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[2018] ZASCA 63
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Zitonix (Pty) Limited v K201250042 (South Africa) (Pty) Limited (290/2017) [2018] ZASCA 63 (21 May 2018)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 290/2017
In
the matter between:
ZITONIX
(PTY) LIMITED
APPELLANT
and
K201250042
(SOUTH AFRICA) (PTY) LIMITED
RESPONDENT
Neutral
citation:
Zitonix
v K201250042
(290/2017)
[2018] ZASCA 63
(21 May 2018)
Coram:
Lewis
and Swain JJA and Davis, Mothle and Rogers AJJA
Heard:
10
May 2018
Delivered:
21
May 2018
Summary:
Where
a claim for the cancellation of lease agreements, and the eviction of
the tenants, is based only on the terms of the agreements,
and not on
the title of the lessor, the court of the tenants’ domicile,
and of the place where the contracts were concluded,
has concurrent
jurisdiction with that of the
forum
rei sitae
.
Ignorance of a term of the leases entitling the lessor to cancel in
the event of a surety’s sequestration not a justus error
on the
facts.
ORDER
On
appeal from:
Western
Cape Division of the High Court, Cape Town (Holderness AJ sitting as
court of first instance):
The
appeal is dismissed with costs including those of two counsel, save
that para 3 of the order of the Western Cape Division of
the High
Court is set aside.
JUDGMENT
Lewis
JA
(Swain JA and Davis,
Mothle and Rogers AJJA
concurring)
[1]
This is an appeal against a judgment handed down by Holderness AJ in
the Western Cape Division of the High Court of South Africa,
in an
application seeking the confirmation of the cancellation of five
leases, and the eviction of the tenants from the premises
hired by
them. She made the orders sought in the application, and authorized
the Deputy Sheriff of the High Court to eject the
tenants in the
event of their failure to vacate the premises.
[2]
The defences to the applications were dealt with comprehensively by
the court a quo and were all rejected. I do not propose
t
o
deal with them all, in view of the fullness of the judgment of the
court a quo, which cannot be faulted in any respect, and because
in
any event only two were pursued with any vigour on appeal.
[3]
The appellant is a company, Zitonix (Pty) Ltd (Zitonix), which had
traded in fashion, with several different South African brands,
in
shopping centres throughout the country. By the time the application
to the court a quo was heard, Zitonix had shops in only
one shopping
centre, the Gateway Theatre of Shopping (the centre) in Umhlanga,
KwaZulu Natal. The controlling mind of the tenant
companies is Mr
Marcel Joubert. The applications for confirmation of cancellation of
the leases and eviction were in respect
of these shops, and were
brought by the manager of that centre, Old Mutual Property
Manangement Services (Pty) Ltd, acting on behalf
of the owner of the
centre, K2012150042 (South Africa) Pty) Ltd, the respondent. I shall
refer to the respondent as the lessor.
[4]
It should be noted that Zitonix is part of the Platinum Group (Pty)
Ltd, which owned the brands. Joubert was the sole director
of the
Platinum Group, and of Zitonix, until his final sequestration in
2016. The Platinum Group has its registered office in Hout
Bay, Cape
Town, and that is Joubert’s residential address as well. The
address in Hout Bay is also the chosen
domicilium citandi et
executandi of the tenants of the shops in the centre.
[5]
Joubert had concluded leases in respect of the shops in the centre in
Cape Town in February 2016. The shops had leases in the
premises
before then, and in order to persuade the lessor to enter into new
leases, Joubert had paid what he called a ‘premium’
to
the lessor: in fact, the amount paid was arrear rental in respect of
the shops. And the lessor agreed to backdate the leases
to August
2015. Joubert signed as surety in respect of the five leases.
[6]
Zitonix fell into arrears shortly after February 2016, and the lessor
cancelled the leases. The disputes between the parties
were resolved,
however, and the leases ‘reinstated’ on the same terms.
Zitonix again defaulted, and the lessor gave
the tenants the
opportunity to remedy their breaches in terms of clause 16.1(a) of
each of the leases. That did not really assist
the lessor because by
August 2016 four of the lessees were again in default.
[7]
The lessor sent letters of cancellation of the leases in respect of
those four leases on 25 August 2016, and then further letters
of
cancellation in respect of all five leases on 31 August 2016. A new
breach was relied on in the five letters cancelling the
leases –
the final sequestration of Joubert as surety. A final order of
sequestration of Joubert was issued on 22 August
2016, which, under
clause 16.1(e) of the leases, amounted to a breach warranting
cancellation. Clause 16 dealt with breach generally.
Clause 16.1 read
‘should the tenant’ commit any one of a number of
breaches the lessor would be entitled to cancel.
Subclause (e) read
‘should any surety of the Tenant be sequestrated or placed in
liquidation’, the lessor had the right
immediately to cancel
the lease and resume possession of the premises.
[8]
As I have said, Zitonix raised numerous defences to the application
for cancellation and eviction brought by the lessor. These
were (a)
that the Western Cape Division did not have jurisdiction to entertain
the application since the property – the centre
– is in
KwaZulu-Natal which is the
forum
rei sitae
;
(b) the deponent to the founding affidavit did not have authority to
depose to it; (c) the letters of cancellation were deficient
in that
they did not disclose in detail what was due in arrear rental and
other charges; (d) Joubert had been ignorant of the provisions
of
clause 16(1)(e) as a result of
iustus
error
and his sequestration could not therefore ground cancellation; and
(e) that the lessor was engaged in anticompetitive behaviour,
an
issue that had to be referred to the Competition Tribunal in terms
of
s 65
of the
Competition Act 89 of 1998
.
[9]
Holderness AJ found that each of these defences was lacking in merit
and rejected them. On appeal, Zitonix persists only with
the
arguments on lack of jurisdiction, and Joubert’s ignorance of
the suretyship provision in the leases. I shall accordingly
deal only
with these two issues, and then only briefly, as Zitonix virtually
conceded that the conclusions of the court a quo were
correct.
Jurisdiction
[10]
The basis for the argument that the Western Cape Division did not
have jurisdiction is that the application for eviction was
one
in
rem
and thus only the
forum
rei sitae
had jurisdiction. It was put to counsel for Zitonix that the
application for confirmation of the cancellations was based on the
contracts of lease – a contractual claim and not one
in
rem
– and that the application for eviction was equally based not
on possession or title, but was entirely contractually founded
–
in
personam
.
The lessor did not at any stage of the proceedings allege
that it had title – ownership. The application was
not a
rei
vindicatio
.
The lessor was not exercising a possessory remedy either. As the
domicile and residence of Zitonix were in Hout Bay, Cape Town,
the
court a quo had concurrent jurisdiction with the KwaZulu-Natal
Division. As Holderness AJ said, if the leases were validly
cancelled, no issue of title arose.
[11]
Counsel for Zitonix conceded, as he had to do, that if the action was
not
in
rem
,
then the jurisdiction argument had to fail. I shall accordingly not
traverse the authorities that deal with the jurisdiction of
a court
that is not the
forum
rei sitae
.
The court a quo did not err in this regard. It considered, correctly,
that
s 42(1)
and (2) of the
Superior Courts Act 10 of 2013
,
which deal with the execution of process throughout the country,
permits the Sheriff of the KwaZulu-Natal Division to execute
in that
Division if the tenants failed to vacate the premises. To the extent
that the court a quo made an order that the Sheriff
or Deputy Sheriff
of the Western Cape Division be authorized to execute in the event of
the tenants not vacating, that part of
the order must be set aside.
The Western Cape Division does not have the authority to make any
order against the officers of the
court in KwaZulu-Natal. If the
tenants fail to vacate the premises, the lessor will, by virtue of
s 42
, be entitled to obtain a writ of ejectment from
the Registrar of the KwaZulu-Natal Division of the High Court for
execution
by the Sheriff or Deputy Sheriff of that court. No special
order to that effect is needed.
The
effect of the surety’s sequestration
[12]
Zitonix alleged that Joubert had signed the leases oblivious to the
consequences of his sequestration. He did not know that
if he were
sequestrated, the lessor would be entitled to cancel the leases in
terms of clause 16.1(e) of the leases. He had thus
erred and his
error was
iustus
because at the time of signing, the lessor, through its legal
representative, knew that he was on the brink of sequestration, yet
allowed him to enter into long term leases despite its right to
cancel in the event of his sequestration.
[13]
The evidence adduced by the lessor showed, however, that it was not
aware of the possibility of final sequestration at the
time of
signing the leases. Moreover, Joubert, an experienced businessman,
who had entered into many similar leases beforehand,
containing
similar clauses, was represented in negotiations by his attorney. He
had signed some 25 leases with this same clause
with the lessor
itself. There is no reason to believe that Joubert was misled in this
regard. And equally there is no reason to
accept the argument that
clause 16.1(e) was ‘tucked away’ in the lease agreement.
It appeared in the body of each lease
under the heading ‘breach’.
This defence must also be rejected.
[14]
Holderness AJ dealt comprehensively with the other defences,
including the argument that the lessor’s conduct was
anti-competitive
and should be referred to the Competition Tribunal.
She declined to do that. Zitonix did not persist with the arguments
regarding
the other defences raised in the court a quo at the hearing
of the appeal.
[15]
Accordingly, the appeal is dismissed with costs including those
of two counsel, save that para 3 of the order of the
Western Cape
Division of the High Court is set aside.
_________________________
C
H Lewis
Judge
of Appeal
APPEARANCES
For
Appellant:
R S van Riet
SC, with him S Miller
Instructed
by:
Reid W Corin, Cape Town
Lovius
Block, Bloemfontein
For
Respondent:
I Jamie SC, with
him K Reynolds
Instructed by:
Cliffe Dekker Hofmeyer
Inc, Cape Town
Honey Attorneys,
Bloemfontein