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[1993] ZASCA 76
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Internet Charter (Pty) Ltd. v Administrator of the Province of the Transvaal and Others (106/92) [1993] ZASCA 76 (28 May 1993)
1
Case No 106/92 /MC
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
Between
INTERNET CHARTER (PROPRIETARY) LIMITED
Appellant
- and -
THE ADMINISTRATOR OF THE
PROVINCE
OF THE TRANSVAAL
First
Respondent
CITY COUNCIL OF ROODEPOORT
Second
Respondent
THE TOWN COUNCIL OF KRUGERSDORP
Third
Respondent
CORAM:
JOUBERT, VIVIER, EKSTEEN
F H GROSSKOPF JJA et KRIEGLER AJA.
HEARD:
10 MAY 1993
DELIVERED:
28 MAY 1993
J U D G M E N T
VIVIER JA.
2
VIVIER JA:
The appellant applied on notice of motion
in the Witwatersrand Local Division for an order declaring that a valid long
lease existed
between it, as lessee, and the respondents, as lessor, in respect
of hangar site no 6 ("site 6") at Lanseria Airport ("the airport"),and
for an
order enforcing execution thereof. It alleged that the lease was for a period of
25 years commencing on 1 January 1987 and
terminating on 31 December 2011 and
that its full terms and conditions were contained in annexure "D" to the
founding affidavit.
In a counter-application the respondents sought an order
declaring that the appellant occupied site 6 under a tacit monthly tenancy.
The
matter came before STEGMANN J who dismissed the application and granted the
counter-application, both with costs. With the necessary
leave the appellant now
appeals to this Court against
3
the judgment and orders of the Court a quo.
It appears from
the papers that the negotiations between the parties for the conclusion of a
lease in respect of site 6 commenced
in early 1987 against the following
background. At that time the appellant was carrying on the business of letting
hangarage and
office space on site no 28 at the airport. For that purpose it had
on 25 March 1986 and in terms of a written cession, acquired the
lessee's rights
under a 25 year "written lease in respect of site no 28 on which a hangar had
been erected. The appellant was anxious
to obtain another site at the airport
and to construct a hangar on it in order to expand the business it was doing on
site no 28.
It is quite clear that during negotiations between Mr Schwartz,
representing the appellant, and Mr Van Eeden, the airport manager
at the time, a
lease of site 6 was offered to the appellant for a period of 25 years at
a
4
rental of R268-75 per month and at a specified rate of escalation, which
terms were accepted by Schwartz. Van Eeden further proposed
that the
respondents' standard agreement of lease for letting sites at the airport, which
contained the usual provisions for the
smooth functioning of the lease, be used
for the purpose of preparing a formal lease.
The second and third
respondents, together with the former statutory body, the Transvaal Board for
the Development of Peri-Urban Areas
(whose rights and obligations later devolved
upon the first respondent in his official capacity), had during 1974 assumed
control
of the airport. A body known as the Lanseria Airport Management Board
("Lamb") had been established to manage and develop the airport,
with two
councillors from each of the said three local authorities serving thereon.
Included in Lamb's powers was the power to let
portions of the land constituting
the airport.
5
Lamb appointed officials to manage the airport, one of whom was
designated as the airport manager.
Following upon their negotiations
Van Eeden during March 1987 forwarded to Schwartz for his signature Lamb's
standard agreement of
lease which had been duly completed in respect of site 6.
Clause 1 of that document provided for the lease to commence on 1 January
1987
and to endure for a period of 25 years. Site 6 was duly identified according to
a diagram annexed to the document. Provision
was made for a rental of R268-75
per month and how this amount was to escalate. It was stipulated that the site
had to be used for
the erection of a hangar and purposes incidental thereto.
Schwartz did not sign this document as he required certain minor amendments
to
it. For that purpose he prepared another document incorporating the amendments,
which he signed and sent to Van Eeden. In the
meantime the appellant
6
commenced paying the stipulated rental which it has done ever since,
together with the required escalation. It took occupation of
site 6 and
constructed a hangar on it during 1988 at a considerable cost. According to
Schwartz the hangar cost Rl,4m to construct
whereas Mr Coetzer, who succeeded
Van Eeden in September 1990 as airport manager, estimated the cost as between
R250 000 and R500
000. The appellant has occupied the hangar since its
construction.
The lease dispatched by Schwartz to Van Eeden was
apparently mislaid in the latter's office and under cover of a letter dated 6
January
1989 Van Eeden forwarded another standard lease to Schwartz for his
signature. Schwartz was requested to return the lease "for signature
by my
Board's representatives whereafter a copy would be forwarded to you". Instead of
signing this document Schwartz forwarded another
signed copy of the lease
containing his amendments to Van Eeden
7
on 8 September 1989. The airport management, however, was still insisting
upon a lease containing Lamb's standard provisions and under
cover of a letter
dated 16 February 1990 the assistant airport manager, Mr M J van Rensburg,
forwarded yet another standard agreement
of lease which had been duly completed
to Schwartz for his signature. Schwartz did not sign this lease
either.
After succeeding Van Eeden, Coetzer reaffirmed to Schwartz
during October 1990 that Lamb would sign a written agreement of lease in
respect
of site 6 for 25 years at the agreed rental on its standard terms and conditions
contained in the documents which had earlier
been sent to him for signature.
Consequently a further print out of the standard agreement of lease which had
been completed in respect
of site 6 was delivered to Schwartz for his signature
during October or November 1990. This was
8
the document which was annexure "D" to Schwartz's founding affidavit.
According to Coetzer, Schwartz indicated to him in January 1991
that he only
required an alteration to the domicilium clause (clause 21) of annexure "D"
before signing it. Coetzer agreed to the
change whereupon Schwartz on 21 January
1991 signed the document and returned it to Lamb.
A comparison
between the document sent to Schwartz for his signature in March 1987 and
annexure "D" reveals that the material conditions
had remained exactly the same.
Certain minor provisions had been omitted and others added, and although it is
not clear who had effected
these alterations it can safely be accepted that they
had been done on the authority of Lamb.
During 1990, and unbeknown to the appellant, the respondents commenced
negotiations with a consortium for the sale of the airport,culminating
in
9
the conclusion of a written agreement of sale on 23 March 1991. In clause
30 thereof it was recorded that the respondents had entered
into certain lease
agreements in respect of sites and offices at the airport which were identified
in annexure "H" to the contract
of sale. Annexure "H" reflects a lease of site 6
to the appellant as one of a large number of 25 year leases which the
respondents
had concluded with various tenants. The expiry date of the lease of
site 6 and the rental therefor stated in annexure "H" correspond
with the terms
of annexure "D". In the contract of sale the respondents undertook to cause all
these 25 year leases (which were required-
to be notarially executed) to be
executed and registered. In an affidavit filed on behalf of the respondents Van
Rensburg claims
to have prepared annexure "H" in error but his explanation is so
clearly untenable that it can, in my view, be rejected on the papers
(Plascon-
10
Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623(A) at 635
B-D).
It is . significant that none of the respondents who signed
the contract of sale has filed an affidavit to support Van Rensburg's
claim that
the appellant's agreement of lease in respect of site 6 ought not to have been
included in annexure "H". The respondents
were certainly alerted to the issue by
a fax sent by appellant's attorney to their attorney on 19 March 1991, i e four
days before
the deed of sale was signed, in which it was claimed that a valid
lease for 25 years existed in respect of site 6 on the terms and
conditions
contained in annexure "D". The respondents' reply, dated 21 March 1991,
contained no denial of the alleged lease, and
it was only after the contract of
sale had been signed that the respondents repudiated the lease. In my view the
conclusion is inescapable,
particularly if regard is had to the
11
correspondence which_ passed between the attorneys acting for the
parties, that this attitude was inspired by the purchasers of the
airport.
The respondents' case is that during the negotiations
between the parties in early 1987 a monthly lease of site 6 at the aforesaid
rental was arrived at by words or conduct. This was the basis upon which the
Court a quo granted the counter-application. The respondents'
case is further
that no informal agreement of lease for 25 years was ever concluded between the
parties; that neither Van Eeden nor
Coetzer in any event had any authority to
conclude - such a lease and finally that the parties agreed that there should be
no binding
25 year lease on the terms and conditions set out in annexure "D"
until that document had been signed by both parties.
When considering the relationship which existed between the parties in
early 1987 it is
12
important to bear in mind that Lamb's objective at all relevant times
clearly was to enter into a 25 year lease in respect of site
6 for the purpose
of the construction of a hangar thereon. To that end site 6 was surveyed and a
diagram prepared. It was expressly
stated in the subsequent documents that site
6 had to be used by the appellant for the construction of a hangar thereon. It
can safely
be accepted that Lamb was aware of the nature of the appellant's
business at the airport viz that of letting hangarage and office
space on site
no 28; that it wanted to extend its business to site 6 and that it would be
quite unthinkable for the appellant to
construct a hangar and to conduct its
business on site 6 if it only had a monthly tenancy. It is clear, therefore,
that neither party
contemplated any other lease than one which was to endure for
25 years. In my view the issue of the airport managers' authority to
negotiate
a
13
25 year lease, as opposed to a monthly lease, does not arise. Lamb itself
wanted a 25 year lease and made that intention clear to
the appellant in a
number of ways, quite apart from what was conveyed to Schwartz by Van Eeden or
Coetzer. It allowed the appellant
to occupy site 6 and to construct a hangar on
it; it accepted payment of the escalated rental; it authorised the dispatch of a
number
of its standard leases, duly completed, to be sent to the appellant for
signature and it authorised the amendments which were made
to these documents
from time to time, some of which I have referred to above. The fact that the
rental was to escalate yearly is
itself an indication that a long lease had been
agreed upon. A provision for a yearly escalation of rental in a monthly lease
would
be unusual. In my view, accordingly, the Court a quo erred in finding that
no more than a monthly lease had been agreed upon during
early 1987. It
14
should have found that a binding agreement of lease had then been
concluded by which Lamb had let to the appellant site 6 for a period
of 25 years
at a rental of R268-75 per month which was to escalate at the rate agreed
upon.
It is clear that both parties desired a formal lease to be
drawn up containing Lamb's usual provisions for the smooth working of the
lease,
and that negotiations took place on minor points. Lamb wanted the formal lease
to include its standard terms and conditions
whereas the appellant wanted those
altered. That both parties wanted a document prepared and duly executed is
understandable.- It
would have facilitated the respondents' task of complying
with the procedural requirements of sec 79(18) of Ordinance 17 of 1939.
It would
also, if registered, have served to protect the appellant's rights. For any
lease to be valid against a creditor or successor
15
under onerous title of the lessor for a period longer than ten years
after having been entered into, it had, in the absence of knowledge,
to be
registered against the title deeds of the leased land (sec 1(2) of Act 18 of
1969) . In order to be registerable it had to
be notarially executed (sec 77(1)
of Act 47 of 1937).
Following upon the conclusion of the informal
lease in early 1987 Lamb over a lengthy period of time consistently held out to
the
appellant that it would execute a formal document containing its standard
terms and conditions. One such document after the other
was sent to the
appellant for signature. So, for example, in Van Eeden's letter dated 6 January
1989 to which I have already referred,
the appellant was requested to sign the
document which was sent to him under cover of that letter and to return it for
signature
by Lamb's representatives.
The question is whether, as was
contended
16
for on behalf of the respondents, the parties agreed that they would not
be bound unless or until a written lease had been executed.
Mr Slomowitz, who
appeared on behalf of the respondents, conceded that the onus of proving this
rested on the respondents. This concession
was, in my view, correctly made. See
Goldblatt v Fremantle
1920 AD 123
at 128-129 and Woods v Walters
1921 AD 303
at
305-306. In the latter case INNES CJ said at p 305 that the mention of a written
document during the negotiations will be assumed
to have been made with a view
to convenience of record and facility of proof of the verbal agreement come to,
unless it is clear
that the parties meant that the writing should constitute the
contract.
Nothing has been placed before us to show that Lamb's object in preparing
annexure "D" and submitting it to the appellant for signature
was to achieve
anything more than to afford facility of proof
17
of the letter's acceptance of its standard terms and conditions contained
therein. Mr Slomowitz relied on clause 1 of annexure "D"
which provided that the
lease "shall be subject to the registration of this contract against the title
deed of the property concerned".
This clause was clearly intended for the
benefit of the lessee and did not require writing or registration as a condition
precedent
to its validity inter partes. That it was not so intended nor
understood appears clearly from the documentation dealing with the
registration
of the lease of site 28. This lease contained a clause similar to clause 1 of
annexure "D". By the end of March 1991
this lease had still not been registered
despite the fact that the appellant had obtained cession of the lessee's rights
and obligations
five years before on 25 March 1986. That notwithstanding, the
validity of the lease of site 28 was never in issue and was acknowledged
by
the
18
respondent in correspondence and in the deed of sale of the airport
concluded on 23 March 1991.
Mr Slomowitz further relied on clauses
8, 11, 12 and 19 of annexure "D". Clause 8 requires the lessor's consent in
writing to a sublease
or cession; clauses 11 and 12 require written notice of
cancellation by the lessor and in terms of clause 19 any variation of the
lease
has to be in writing. All these clauses would seem to be consistent with an
object merely to facilitate proof of the terms
and conditions contained in
annexure "D" and it is not at all clear that the parties thereby intended that
writing was a condition
precedent to the validity of the lease.
If one looks at the conduct of the parties the matter is placed beyond
doubt by the respondents' admission in signing, the deed of
sale to the effect
that a valid agreement of lease for 25 years in respect
19
of site 6 existed on the terms and conditions set out in annexure "D". In
all the circumstances I am of the view that the respondents
have failed to
discharge the onus of proving an agreement that there would be no binding lease
on the terms and conditions set out
in annexure "D" until the due execution of
that document. When Schwartz signed annexure "D" and returned it to Lamb the
parties had
reached complete agreement on every point which they had intended to
embody in the . lease, and a valid lease was thereby concluded.
The execution of
the formal document was not a condition precedent to its validity, but was
clearly a contractual- obligation under
the informal contract. The respondents
were therefore not entitled to refuse to sign annexure "D" and the Court a quo
should have
ordered specific performance of the obligation to sign and to
register the lease. See Woods v Walters, supra at p 309.
20
It remains to deal with the costs of the
appellant's application that the matter be remitted to the Court a quo for the
hearing of
further evidence. In my view no reasonably sufficient explanation has
been furnished by the appellant why the evidence which it was
sought to lead was
not led at the trial. It follows that the application could not have succeeded
and the appellant must accordingly
bear the respondents' costs of opposition to
it.
In the result the appeal succeeds. It is . ordered:
(1) That the appeal be allowed with costs, such costs to include the costs
of two
counsel.
(2)
That
the order of the Court a quo be
set
aside and there be substituted the following:
"An order is granted:
(a) Declaring
that there is a valid and binding agreement of lease between
21
the parties on the terms contained in annexure
'D' to the founding Affidavit;,
(b)
Directing the
respondents to sign the agreement of lease which is annexure 'D' to the founding
affidavit and to do all things necessary
to cause such lease to be registered as
a long lease;
(c)
Directing
that in the event of one or more of the respondents failing to sign annexure 'D'
by 31 July 1993, the sheriff is authorised
and directed to sign the agreement of
lease on their
behalf;
(d)
That the costs of
the application be paid by the
respondents;
(e)
That the
counter-application be dismissed with
costs."
(3) That the appellant's application for the matter to be remitted be
refused with costs, such costs to include the costs of two
counsel.
W. VIVIER
JA.
JOUBERT JA)
EKSTEEN JA) Concur.
F H GROSSKOPF JA)
KRIEGLER AJA)