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[1991] ZASCA 60
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Proud Investments (Pty) Ltd v L L G International (Pty) Ltd formerly Lanchem International (Pty) Ltd (405/89) [1991] ZASCA 60; 1991 (3) SA 738 (AD); (23 May 1991)
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between
PROUD INVESTMENTS (PTY) LTD
Appellant
and
L L G
INTERNATIONAL (PTY) LTD
formerly
LANCHEM INTERNATIONAL PTY LTD
Respondent
Coram
: JOUBERT, HEFER, VIVIER, KUMLEBEN et
EKSTEEN JJA
Heard
: 19 March 1991
Delivered
: 23 May 1991
JUDGMENT JOUBERT
, J A :
/This
2
This is an appeal against a judgment of LABUSCHAGNE AJ in the
Witwatersrand Local Division dismissing an exception of the appellant
to the
respondent's plea.
The appellant is the registered owner of certain immovable
property in Rosebank on which a building is situated. On 1 September 1986
the
parties entered into a written agreement of lease ("the main lease") in
pursuance of which the appellant, as landlord, let to
the respondent, as tenant,
the entire second floor of the building for administrative offices together with
24 basement parking bays,
as from 1 January 1987 for a period of 6 years.
It is necessary to refer to those material terms of the main lease which are
relevant for purposes of the appeal.
1. Clause 5 provides for payment during the first year of the lease of rent in
the fixed amount of
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3
R8 750-82 per month for the second floor of the building and a fixed amount
of R65-00 per month for each of the parking bays. Provision
is also made for a
percentage increase of the rent during the second and third years of the
lease.
As regards the remaining period of the lease the rate of escalation of
the rent is to be determined in accordance with an agreed method
of
ascertainment by valuers designated by the parties, or failing agreement by the
valuers, by a third party appointed by the South
African Council for
Valuers.
The parties also entered into a written addendum of lease. In terms
thereof the respondent undertook to pay the appellant, during
the currency of
the main lease certain fixed amounts of monthly rent for the use of certain
furnishings and fittings
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4
effected to the leased premises.
The provisions of Clause 5, read in conjuction with the addendum of lease,
obviously comply with an essential element of a contract
of lease of things
(
locatio conductio rei
), viz., that the rent agreed upon by the parties
should be fixed in a definite amount (
merces certa
) or be determinable by
a third person in accordance with the maxim:
certum est quod certum reddi
potest
, D 12.1.6, D 45. 1. 74.
See de Groot (1583-1645) 3.19.7, Voet (1647-1713) 19.2.7, Van der Keessel
(1738-1816) ad Gr 3.19.7.
2. Clause 8 reads as
follows:
"8.
Local authority charges
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5
8.1 The tenant shall pay on demand to the
landlord or to the local authority, as the landlord may require, the cost of
all -
8.1.1 electric current consumed in the
premises:
8.1.2
water consumption, sewerage and effluent charges and sanitary fees
and business refuse removal fees levied from time to time in respect
of the
premises.
8.2 Should any amount referred to in 8.1.2
be levied
or assessed in respect of the property and/or the building as opposed to the
premises, the tenant shall pay an amount equal
to the contribution quota of the
total amount levied or assessed."
3. Clause 9 provides as follows:
"9
Rates and other expenses
9.1 The tenant
shall pay the landlord a portion equal to the contribution quota of -
9.1.1
the assessment rates
payable in respect of the property and/or the
building;
9.1.2 any levies of whatever nature imposed
in
respect of the ownership of immovable property or in respect of services
supplied
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to occupiers of immovable property;
9.1.3 the reasonable wages or other costs payable
or incurred by the landlord
in or about
or in connection with the administration, cleaning, maintenance and/or security
of the building, the property and the gardens thereon;
9.1.4 the landlord's reasonable costs of maintaining and/or servicing the lifts,
electrical installations, safety and/or fire-fighting
equipment in the
building;
9.1.5 the landlord's reasonable costs of maintenance of the water reticulation,
internal or external finishes, roofs and other items
and services essential to
the effective and safe functioning of the building and the property.
9.2 If there is any dispute between the landlord and the tenant concerning the
reasonableness of any of the operating costs or as
to the amount for which the
tenant is liable in terms hereof, such dispute shall be determined by the
landlord's auditors acting
as experts and not as arbitrators and whose decision
shall be final and binding on the parties provided that such auditors shall
be
obliged, in making
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such determination, to have regard to whether the services in
respect of which the operating costs are paid have been supplied at
fair market
cost and to call evidence from such persons as the auditors may regard as being
suitably qualified to assist them in
making their determination."
The purpose of Clauses 8 and 9 is to cast on the respondent as tenant a
liability to make contributions in respect of certain charges,
rates,
maintenance and service costs which would according to our common law appertain
to the appellant's obligations as landlord.
According to our common law a
landlord is obliged to pay all taxes and burdens charged upon the leased land
unless the parties expressly
agreed that they should be borne by the tenant. Van
Leeuwen (1625-1682) R H R 4.21.5 (as translated by Sir John G Kotzê)
states
the position thus :
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8
"The common burdens and charges, fixed by the State, town, or
village, upon hired property, must be borne by the lessor.
arg
. 1.7.
de publican
. Charond
Pandect. du droicts franch
.
lib
. 2.
cap
. 32. Garsias
de expens
.
et meliorat
.
cap
. 14.
num
. 18. Tussch.
vol
. 2
practicab
.
conclus
. 617.
littera C
. Pinell
in 1
. 1.
Cod
.
de bon matern
.
part
. 2
num
. 72. except where any charges have been laid upon the
fruits themselves, which the lessee would then have to bear, but otherwise
not.
arg
.
cap
. 26. rn
verb
.
sicut
.
Colonus extr
.
de decimis
. Charond. d.
loco
, unless the contrary was expressly
agreed upon (e)."
See also de Groot 3.19.15, Van der Keessel ad Gr. 3.19.15,
Wassenaar
(1589-1664),
Practyck Notariaal
, 1729, cap 14
nr 9, Pothier
(1699-1772),
Contrat de Louage
, (Mulligan's
translation as Pothier's
Treatise on the Contract of Letting
and Hirinq
) para 211.
A landlord is likewise according to our
common law obliged to maintain at
his own cost the leased
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9
property during the currency of the lease in a condition
reasonably fit for the purpose for which it was let unless the parties expressly
stipulated that they should be borne by the tenant. Compare de Groot 3.19.12,
Van Leeuwen C.F. 1.4.22.10, Voet 19.2.14, Van der Keessel
ad Gr 3.19.12,
Wassenaar, op.
cit
., cap 14 nrs 7, 8, 9, Huber
(1636-1694) H R 3.10.2
,
Kersteman (1728-1793),
Hollandsch Rechtsgeleert Woordenboek
, 1768, s.v.
Huur p 182 nr 6, Van Zutphen (ob.1685),
Practycke der Nederlantsche
Rechten
, 1655, s.v. Huyringe en Verhuyringe, nr 44, 2
Observationes
Tumultuariae Novae
979,
Harlin Properties (Pty) Ltd and Another v Los
Angeles Hotel (Pty) Ltd
,
1962 (3) SA 143
(A) at p 147 A-B.
In law there
is no
nexus
or correlation between a tenant's contractual obligation to
pay the fixed or determinable amount of rent as an essential element
of the
lease and his contractual undertaking of those common
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law obligations of the landlord which are in essence unrelated
to the tenant's obligation to pay rent for the use of the leased property.
Compare
Black v Scheepers
1972(1) SA 268 (E) at p 269 H.
It is common
cause that the respondent duly took occupation of the leased premises in terms
of the main lease.
On 29 January 1988 the respondent wrote a letter to the
appellant in which it stated that the lease was void for vagueness and therefore
of no force and effect. The defendant could let the premises at its
convenience.
On 23 August 1988 the appellant instituted its action against
the respondent which was based on the main lease and the addendum of
lease as
annexures "A" and "B" respectively. In its main claim as set out in its
particulars of claim the appellant alleged that
the respondent
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had on 29 January 1988 unlawfully repudiated the lease
agreements which repudiation the appellant accepted. As a result of the
repudiation
the appellant claimed from the respondent payment of the amount of
R6 110-61 in respect of the respondent's obligations under the
lease agreements
as well as an amount of R192 855-07 as damages.
In its alternative claim the
appellant alleged that the respondent had occupied the leased premises from 1
November 1987 until 19
February 1988 well-knowing that it had no lawful right to
do so (or alternatively without reasonable grounds for believing it possessed
a
lawful right so to occupy) and as such was a
mala fide
occupier of the
leased premises as a result of which it had been unjustly enriched at the
expense of the appellant in the amount
of R19 029-29.
The respondent admits in its plea having
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entered into the main lease and the addendum of lease
with
the appellant. The material grounds of its defence to
the appellant's
main claim are described in para 2.3 to
2.6 as follows:
"2.3 In terms of clauses 8 and 9 of annexure A the defendant is obliged to
pay to the plaintiff certain charges, rates, levies, wages
and other costs and
expenses (collectively referred to herein as 'cost items') -
2.3.1 the
quantum
of each of the cost
items
is not determined in or determinable from
annexure A and B;
2.3.2 some or alternatively all of the cost
items vary from time to
time and are
dependent upon circumstances and expenses
which may be incurred by the plaintiff;
2.3.3 some or alternatively all of the cost
items are determinable at the
sole instance
of the plaintiff;
2.4 In the premises annexures A and B fail
to make
provision for payment of a fixed or determinable rental.
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2.5
The terms of
annexures A and B are not severable.
2.6
Accordingly annexures A and B are invalid and of no force or
effect."
The same defence is raised in para 10.2 of
the plea to the
appellant's alternative claim.
On 17 November 1988 the appellant filed
an exception to para 2.3 to 2.6
and 10.6 of the plea as being
bad in law, alternatively as not containing
matters of fact
and/or law sufficient to sustain a defence, further
alternatively as irrelevant. The grounds of the exception
were stated as follows:
"1. In paragraph 2.6 of its Plea the Defendant alleges that Annexure 'A' and 'B'
are invalid and of no force or effect.
2. The bases upon which Defendant grounds this conclusion
are:
2.1. that the quantum of each of the cost items
is not determined in or determinable from
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Annexures 'A' and 'B';
2.2 that some or
alternatively
all of the
cost items vary from time
to time and
are dependent upon circumstances and expenses
which may be incurred by the Plaintiff;
and
2.3 some or
alternatively
all of the cost
items are determinable at
the sole instance
of the Plaintiff.
3. In fact:
3.1. the guantum of each of the cost items
is either
determined in or determinable from Annexures 'A' and 'B';
3.2 although certain of the cost items are
dependent
upon circumstances and expenses which may be incurred by the Plaintiff from time
to time, the said items are not thereby
rendered vague, uncertain or
indeterminable;
3.3. none of the cost items are determinable at the sole instance of the
Plaintiff,
and therefore all the rental items provided for in Annexures 'A' and 'B' are
either determined or determinable."
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The Court
a quo
held that the cost items referred to in
Clause 8 were determined or determinable from its provisions. Clause 9.1.2 was
held to be
void for vagueness while Clauses 9.1.3, 9.1.4 and 9.1.5, which left
the determination of the cost items referred to therein to be
ascertained in the
discretion of the landlord, were invalid. Since Clause 9 was not severable from
the other provisions of the main
lease it followed that the invalidity of Clause
9 invalidated the entire main lease. The exception was accordingly
dismissed.
In this Court the finding of the Court
a guo
in regard to
the validity of Clause 8 of the main lease was not challenged by the parties. It
was also common cause that Clause 9,
which formed an integral part of the main
lease, was not severable from its other provisions.
The gist of the respondent's defence to
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Clause 9 of the main lease (as set out in para 2.3 to 2.6 of
its plea) is that the cost items mentioned therein amount to
rental
while
the quantum thereof is not determined in or determinable from the provisions of
the main lease but is determinable at the sole
instance of the appellant without
reference to the respondent. Hence the main lease and the addendum of lease,
which are inseverable,
are invalid and of no force or effect.
The exception
in attacking the soundness and validity of the respondent's defence recognised
the cost items as constituting
rental
which was either determined in or
determinable from the main lease but not determinable at the sole instance of
the appellant. The
issue raised by the exception in regard to Clause 9 is
accordingly whether or not the cost items referred to therein are fixed or
determinable "rental". In view of the reference in both
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the plea and the exception to the cost items as
rental
I shall for purposes of this judgment assume, without deciding, that they in
fact amount to
rental
to which the legal principles regarding the fixing
and determination of rent apply.
I now turn to consider the provisions of
Clause 9. According to Clause 9.1 the respondent is to pay a portion equal to
the contribution
quota of the cost items mentioned in the other sub-clauses of
Clause 9. This contribution quota is to be calculated in terms of Clause
7.1
according to the ratio between the rentable area of his leased premises on the
second floor of the building and the total rentable
area of all offices in the
building. I shall now consider the cost items mentioned in the other sub-clauses
of Clause 9 :
1. Clause 9.1.1 refers to assessment rates payable
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in respect of the building. The assessment rates determined by
a public body or a local authority will obviously consist of fixed
amounts of
money. They accordingly present no difficulty. 2. Clause 9.1.2 relates to
"levies of whatever nature" imposed in respect
of the building or in respect of
services supplied to occupiers of the building. The Court
a guo
held that
the "levies of whatever nature" was framed in such wide terms as to render
Clause 9.1.2 void for vagueness. I cannot agree.
The levies in question,
determined by a public body or a local authority, are circumscribed to relate to
the ownership of the building
or to services supplied to occupiers of the
building. They will be easily ascertainable and consist of fixed amounts of
money.
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3. The cost items mentioned in Clauses 9.1.3, 9.1.4 and 9.1.5 were held by the
Court
a quo
to be so worded that they were left to be determined by the
appellant according to the circumstances and expenses incurred by it
during the
currency of the main lease. They were therefore held to be invalid. In my
judgment the Court
a quo
erred in its interpretation of Clauses 9.1.3,
9.1.4 and 9.1.5. I am not persuaded by the contentions advanced by Mr
Van
Wyk
on behalf of the respondent in support of the interpretation by the
Court
a quo
. On a proper construction of Clauses 9.1.3, 9.1.4 and 9.1.5
they should be read in conjunction with Clause 9.2. The operating charges
referred to in these sub-clauses are described with sufficient clarity to
identify them. The fact that each of the cost items in
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question are qualified by the word "reasonable" does not brand
them as reasonable
rental
, since Clause 9.2 provides the mechanism for
the objective determination of the reasonableness "of any of the operating costs
or
as to the amount for which the tenant is liable" by the landlord's auditors
as expert outsiders without any reference to the landlord.
In the result the
appeal succeeds with costs, including the costs of two counsel. The following
order is substituted for the order
of the Court
a quo
: "The exception is
upheld with costs. Such costs are to include the costs of two counsel."
C P JOUBERT J A. HEFER JA VIVIER JA Concur.
KUMLEBEN JA EKSTEEN JA