CASE NUMBER: 642/04 IN THE HIGH COURT OF SOUTH AFRICA (BOPHUTHATSWANA PROVINCIAL DIVISION) In the matter between: NORTH WEST DEVELOPMENT CORPORATION Applicant (PTY) LTD andSOLID DOORS (PTY) LTD Respondent URGENT APPLICATION MAFIKENG HENDRICKS J. DATE OF HEARING : 09 JUNE 2004 DATE OF JUDGMENT : 22 June 2004 COUNSEL FOR THE APPLICANT : Adv J.J. Reyneke S.C.with him Adv. J W Steyn COUNSEL FOR THE RESPONDENT : Adv C.P. van Coller with him Adv H.M. Vermaak
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IN THE HIGH COURT OF SOUTH AFRICA …the total of R 2 903 069.68. Annexures FZ15, FZ16, FZ17 also proofs the individual amounts which the Respondent is in arrears with in respect of
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CASE NUMBER: 642/04
IN THE HIGH COURT OF SOUTH AFRICA
(BOPHUTHATSWANA PROVINCIAL DIVISION)
In the matter between:
NORTH WEST DEVELOPMENT CORPORATION Applicant
(PTY) LTD
and
SOLID DOORS (PTY) LTD Respondent
URGENT APPLICATION
MAFIKENG
HENDRICKS J.
DATE OF HEARING : 09 JUNE 2004
DATE OF JUDGMENT : 22 June 2004
COUNSEL FOR THE APPLICANT : Adv J.J. Reyneke S.C.with him Adv. J W SteynCOUNSEL FOR THE RESPONDENT : Adv C.P. van Coller
with him Adv H.M. Vermaak
HENDRICKS J:
INTRODUCTION
[1] This matter came before me as an urgent application on 31st May
2004 and was postponed until 09th June 2004 at the instance of the
Applicant. Costs was reserved at that stage.
[2] The Applicant is the owner of 4 premises in the Babelegi Industrial
Township. The Respondents hired these premises from the Applicant
for several years in terms of written lease agreements which were
extended from time to time. Separate lease agreements were entered
into between the parties for each of the 4 premises.
[3] It is common cause between the parties that at the time the Applicant
instituted this application, Respondent was still in occupation of all 4
premises (Stands 96, 97A, 97B and 98) and enjoyed undisturbed
possession thereof.
[4] The Respondent has given notice to the Applicant of its intension to
terminate the lease agreements and that it intends to vacate these
premises. Different dates were advanced as the respective dates on
which the Respondent will vacate each of the different premises.
[5] The first date specified by the Respondents was during May 2004 in
respect of the first premises (Stand 96). The Applicant approached
this court on an extreme urgent basis for an order in the following
terms:
“2. That the Respondent be interdicted and restrained from removing or alienating
any of the Respondents or third parties’ movable assets (“the assets”) situated at
Stands 96, 97A, 97B and 98 in the Babelegi Industrial Township (“the immovable
properties”) pending the institution and finalisation of an action by the Applicant
against the Respondent for payment of arrear rental.;
3. Alternatively, that the Respondent be interdicted and restrained
from removing or alienating the assets situated at the immovable
properties pending the issuing of an order by the above
Honourable Court for the attachment of the assets;
4. Costs of suit to be paid by the Respondent.”
[6] I may just mention that the above prayers are set out in the amended
notice of motion which was filed at a later stage. It differs from the
original notice of motion because of the insertion of the words “...and
finalisation...” in paragraph 2.
[7] This application is opposed by the Respondent on various grounds which
I will deal with later on in this judgment.
[8] The nature of the application is that the Applicant applies to have his
hypotec over the movables of the Respondent or third parties on the
premises hired by the Respondent from the Applicant perfected.
URGENCY
[9] The Applicant initially approached this court on the Monday 31st May
2004 at 10h00. The documents were served on the Respondent on the
preceeding Friday, 28th May 2004 at 14h04 and was also filed with the
Registrar of this court on the very same day.
[10] The notice of motion is in short form and does not comply with
Form 2(a). No time limit was given to the Respondent during which
he could answer to what it contained in the founding papers.
[11] When the matter appeared before me on the 31st May 2004, the
Respondent had filed its opposing papers that very same morning.
[12] The Applicant who wanted to reply to the allegations contained in
the opposing papers successfully applied for a postponement of
the matter. Costs were reserved at that stage.
[13] One of the basis on which the Respondent opposed this
application is the lack of urgency, alternatively that the urgency is
selfcreated by the Applicant.
[14] In a letter dated 9 th December 2003 , Respondent’s attorneys
notified the Applicant about their intention to terminate the various
lease agreements and to vacate the premises. The following
appears in paragraphs 9 and 10 of the said letter:
“9. Our clients, in view of the aforegoing, however, hereby
formally give notice of its intention to vacate the immovable
properties after the lapsing of periods hereunder referred to
and upon which dates the leases will be cancelled by our
clients, our clients occupying the properties until the lapsing
of such period with a view to mitigating damages and in an
effort to afford yourselves reasonable notice. Our clients will
vacate the properties after the lapsing of the periods in
respect of the respective properties as follows:
9.1 In respect of Stand 96, a period of five months
calculated from date hereof;
9.2 In respect of Stand 97A, a period of six months from
date hereof;
9.3 In respect of Stand 98, a period of twelve months
calculated from date hereof;
10. Our clients accordingly in view of the aforegoing while
reserving all its rights affords your clients notice formally in
terms hereof of its intention to vacate the leased premises
after the expiry of the aforementioned periods at which time
the leased agreements shall be cancelled”.
[15] This letter is attached as Annexure FZ11 to the Founding Affidavit
of the Applicant, and it is common cause that Applicant did receive
this letter shortly after 09 December 2003.
[16] It is also common cause that at no stage did the Respondent
undertake not to proceed with the vacating of the said premises, as
stated in the letter.
[17] It was submitted by Mr Reyneke S.C. who appeared on behalf of
the Applicant that it came to the attention of the Applicant via a
Review Application instituted by the Respondent, that the
Respondent (in an affidavit in that Review application) states that it
is “in the process of vacating the said premises”.
See : paginated page 87 of the record
[18] It is then that Applicant realised that the Respondents is serious
about vacating the said premises. This affidavit was attested to on
19th May 2004 and it came to attention on the Applicant around
27th May 2004. This prompted the Applicant to resort to bringing
this application on an extreme urgent basis.
[19] It is abundantly clear that the Applicant was indeed notified by
Respondents of its intended vacating of the said premises several
months ago.
[20] It is clear that Applicant itself, created
the situation it finds itself in by waiting
until the last moment before taking
action. The urgency is therefor self
created.
[21] I agree fully with the submission made by Mr Van Coller who
appeared on behalf of the Respondent that the Respondent was
“frogmarched” to court by the Applicant.
[22] Although applications of this nature can be urgent depending on
the circumstances, I find myself unable to think of any valid reason
why the Applicant did not take appropriate steps at a much earlier
stage.
[23] It is mindboggling why the Applicant waited until the end of the
notified first period of five months before it took action. A court will
not condone or tolerate the actions of a applicant where he
creates himself the urgency.
[24] I am of the view that the actions of the Applicant under the
circumstances of this case warrants that this court shows its
disapproval of such actions with the granting of an appropriate
punitive cost order.
[25] I was inclined to dismiss the application outrightly due to the fact
that the urgency is selfcreated, but I am of the view that it is in the
interest of justice that this matter be entertained as there is merit in
Applicant’s application.
THE APPLICATION
[26] The Applicant is applying to have his hypotec over the movables
on the hired premises perfected.
[27] A Lessor’s hypotec comes into operation only when (and operates
only as long as) rent is owing.
[28] Before the lessee is in arrear with rent the lessor has no hypotec
and cannot interdict the lessee from removing his goods from the
hired premises.
See: Landlord and Tenant by W.E. Cooper on page
1923.
[29] A lessor’s hypotec operates only in respect of movables on the
hired premises and unless they have been attached, the lessor’s
hypotec is lost as soon as they are removed from the hired
premises.
See: Frank v Van Zyl 1957 (2) SA 207 at Page 210 AC.
[30] It is trite law that if a lessor wants to render his hypotec legally
effective he must by judicial process perfect his hypotec over the
movable property while it is still on the hired premises.
See: KleinsakeontwikkelingsKorporasie Bpk v Santam
Bpk 1988 (3) SA 266 (K) on page 270 CD where the
following is stated by Tebbutt R:
“Dit word egter geleer dat, alhoewel die verhuurder se
hipoteek outomaties ontstaan wanneer die huurgeld
agterstallig raak oor die goed van die huurder, of _ derde in
die omstandighede hierbo uiteengesit, wat op die verhuurde
perseel deur die huurder gebring word, dit nodig is alvorens
die verhuurder dit kan afdwing, of die ‘voordeel’ van die
hipoteek kan verkry, dat hy dit moet perfek maak of bevestig
deur _ bevel van _ bevoegde hof;...”
See also the other authorities quoted further on that
page.
[31] In order to succeed in obtaining an attachment order or an interdict,
the lessor must prima facie establish and proof that the lessee is
in arrears with his rent.
See: Currie v Kessack 1904 TH 6. On page 10 where
Mason J states:
“I consider, therefore, that the Applicant has made out a
sufficient prima facie claim to justify an interdict if he is
entitled to it on other grounds”.
[32] The applicant has attached proof that the Respondent is in arrears
with the rentals in respect of the said premises.
See: Annexure FZ10 on page 65 of the paginated pages
of the record as well as page 3 of Applicant’s
Supplementary Head of Argument filed on 14th June
2004.
[33] In terms of the above, it is evident that Applicant claims that
Respondent is in arrears with the rentals on the said premises to
the total of R 2 903 069.68. Annexures FZ15, FZ16, FZ17 also
proofs the individual amounts which the Respondent is in arrears
with in respect of each of the individual premises.
[34] Respondent denies that any rentals are due and payable to
Applicant.
In paragraph 6.14 and paragraph 7 of the answering affidavit,
Respondent states the following;
“6.14 The court will also note that the Respondent disputes
the alleged amount of arrear rentals, stating that it is not in
arrears with its rentals at all.
7. It will therefore be denied that the Applicant has
established any basis in law to interdict the Respondent in
any way, as the Respondent simply does not owe the
Applicant any money at all”.
[35] This is in contrast with what is stated in paragraphs 5254 of the
answering affidavit where Respondent clearly states his ability to
pay whatever rentals may be found to be owed to Applicant after
the action (now instituted) is disposed off.
[36] In its opposition to the application, Respondent does not claim a
reduction in rentals nor does it raise setoff as a valid defence in
the action that is now instituted. Respondent opposes the
applicant on the basis that:
(a) the judicial managers of the Applicant lacks the necessary
locus standi in bringing this application;
(b)that a rent moratorium was agreed upon between the Applicant and Respondent;
(c)the claim has prescribed; and on
(d)a counterclaim
(a) Lack of Locus Standi of the judicial managers of the Applicant:
[37] It is common cause that the Applicant was placed under judicial management by this
Honourable Court as far back as 10thAugust 1999, under Case Number 96/99.
Paragraph 2.7 of the final order placing the applicant under judicial management
reads thus:
“2.7. that while the respondent (Applicant in this matter*) is under judicial
management all actions, proceedings, the execution of all writs, summonses
and other processes against* the respondent (Applicant in this matter*) be
stayed and be not proceeded with without the leave of this court being
obtained;”
(* my insertion and underlining)
[38] It is clear from the reading of this court order that proceedings againstthe Applicant
were stayed and such proceedings could not be proceeded with (against the Applicant)
without leave of the court.
[39] It does not affect proceedings which the Applicant institute or that it had instituted. I
am in agreement with the submission made by Mr Reyneke SCthat the judicial
managers are empowered to discharge all the duties prescribed in Section 433 of the
Companies Act, Act 61 of 1973 (as amended).
[40] The Court order referred to above also confirm this position.
Paragraph 2.9 of the Court Order reads thus:
“2.9 that the final judicial managers discharge the duties prescribed by
section 433 of the Companies Act, Number 61 of 1973 as amended;”
[41] The submission by Mr Van Collerthat the judicial managers are on the same footing
as a liquidator of a company is with respect incorrect. It is clear from the reading of
Section 433 of the Companies Act and the abovementioned order of the court that the
judicial managers of the Applicant de facto as directors of the Applicant. The judicial
managers so to say stepped into the shoes of the erstwhile directors of the Applicants.
[42] As such, the judicial managers do have the necessary locus standito institute court
proceedings for and on behalf of the Applicant within the scope of Section 433, of the
Companies Act.
[43] I am therefore of the view that the judicial managers acted within the scope of their
duties and powers when they instituted this application. They do have the necessary
locus standirequired to institute this application.
b)The rent Moratorium
[44] opposing this application, the Respondent also states that a
moratorium over the payment of rent was agreed upon between Applicant and
Respondent. For his submission that such a moratorium is in place, Mr van Collerrely
inter aliaon a letter written on behalf of Applicant to Respondent. This letter is dated
06 September 2002 and is attached as Annexure “NC10" to the Answering Affidavit
on page 196 of the record. The third paragraph thereof reads thus:
“During the meeting which was held on the 20/06/2002 with you, it was
agreed that the rental moratorium allegedly granted by Mr Frank Peter
should come to an end on the 30/06/2002, as Mr Peter was not authorized to
do this”.
[45] Although the contents of this paragraph is denied in a letter from the Respondent to
the Applicant, (Annexure NC11 on page 197 of the record) the intention of the
Applicant is made clear that it firstlywants to bring the moratorium “allegedly
granted by Mr Frank Peter” to an end. It is clear that the usage of the word
“allegedly” a denial of the existence of such a moratorium. Secondly, it is
undoubtedly clear that Applicant categorically states that Mr Frank Peter, if he
indeed entered into such a moratorium, “ was not authorized to do this”.
[46] This clearly indicates that Applicant did not agree to a moratorium. If a moratorium
was in place, it would have the effect of an indulgence was granted to the Respondent.
Such indulgence, if it existed, was in any event brought to an end on 30/06/2002,
albeit the version of the Applicant.
[47] Estoppel though not raised as a point in limineby Respondent, was raised during
argument by Mr Van Coller. Mr Van Colleralso submitted that Applicant waived its
right with regard to the verbal amendment of the lease agreements.
[48] I am unconvinced that Applicant waived its rights with regard to verbal amendment of
the lease agreements. Similarly, I am of the view that estoppel as a possible defence
in opposition to the application cannot stand. As far back as 06 September 2002 (1
year and 9 months ago) was the existence of the moratorium denied by the Applicant.
[49] On careful perusal of the Answering Affidavit by Respondent, it is clear that
Respondent admits that it did not pay rental for a substantial period of time. What the
Respondent denies is that it is liable for the payment of such rentals as a result of inter
alia the alleged moratorium.
[50] I am of the view that no moratorium is in place and that Respondent is in arrears with
the payment of rentals .
c)Prescription
[51] Another defence raised in opposing of he Application, is that of prescription. The
accounting and payment history in respect of the various premises are attached as
Annexures FZ15, FZ16 and FZ17 on pages 254 274 of the record. It is clear that a
substantial portion of the amounts reflected thereon have not prescribed. Prescription
as a defence in the action that has now been instituted can possibly be successfully
raised with regard to the amounts that was due and payable on or before the end of
May 2001. I am unconvinced that prescription can be raised as a total defence under
the circumstances of this case.
d)Respondent’s counter claim
[52] In paragraph 70 of its Answering Affidavit, Respondent list the damages which it
suffered as a result of structural defects on the leased premises. This, it is said,
amounts to a major damages claim.
[53] This counterclaim by the Respondent is in essence one for damages. In terms of the
lease agreements entered into between the Applicant and the Respondent, it was
agreed inter alia, that the Applicant will not be liable for damages arising as a result of
structural defects.
[54] It is clear from paragraph 79 of the Answering Affidavit (paginated page 160 of the
record) that Stand 96 have not been vacated. By reason of inferential reasoning, it
follows that the other stands or premises have not been vacated either and it means
therefore that the Respondent is still in occupation of the said leased premises.
[55] In the case of Greenberg v Meds Veterinary Laboratories (Pty) Ltd, 1977 (2) SA 277
(T) Franklin J. states on page 286D the following:
“When a party has a counterclaim for damages, ... he cannot claim to set off
his counter claim for damages against the rental which has already accrued;”
[56] In Basinghall Investment (Pty) Ltd v Figure Beauty Clinics (SA) (Pty) Ltd1976 (3)
SA 112 (W) on pages 120 G 121 H McEwan J., said this:
“There are a number of cases which suggest that a tenant who is in
occupation of premises is liable for payment of the rent notwithstanding that
he claims that by reason of defects in the premises he has not had full
beneficial occupation of them. It appears that in such circumstances the
landlord (lessor) is not required to claim some sort of quantum meruit, based upon the actual value of occupation of the tenant. He is entitled to
claim the full amount of the rent. It is then open to the tenant to establish a
claim for a setoff or a counterclaim for damages.”
[57] It is noteworthy that the Respondent does not claim a reduction in rentals as a result
of the structural defects. Even if a reduction in rentals was claimed by the
Respondent it would mean that he will still be liable to pay rentals even though it may
be reduced.
[58] The mere fact that the Respondent was and still is in beneficial occupation of the said
premises mean in essence that it is liable to pay the accrued rent because it is keeping
the lease agreements alive.
See: Greenberg v Meds Veterinary Laboratories (Pty) Ltd (supra)