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[2011] ZAKZDHC 37
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Ethekweni Municipality v Zedek Trading 82 CC (12482/2008) [2011] ZAKZDHC 37 (28 March 2011)
1
IN THE KWAZULU NATAL
HIGH COURT, DURBAN
REPUBLIC OF SOUTH
AFRICA
CASE NO. 12482/2008
In the matter between:
ETHEKWINI MUNCIPALITY
….................................................................
APPLICANT
and
ZEDEK TRADING 82 CC
….................................................................
RESPONDENT
JUDGMENT
MURUGASEN,
J.
1] This is an application by the
eThekwini Municipality, the owner of immovable property described as
Sites 129, 130 and 133 on
Remainder of Erf 301, Springfield situate
at Electron Road (‘the property’) for the ejectment of
the respondent, Zedek
Trading 82 CC, and all persons occupying the
property through it, from the property and costs.
2] One day prior to the hearing of
this application, the respondent brought an application to stay these
proceedings pending the
joinder by the applicant of the respondent’s
seven sub-lessees on the grounds that they had a direct and
substantial interest
in any order granted in this application.
3] The applicant opposed the
application, and advised that it had its own arrangements and
undertakings in place with the subtenants.
4] The application was dismissed with
costs as the respondent had failed to bring the application
timeously.
Factual Background
5] On 17 August 1994, the City Council
of Durban (as the applicant was then known) entered into a short term
tenancy agreement (‘the
agreement’) with one P Naidoo
(‘Naidoo), in terms of which the property was leased to Naidoo.
The agreement was deemed
to have commenced on 1 May 1994.
6] In terms of a written agreement of
assignment, the applicant consented to the assignment by Naidoo of
his rights and obligations
in terms of the agreement to Mr V Reddy
(‘Reddy’) with effect from 1 October 1997. Reddy accepted
the assignment and
assumed all the obligations of the tenant in terms
of that agreement.
7] The applicant thereafter concluded
a further agreement of assignment with Reddy and the Respondent, in
terms whereof Reddy assigned
his rights and obligations to the
Respondent, who assumed such rights and obligations with effect from
12 July 2002. In concluding
that agreement Reddy represented himself
and the respondent.
The following is common cause:
8] The applicant is the owner of the
property. The property is commercial albeit some occupants reside
thereon. The respondent is
in occupation thereof, and the seven
subtenants occupy the property under a sublease with the respondent.
9] The original lease agreement
between Naidoo and the applicant and the agreement of assignment
between Naidoo and Reddy was signed
with the consent of the applicant
and the tenancy by Reddy was subject to the same terms and conditions
as the lease agreement.
10] The agreement of assignment
between Reddy and the Respondent was executed with the consent of the
applicant and the respondent
occupied the property in terms thereof.
11] Reddy the sole member of the
respondent, is now deceased and Leenderen Reddy represents the
Respondent in these proceedings
by virtue of his office as duly
authorised executor in the estate of Reddy.
THE APPLICANT’S GROUNDS
12] The applicant alleges that the
respondent occupied the property on the same terms and conditions as
set out in the tenancy agreement
with Naidoo as the terms and
conditions in the agreement remained binding on the tenants who
subsequently occupied the property
in terms of the assignment
agreements.
13] Some of the pertinent and material
terms of the tenancy agreement were:
the tenancy of the property was made
available only as an interim measure pending alienation of the
property; the City Council
was not obliged to find a replacement
site for the tenant when the property was alienated.
In the event that the any portion of
the property was required by the applicant for any purpose, the
applicant was entitled to
terminate the agreement in writing,
without any obligation to compensate the tenant.
The tenancy agreement could be
terminated at any time by either party provided that one month’s
notice of such intention
was given to the other party in writing.
Should the City Council proceed with
legal action consequent to any breach of the terms and conditions by
the tenant, the tenant
would be liable to pay the City Council’s
costs on an attorney and client scale.
14] Each assignment agreement
contained a non variation clause in terms of which ‘no
variation or cancellation or institution
of rights or obligations
under the assignment agreement would be binding unless reduced to
writing and signed by all the parties
thereto’.
15] The applicant alleges that the
lease was properly terminated, after written notice was served on the
respondent on 29 January
2008 that its tenancy would terminate on 28
February 2008 and that should the respondent fail to vacate the
property by that date,
legal action for its eviction and damages
would be instituted. The notice was received by L Reddy in person.
17] As the respondent has failed and /
or refused to vacate the property despite the notice, it is in
unlawful occupation and the
applicant is consequently entitled to an
order for the eviction of the respondent from the property and costs
on an attorney and
client scale.
18] The applicant also contends that
it will be prejudiced if the property were not available for use by
its Water and Waste Service
Unit, while the respondent will suffer no
prejudice as it could conduct its business on alternative sites. The
intended development
by the applicant was also in the public
interest.
THE RESPONDENT’S GROUNDS
OF OPPOSITION
19] The respondent has opposed the
application, on the following grounds:
the applicant has failed to prove a
nexus between the agreements it relies on and the agreement in terms
of which the respondent
occupies the property;
the applicant had not properly
cancelled the lease and the respondent accepted the notice of
termination on 29 January 2008 without
prejudice to its rights;
the cancellation will result in
financial prejudice to the applicant while the applicant has
alternative immovable property resources;
the applicant has failed to join the
subtenants to the prejudice of their constitutional rights to
property;
the respondent is not in breach of
the agreement of lease between the parties as it has paid the rental
in accordance with the
invoices submitted by the applicant;
the applicant has accepted the rental
paid by the respondent and is not entitled to occupational damages;
The issues that lie for
determination are :
1 Whether the terms and conditions of
the tenancy agreement dated 1 August 1994 apply to the agreement of
assignment under and in
terms of which the respondent occupies the
property?
2 Whether the lease of the property
was cancelled by the applicant by way of the notice dated 29 January
2008?
3 Whether the respondent is able to
resist the cancellation of the lease because it alleges that the
applicant has other immovable
property at its disposal for
alternative use for the same project it intends developing on the
property?
4 Whether the rights of the subtenants
are prejudiced by the application and is there a constitutional
imperative obliging the applicant
to join them in this application?
5 Whether the applicant has waived the
termination of the lease by accepting the monies paid by the
respondent?
6 Whether the applicant entitled to
the relief it seeks?
The assignment of the lease
:
20] Assignment is the transfer by a
lessee of his rights and obligations under a lease to a third party,
the assignee. ‘The
effect of an assignment of a lease by a
lessee is that the assignee steps into the lessee’s shoes: the
assignee acquires
and the lessee is divested of his rights
and
obligations
under the lease.’ (
Cooper:Landlord andTenant
2nd edition page
245.
)
The assignment therefore has the
effect of creating a new lease between lessor and assignee. (
Cooper
page 269)
21] The respondent relies on the
failure of the applicant to attach a copy of the agreement dated 1
May 1994 concluded with P Naidoo
to the agreement of assignment (AGT
2), and alleges that as the copy of the agreement of assignment
between the applicant, Naidoo
and Reddy (AGT2) was unsigned, there
was consequently no nexus between agreements AGT1 and AGT3. It
contends further that the short
term tenancy agreement concluded on 1
May 1998 was deliberately not annexed to the papers because the terms
and conditions thereof
do not favour or assist the applicant.
22] A perusal of the relevant
documents (including the application by the respondent under Case No.
4451/2007 furnished by the applicant
in support of the allegations in
its replying affidavit) reveals the following :
1 the short term tenancy agreement
(‘the tenancy agreement’) which was the principal
agreement of tenancy between the
applicant and Naidoo was effective
from 1 May 1994, despite the date of signature thereof by the
parties.
2 The tenancy agreement contained the
material terms and conditions of the lease and regulated the rights
and obligations between
the applicant and Naidoo. This included the
right of the parties to terminate the lease by giving one month’s
written notice
of the termination to the other party.
3 Naidoo assigned his rights and
obligations under the tenancy to Reddy, who accepted same, with the
consent of the Applicant with
effect from 1 October 1997 by way of an
agreement of assignment dated the 10 April 1998.
4 Although the assignment agreement
refers to “a Short Term Tenancy Agreement (a copy of which is
attached) completed on 1
May 1994, there can be no doubt that what is
referred to is the tenancy agreement between the applicant and Naidoo
with effect from 1 May 1994.
(my emphasis), even though a copy
of the tenancy agreement was not attached to the assignment
agreement.
5 Reddy then in effect became the
tenant. Therefore when the applicant, Reddy and the Respondent
entered into the agreement of assignment
dated 2 December 2002 with
effect from 12 July 2002, the parties relied on the same tenancy
agreement, although the paragraph 1
thereof refers to “a Short
Term Tenancy Agreement (a copy of which is attached) completed on 1
May 1998”, and the tenancy
agreement was not attached.
23] It is apparent from a perusal of
all the agreements that the Applicant used a proforma agreement; the
format and contents of
the Assignment agreements are the same except
for the dates and details of the parties.
24] The tenancy agreement relied on by
the applicant and the Respondent
under Case No 4451/2007 is the
agreement between the applicant and Naidoo which was effective from 1
May 2004. He therefore knew
that there was no tenancy agreement dated
1 May
2008,
and his allegation that the applicant has failed
to prove a nexus between AGT 1 and AGT 3 smacks of dishonesty.
25] The probabilities therefore favour
the conclusion that there is no other
Tenancy Agreement but the original one
effective from 1 May 1994 (AGT 1) and the reference to ‘1998’
in AGT 3 was a
typographical error.
26] It is trite that an applicant must
make out its case in its founding papers; but I am satisfied the
furnishing of an unsigned
copy of the assignment agreement (AGT 2) is
not fatal to the application. The signed copy was furnished by the
applicant when the
respondent relied on the applicant’s failure
to furnish a signed copy, although it had a signed copy in its
possession, on
which it relied in its application under Case
4451/2007 to establish its
locus standi
.
27] The respondent’s conduct is
therefore disingenuous and dishonest, particularly his allegation in
paragraph 8.2 of his
answering affidavit that ‘these agreements
can only be in the possession of the Applicant’.
Further despite its dispute of the
agreement relied on by the applicant, the respondent has itself not
provided the basis on which
it occupies the property .
28] I am in the premises satisfied
that the respondent occupied the property under the terms and
conditions as contained in the
tenancy agreement with effect from 1
May 1994 (AGT 1), and the applicant was entitled to terminate its
occupation by way of one
(1) calendar month’s written notice to
the respondent.
Cancellation of the lease
29] As the applicant relies on the
letter of termination dated 29 January 2008, and not the notice
issued in 2003, the respondent’s
objection thereto
disseminates, as it has submitted that the aforesaid notice is not
valid ‘if the Applicant wants to rely
on the earlier
termination of 28 January 2003’ (page 71 paragraph 11.2).
30] The applicant
was entitled under the tenancy and assignment agreements to terminate
the lease on one month’s written notice;
the only further
obligations on the applicant apart from the period of notice and that
it had to be in writing, was that the notice
of cancellation had to
be clear and unequivocal (
Ponisammy v
Versailles Estates
1973 (1) SA 372
(A) at 385 G
and
communicated to the Respondent
(Swart v Vosloo
1965 (1) SA
100
(A)).
Notice of termination is effective
from the date when it is communicated to the mind of the lessee and
it does not require acceptance.
(Cooper page 67)
31] I am satisfied that although the
applicant referred to the letter dated 28 January 2003 (AGT 4) in its
notice of termination
dated 29 January 2008 (AGT 6), it has properly
complied with its aforementioned obligations and there is no merit in
the respondent’s
submissions disputing the cancellation.
32] In the premises, the lease between
the parties terminated on 28 February 2008, from which date the
respondent was obliged to
vacate the property.
THE INTENDED USE OF THE PROPERTY
33] In cancelling the lease, the
applicant has relied on the relevant terms of the tenancy agreement,
inter alia
the tenancy of the property was made available only
as an interim measure pending alienation of the property; the tenancy
agreement
could be terminated at any time by either party provided
that one month’s written notice of such intention was given to
the
other party.
34] The respondent however resists the
application on the grounds that that the cancellation of the lease
will result in financial
prejudice to the respondent, while the
applicant has vast immovable property resources available for
alternative use for the intended
project by the Water and Sanitation
Unit.
35] Although the applicant has
provided details of the use to which the property is to be put once
the respondent has vacated the
property, the submissions are not
necessary to the relief it seeks, while the submissions of the
respondent are ill founded and
lack merit, particularly the
allegations against Tromp, and it is apparent that it is attempting
to protect its own financial interests
at the expense of the
applicant.
36] An essential element of a lease is
that the lessor gives and the lessor receives temporary use and
enjoyment of the property
(Cooper page 3).
Once the lessor
properly cancels the lease in terms of the lease agreement, it is
entitled to restoration of the leased property
to it.
37] The applicant was therefore
entitled to the restoration of the property, no matter what the
intended use.
THE PROTECTION OF THE
CONSTITUTIONAL RIGHTS OF THE SUBTENANTS
38] Mr Marnewick argued that while
traditionally sub-lessees did not have the right to receive notice of
ejectment proceeding or
to be joined in ejectment proceedings, the
applicant was constrained by the provisions of Articles 25 and 34 of
the South African
Constitution to join the sub-lessees as interested
parties with the right not to be deprived of property.
He also exhorted the court not to
persist with an apartheid era attitude that the rights of the
registered landowner were paramount
to the exclusion of the rights of
all others, including subtenants, by failing to afford recognition to
the property rights of
the subtenants, which extended to any
property, movable or immovable which the sub-tenants had on the
leased land to conduct their
business, albeit subsidiary to those of
the landowner.
39] T
his
court recognizes that there is a constitutional imperative that the
property right of all occupiers of land must be weighed
against that
of the owner of the property, and that these property rights have
been recognized by the superior courts as rights
worthy of
protection.
However this property is utilised for
commercial purposes and the benefit derived by the subtenants is
financial as is the benefit
to the respondent. The same
constitutional protection afforded to the occupants of residential
property does not apply.
(Ndlovu v Ngcobo; Bekker & Another v
Jika 2003(1) SA 113 S C A)
40] The effect of the respondent as
lessee subletting is to create a lease between the respondent and the
sublessee without creating
a contractual nexus between the sublessee
and the original lessor, viz, the applicant and without affecting the
original lease
or the contractual rights and obligations between the
applicant and respondent.
41] It is therefore not for the
respondent to insist that the subtenants be joined. The decision lies
with the applicant and a risk
that the applicant must take should it
decide not to join the subtenants as parties to this application.
42] Furthermore any order of this
court will not preclude the subtenants from exercising any right of
recourse that they may have
against the applicant and any grievance
that the subtenants may feel against the Applicant may be ventilated
at their instance
and in any forum they consider appropriate. The
applicant has in any event advised that it has an arrangement with
the subtenants
and has given an undertaking that any occupier will
not be evicted without recourse to due procedure.
43] I am therefore not persuaded that
should this court order the ejectment of the respondent given the
facts and circumstances
of this case, it would be neglecting its
constitutional and common law obligations to protect the rights of
the subtenants.
Rental or Damages for Holding
Over?
44] As the lease was cancelled the
applicant was entitled to occupational damages and accepts any money
paid by the respondent as
occupational damages for holding over. The
notice of termination states as follows: ‘Should you fail to
vacate the property;
Legal action will be instituted against you for
eviction and damages, all costs being to your account.’
The respondent was therefore aware
that if it did not vacate the property as it was obliged to on
termination of the lease terminated,
it would liable for damages as a
result of its unlawful occupation.
45] The respondent alleges that there
has been no unlawful holding over because the lease was not
cancelled, and therefore the applicant
was not entitled to damages.
46] Should a lessor cancel a lease
when he is entitled to do so, he may claim damages for unlawful
occupation or holding over. Rent
is payable to date of cancellation.
But once a lease agreement has been terminated, the rights and
obligations relating to the
payment of rent are also terminated.
Thereafter the lessee is liable for damages for the period he remains
in occupation of the
property ie lessor is entitled to damages
suffered as a result of the unlawful occupation of the premises
(Cooper Page 159 – 160).
47]
In Nedcor Bank Ltd v Withinshaw
Properties (Pty) Ltd
[2002] JOL 9810
(C), Van Zyl J,
considered
the approach confirmed by the Appellate Division in
Sapro v
Schlinkman
1948 (2) SA 637
(A)
that a lessor was entitled to rent
for the actual period of occupation by the lessee after the
cancellation of the lease agreement
between the parties and has in my
respectful view properly focussed on the anomaly therein when the
lessee remains in occupation
without the consent of the lessor at
page
19 [45] –[46]
:
[45]
“The fundamental
criticism has been that, if a lease agreement has been terminated by
cancellation or otherwise, the rights
and obligations attaching
thereto are terminated. The lessor cannot then claim arrear rent from
the lessee should he remain in
occupation of the premises after such
termination. This would, it is suggested by
AJ Kerr "Incompatible
Remedies for Breach of Contract: Is Lease a Special Case?"
in
90
SALJ
(1973) 228–233 at 229,
constitute "a radical departure from the general rule that an
aggrieved party cannot both cancel a contract and sue for specific
performance" (see in this regard
Custom Credit Corporation
(
Pty
)
Ltd v Shembe
1972 (3) SA 462 (A)
at
469G–H
).
His remedy would under normal circumstances, Kerr opines, be directed
at damages for breach of contract.
[46]
This appears to have
been the approach in
Easton Investment Co
(
Pvt
)
Ltd v Edwards
1967 (2) SA 83 (R)
at
87B–C
, where
Davies J
said:
"In principle rent is a payment
for the right to use and occupy the leased premises. Where such right
is denied the tenant,
for whatever reason, it is contrary to
principle to enforce the obligation to pay rent. On this basis,
therefore, I am of the opinion
that the petitioner has no right to
claim any amount as rent in respect of the period subsequent to his
cancellation of the agreement,
but is restricted to a claim for
damages."
48] The applicant was therefore
entitled to damages and not rent from the date of cancellation of the
lease.
Ex facie
the notice of termination, the intention of
the applicant was to claim damages, not rental, for unlawful holding
over.
49] The respondent does not aver that
because its payments were accepted by the applicant, a new lease was
tacitly agreed upon by
the parties, nor does it make any attempt to
prove such agreement. (
Van der Merwe v Erasmus and Another
1945
TPD 97).
It merely relies on the assertion that it was not in
breach of the lease agreement in that it has paid the rental for its
occupation
and the applicant could therefore not cancel the lease or
claim occupational damages as its occupation was not unlawful.
50] The inference can therefore be
drawn that the respondent was aware that it was paying damages and
not rental, particularly when
the applicant had made it abundantly
clear that it has alternative use for the property.
51] As the applicant was entitled to
damages for unlawful holding over because the respondent failed to
vacate the property in compliance
with its obligations, t
he
acceptance by the applicant of the monies paid by the respondent did
not constitute a waiver of its termination of the lease.
Relief sought by the applicant
53] In the premises, I am satisfied
that the applicant is entitled to the relief it seeks. In my view the
respondent has opposed
the application as a dilatory ploy and the
application to stay this application pending the joinder of the
subtenants was a ‘last
ditch attempt’ to stave off the
inevitable.
COSTS
54] There is no reason why costs
should not follow the result.
As the applicant was compelled to take
legal action when the respondent breached the tenancy agreement by
failing to vacate the
premises when notice of cancellation was
properly given by the applicant, in terms of clause 21 the respondent
is liable to pay
attorney and client costs. In any event given the
disingenuous and dilatory conduct of the respondent, the court finds
costs on
an attorney and client scale appropriate.
ORDER
The respondent, Zedek Trading 82 CC,
and all other persons in occupation under or through the respondent,
are directed to vacate
the immovable property described as Sites MA
129, 130 and 133 on Remainder of Erf 301, Springfield, and situate
at Electron Road
(‘the property’);
Failing immediate compliance with
paragraph 1 of the order, the Sheriff of the High Court is
authorised to evict the Respondent
and all persons in occupation
under or through the respondent, from the property.
The respondent is ordered to pay the
costs of the application on an attorney and client scale.
__________________
Counsel
for the Applicant: Ms T Norman
Instructed
by: Ndamanse Incorporated
Siute
41/42 First Floor West Palm
4
Palm Boulevard
GATEWAY
Counsel
for the Respondent: Mr GC Marnewick
Instructed
by: Naidoo & Company Incorporated Clarence House
247
Cowey Road
Morningside
DURBAN
Delivered
On: 28-03-2011