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[2014] ZAWCHC 177
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Xtraprops 66 (Pty) Ltd v Phiopater Supplies (Pty) Ltd (20228/14) [2014] ZAWCHC 177 (25 November 2014)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
Case
number: 20228/14
DATE:
25 NOVEMBER 2014
In the matter
between:
XTRAPROPS 66
(PTY)
LTD
................................................................
Applicant
And
PHIOPATER
SUPPLIES (PTY)
LTD
................................................
Respondent
JUDGMENT
DELIVERED ON 25 NOVEMBER 2014
Before: The Hon.
Mr Justice Binns-Ward
BINNS-WARD J:
[1] The applicant
has applied for the eviction of the respondent from certain business
premises in Camps Bay. The respondent has
been in occupation of the
premises in terms of an agreement of lease with the applicant.
[2] It is not in
dispute that the respondent is in arrears with the rental calculated
according to the tenor of the deed of lease,
although the extent
thereof is a matter in contention.
[3] The deed of
lease provides in clause 12.1 that should the tenant fail to pay any
amount due under the lease on due date the
landlord shall be entitled
to cancel the lease. Acting pursuant to that provision, the
applicant gave the respondent written notice
of the cancellation of
the lease on 4 November 2014. The letter of cancellation gave the
respondent notice to vacate the premises
by 5:00 p.m. the same day.
[4] The current
proceedings were instituted on 11 November 2014 after the respondent
had failed to comply with the demand that it
vacate the premises.
The application was set down pursuant to a notice of motion
formulated in accordance with the practice described
in Gallagher v
Norman's Transport Lines (Pty) Ltd
1992 (3) SA 500
(W) to incorporate
a truncated timetable for the exchange of papers. The respondent
duly delivered its answering papers in compliance
with the timetable
set in the notice of motion.
[5] The respondent
contested the propriety of the application being entertained as a
matter of urgency. There is no doubting that
it remained open to the
respondent to take the point notwithstanding its delivery of
answering papers. There was no suggestion
by the applicant’s
counsel, quite rightly, that the respondent had waived its right to
contest urgency by delivering answering
papers that went into the
merits of the case. On the contrary, a respondent in receipt of a
notice of motion in an allegedly urgent
matter, in which a reasonably
formulated timetable on truncated time limits for the exchange of
papers has been provided, puts
itself at risk of not having its side
of the case considered if the court determines that the case should
be heard as one of urgency
on the date on which it has been set down
for hearing in terms of the timetable.
[6] The applicant
contends that the urgency of the matter lies in the fact of the
continuing prejudice it is suffering through non-receipt
of the
stipulated rental on the property and that it has a replacement
tenant who is able to take occupation of the premises as
soon as the
respondent vacates them. There is the potential, in the context of
the respondent’s alleged history of an inability
to meet its
debts, that the applicant may suffer irremediable financial prejudice
if the matter were to be heard in the ordinary
course, or three
months’ hence on the semi-urgent roll. In my judgment a case
for some degree of commercial urgency has
been made out. Having
regard to the fact that the papers were complete, counsel on both
sides had been briefed to be prepared
to argue the matter and the
demands on the ‘fast lane’ court of the Third Division
were relatively light at the time,
I considered that it was in the
interests of justice to entertain the application out of the ordinary
course. As I remarked during
the course of argument, this was a
borderline case on urgency. While the court should be careful to
discourage the bringing of
applications on unrealistically optimistic
contentions of urgency, the distinction between what will be
entertained as urgent enough
to be heard in the ‘fast lane’
court and what will be enlisted for hearing as semi-urgent will to
some degree be determined
by the exigencies of the demands on the
duty judges when the matter is called. Had the state of the
‘urgents’ roll
been more pressing at the time, the matter
would have been sent for hearing on the semi-urgent roll.
[7] The respondent
opposed the application on the basis of an alleged agreement
concluded orally between its representative and
a representative of
the applicant in April 2014. According to the respondent, the
applicant had agreed to accommodate the respondent’s
difficulty
in respect of meeting its rental obligations by accepting payment of
25% of the daily takings of the restaurant business
conducted by the
respondent in the leased premises. The respondent alleged that it
had been complying with the terms of the so-called
‘compromise
agreement’. The applicant disputed the respondent’s
allegations concerning the alleged compromise
agreement. As the
applicant is seeking final relief on motion, the application falls to
be decided accepting the respondent’s
version to the extent
that it is not patently untenable.
[8] The applicant’s
counsel contended, however, that the respondent was unable to rely on
the orally concluded compromise
agreement by reason of clause 14 of
the deed of lease, which provides as follows:
14. NO VARIATIONS
14.1 No variations
of this agreement shall be of any force or effect unless it (sic) is
in writing and is signed by both the Landlord
and the Tenant.
(underlining supplied)
14.2 This Lease
contains all the terms and conditions of the agreement between the
Landlord and the Tenant. The parties agree that
there are no
understandings, representations or terms between the landlord and the
Tenant in regard to the Letting of the Premises
other than those set
out herein.
14.3 No indulgence,
concession, act of relaxation or latitude on the part of the Landlord
in regard to the carrying out of any of
the Tenant’s
obligations in terms of this Lease shall prejudice or derogate from
or be construed as a waiver of any of the
Landlord’s rights in
terms hereof or be regarded as a novation of such rights or found an
estoppel.
The applicant’s
counsel was relying on what is commonly called the Shrifren
principle, after the judgment in SA Sentrale Ko-op
Graanmaatskappy
Bpk v Shifren en Andere
1964 (4) SA 760
(A).
[9] In Shifren, the
Appellate Division of the late Supreme Court of South Africa
determined that parties who contracted on the basis
of entrenching
formalities, such as requirements that any consensual cancellation or
variation of their agreement had to be in
writing signed by the
parties to be of any force or effect, bound themselves by such
contracts to observe such formalities, and
that any subsequent
contract of a nature to which the formalities were intended to apply
would be unenforceable unless compliant
with the self-imposed
formalities. The application of the Shifren principle in the
post-constitutional era was confirmed by the
Supreme Court of Appeal
in Brisley v Drostky
2002 (4) SA 1
(SCA)
(2002 (12) BCLR 1229
;
[2002]
3 All SA 363)
[10] The
respondent’s counsel acknowledged the effect of the Shifren
principle, but argued that in the circumstances of the
current case
it could be ameliorated to allow recognition and effect to be given
to the compromise agreement. In this regard counsel
submitted that
the conclusion of the compromise agreement had entailed the oral
waiver by the applicant of its rights in terms
of the rental clause.
He contended that the Shifren principle did not exclude the ability
of a contractant to orally waive a provision
in a contract subject to
a non-variation clause that was exclusively for the benefit of that
party. In support of that contention
he called in aid the unreported
decision of the KwaZulu-Natal High Court in Buffet Investments
Services (Pty) Ltd and Another v
Band and Another [2009] ZAKZDHC 38
(5 May 2009). Counsel submitted that the conclusion of the
compromise agreement had entailed
the waiver by the applicant, pro
tanto, of the benefit of the rental clause, which was a provision
exclusively for its benefit.
[11] The
respondent’s counsel also argued that, depending on the facts
of a given case, public policy considerations might
justify a
departure from the controversial strictures of the Shifren principle.
For this part of his argument counsel invoked
support from the
judgment of Peter AJ in Steyn and Another v Karee Kloof Melkery (Pty)
Ltd and Another [2011] ZAGPJHC 228 (30 November
2011), which, in
turn, in the relevant part, had relied on the judgments of Alkema J
(Pillay and Ndengezi JJ concurring) in Nyandeni
Local Municipality v
Hlazo
2010 (4) SA 261
(ECM) and Kollapen AJ in GF v SH and others
2011 (3) SA 25
(GNP). Counsel contended that it would be against
public policy to allow the applicant, to the grave prejudice of the
respondent,
to avoid the solemnly concluded compromise agreement by
reliance on the Shifren principle. I understood counsel’s
argument
in this regard to be in essence that to apply the Shifren
principle in the context of the given facts would be, in effect, to
favour
dishonesty or business immorality in a manner that should not
be countenanced by public policy.
[12] A final
argument advanced by the respondent’s counsel – about
whom, it should be recorded, that while he acknowledged,
realistically, that his client was in a difficult spot, said
everything that could be advanced in favour of his client in the
circumstances – was that the compromise agreement established a
regime of substituted performance in respect of the rental
obligation
in terms of the deed of lease. Referring to Van der Walt v Minnaar
1954 (3) SA 932
(O) and Telcordia Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA) (cited at para 34 of the judgment in Steyn and
Another supra), he submitted that it had been held that an agreement
to accept
substituted performance was not a variation of the original
agreement.
[13] For the reasons
that follow I am of view that there is no merit in any of bases
suggested by the respondent’s counsel
upon which the respondent
could avoid the effect of the Shifren principle to rely on the
compromise agreement. I also find that
there is nothing to be had in
the substituted performance related defence.
[14] An agreement
that the rental be determined and paid by way of 25% of the
respondent’s business’s daily takings
would amount to a
variation of the agreement as to the determination and payment of the
rental entrenched in the deed of lease.
The subject of any such
agreement would therefore fall four square within the ambit of clause
14.1 of the deed lease and thus,
on the Shifren principle, be
enforceable only if it complied with the entrenched formalities, viz.
that its terms be reduced to
writing and signed on behalf of both the
parties. I subscribe to the criticism expressed by Peter AJ in Steyn
and Another supra,
at para 33, of the judgment in Buffet Investments
on which the respondent’s counsel relied for this part of his
argument.
For the reasons given by Peter AJ, I too consider that the
decision in Buffet Investments was wrong in the respects relevant for
the purposes of the argument advanced on behalf of the respondent.
The compromise agreement involved in Buffet Investments was
nothing
other than a variation agreement and therefore subject to the
formalities entrenched in the non-variation provisions of
the
original agreement between the parties in that case quoted at para 2
of the judgment. (It seems to me, with respect, that
the learned
judge in Buffet Investments may have confused the discrete concepts
of the doctrine of election, the waiver of conditions
and the
contractual variation of agreements in her consideration of the
operation of the Shifren principle.)
[15] The judgment of
the full court of the Eastern Cape High Court in Nyandeni Local
Municipality would indeed appear to provide
some support for the
argument put up by Mr Wynne for the respondent. The difficulty that
I have with it is the issues of probity
and good faith on which it
places emphasis as justification for deviating from the Shifren
principle will almost invariably arise
in matters in which the
enforceability of a subsequently concluded agreement is excluded by
reason of non-compliance with formalities
entrenched in the preceding
agreement which it purports to vary. It has been considerations of
that nature that have led to the
observation by judges and academic
writers over many years that the effect of the statutorily imposed
formalities in respect of
contracts such as those in respect of the
alienation of land has often been to bring about greater evils than
those which it was
hoped thereby to avoid; see e.g. RH Christie and
GB Bradfield, The Law of Contract in South Africa 6 ed (LexisNexis)
2011 at pp.
114-115 and the authorities cited there in note 34.
While I thus readily appreciate, and indeed identify with, the
philosophical
approach that informed the judgment in Nyandeni Local
Municipality, it is impossible, in my view, to reconcile it with the
legal
policy decision reflected in the Shifren judgment.
[16] Mr Acting
Justice Kollapen followed the judicial philosophy of the decision in
Nyandeni Local Municipality in his subsequent
judgment in GF v SH and
others supra. He held that public policy considerations concerning
the paramountcy of the best interests
of children trumped the
application of the Shifren principle. The learned judge articulated
his reasoning towards that conclusion
along the following lines. In
para 13 of the judgment he referred to the decision in Nyandeni Local
Municipality, stating:
In a full bench
decision of the Eastern Cape High Court in Nyandeni Local
Municipality v Hlazo
2010 (4) SA 261
(ECM) the court held that:
'Public policy (as
underpinned by constitutional norms) dictates that the Shifren
principle, which holds that a contractual non-variation
clause is
valid and effectively entrenches both itself and all other terms of
the contract against oral variation, should be relaxed
so as to bar a
party from relying on it where it was invoked for purposes other than
the vindication of legitimate rights.'
Thus, even though
the Shifren principle is firmly entrenched in our law, it is subject
to the consideration that in appropriate
cases the demands and the
requirements of public policy may well permit or indeed justify a
departure from such a principle.
With reference to
the question of whether a non-variation clause in a divorce
settlement agreement prevented the enforceability
of a subsequently
orally agreed variation of the respondent’s maintenance
obligations, the learned judge held as follows
at para 18-22:
[18] While the
Shifren principle was not articulated as being confined to contracts
of a commercial nature, and on the face of it
would have general
application, it must also be evident that, in matters that relate to
the rights and obligations (in the context
of family law), different
considerations, distinguishable from those applying in the world of
commercial contracts, may well warrant
consideration.
[19] Those
considerations include:
[19.1] The
constitutional imperative that in all matters concerning children the
principle of the best interests of the child must
apply as a guiding
and paramount principle.
[19.2] The
obligation of parents to maintain their children in accordance with
their ability, as well as the needs of the minor
children. It should
follow that it is indeed a matter of public policy to ensure that
those guiding principles, insofar as they
relate to the reciprocal
and mutual reinforcing obligations of parents, are maintained and are
not sacrificed, as it were, at the
altar of ensuring certainty at all
times.
[19.3] The fact that
in the real world parents, entrusted with the responsibility of
ensuring that the best interests of their minor
children are
advanced, must invariably make decisions that may warrant a departure
from, or a variation of, the express terms of
a settlement agreement.
It would be impractical and inconvenient to suggest that, in all such
instances, and in the face of a non-variation-except-in-writing
clause, parents should then be constrained in their ability to take
decisions and to do things, even by mutual agreement, that
would
advance the interests and the wellbeing of such minor children.
[20] Certainly, and
for the considerations alluded to above, there must be instances
where public policy may justify a departure
from the Shifren
principle in the area of family law. Without suggesting that such
departure should be easily justified or readily
countenanced, there
must be due regard to the context within which parenting takes place,
and within which decisions that may on
the face of it vary an express
obligation, are arrived at to attain some other socially desirable
objective — the best interests
of the child. In all the
circumstances the demands and the consideration of public policy, in
the context of ensuring the development
of family law, that are
consistent with the values of the Constitution, including the values
of equality and non-discrimination,
as well as ensuring the
advancement of the best interests of the child, would in my view, in
appropriate instances and where a
proper case is made out, certainly
justify a departure from what has become known as the Shifren
principle.
[21] In conclusion,
I find that while the principle remains a firmly entrenched and
necessary part of the law, the departure may
not only be
constitutionally permissible, but perhaps even constitutionally
mandated.
[22] If indeed the
Shifren principle were entrenched and did not (sic) apply in the
context of family law, it may well have the
effect of achieving all
kinds of unintended consequences that may well militate against the
development of a public policy consistent
with the norms and values
of our Constitution. In particular, a strict adherence to those
principles may well mean that parents
become saddled with a
disproportionate share of their responsibility in respect of the
maintenance and upbringing of a minor child.
It may well have the
effect of restricting the ability of parents to do that which the
best interests of the child demand, as opposed
to that which they are
obliged to do in terms of an agreement of settlement, which terms and
provisions may well not have kept
in touch with the changing times
and developments relevant to the context.
[17] The passage in
Steyn and Another supra, on which the respondent’s counsel
relied, followed the judicial philosophy reflected
in the judgments
in the Nyandeni Local Municipality and GF v SH judgments just
discussed. The determination of the case appears,
however, to have
been made on unrelated grounds and the dicta of Peter AJ in point
were thus probably obiter.
[18]The approach
adopted by Kollapen AJ in the respect described above was rejected by
the Supreme Court of Appeal when the matter
was taken to that court
on appeal. At para 16 of the judgment on appeal, SH v GF and Others
2013 (6) SA 621
(SCA), it was held:
In any event the
view of Kollapen AJ that in the light of the oral agreement of
variation of the maintenance order it would offend
against public
policy to enforce the non-variation clause, cannot be endorsed. This
court has for decades confirmed that the validity
of a non-variation
clause such as the one in question is itself based on considerations
of public policy, and this is now rooted
in the Constitution. See SA
Sentrale Ko-op Graanmaatskappy Bpk v Shifren en Andere
1964 (4) SA
760
(A) at 767A – C and Brisley v Drotsky
2002 (4) SA 1
(SCA)
(2002 (12) BCLR 1229
;
[2002] 3 All SA 363)
paras 7, 8, 90 and 91.
Despite the disavowal by the learned judge, the policy considerations
that he relied upon are precisely
those that were weighed up in
Shifren. In Media 24 Ltd and Others v SA Taxi Securitisation (Pty)
Ltd (AVUSA Media Ltd and Others
as Amici Curiae)
2011 (5) SA 329
(SCA) para 35 Brand JA said:
'As explained in
Brisley v Drotsky
2002 (4) SA 1
(SCA) (para 8), when this court has
taken a policy decision, we cannot change it just because we would
have decided the matter
differently. We must live with that policy
decision, bearing in mind that litigants and legal practitioners have
arranged their
affairs in accordance with that decision. Unless we
are therefore satisfied that there are good reasons for change, we
should confirm
the status quo.'
That approach has
most recently been confirmed in the judgment of the Supreme Court in
Spring Forest Trading 599 CC v Wilberry (Pty)
Ltd t/a Ecowash and
Another
[2014] ZASCA 178
(21 November 2014), which was given on the
very day that the current matter was argued. At para 13 of the
judgment, Cachalia JA
stated ‘…it is necessary to remind
ourselves that when parties impose restrictions on their own power to
vary or cancel
a contract – as they did in this case –
they do so to achieve certainty and avoid later disputes. The
obligation to
reduce the cancellation agreement to writing and have
it signed was aimed at preventing disputes regarding the terms of the
cancellation
and the identity of the parties authorised to effect it.
Our courts have confirmed the efficacy of such clauses’.
[19] In the
circumstances, while I suspect that the last word has yet to be
spoken on the inviolacy of the Shifren principle, I
consider that I
am bound by the judgments of the Supreme Court of Appeal not to
follow the approach contended for by the respondent’s
counsel
on the basis of the views reflected in the decisions in Nyandeni
Local Municipality, SH v GF (GNP) and Steyn and Another.
[20] Dealing with
the respondent’s counsel’s aforementioned final argument,
I do not think that the alleged compromise
agreement postulated
substitute performance. Rather, as already noted, it varied the deed
of lease’s provisions on the determination
of the rental and
how it was to be paid. Even were the alleged arrangement properly to
be characterised as a method of substituted
performance, it is common
cause that the equivalent of the rental due to have been paid in
terms of the deed of lease has in point
of fact not been paid under
the alternative scheme related to the respondent’s daily
takings. Thus, on any approach there
is nothing in the argument.
[21] It follows that
the applicant is entitled to an order directing the respondent to
vacate the premises. I consider that it
would be reasonable to
afford the respondent a few days in order to make the necessary
arrangements to do so. The order to be
made will provide that
respondent must vacate the premises within five days of the service
on it at the premises of a copy of the
order.
[22] The applicant
sought costs on the attorney and client scale. The applicant’s
entitlement to costs on that scale was
stipulated in terms of clause
12.2 of the deed of lease. The applicant also sought the costs of
two counsel. In my view the nature
of the matter did not reasonably
require the costs of two counsel. I shall allow only the costs
entailed in the engagement of
a single advocate, even if those be the
fees of a senior counsel.
[23] The following
order is made:
1. The applicant’s
non-compliance with rules, in particular those relating to service
and time periods, is condoned; and the
matter is declared to have
been properly instituted as one of urgency within the meaning of rule
6(12) of the Uniform Rules.
2. The respondent is
directed to vacate the premises situated at Shops 15 and 16, First
Floor, The Promenade, Victoria Road, Camps
Bay, within five (5) days
of the service on it at the premises of a copy of this order.
3. The respondent
shall be liable to pay the applicant’s costs of suit on the
scale as between attorney and client.
A.G. BINNS-WARD
Judge of the High
Court
Date of
hearing: 21 November 2014
Date of
judgment: 25 November 2014
Applicant’s
counsel: B.J. Manca SC
S. Wagener
Applicant’s
attorneys: Van der Spuy & Partners
Respondent’s
counsel: R. Wynne
Respondent’s
attorneys: Clyde & Co.