Charter v Butler's Port Alfred Properties (Pty) Ltd and Others (3811/2016) [2016] ZAECGHC 151 (21 October 2016)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION, GRAHAMSTOWN

CASE NO 3811/2016

DATE HEARD: 22/09/2016

DATE DELIVERED: 21/10/2016

In the matter between

KAINE STANLEY CHARTER APPLICANT

and

BUTLER’S PORT ALFRED PROPERTIES (PTY) LTD 1ST RESPONDENT

CAPGRO ASSET MANAGEMENT (PTY) LTD 2ND RESPONDENT

SCHӒFERS ATTORNEYS 3RD RESPONDENT

REGISTRAR OF DEEDS, CAPE TOWN 4TH RESPONDENT

JUDGMENT

ROBERSON J:-

[1] On 6 March 2010 the applicant (Charter) and his brother Dean concluded a lease agreement with the first respondent (Butler’s)

in respect of Butler’s immovable property in Van Der Riet Street, Port Alfred (the property). The property was to be used as a restaurant and cocktail lounge. The initial lease period was for one year. Charter’s parents, Mrs Mauneen Charter and Mr Peter Charter, signed a deed of suretyship in favour of Butler’s for the obligations of the lessees. Clause 25 of the lease provided:

“For all purposes arising out of the Agreement each of the parties hereby chooses domicilium citandi et executandi for all purposes hereunder, including the delivery of notices as follows:

The LESSOR:

c/o Schäfers Attorneys

31 van der Riet Street Port Alfred 6170

The LESSEES:

32 Bekker Street

Port Alfred 6170

The parties to the Agreement shall be entitled to change their respective domicilia on giving not less than 10 (ten) days written notice thereof to the other party hereto and provided that any new domicilia so selected shall be situated within the same Magisterial district as those originally selected. All notices to be given by any party in terms of the Agreement shall be delivered to the recipients personally by hand, or, alternatively, be posted by prepaid

registered post in which event the addresses shall be deemed to have received any such notice within 5 (five) days after the date of posting thereof.”

[2] The lease period was extended from time to time, as recorded in three addenda (concluded in 2011, 2012 and 2015), the last extension being for a period of three years from 1 June 2015 to 31 May 2018. It was recorded in the 2015 addendum that Dean was withdrawn as a lessee and Mr and Mrs Charter were released as sureties for the obligations of the lessees. Clauses 3 and 4 of the 2015 addendum provided:

“3. That if the Lessor should receive an offer in writing from a third party to purchase the property during the currency of the lease agreement, the Lessor immediately shall communicate this fact to the Lessee who shall have the right to match the price the Lessor is prepared to accept for the sale of the property;

4. That within 72 (seventy two) hours of receiving such notification from the Lessor the Lessee shall exercise his right of “first refusal” (that is, the right to determine whether to offer to purchase the property for the same price as that which the third party is prepared to pay), and to take transfer of the property within 3 (three) months thereafter.”

[3] Butler’s and the second respondent (Capgro) concluded an agreement of sale of the property on 30 May 2016 for the purchase

price of R2 250 000.00. Clause 9 of the agreement provided:

“Notwithstanding anything to the contrary herein, the parties agree that:

The lessee notice terms must be presented on the same terms and conditions as this offer.”

[4] On 31 May 2016 the third respondent (Schӓfers) served a letter (the notice letter), addressed to Charter, on Mrs Charter personally at 10h15. The contents of the notice letter were as follows:

“Your Lease with Butlers Port Alfred Props (Pty) Ltd

I refer to the Addendum dated 20 May 2015 in respect of the lease agreement with Butlers Port Alfred Props (Pty) Ltd, a copy of which is attached, and advise that my client has received an offer from a third party to purchase her property Erf [...]5 and Erf [...]3, otherwise known as [...]/[...] R. Street Port Alfred, for the sum of R2 250 000,00 (two million two hundred and fifty thousand Rand).

In the circumstances you are hereby give notice in terms of clause 4 of the Addendum to exercise your right of first refusal (that is, the right to determine whether to purchase the property at [...]/[...] van der Riet Street, Port Alfred, for the same unconditional cash price as that which the third party is prepared to pay), and to take transfer of the property within three months thereafter.

Should you fail or be unable to comply with the right of first refusal within 72 hours of receiving this notice, the lease will be cancelled 6 (six) months from the expiry of the 72 hours notice. You will then be required to vacate the premises on or before the expiry of the said 6 months.

The period of 72 hours will be calculated from the time you, or your agent, receives this written notice. I shall be grateful if you will advise me of your decision whether or not to exercise the above right of first refusal.”

[5] On 3 June 2016 Charter’s former attorneys faxed the following letter to Schӓfers:

“LEASE: BUTLERS PORT ALFRED PROPS (PTY) LTD / KS CHARTER ERVEN 553 & 3715 PORT ALFRED

Your letter dated the 31st May 2016 ` and addressed to our client, KS Charter has reference.

It is our instructions to hereby confirm that our client, KS Charter, will exercise his right of first refusal and is willing to purchase the above property for the cash price of R2,250,000.00 (two million two hundred and fifty thousand rand). Client has noted that transfer is to be effected within three months.

Kindly let us have your draft Agreement of Sale for presentation to our client.”

[6] This letter (the acceptance letter) was received by Schӓfers at 12h25 on 3 June 2016.

[7] On 3 June 2016 Schӓfers responded as follows:

“Thank you for your fax letter dated 3 June 2016 which was received at my office at 12,25 pm today.

The 72 hours period which your client had in which to exercise his right of first refusal expired at 10,15 am today.

In the circumstances, please advise your client that he has 6 months calculated from today to vacate the premises.

Please acknowledge receipt of this letter.”

[8] Charter’s attorneys responded to the effect that Charter had received the notification from Mrs Charter after 13h00 on 31 May 2016 and therefore he had exercised his right of first refusal within 72 hours.

[9] Schӓfers responded as follows:

“Thank you for your letter dated 6 June 2016.

At all stages since the beginning of 2010 I, on behalf of my client, have dealt directly with Mrs Charter who, with the knowledge of your client, has at all times purported to act on his behalf.

Almost all the previous correspondence relating to the lease agreement was normally addressed to and from Mrs Charter, without objection from your client.

At no time has your client ever instructed me not to deal directly with his mother nor has he ever denied her capacity to send and receive correspondence on his behalf and otherwise to represent his interests in relation to the lease agreement.

In the premises, your client has, by his conduct, represent that Mrs Charter is his duly appointed agent.

Your client’s contention that the notice served on his mother was “without consent or permission” is therefore demonstrably false.

Accordingly, your client is reminded that the 6 month period during which he is to vacate the premises commenced on 3 June 2016.”

[10] This background led to the present application, which I shall accept for the purposes of this judgment, is for an interdict pendente lite.

[11] The relief claimed in the notice of motion is as follows:

“2. That a Rule Nisi do hereby issue, calling on the Respondents to show cause, on 13 September 2016, why the following order should not be made:

2.1. That the Respondents be interdicted and restrained from transferring the following properties registered in the First Respondent’s

name and situated in van der Riet Street, Port Alfred, to the Second Respondent or any third party, pending the outcome of the action to be instituted by the Applicant against the First and Second Respondents, inter alia, as set out below in paragraph 3, the property descriptions being:

2.1.1. Erf [...]3, Port Alfred; and

2.1.2. Erf [...]5, Port Alfred.

2.2. That the Fourth Respondent be interdicted and restrained from registering the properties, supra, in the Second Respondent’s name, pending the outcome of the action to be instituted by the Applicant against the First and Second Respondents, inter alia, as set out below in paragraph 3.

2.3. That the First Respondent be interdicted and restrained from cancelling the agreement of lease between it and Applicant and

evicting the Applicant from the properties, supra, within 6 months hereof or at any other time, pending the outcome of the action to be instituted by the Applicant against the First and Second Respondents, inter alia, as set out below in paragraph 3.

3. That the Applicant issue a Summons out of the above Honourable Court within 30 days of granting of this Order, for the following relief, inter alia:

3.1. That the agreement of sale entered into between First and Second Respondents relating to the sale of the properties, supra, be set aside.

3.2. That the Applicant be declared to have the right of first refusal to purchase the properties described supra, on the same terms and conditions as the offer made by the Second Respondent to First Respondent.

3.3. That the Applicant be declared to have validly notified the First Respondent of his election to exercise his right of first refusal to purchase the properties, supra, alternatively that the First Respondent be ordered to grant Applicant such opportunity as provided for in the Addendum to the lease agreement between Applicant and First Respondent.

3.4. That the First Respondent accept the Applicant’s notice of election to exercise his right of first refusal on the same terms as the offer made by Second Respondent.

3.5. That the First Respondent be ordered to provide Applicant with an agreement of sale on the same terms as the agreement of sale it purported to enter with the Second Respondent relating to the sale of the properties, supra.

3.6. That the First Respondent be ordered sign all documents necessary to give effect to the sale agreement between Applicant and First Respondent within 30 days of judgment and to the effect the transfer of the property into the Applicant’s name.

3.7. That the transfer be effected within three months of signing of the Deed of Sale between Applicant and First Respondent.

3.8. Costs of suit on an attorney and client scale.

4. That the Orders in paragraph 2.1, 2.2 and 2.3, supra, operate as interim interdicts with immediate effect, pending finalisation of this application.

5. That the First Respondent pay the costs of this application on an attorney and client scale, together with any such Respondent/s who may oppose this application, jointly and severally.”[12] In Biggs and Others v Muller and Others [2005] ZAECHC 12 (31 March 2005) Leach J, as he then was, said the following with regard to an interdict pendente lite (authorities omitted):

“In determining whether an interim interdict should be issued pending the outcome of a trial, the proper approach is to take the facts set out by the applicants, together with any facts set out by the respondents which the applicants cannot dispute, and then to consider whether on those facts and having regard to inherent probabilities the applicants should, (not could), obtain final relief at the trial ........”

[13] Further, Leach J also stated:

“In order to obtain an interim interdict pending the outcome of such an action, the applicant must show (1) that it has either a prima facie right or at least such a right, albeit open to some doubt (2) that there is a well-grounded apprehension of irreparable harm should interim relief not be granted and should it succeed in the main action (3) that the balance of convenience favours the granting of interim relief, and (4) that it is without any other satisfactory relief ........”

[14] The main relief to be claimed in the action rests in my view on a contention that Charter properly exercised his right of first refusal and that a binding agreement of sale came into being. So much was submitted in Charter’s heads of argument. The submission was that Schӓfers, as agent of Butler’s, advised Charter in writing that he could exercise his right of first refusal within 72 hours, that Charter’s agent, Audie Attorneys, accepted the offer, and that a valid and binding sale agreement came into being. There was considerable argument about the interpretation of clauses 3 and 4 of the 2015 addendum and whether or not they in fact amounted to a right of first refusal. I shall assume for the purposes of this judgment that those clauses did contain a right of first refusal. In order for Charter to show that he should obtain final relief at the trial, he would at this stage have to establish prima facie that he exercised his right of first refusal in accordance with the provisions of clauses 3 and 4. This would include establishing prima facie that the 72 hour period within which he was to exercise his right only began to run from 13h00 on 31 May 2016 and not from 10h15, which was the time Mrs Charter received the notice letter from Schӓfers.

[15] In his founding affidavit Charter contended that Butler’s was in breach of the agreement because the notice letter was served on Mrs Charter and not as provided for in terms of clause 25 of the lease. Charter stated that he had never given written notice of a change of domicilium address nor had he given written notice that Mrs Charter could accept notices on his behalf. Butler’s therefore, so he stated, was not entitled to serve the notice letter in the manner it did.

[16] In Butler’s answering affidavit, deposed to by Mrs Audrina MacDonald, a director of Butler’s, a number of communications

between Mrs Charter and Schӓfers were referred to and annexed. It is necessary to deal with them in some detail.

[17] On 19 February 2010 Schӓfers sent an e-mail to Mrs Charter to which a draft lease was attached. She was requested to discuss the lease with her sons and husband.

[18] On 16 March 2010 Mrs Charter sent an e-mail to Mrs MacDonald in which she discussed progress concerning cleaning and repairs to the property, the transfer of the liquor licence and other matters. She consistently used the pronoun “we”, for example “we signed the lease on March 2 but did not receive any keys”; “we started working on the outside of the building on March 3rd”; “we are still waiting for a document to be signed ……………. before we can proceed with the liquor licence”; and “unfortunately, I doubt whether we will be able to start trading in April as intended ……………… but we are trying our utmost to get things done asap”.[1]

[19] On 10 April 2010 Mrs Charter sent an e-mail to Schӓfers and Mrs MacDonald in which she requested the bank details for rent payments. In this e-mail she also dealt at length with the condition of the property, repairs and alterations, and who was responsible for payment for particular items. She frequently used the pronoun “we” and also frequently used the first person, for example: “I am still waiting for the quote from the plumber”; “I am waiting for the people to come and check the extractor fans”; “as soon as we have checked the appliances I will send payment for them”; and “please advise how I must go about paying the contractors for the plumbing, electrics, cooler room and extractor, etc, as well as for the removal of all the rubbish ……… Would you like me to pay them and deduct it from my rent or deposit, or submit accounts to Ivan?”.

[20] On 3 June 2010 Schӓfers sent an e-mail to Mrs Charter in which she was advised that rent was to be paid into Schӓfers’

trust account. This was a written direction in terms of clause 5 of the lease which provided:

“The monthly rental payable by the LESSEES to the LESSOR during the currency of the Lease shall be paid monthly in advance by not later than the first day of each and every month, free of exchange and free of any deductions whatsoever to the LESSOR by deposit into the bank account the LESSOR may from time to time direct in writing.”

[21] According to Mrs MacDonald, Charter did not contend that this notice was not properly given and he acted upon that notice by making payment into the trust account.

[22] On 7 July 2010 Schӓfers sent an e-mail to Mrs Charter to which was annexed a letter addressed to Charter and Dean, in which they were advised of the details of the bank account into which rent was to be paid. Charter did not object to this notice and made payment into the bank account mentioned in the letter.

[23] On 20 December 2010 Schӓfers sent an e-mail to Mrs Charter to which was annexed a letter to Charter and Dean. Mrs Charter was requested to pass the letter on to them. The letter reminded them of their option to purchase the property which expired on 31 December 2010. Mrs Charter responded the same day by e-mail and stated:

“Dean and Kaine have asked if this option could be extended for another year. Unfortunately at the moment it is not possible, and they have not yet experienced a “season” to be able to gauge what their income could be.”

It was not in dispute that the option referred to by Mrs Charter was an option to renew the lease. Clause 33A of the lease provided that:

“The Lessees shall give notice of their intention in writing to renew the lease on or before 31 December 2010.”

[24] Mrs Charter continued in her e-mail to mention expenses involved in replacing equipment and building up the business. She dealt with a security problem and asked if the owner would be prepared to install burglar bars or trellidors. This would satisfy the insurers who she said were not happy with the situation. She frequently again used the pronoun “we” and ended by saying:

“We would be very grateful if the option could be extended for another 12 months to be able to gauge accurately.”

[25] On 20 January 2011 Schӓfers sent an e-mail to Mrs Charter to which was annexed a letter addressed to Charter and Dean. The 2011 addendum to the lease was attached to the letter for their signature.

[26] On 20 January 2011 Dr Ivan Schӓfer of Schӓfers wrote a file note in which he recorded a conversation between him and Mrs Charter, during which she had pointed out that occupation of the property had only occurred in May 2010 and asked that the termination date in the 2011 addendum be changed from 31 March 2012 to 31 May 2012. Dr Schӓfer agreed to the change and asked Mrs Charter to change the date by hand on the addendum and initial and sign the change.

[27] On 5 November 2011 Dr Schӓfer wrote a file note in which he referred to a telephone conversation with Mrs Charter in which the extension of the lease and its terms were discussed.

[28] On 24 February 2012 Dr Schӓfer wrote a file note of a discussion with Mrs Charter. These discussions included a

reduction in the rent, a three year lease, and an option to buy at a suggested price of R2 million. On 13 March 2012 Mrs Charter sent an e-mail to Schӓfers asking if there was any news. Schӓfers responded by saying that Mrs Charter’s proposals had been communicated to Mrs MacDonald. In response, Mrs Charter said that they (she referred to “we”) needed an answer “soonest” in order to make plans to move out or do what was necessary. On 28 March 2012 Schӓfers sent an e-mail to Mrs Charter advising that there was still no response from Mrs MacDonald and requesting Mrs Charter to send a formal letter asking for a response to her proposals. On 29 March 2012 Mrs Charter sent an e-mail to Schӓfers in which she said she had spoken to “the boys” and that they were relieved that the rent would be reduced. She further said that they had asked for a three year lease renewable for a further three years and that they would be happy to be given the option to meet any purchase price offered.

[29] On 17 April 2012 Schӓfers sent an e-mail to Mrs Charter to which was annexed the draft 2012 addendum “for your, Kaine’s and Dean’s perusal”. Mrs Charter was also informed in the e-mail that the original termination date of 31 March 2012 had been changed to 31 May 2012, because they had first taken occupation in May (this must be May 2010). This explanation was made to Mrs Charter in response to her query that the new lease should have taken effect from 1 April. Handwritten notes by Dr Schӓfer on the draft addendum were made in consequence of discussions between Dr Schӓfer and Mrs Charter.

[30] On 27 April 2015 Schӓfers sent an e-mail to Mrs Charter to which was attached the 2015 addendum for Charter’s signature.

Mrs Charter and her husband were also requested to sign in view of their release as sureties. Charter accordingly came to

Schӓfers’ offices to sign the addendum and did not object to the fact that the e-mail had been sent to Mrs Charter.

[31] It was not in dispute that Dr Schäfer and Charter only met four times during the 2010 – 2016 period. On three occasions Charter had come to Schäfers’ offices to sign the lease and two of the addenda, and on the fourth occasion they met at a hearing before the Gambling Board.

[32] Charter contended that although there had been communications between Schäfers and Mrs Charter by e-mail he had never agreed to this in writing and had never changed his domicilium address. He denied that Mrs Charter was his appointed agent and stated that she had never been authorised to sign any agreement on his behalf. The communications were made when she was a surety and had a vested interest in the lease. She was merely a communication channel because he is not completely computer literate. In particular he said that her e-mail of 20 December 2010 had been dictated by him and Dean. He maintained that the various communications were mere negotiations and not the exchange of formal notices as contemplated in clause 25 of the lease. He had never been prejudiced by these communications as none of them were “formal” notices, nor were they “time bound” such as the notice letter. The notice contemplated in clause 3 and 4 of the 2015 addendum would fall outside any mandate and would have to be brought to his personal attention, because it involved a serious decision on his part. According to Charter, Butler’s should have realised that service on any other person would be ineffective and because of the time constraints would be prejudicial to his right to exercise his option timeously.

[33] It was submitted on behalf of Charter that Mrs Charter did not have the authority to perform juristic acts on his behalf and that she was a mere communication channel. However Butler’s case was not that she was such an agent, but rather that Mrs Charter had actual or ostensible authority to accept service of notices, and that notice to Mrs Charter was notice to Charter.

[34] Actual authority and ostensible authority were explained in Hely-Hutchinson v Brayhead Ltd and another [1968] 1 QB 549 (CA) at 583A-G as follows:

"[A]ctual authority may be express or implied. It is express when it is given by express words, such as when a board of directors pass a resolution which authorises two of their number to sign cheques. It is implied when it is inferred from the conduct of the parties and the circumstances of the case, such as when the board of directors appoint one of their number to be managing director. They thereby impliedly authorise him to do all such things as fall within the usual scope of that office. Actual authority, express or implied, is binding as between the company and the agent, and also as between the company and others, whether they are within the company or outside it.

Ostensible or apparent authority is the authority of an agent as it appears to others. It often coincides with actual authority. Thus, when the board appoint one of their number to be managing director, they invest him not only with implied authority, but also with ostensible authority to do all such things as fall within the scope of that office. Other people who see him acting as managing director are entitled to assume that he has the usual authority of a managing director. But sometimes ostensible authority exceeds actual authority. For instance, when the board appoint the managing

director, they may expressly limit his authority by saying he is not to order goods worth more than £500 without the sanction of the board. In that case his actual authority is subject to the £500 limitation, but his ostensible authority includes all the usual authority of a managing director. The company is bound by his ostensible authority in his dealings with those who do not know of the limitation. He may himself do the 'holding-out'. Thus, if he orders goods worth £1 000 and signs himself 'Managing Director for and on behalf of the company', the company is bound to the other party who does not know of the £500 limitation . .”

[35] In Makate v Vodacom Ltd 2016 (4) SA 121 (CC) Jafta J elaborated as follows at para [47]:

“A closer examination of the original statement on apparent authority by Lord Denning, quoted below, reveals that the presence of authority is established if it is shown that a principal by words or conduct has created an appearance that the agent has the power to act on its behalf. Nothing more is required. The means by which that appearance is represented need not be directed at any person. In other words the principal need not make the representation to the person claiming that the agent had apparent authority. The statement indicates the absence of the elements of estoppel. It does not mention prejudice at all. That statement of English law was imported as is into our law in NBS Bank A and other cases that followed it.”

[36] In the light of these dicta I now consider the various communications between Mrs Charter and Schäfers.

[37] Not long after the lease was signed, Mrs Charter communicated directly with Mrs MacDonald concerning progress with the conditions

contained in the lease which were to be complied with. In these communications she did not appear to be passing on messages from Charter and Dean, but rather she appeared to be representing them in their contractual relationship with Butler’s. The use of the word “we” would have included Charter and Dean and it can be inferred from the content and the material nature of the e-mail to Mrs MacDonald that they were aware that Mrs Charter was communicating with Mrs MacDonald on their behalf, and were content to allow her to do so.

[38] The same applies to Mrs Charter’s e-mail to Schäfers requesting bank details for rent payments. The obligation to pay rent rested on Charter and Dean, not on Mrs Charter, even though she was a surety. Schäfers informed Mrs Charter directly of the bank details. It was not in dispute that Charter did not object to notification being sent directly to Mrs Charter, and that he (and presumably Dean) acted on this notification and paid the rent into the named bank account. In the same e-mail Mrs Charter used the pronouns “we” and “I” interchangeably when discussing repairs, alterations and payments, which again in my view indicated that she was representing Charter and Dean in matters relating to the lease, with their knowledge and consent.

[39] The next notification of bank details was by way of a letter addressed to Charter and Dean, annexed to an e-mail to Mrs Charter.

The fact that the letter was addressed to Charter and Dean does not in my view diminish the inference that they were content that such notifications could be sent to Mrs Charter on their behalf. Again they acted on the notification without objection to the fact that it was sent to them via Mrs Charter.

[40] The next communication was the reminder about the option to purchase. This was also addressed to Charter and Dean but it was attached to an e-mail sent to Mrs Charter. There was apparently no objection to Schäfers communicating with her directly. She in turn responded on their behalf. This response was a notification in writing of an intention to renew the lease and it was communicated to Schäfers by Mrs Charter.

[41] The 2011 addendum was sent to Mrs Charter again apparently without any objection to the fact that she received the addendum on behalf of Charter and Dean.

[42] Dr Schäfer’s file note of 20 January 2011 reflected a discussion about the terms of the 2011 addendum. Mrs Charter’s role in this discussion indicates that she was representing Charter and Dean in their contractual relationship with Butler’s, and not merely acting as a conduit. The fact that Charter and Dean went on to sign the addendum, amended in accordance with the discussion between Dr Schӓfer and Mrs Charter, indicates that they were content that she should so represent them. The same applies to the discussion between Dr Schäfer and Mrs Charter on 5 November 2011 when the terms of the extension of the lease were discussed.

[43] Events during February and March 2012 in my view reinforce the ongoing practice of communications received from and addressed to Mrs Charter, in relation to substantive contractual matters. Again, Charter and Dean must have been content to allow her to represent them, make proposals on their behalf and receive important communications on their behalf. Mrs Charter’s statement in her e-mail of 29 March 2016 that Charter and Dean were relieved at the reduction in the rent implies that they were content that she negotiated on their behalf and produced the desired results.

[44] In April 2012 Schäfers communicated directly with Mrs Charter in relation to the 2012 addendum and informed her of the change in the termination date following her query. Again this was a communication in relation to a contractual term.

[45] The 2015 addendum was sent to Mrs Charter. Charter did not object to this fact and signed the addendum.

[46] Lastly the notice letter which is the subject of the dispute in the present application, was served on Mrs Charter and received by her without objection. Charter’s former attorney’s response did not raise any objection to the fact that the notice letter had been served on Mrs Charter.

[47] Charter admitted the ongoing communications between Schäfers and Mrs Charter. They endured for several years and concerned matters of contractual importance. As a lessee he must have been aware at all times of these communications, and acquiesced not only in this manner of communication, but also to the matters which were dealt with in the communications. He signed addenda following negotiations between Mrs Charter and Dr Schäfer in which he did not participate. He never raised an objection to this method of communication or to the fact that Mrs Charter discussed and negotiated contractual terms. Other than the four occasions that he met Dr Schӓfer, he did not directly communicate with him in relation to the lease and the various addenda. His explanation that he is not completely computer literate is unconvincing. It does not explain the content of the communications between Mrs Charter and Schӓfers, which indicate that she represented him in relation to the lease, nor does it explain telephonic/verbal communications. Other than a reference to computer illiteracy, Charter did not meet squarely and explain the undisputed fact of the constant communications between Mrs Charter and Schӓfers and their content. I am satisfied that it can be inferred from this conduct that Mrs Charter had actual authority to negotiate on Charter’s behalf and to give and receive communications and notices relating to the lease.

“A notification given to an agent is effective as such if the agent receives it within the scope of his actual or apparent authority, whether or not it is subsequently transmitted to the principal, unless the person seeking to charge the principal with notice knew that the agent intended to conceal the notification from the principal.”

(Bowstead & Reynolds on Agency 20th edition at 8-204. See also Kerr The Law of Agency Fourth Edition at 230-231.)

The notice to Mrs Charter was therefore effective.

[48] Even if I am wrong in concluding that there was implied actual authority, I am of the view that the various communications between Schäfers and Mrs Charter and Charter’s conduct created the appearance of authority to others. The length of time over which the communications took place, the nature of the communications, Charter’s lack of objection to the method of communication, his conduct in acting on such communications, and his lack of direct contact with Schӓfers, would have caused a person seeing such conduct to assume that Mrs Charter had the requisite authority to represent him in all matters arising from the lease and to give and receive notices or communications.

[49] I do not think that the fact that Mrs Charter was a surety diminishes the effect of her role in representing Charter and Dean. A surety would have a substantial interest in seeing that payments were made but only at best a peripheral interest in the negotiation of terms. In any event, she ceased to be surety when the 2015 addendum was signed, yet she accepted service of the notice letter on 31 May 2016 without demur.

[50] Further I do not think there are grounds for Charter to distinguish between the types of notices/communications which were subject to clause 25 of the lease. The clause is expressed in wide terms, for example “for all purposes arising out of the Agreement” and “for all purposes hereunder”. Charter’s basis for distinguishing between the types of notices/communications is in my view, and as was submitted, arbitrary. He places the notice letter in the category of “formal” notices, a notice “which involved a serious decision”, and a “time bound” notice. I am of the view that such a distinction between the types of notices/communications cannot be read into clause 25. In any event Charter conceded that a notice of intention to renew the lease was a notice covered by clause 25.

[51] Lastly I am of the view that Charter cannot rely on the provision in clause 25 that a change of domicilium should be by way of written notice to the other party. There was no non-variation clause in the lease and the parties could therefore agree not to apply that particular provision in clause 25. Clause 25 was consistently not utilised, with Charter’s knowledge. It is significant that Mrs Charter did not adhere to clause 25, in that she gave notice of intention to renew the lease by e-mail. In addition Charter’s former attorneys faxed the letter of acceptance to Schӓfers.

[52] Alternatively, and as was submitted, Charter waived his right to receive notices at his chosen domicilium. In Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA) Nienaber JA at para [16], [18] and [19] said the following with regard to inferred waiver (authorities omitted):

“The test to determine intention to waive has been said to be objective ……………. That means, first, that intention to waive, like intention generally, is adjudged by its outward manifestations ……….; secondly, that mental reservations, not communicated, are of no legal consequence ……….; and, thirdly, that the outward manifestations of intention are adjudged from the perspective of the other party concerned, that is to say, from the perspective of the latter’s notional alter ego, the reasonable person standing in his shoes.

The outward manifestations can consist of words; or of some other form of conduct from which the intention to waive is inferred; or even of inaction or silence where a duty to act or speak exists.

Because no one is presumed to waive his rights ………………., one, the onus is on the party alleging it and, two, clear proof is required of an intention to do so …………….

The conduct from which waiver is inferred, so it has frequently been stated, must be unequivocal, that is to say, consistent with no other hypothesis.”

[53] If one takes into account Charter’s knowledge of his rights contained in the clause, the length of time during which

communications were made to and by Mrs Charter, and Charter’s apparent acquiescence throughout this time in this method of

communication by not objecting to and acting upon such communications, a reasonable person would have concluded that he intended to waive his right to insist that notices be delivered in accordance with the provisions of clause 25. His conduct was in

my view inconsistent with an intention to the contrary.

[54] It follows that, applying the tests set out by Leach J in Biggs and Others v Muller and Others (supra), that Charter failed to establish, even prima facie, that the notice in terms of clause 3 of the 2015 addendum was not properly delivered, that the 72 hour period commenced running at 13h00 and not 10h15 on 31 May 2016, and consequently that his acceptance of the offer contained in the notice was made within 72 hours of delivery of the notice. On the inherent probabilities Mrs Charter was authorised to accept service of the notice letter and Butler’s therefore complied with its obligations in terms of clause 3 of the 2015 addendum. Charter’s acceptance was therefore not communicated within the contractually agreed 72 hours.

[55] In my view that should be the end of the matter. However it was alleged further that Butler’s had breached the terms of the 2015 addendum in that it had not immediately communicated the fact of Capgro’s offer to purchase to Charter as it was obliged to do in terms of clause 3 of the 2015 addendum, and had concluded a binding agreement with Capgro. Charter, so it was submitted, had therefore been deprived of his right to exercise his right of first refusal. This contention contradicts his contention that a valid and binding agreement had come into being. However I shall deal with it. The offer was made on 28 May 2016. The deed of sale reflected that it was accepted on 28 May 2016 but according to Mrs MacDonald, this date was erroneously inserted and she in fact accepted the offer on 30 May 2016. In my view this point is linked to clause 9 of the agreement between Butler’s and Capgro, the interpretation of which was in dispute. Butler’s and Capgro contended that this was a suspensive condition whereas Charter contended to the contrary. I agree with the submission that the reference in clause 9 to “the lessee notice terms” could only have been a reference to Charter’s right contained in clauses 3 and 4 of the 2015 addendum, which on Charter’s own case was a right of first refusal. Sensibly interpreted, it meant that the agreement was suspended on condition that Charter did not exercise his right in terms of clauses 3 and 4 of the 2015 addendum. If he did exercise that right, which included taking transfer of the property within three months, the agreement between Bulter’s and Capgro would be rendered void. It follows that there was no breach by Butler’s of its obligation to communicate the fact of the offer to Charter and to allow him an opportunity to exercise his preferential right.

[56] It is therefore not necessary to deal with further arguments relating to: whether or not Charter’s response to the notice letter was a valid acceptance; whether or not the alleged contract which came into being complied with the statutory formalities; the interpretation of clauses 3 and 4 of the addendum (Butler’s and Capgro contended that it was not a right of first refusal but merely a right to make an offer); or whether or not a right of first refusal could be enforced by way of an order of specific performance.[57] The application therefore cannot succeed and must be dismissed. It was submitted on behalf of Butler’s that it should be awarded costs on the attorney and client scale on various grounds: the notice of motion was defective in that both temporary and final relief was sought and this defect had not been remedied despite being pointed out in the answering affidavit; Charter’ claim of computer illiteracy was not plausible; Charter sought an interdict for a duration which was longer than necessary to protect his interests; Charter failed to explain why the balance of convenience favoured him; and Charter gave an incomplete of the events which preceded the launching of the application. Similarly Capgro sought an award of costs on the attorney and client scale, on the ground that it was brought to court to oppose final relief. In my view none of these grounds warrant a punitive costs order.

[58] The application is dismissed with costs.

_____________

J M ROBERSON

JUDGE OF THE HIGH COURT

Appearances:

For the Applicant: Adv K van der Merwe, instructed by McCallum Attorneys, Grahamstown

For the 1st Respondent: Adv L I Schӓfer, instructed by Netteltons Attorneys, Grahamstown

For the 2nd Respondent: Adv G Young, instructed by Netteltons Attorneys, Grahamstown

[1] Clause 3 of the lease provided that if certain conditions were not met within 30 days of signature of the lease, the lease would be null and void. The conditions included transfer of the liquor licence, renovations and alterations.