring 77,519
square metres
(“the premises”),
a
copy of which is annexed to the founding affidavit of the applicant
as annexure “B” is confirmed.
The respondent is
ordered to vacate the premises by no later than 30 June 2012.
The Sheriff of this
Court is ordered to execute the eviction in the event of the
respondent failing to comply with paragraph (b)
hereof.
The respondent is
ordered to pay the costs of this application on a scale as between
attorney and client.
__________
K. SWAIN J
Appearances
/
Appearances:
For the Applicant :
Mr. G.M.E. Lotz S C with
Mr. C. Pretorious
Instructed
by
:
Mason Incorporated
Pietermaritzburg
For
the Counter Applicant :
Mr. S. M. Shepstone
Respondent:
Instructed
by :
J H Nicholson Stiller & Geshen
C/o Von Klemperers
Attorneys
Pietermaritzburg
Date of Hearing :
31 May 2012
Date of Filing of
Judgment :
04 June 2012