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[1985] ZASCA 16
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Soteriou v Retco Poyntons (Pty) Ltd. (2) (381/83) [1985] ZASCA 16; [1985] 2 All SA 208 (A) (29 March 1985)
LL
Case No. 381/1983
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
EVANGELOS ANTONIOU SOTERIOU
Appellant
and
RETCO POYNTONS (PROPRIETARY) LIMITED
Respondent
(formerly known as POYNTONS PROPERTIES (PROPRIETARY) LIMITED
CORAM
: KOTZé, BOTHA, NICHOLAS JJA, GALGUT
et
VIVIER AJJA
HEARD
: 7 MARCH 1985
DELIVERED
: 29
MARCH 1985
JUDGMENT
/
BOTHA JA
...
2.
BOTHA JA
:-
In my judgment this appeal ought to be dis= missed.
There is no doubt in my mind that clause 2 (b) of the lease is not
susceptible of bearing the mean= ing assigned to it in the judgment
of my
Brother NICHOLAS.
By using the expression
"upon such terms and conditions and at such rental as may be mutually agreed
upon"
the parties in the plainest possible language expressed
their intention to
be that the terms, conditions and
rental to be applied to the extended period
of the lease
would be settled by negotiation and agreement between
the
parties. It cannot be doubted, I consider, that the
words embody an
agreement to agree.
The words "first refusal" connote a right of
election either to accept or
to decline something. That
something can be, and frequently is, an offer by
the other
/party ...
3.
party. But it need not be so. It can also be an opportunity to
negotiate and to enter into an agree= ment. That, to my mind, is clearly
what is
conveyed by the words "first refusal" in the context of clause 2 (b).
At the heart of the interpretation of the clause which is contained in the
judgment of my Brother NICHOLAS lies the view that the
lessor is obliged
to
submit an offer to the lessee, which the latter can then accept or refuse.
In my opinion, with respect, such a notion cannot be found
in the wording of the
clause, and is, on the contrary, quite foreign to it. It will not do to
transplant the reasoning in the
Manchester Ship Canal Company
case
(1900)
2 Ch 352
at 364 and
(1901) 2 Ch 37
at 48), on which my Colleague relies, onto a
clause such as the present, which contains explicit provisions of a kind not
present
in the clause considered in that case. Here, the clause in
/question ...
4.
question contemplates mutual agreement being reached on the
terms, conditions and rental of the extended lease. If the parties had
intended
to impose an obligation on the lessor to submit a unilaterally settled offer to
the lessee, I can hardly conceive of a more
inept way of saying so than that
contained in the clause. If, instead of affording the lessee an opportunity of
nego= tiating an
agreement regarding the extension of the lease, the intention
had been to oblige the lessor to submit an offer, the parties would
assuredly
have given expression to such an intention in words quite different from those
appearing in the clause.
In
Smith v Morgan
(1971) 2 All ER 1500
, on which my Brother NICHOLAS
relies, the clause under con= sideration differed substantially from the clause
in question here, particularly
in so far as the former contained an express
reference to an offer to be made, which is lacking in the latter. Apart from
that, I
/differ ...
5.
differ, with respect, from NICHOLAS JA in my assessment of the
reasoning in that case: I do not find it con= vincing. Applied to the
circumstances of the present case, it amounts to this: the expression "as may be
mutually agreed upon" is to be understood as referring
to the agreement which
will arise in the event of the lessee accepting an offer which the lessor is
obliged to submit to him. With
great respect, I consider such an interpretation
of the words mentioned to be wholly strained and artificial, and, in fact, in
conflict
with the plain and natural meaning of the words. As far as comparable
cases go, I much prefer the reasoning of TROLLIP J in
Hattingh v Van
Rensburg
1964 (1) SA 578
(T) at 582 D - H, and I think it applies to the
facts of the present case.
No doubt the parties intended the clause to have business efficacy. But then,
they no doubt did not realise that an agreement to agree
was devoid of
/legal ...
6.
legal effect. The Court is powerless to correct their error
for them. While the Court will strive not to be a destroyer of bargains,
it can
never be the creator of them. In
Roode v Morkel
1976 (4) SA 989
(A),
MILLER JA said, at 993 E:
"Die uitgangspunt van die betoog namens die appellant is dat dit hoogs
waarskynlik is dat die partye deur klousule 9 by die kon= trak
in te lyf, bedoel
het om 'n afdwingbare hernuwingsreg te skep. Daar moet egter gewaak word teen
enige neiging om die be= doeling
van die partye te veronderstel en dan op grond
van sodanige veronderstelling die woorde wat in die kontrak gebesig is te
interpreteer.
Die bedoeling van die partye moet in die eerste instansie in die
bewoord= ing van hulle kontrak gesoek word."
And in
Aronson v Sternberg Brothers (Pty) Ltd
1985 (1) SA 613
(A) at
622 E ELOFF AJA said:
"The defendant's counsel submitted that if the grant of a right of first
refusal was not coupled with a duty on the part of Alburn
to find another
tenant, the clause lacked business efficacy. That might be so, but that
per
se
is not sufficient justi= fication for placing an interpretation on
/the ...
7-
the lease to supplement a deficiency for which the parties did
not provide. As WESSELS JA said in
Haviland Estates (Pty) Ltd and Another v
McMaster
1969 (2) SA 312
(A) at 336 E - G:
'It not infrequently occurs that, where subsequent developments show that a
party has contracted 'inadequately', equitable considerations
may at times give
rise to a natural desire to come to the aid of the party concerned, par=
ticularly so where the 'inadequacy' of
his right vitally affects him. This
feeling of sympathy should, however, not be permitted to blunt the Court's
under= standing of
the meaning of the words.'"
In my view, therefore, clause 2 (b) of the lease did not confer a legally
effective right of renewal of the lease on the appellant
and I would dismiss the
appeal on that ground.
There is, however, another difficulty in the way of the appellant, which I
consider to be insuperable. On the supposition that my
interpretation of clause
2 (b) is wrong and that of my Brother NICHOLAS correct, it seems to me that the
appellant has failed to
avail himself of
/his ...
8.
his proper remedy. In terms of the decision in the
Associated South African Bakeries
case
(1982 (3) SA 893
(A)), which is
mentioned in the judgment of NICHOLAS JA, the appellant's remedy, in principle,
was to step into the shoes of CNA
by means of a unilateral declaration of
intent. Clearly, to be legally effective such a declaration had to be an
unequivocal and
unqualified one. To the extent that some of the unknown terms of
the respondent's contract with CNA may have been inappro= priate
to the
appellant's use of the premises, I am of the view that the appellant should at
least, if he had wished to pursue his remedy,
have declared unequivocally and
unqualifiedly that he intended to step into the shoes of CNA at the rental fixed
between the respondent
and CNA for a period of 4 years and 11 months and on the
terms and conditions of that lease in so far as they were not inconsistent
with
his continued use of the premises as before. The appellant never expressed a
firm intention
/in ...
9.
in that regard, as appears from a perusal of his answer= ing
affidavit.
Although the appellant alleged in his affi= davit that the respondent was not
entitled to let the premises to CNA until it had given
him an opportunity of
competing with the rental proposed to be paid by CNA, and although there are
passages in the affidavit in which
he professes a willingness to pay the rental
agreed upon between the respondent and CNA, it is clear from other passages that
such
professed willingness did not in fact constitute an unqualified declaration
of intent. This came about because the appellant's main
line of defence against
the application for ejectment was based on an alleged agreement which the
appellant said he had concluded
with a representative of the res= pondent, one
Walker. The appellant alleged that he and Walker had agreed on a renewal of the
lease
at a rental not exceeding by more than R200 per month the rental
/payable ...
10.
payable by the appellant at the termination of his period of
lease. This, the appellant averred, meant that a renewal had been agreed
upon at
a rental of R811 plus R200 per month, which he was prepared to pay. The
appellant anticipated that a dispute would arise
on the papers regarding the
alleged agreement with Walker. Against this background, I quote the following
two pas= sages from the
appellant's affidavit:
"
Without prejudice and without being lawfully obliged to do so
by
reason of the prior agree= ment with the said WALKER, I am prepared to pay the
same rentals and be subjected to the same conditions
and terms as the CNA in
their purported contract."
"I am,
pending the dispute
, in fact quite pre= pared to pay the same
rental as the CNA would be required to pay the applicant,
although I contend
that there is a valid agreement between the applicant and myself as
aforesaid
."
(My emphasis.)
These passages make it abundantly clear that the appellant by no manner of
means expressed an unequivocal and
/unqualified ...
11.
unqualified intent to be bound by the rental agreed upon
between the respondent and CNA. On the contrary, it seems to me that the
appellant plainly disavowed any in= tent to avail himself of his proper remedy.
Moreover, it is apparent from the appellant's affidavit
that his lack of
knowledge of the full terms and conditions of the lease with CNA played no role
at all in the stance that he took
in his affidavit. The appellant at no time
suggested that the application for his ejectment should be dismissed, or even
stayed,
pending the submis= sion of an offer to him by the respondent, and its
re= fusal or acceptance by him. On the contrary, the first
two paragraphs of the
prayer with which his affidavit concluded are significant:
"WHEREFORE I pray that applicant's claim for:
(a)
A declaration and ejectment
be dismissed with costs.
(b)
That the
applicant be interdicted and restrained from giving the CNA posses= sion of the
leased premises
pending the hearing and determination of the
dispute
."
(My emphasis.)
/"The ...
12.
"The dispute" obviously refers to the appellant's alleged
agreement with Walker. Although McCREATH J found that the appellant's
allegations
in regard to the agreement were so improbable that they could be
summarily dismissed on the papers, they were persisted in in the
heads of
argument filed on behalf of the appellant, albeit side by side with the argument
that the respondent was obliged to submit
an offer to the appellant. It was only
at the commencement of the hearing of the appeal that counsel for the appellant
abandoned
reliance on the alleged agreement with Walker and confined himself to
the last-mentioned argument.
In all these circumstances the conclusion is inescapable, in my opinion, that
the appellant has perempted the right either to step
into the shoes of CNA or to
re= ceive an offer from the respondent in regard to the exten= sion of the
lease. At the very least,
his attitude has been ambivalent up to the last
moment, and it is impossible
/for...
13.
for the Court to come to his assistance now without causing
serious prejudice to the respondent, which it would not have suffered
had the
appellant not miscon= ceived his remedy in the Court
a quo
. In this
connec= tion it is to be observed that in the judgment of my Brother NICHOLAS
there is to be substituted for the order granted
by McCREATH J an order
dismissing the ap= plication for ejectment. Such an order would seem to be the
only possible one if the appeal
were to be allowed, in view of the way in which
the appellant's case was con= ducted in the Court
a quo
. But such an
order would leave a number of issues of vital importance to the parties
unresolved. It cannot mean that the appellant
has been occupying the premises at
the rental stipulated in the respondent's contract with CNA, nor that he will
henceforth occupy
them at that rental. Presumably the order is intended to
compel the respondent to submit an offer to the appellant. But, having regard
to
the
/latter's ...
14.
letter's past conduct in this litigation, he will not be
obliged to accept it even if it corresponded exactly to the terms of the
lease
with CNA, and it may well be that it would serve his purposes now to refuse it.
Is the offer to be made with retrospective
effect? If it is refused, by virtue
of what title has the appel= lant been occupying the premises, and what are the
rights of the
parties with regard to the rental in the inter= vening period?
Considerations such as these fortify my view that the appellant ought
not at
this late stage to be afforded an opportunity of pursuing his proper remedy,
which he neglected to do timeously.
I would accordingly dismiss the appeal, with
costs.
A.S. BOTHA JA