Gerotek Test Facilities (formerly known as Gerotek Test Facilities (Pty) Ltd, a division of Armscor Business (Pty) Ltd v New Generation Ammunition (Pty) Ltd (31225/2004) [2007] ZAGPHC 33 (19 April 2007)

IN THE HIGH COURT OF SOUTH AFRICA (TRANSVAAL PROVINCIAL DIVISION)

NOT REPORTABLE CASE NO: 31225/2004

DATE: 19/4/2007

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In the matter between:

GEROTEK TEST FACiliTIES (formerly known as GEROTEK TEST FACILITIES (PTY) LTD, a division of ARMSCOR BUSINESS (PTY) LTD

Applicant

and

NEW GENERATION AMMUNITION (PTY) LTD

Respondent

JUDGMENT

LEDWABA. J

2

[1]

Applicant sought an order against the respondent for payment

of an amount of R 376 576,20 plus interest and costs.

[2]

The brief backdrop of the matter is as follows:

2.1. On 4th October 1999 Gerotek Test Facilities (Pty) Ltd

leased immovable property to respondent in terms a

written lease agreement. The monthly rental for the initial

period was R 14 4000, 00 (excluding VAT) and would

escalate by 10% per year. The lease was for one year

with effect from 1st October 1999 - 30th September 2000.

The respondent had the option to renew the lease from

time to time for a further period of one year "upon terms

and conditions to be agreed" between the parties. The

option to renew the lease had to be in writing at least

three months prior to the termination of the lease.

2.2.

The respondent renewed the lease from time to time untiI 30th September 2003. The rental payable agreed upon

for the period 1st October 2002 - 30th September 2003

was R 25 410,00 per month.

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2.3. On 13th May 2003 the lessor notified the respondent in

writing, that the lease would terminate on 30th September

2003 because it required to use the leased premises for

it's own requirements.

2.4. 1st July 2003 lessor concluded a written agreement with

Armscor Business (Pty) Ltd (applicant) in terms of which it

sold its business with effect from 31st March 2003. The

ownership of the

leased

premises

was

officially

transferred to applicant on 27th June 2003.

2.5. In October 2003 applicant instituted an action against the

respondent in the Magistrate's court of Pretoria for

payment of arrear rental for September 2003 and for an

eviction order against the respondent.

2.6. In November 2004 applicant launched an application

wherein an order of eviction and payment of an amount of

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R 385 993, 01 which was amended to an amount of

R 376 576, 00 was sought.

2.7. The respondent raised a point that the application should

not be adjudicated in the High court because the matter

was lis pendens in the Magistrate court.

2.8. The learned judge in hearing the application dismissed

the application with costs.

2.9. Applicant appealed against the decision to the full

bench of this court which made the following order:

"1.

The appeal succeeds only to the extent that the

order of the court a quo is altered by replacing it

with the following:

"(a) The hearing of the application is postponed

until judgment is given in the action between

the parties under case nor 124750/03 in the

magistrate's court at Pretoria.

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(b)

The applicant is ordered to pay the

respondent's costs of suit."

2.

The appellant is ordered to pay the respondent's

costs of appeal."

2.10 The magistrate's court has now finalised the action

between the parties and the magistrate made the

following order:

"1.

Die huur interdik word bekragtig;

2.

Die verweerder word gelas om die perseel te

ontruim voor

of op 27 September 2005, by

gebreke

waarvan die Balju gemagtig word

om alle redelike stappe te neem en ten einde

die uitsetting van die Verweerder vanuit die perseel

te Elandsfontein te bewerkstellig;

3.

Die Verweerder word gelas om die bedrag van

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R 29 691. 77 aan die Eiser te betaal;

4.

Die Verweerder word gelas om rente op die

voormelde bedrag te betaal teen 'n koers van

15.50% bereken vanaf 1 Augustus 2003 tot op

datum van volle en finale vereffening;

5.

Die Verweerder word gelas om die Eiser se koste

van die aksie te betaal op prokureur en klient

skaal, welke koste insluit die verhoogde koste

van Advokaat ooreenkomstig die parameters

van die Pretoria Vereniging van Advokate,

binne

die diskresie van die Takseer Meester, welke koste

onmiddellik takseerbaar en betaalbaar is."

2.11 The respondent vacated the premises at the end of

October 2004. Hence, the applicant is now only claiming

the amount of R 376 576.00 and is not pursuing the

eviction order

[4]

[5]

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[3]

The applicant's counsel, Mr J. F Grobler, submitted that the

claim for the amount of R376 576,00 is the aggregate of the

damages suffered by the applicant for the occupation of the property by the respondent for thirteen months, (1st October

2003 - 31st October 2004), at a rental of R25 410. 00 (plus

VAT). He submitted further that the rental amount of R25 410.

00 is based on the rental that was agreed upon between the lessor and respondent for the period 1st October 2002: - 30th

September 2003.

Advocate J.F. Grobler further submitted that applicant is entitled

to be compensated for the occupation of the property by the

respondent for the aforesaid period. He described this as a

claim for damages for the so-called "holding over" because the

lease expired and there was no further lease agreement

between the parties. Mr Grobler referred me to Nedcor Bank

Limited v Withinshaw Properties (Pty) Ltd 2002 (6) SA

236.(Nedcor Bank case) to support his submission for claiming

arrear rentals

I interpose to state that the locus standi of the applicant was

raised in the Magistrate court action and the magistrate found

[7]

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that the applicant had locus standi to institute an action against

the respondent. The question of locus standi is not an issue

before me.

[6]

Respondent's counsel, advocate N C Maritz, submitted that, on

the papers, the applicant did make out a case to claim

damages on the basis of unjust enrichment, as applicant

alleged in its papers, because the essential requirement for

showing that respondent has been enriched and that applicant

has been impoverished were not proved.

See: Brooklyn House Furnishers (Pty) Ltd v Knoetze and

Sons 1970 (3) SA 264 (A).

Advocate N C Maritz further submitted, correctly in my view,

that if the leased property was not restored timeously the

damages that the applicant may recovered, if proved, are

(i)

the value of the use and enjoyment of the premises for

the period 1st October 2002 and 31st October 2003,

(ii)

what the applicant had to disburse and

(iii)

it's loss of profit

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[8]

He submitted further, that the applicant's claim is for the breach

of the respondent to vacate the property, now since applicant is

claiming damages, it should have proceeded by way of action

instead of motion proceedings. Of significance was that

applicant did not prove it's damages. Therefore application had

to be dismissed with costs.

[9]

In this case, it is abundantly clear that the lease terminated on 30th September 2000, there was no agreement between the

parties that the respondent should occupy the property and

respondent remained in occupation of the property until

October 2004.

[10] The respondent in an attempt to overcome his, in my view

insurmountable, difficulties gave various reasons why it could

not vacate the property. However, the issue of eviction is no

more material since the magistrate has adjudicated on it.

[11] Regarding the issue raised by Advocate N. C. Maritz, that the

applicant in a matter of this nature, should have proceeded by

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way of action, in Room Hire Co. (Pty) Ltd v Jeppe Street

Mansion (Pty) Ltd 1945 (3) SA 1155 (T) at 116, it was stated

that:

(1)

There are certain matters in which, by statute, motion

proceedings should be used,

(2)

There are certain types of cases where motion

proceedings are not permitted.

(3)

Between the two extremes, however, there is a choice

between motion proceedings and action proceedings

depends on whether there is or is not a real material

dispute of facts between the parties.

[12] Advocate Grobler submitted, correctly in my view, that there are

no material disputes of facts in this application.

However,

where no dispute of fact exists and damages are claimed for

breach of obligation to vacate the premises it is not appropriate,

in my view, to proceed by way of motion proceedings.

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See: Estate Behr v Mactch 1924 CPD

[13] In the Nedcor Bank case, Van Zyl J clearly referred to the

relevant cases and the law relevant to cases involving matters

where a lessee failed to vacate the property and the lessor

claimed some damage or rental. On page 251 paragraph 45,

the learned judge stated that:

"... The fundamental criticism has been that, if a lease

agreement has been terminated by cancellation or otherwise,

the rights and obligations attaching thereto are terminated.The

lessor cannot claim arrear rent from the lessee should_he

remain in occupation of the premises after such termination.

This would, it is suggested by A J Kerr 'Incompatible Remedies

for Breach of Contract: Is Lease a Special Case? in (1973) 90

SALJ 229-33 at 229, constitute 'a radical departure from the

general rule that an aggrieved party cannot both cancel a

contract and sue for specific performance'. See in this regard

Custom Credit Corporation (Pty) Ltd v Shembe 1972 (3) SA

462 (A) at 469G-H. His remedy would under norma1

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circumstances. Kerr opines. be directed at damages for breach

of contract. " (own underlining)

[14] Van Zyl J correctly stated that in matters where the lessee

occupied the property without the consent of the lessor that

constitutes unlawful 'holding over'. Where there is unlawful

'holding over' and the agreement has been terminated by

cancellation or otherwise the lessor is entitled to claim damages

and not damages and arrear rental.

[15]

Mynhardt J in the full bench judgement when the aforesaid

order of Pretorius AJ, as she then was, was appealed against,

commented as follows:

"I am equally unimpressed by the predicament in which the

applicant found itself. If needs be, the applicant could have

hired suitable storage space for its records. It did not allege that

it endeavoured to do so but could find none. The rentals that it

would have had to pay, and other expenses that it would have

had to incur, could have been recovered from the respondent

as damages arising from the respondent's breach of contract to

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make the premises available to the appellant as from 1 October

2003."

[16] I fully agree with the comment since it is relevant in the

adjudication of the matter before me.

[17] Advocate Grobler further referred me to the last paragraph on

pages 14 - 15 of paragraph 12 of the judgement of Mynhardt J..1

where the learned judge said:

"In paragraph 14.5 of the founding affidavit the deponent stated,

rightly in my view, that the appellant "is entitled to be

compensated for the said occupation on the basis of unjust

enrichment/damages in the amount of at least R330 330,00"

[18] In my view, Mynhardt J, did not make a finding that the

applicant is entitled to proceed by motion proceedings. The

learned judge expressed, in my view, that the applicant is

entitled to be compensated for the damages it suffered.

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[19] In this case, it is my respectful view, that the applicant is

entitled to damages instead of the recovery of rental.

[20] The other factor to be considered is that the written lease

agreement stated that the lease was to be upon "terms and

conditions" to be agreed upon by the parties.

[21] It is clear from the papers that the rental amount of R 25 410.00

per month claimed by the applicant is not the correct amount if

the rental amount of R 14 400. 00 (excluding VAT) in the

original written lease agreement is used as the basis to

calculate the annual 10% escalated from 10 October 2000, the

rental would have been as follows:

R 15 840. 00 (excluding Vat) for the period- 1 October

2000 - 30 September 2001

R 17 424. 00 (excluding Vat) for the period - 1 October

2001 - 30 September 2002

R 19 166. 40 (excluding Vat) for the period - 1 October

2002 - 30 September 2003 and

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R 21 083. 04 (excluding Vat) for the period - 1 October

2003 - 30 September 2004

[22] The above calculations are an illustration that the rental or

damages cannot be merely assumed by the amount that should

be agreed upon by the parties. The above figures, further show,

that somewhere during the lease the parties agreed on a

certain amount for the rent, they did not merely use the annual

10% escalation formula.

[23] Using the above mentioned formula of 10% annual escalation,

the amount to be claimed if the arrear rentals are calculated for

thirteen months amounts to R 27 4079. 52 (excluding VAT)

which would still be less than the amount the applicant is now

claiming even if the VAT is added to it.

[24] The above clearly shows how important is it that in claims for

damages proceedings should be by way of action instead of

motion proceedings.

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[25] On the papers the applicant did not prove the claim. There are

no affidavits to confirm the value of the use and enjoyment or

the market value thereof.

[26] The fact that respondent in the answering affidavit stated that if

it made provision for the security of 'rental' does not, in my

view, assist the applicant to prove its damages. the onus is on

the applicant to prove the damages it suffered. The claim

should have proceeded by action proceedings in my view.

[27] I therefore, make the following order:

The applicant's application is dismissed with costs.

A. P: LEDWABA JUDGE OF THE HIGH COURT