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[2012] ZAKZDHC 100
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Old Mutual Assurance Company v Tycoon Trading Enterprise CC trading as Copper Chimney Restaurant (13481/2012) [2012] ZAKZDHC 100 (14 December 2012)
IN
THE KWAZULU-NATAL HIGH COURT, DURBAN
REPUBLIC
OF SOUTH AFRICA
Case
No: 13481/2010
In
the matter between:
OLD
MUTUAL ASSURANCE
COMPANY
...............................................................
Applicant
and
TYCOON
TRADING ENTEPRISE CC trading as
COPPER
CHIMNEY
RESTAURANT
.................................................................
Respondent
JUDGMENT
Delivered:
14 December 2012
MBATHA
J
INTRODUCTION
[1]
The Applicant in this matter is Old Mutual Life Assurance Company
(South Africa) Limited, registration no. 1999/004643/069 registered
and incorporated in terms of the laws of the Republic of South
Africa. It is the owner of an extensive portfolio of immovable
properties, including the Gateway Theatre of Shopping located on the
Umhlanga Ridge, Umhlanga, KwaZulu-Natal.
[2]
The Respondent is Tycoon Trading Enterprise CC, registration number
2002/035020/23, a close corporation duly incorporated and
registered
in accordance with the laws of the Republic of South Africa. It
trades as Copper Chimney Restaurant at shop G010, Gateway
Theatre of
Shopping, Umhlanga Ridge, Umhlanga. It is represented in these
proceedings by Mohamned Abdul Sattar Merchant, who holds
a 60%
interest in the business. The other 40% interest is held by his
brother, who is referred to as Imran.
The
Applicant approached this Court seeking an order of ejectment of the
Respondent from the premises at Shop G010, Gateway Theatre
of
Shopping, Durban. This application is opposed by the
Respondent.
[3]
A Brief history to this matter is as follows:
3.1 This matter came
before Swain J on 1 February 2011; Ntshangase J on 17 May 2011 and
Steyn J on 8 June 2011. It was referred
for oral evidence by Madam
Justice Steyn and adjourned to 21 to 23 September 2011. The matter
was heard before me on the 28
th
to 30
th
of
September 2011 and 16 March 2012, when it was adjourned for the
parties to file their arguments in writing by not later than
the 16
th
of April 2012. They later on extended the date to the 14
th
of May 2012.
3.2
Subsequently thereafter, an application to re-open the hearing was
brought by the Respondent. The Applicant also lodged an application
to compel the Respondent to file its argument in writing. These
applications were simultaneously heard on 05 June 2012. The written
arguments were finally filed with the Court on the 11
th
of June 2012.
[4]
A brief summary of the nature of the matter before this Court is as
follows:
4.1 This matter was
referred for oral evidence on the issue “as to whether an oral
agreement of lease as contended by the
Respondent was in fact
concluded”. The onus of proof therefore shifted to the
Respondent to prove the oral agreement. The
parties are
ad idem
on this aspect of evidence.
4.2
The issue to be decided is whether Ms Kemraj also known as “Nisha”,
representing the Applicant and Mr Merchant,
representing the
Respondent entered into any oral agreement and if Exhibit “K”
was the proposal sent by “Nisha”
to Merchant, in line
with the alleged oral agreement.
[5]
The parties had concluded a Written Agreement of Lease on the 3
rd
of May 2005 which was to terminate on the 30
th
of June 2010. This lease agreement which was subsequently terminated
in 2008 at the instance of the Applicant. The Applicant obtained
in
the Verulam Magistrates’ Court under case no. 5112/08 a
judgment for the payment of R63 332.64 and an order for
ejectment against the Respondent. Pursuant to the Default
Judgment the Respondent furnished a written undertaking, whereby
inter alia
,
it agreed to hand over vacant occupation of the premises to the
Applicant on the 30
th
of June 2008.
[6]
By then the Applicant had a prospective tenant to take over the
premises leased to the Respondent. When the prospective
tenant
failed to conclude the contract with the Applicant, the Respondent
was allowed to remain in the premises on a month to month
basis,
subject to one calendar months’ notice.
[7]
The Respondent remained in occupation thereof up to the time that it
was given notice to vacate the premises by the Applicant,
which was
by no later than the 31
st
of August 2010. This notice was preceded by a telefax dated the 26
th
of May 2010 from the Respondents’ attorney contending that an
oral agreement had been reached in terms of which his client
would
lease the premises for further period of five (5) years, when the
current lease expires. The Applicant’s version is
that the
“current written lease” had long been cancelled and this
was within the knowledge of the Respondent’s
representatives.
Applicant also disputes that an oral agreement was entered into
between itself and the Respondent.
[8]
The Respondent opposes the application on the basis that he has an
oral agreement for a period of five (5) years with the Applicant
as
of the end of June 2010. He further relies on a document,
Annexure “K”, which he states that it is a proposal
for
the renewal of the lease, which he relies on as a part and parcel of
the oral agreement negotiations. The Applicant disputes
the existence
of the oral agreement and submits that Annexure “K” is
fabricated and was not issued by the Applicant
APPLICATION
OF THE LAW:-
[9]
One has to bear in mind that it must be determined who are the
contracting parties to the contract; if there was an offer and
acceptance; where and when was the contract made and if consensus was
reached.
Van
der
Heever
JA in Estate Breef V Peri-Urban Areas Health Board
[1]
this to say:
“
Consensus
is normally evidenced by offer and acceptance. But a contract may be
concluded without offer and acceptance other than
pure fictions
imported into the transaction for doctrinal reasons. Nor does every
accepted offer constitute a contract.”
[10]
It is therefore important to establish from the evidence before this
Court as to whether there was an offer and acceptance,
which leads to
the ascertainment of when and where was the agreement made.
[11]
To determine if there was a valid and enforceable agreement it must
be established if the parties were
ad
idem
. To establish if this has occurred
one must look at the external factors to the agreement. A
subjective test is therefore
applied. The Court must also
consider the offer and acceptance, as not every offer and acceptance
constitutes a contract;
the time and place thereof; determine if the
parties herein had the intention to enter into a contract (
animus
contrahendi
),
look at the nature of the offer, the relationship between the parties
and the surrounding circumstances at the time of making
the offer.
These must all be examined to determine if the oral agreement was
entered into at all.
It
must also be borne in mind that there are circumstances where there
is an intention to enter into a contract but the contract
is void and
unenforceable.
[12]
The evidence of Mr Adrian Raw and Ms Kemraj dispute the existence of
the oral agreement. It is submitted that the Applicant
with the
tenancy of over 400 would not have entered into an oral agreement
spanning over a period of five (5) years. This is confirmed
by the
evidence before Court, which is not in dispute that even the first
lease agreement that the Respondent entered into with
the Applicant
was in writing. This is the Applicant’s policy with all its
tenants. This is a more probable version than the
one advanced by Mr
Merchant, who represents the Respondent.
[13]
There is evidence before this Court that the tenancy of the
Respondent was terminated sometime in 2008. However, at the instance
of the Applicant it retained the use of the premises on a month to
month basis. The Court accepts that it is unlikely that such
a
tenancy would have been renewed with the tenant who has defaulted in
the payment of rent to such an extent that the first agreement
was
terminated and a Court order of ejectment was obtained. The only
reasonable measure for the Applicant, to have resorted to,
if indeed
it renewed the lease with the Respondent, would have been more of a
cautionary nature, by having the lease agreement
reduced in writing
and with stringent terms for the payment of its rental. The
initial lease agreement state that the contract
could only be varied
in writing. If the Applicant caters for variation of the terms of its
agreements in writing it is more probable
that any renewal or new
lease agreement would be in writing.
[14]
Kemraj gave a reasonable explanation why the Respondent was kept in
the premises, being that there were ongoing negotiations
with
potential clients and that they did not want to have the building
refurbished during the world cup to accommodate a new client
as this
would have a negative impact on the entire business centre.
[15]
The Respondent’s submission is that the Respondent knew nothing
about the ejectment order obtained against it in 2008,
which occurred
as a result of insufficient payment of rental by the Respondent. I
find that the Respondent has a duty to perform
in terms of the
contract, in this case whether he had a debit order or stop order he
should have made certain that he keeps to
the terms of the contract.
He could not have been in arrears if he was diligent and properly
looked after his interests.
He could also not have accepted the
termination thereof in writing.
[16]
The Respondent’s case is that during or on or about the
beginning of March 2010, Kemraj a duly authorised agent for the
Applicant entered into an oral agreement with Mr Merchant, the
representative of the Respondent, the salient terms thereof being
inter alia
;
that there would be an increase in the rental amount; that the lease
agreement was for a five (5) year period; and that the other
terms
would remain the same as in the initial agreement entered into in
2005. It was further submitted that the reducing of the
oral
agreement into writing would just be a mere formality.
[17]
It is further submitted that Kemraj gave Merchant a document, which
is referred to as Annexure “K”, a proposal,
which formed
part of the oral agreement. Annexure “K” was an offer to
the Applicant to enter into a written lease agreement
on the 27
th
August 2010, which Merchant submits he signed at Kemraj’s
behest on the 24 May 2010. It is further submitted that the
Respondent
has complied with the terms of the oral agreement with
regard to the payment of rent. The strange aspect about Annexure “K”
is that Merchant does not disclose its existence at the crucial stage
when he asserts that he has entered into an oral agreement
with the
Applicant. This Court accepts that if he was in possession of such
document which he believed to be valid, signed by an
authorised
representative of the Applicant, he would have disclosed it as early
as possible. He claims to have acted at the instructions
of Kemraj
not to disclose it and was to use it as a trump card at a later
stage. This notion is rejected by the Court as no reasonable
person
would not disclose such an important document at the expense of being
ejected from the premises.
[18]
There is no evidence before this Court that the occupancy of the
premises by the Respondent was by virtue of an oral agreement
or a
re-instatement of the old lease agreement. I am saying so because the
existence of the oral agreement and in particular where
it was
concluded is not certain from the evidence before this Court. The
place where it was concluded is not certain, Merchant
says it was at
Kemraj’s office and his main witness Raza says it was concluded
at the Respondent’s shop and where both
Raza and Merchant were
present. It is important in law to know where and when was the offer
made to determine its existence.
[19]
According to Merchant’s evidence the rental in terms of the
oral agreement was to be about R200 to R250. An offer must
be
unequivocal and unambiguous. One cannot therefore say that the
parties were
ad idem
.
Such a contract is void for vagueness, signifying that the parties
were not
ad idem
.
This put paid to any inference that this contract was discussed at
all.
[20]
The acceptance should have been clear, unequivocal and unambiguous.
Can one really say that the evidence of Merchant in that
he was
assured by the “flippant don’t worry assurance”
which he claimed he received from Kemraj from time to
time were an
acceptance of the offer. The
Court rejects this assertion by Mr
Merchant. Furthermore, the Applicant would not have accepted a
proposal with indeterminable terms
of payment of its rent at all and
more so with a defaulting tenant.
[21]
We must consider if the communication of an offer in terms of Exhibit
“K” was a valid offer and if it indicates
animus
contrahendi
on the part of the Applicant. At the receipt of Annexure “K”
the offeree ought to have known that there was no intention
to
contract on the part to the Applicant. Lack of
animus
contrahendi
can be ascertained from the nature of the agreement and from the
surrounding circumstances. A similar position emanated in
Bosman
v Prokureursorde Van
Transvaal
[2]
,
where an articled clerk entered into a contract of articles with an
attorney who already had the prescribed number of articled
clerks
prescribed by the regulatory body. The Court held in that case that
there had been no intention that he should serve with
the attorney as
an articled clerk; therefore, his articles were invalid. There is
nothing that indicates in that document that
the Applicant had the
intention to enter into a contract with the Respondent.
[22]
An offer made by way of an incomplete and vague proposal as to the
pertinent issues of the contract cannot be valid in law.
An offer
accompanied by a proposal which has irrelevant terms on it, not
applicable to the offeree is not a valid offer. In this
case the
signature of the signatory thereto is disputed; it is not even signed
by the person who is alleged to have entered into
a contract with Mr
Merchant. It was Kemraj’s evidence that she does not deal with
proposals at all.
[23]
The document Annexure “K” is said to have been delivered
by Kemraj to Merchant for consideration and signing. It
is submitted
that it was collected by Kemraj from Ms Ramiah in the absence of
Merchant who was abroad. At the same time Merchant
has advanced other
versions regarding the collection of this document. Merchant had
stated that he signed Annexure “K”
in May 2010, he forgot
to give it to Nisha and Nisha had to remind him to look for it.
[24]
This document is disputed by the Applicant’s witnesses. Its
authenticity is disputed. Kemraj’s name is wrongly
spelt. The
Applicant’s version is that there was a new format of proposals
in place. It could not have gone out without their
knowledge; Ms
Kemraj is not the authorised signatory; Ms Poswa’s signature
had been forged and she had no authority to sign
on behalf of Kemraj.
More so, Ms Kemraj’s evidence is very relevant here in that
once the document is handed over to Poswa,
she has got nothing to do
with it, therefore there was no need for the
per
procurationem
signature on her behalf.
[25]
I accept the evidence of Kemraj that she would not have given
Merchant a proposal which is meant for new tenants for the purpose
of
reducing the oral agreement in writing. The proposal that Merchant
has deals with issues applicable to first time occupiers
of the
premises. Merchant could not explain why the document had such terms
and why it was not in line with his version.
[26]
The Court accepts that this document could not have come from Kemraj.
Merchant’s evidence is that Kemraj was an authorised
signatory.
He was given a document by a person in authority, but fails to
disclose his trump card, even at the most opportune time,
when that
it would save him. I accept that the evidence of Ms Melville, that
this document could not have been issued by the Applicant.
Merchant
was requested by the attorneys of the Applicant to furnish the terms
of the agreement as early as the 2
nd
of September 2010, but failed to do so. He threatened to bring an
urgent application to Court to force the Applicant to record
the
contract but failed to do so. Strangely enough even the document that
he relies on Annexure “K” states that “
you
will be required to sign the landlord’s standard lease (a draft
of which is attached hereto)”
.
There is no mention in his evidence of what happened to the
supposedly draft attached to the proposal.
[27]
As part of the surrounding circumstances that I have looked at, I
accept that this kind of contract could only have been entered,
varied or renewed in writing. It is therefore unlikely that the
Applicant, that manages such a huge business complex, would have
made
an exception of the Respondent. More so, according to Lee-Anne
Melville, who is in charge of the renewal process, she was
not given
a mandate to renew this contract.
[28]
I have extensively been addressed on the month to month basis
contract which kept the Respondent on the premises. It was said
that
the Applicant has a way of stringing along clients. That is not an
issue that was referred to oral evidence to prove the month
to month
tenancy of the Respondent after his ejectment on the premises.
Further, that part of the month to month tenancy falls
outside the
ambit of the oral agreement which has been referred to Court for oral
evidence and determination. The Respondent accepted
in writing that
he would vacate the premises after the Applicant obtained an
ejectment order against him. This clears all the grey
areas in the
subsequent month to month tenancy by the Respondent.
[29]
A number of issues were raised by Merchant regarding Kemraj. His
alleged receipt of an email from Kemraj’s husband. Irrespective
of how he alleges that he received the document, he has failed to
prove that the parties entered into a valid contract. The evidence
given by the Applicants’ witnesses was credible unlike the
evidence of Messrs Merchant and Raza which was riddled with
contradictions
and improbabilities.
[30]
The Applicant prayed for an order of ejectment within 24 hours of the
granting of this order. In the light of the nature of
the business
that the Respondent conducts, the Court has considered if it is
possible to do this within 24 hours. The Respondent
has been involved
in this protracted litigation and ought also to have made contingency
plans should it not be successful. I therefore
find that a reasonable
period for the Respondent to vacate the premises would be a period of
five (5) days upon the granting of
this order. The calculation of the
five (5) days period to include the weekends and holidays.
[31]
The Applicant has prayed for an order of costs on an attorney and
client scale. There have been delays occasioned by
the
Respondent, however, at each and every stage thereof, the Respondent
was ordered to pay wasted costs. The Court is not inclined
to make an
order for punitive costs as it has not been fully persuaded to grand
such an order.
CONCLUSION
[30]
I therefore make the following order:
(a)
That the Respondent and all persons holding
through the Respondent, are hereby ordered forthwith to vacate the
premises at Shop
G10, Gateway Theatre of Shopping, 1 Palm Boulevard,
Umhlanga Ridge, Newtown Centre, Umhlanga, KwaZulu-Natal, within a
period of
five (5) days from the date of the granting of this order.
(b)
That in the event that the Respondent or
any person or persons through the Respondent fail to vacate the
premises within five (5)
days of this order.
(c)
The Respondent is ordered to pay costs
including costs of two (2) Counsel, where necessary and cost
occasioned by the adjournment.
MBATHA
J
Date
of hearing:
Date
of Judgement: 14 December 2012
Counsel
for the Applicant: Adv R.J Salmon SC
Instructed
by: Thorpe & Hands Inc.
4
th
Floor, 6 Durban Club Place
DURBAN
Counsel
for the Respondent: Adv Haasbroek
Instructed
by: M.A.K Ameen & Company
208
Dr Yusuf Dadoo Street (Grey Street)
Suite
31, 3
rd
Floor
DURBAN
[1]
1955
(3) SA 523 (A) 532 E
[2]
1984
(2) SA633 (T)