Huurkok Commercial (Pty) Ltd v Subtinix (Pty) Ltd and Others (66183/2020) [2021] ZAGPPHC 47 (1 February 2021)

IN

THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

(1) REPORTABLE: NO

(2)

OF INTEREST TO OTHER JUDGES: NO

DATE: 01-02- 2021

Case Number: 66183/2020

In the matter between:

HUURKOK COMMERCIAL (PTY) LTD

APPLICANT

and

SUBTINIX (PTY)

LTD

FIRST

RESPONDENT

TSHWANE

UNIVERSITY OF TECHNOLOGY

SECOND

RESPONDENT

THE OCCUPANTS: DUBAI

RESIDENCE

THIRD

RESPONDENT

THE

MINISTER OF HIGHER EDUCATION,

FOURTH

RESPONDENT

SCIENCE

AND TECHNOLOGY

FUNDI CAPITAL (PTY)

LTD

FIFTH

RESPONDENT

THE

STUDENT REPRESENTATIVE COUNCIL OF

SIXTH

RESPONDENT

TSHWANE

UNIVERSITY OF TECHNOLOGY

JUDGMENT

KUBUSHI J,

This judgement is handed down electronically by circulating to the parties’ representatives by email and by uploading on Caselines.

[1] On 7 December 2018, the applicant Huurkor Commercial (Pty) Ltd (“Huurkor”) and the first respondent, Subtinix (Pty) Ltd (“Subtinix”) entered into a written agreement of lease in respect of the premises known as Dubai Residence, the premises are also known as Casa JJ as described in the agreement of lease (“the premises”). The occupants of the said premises are mainly students enrolled with The Tshwane University of Technology ("TUT").

[2] Subtinix is one of the entities accredited with TUT to provide student accommodation. Subtinix does not have its own premises and have leased the premises from Huurkor to provide for the accommodation needs of the students. An entity by the name of TMM Rental (Pty) Ltd (“TMM Rental”) is the registered owner of the premises and Huurkor is its authorised managing agent.

[3] The students are beneficiaries of the National Student Financial Aid Scheme of South Africa (“NSFAS”) bursaries. The NSFAS funds are administered by the fifth respondent, Fundi Capital (Pty) Ltd (“Fundi”), which issues payment cards to the students. The students use the cards at accredited businesses and also use the cards to pay for their accommodation.

[4] Fundi makes payments to Subtinix in respect of the accommodation of the students who have signed agreements of lease with it and Subtinix in turn makes payment to Huurkor for the number of students it has accommodated in the premises.

[5] Huurkor performed all its contractual obligations by giving Subtinix occupation of the premises. Subtinix took possession of the premises on 1 January 2019. It has also concluded agreements of lease with the occupants (Sub-lease) who in turn commenced occupying the premises and are in fact in occupation of the premises.

[6] The agreement of lease between Huurkor and Subtinix provided for an initial lease period of twelve (12) months with an option to renew. The lease period started on 1 January 2019 and terminated on 31 December 2019 but was renewed for another twelve (12) months scheduled to expire on 31 December 2020. The lease period was not extended for a further period and at the time of the hearing of this application the agreement of lease had expired by effluxion of time.

[7] In terms of the agreement the monthly rental, excluding utilities amounted to R648 000 and later escalated to R777 600. In addition to the said rental, Subtinix was in terms of clause 2.3 of the agreement of lease, liable for payment of the utilities, water sanitation, electricity WI-FI data, Top ups and a card machine for collection of rental, pertaining to the premises.

[8] It is alleged that Subtinix has continually defaulted, and remains in default, in its contractual obligations, including defaults in making payment of the monthly rental, utilities and WI-FI data as contractually agreed. Subtinix was requested in a written letter of demand to remedy its breach within fourteen (14) days in accordance with clause 19.1.1 of the agreement of lease but failed to comply with such demand. Due to Subtinix’s failure to remedy the said breach, Huurkor, in a letter dated 16 November 2020, cancelled the agreement of lease. As at date of cancellation of the agreement of lease, Subtinix was in arrears in the amount of R4 504 953, 56.

[9] The municipal account is registered in the name of the premises, TMM Rental. Against a threat to discontinue services to the premises, TMM Rental was forced to enter into a payment arrangement with the City of Tshwane Municipality under agreement number 80000670202 on 3 November 2020. The financial exposure and risk is alleged to be very real and is increasing drastically and without receiving rental payments and thus not paying the City of Tshwane per the arrangement, TMM Rental will be held accountable.

[10] The breach clause contained in clause 19.1 of the agreement of lease provides that –

"19.1.1 If either party commits any and fails to remedy such breach within 14 (fourteen) days after receipt of a notice requiring that it be remedied, provided that no such notice shall be necessary in the case of a third or subsequent breach occurring within the leased premises period; or

19.1.2

Either party commits any breach of the terms of this lease which is incapable of being remedied; or

19.1.3

The lessee so consistently breaches the terms of this lease (whether by non-payment of rent or any other amount due to the lessors on due date or by non-compliance with its terms) as to justify the lessor in holding that the lessee's conduct is inconsistent with an intention or an ability to carry out such terms; . . .

then the aggrieved party shall have the right, but shall not be obliged, forthwith to cancel this lease and to resume possession of the leased premises but without prejudice to its claim for arrear rental and/or damages which it may have suffered by reason of or of the premature cancellation, alternatively to unilaterally vary this lease and make it thereafter terminable by 1 (one) month's written notice by either party."

[11] Huurkor, has approached the court on urgency seeking an order that Subtinix restores the possession of the premises in question including all indicia of such possession as detailed in the notice of motion, namely

11.1. Giving effective control of and access to the premises to Huurkor;

11.2. Handing over the keys to the premises to Huurkor;

11.3. Handing to Huurkor any and all of Subtinix’s electronic access devices regulating access to the premises.

[12] In the event of Subtinix failing to comply with this order, that the Sheriff of the High Court, alternatively his deputy, be authorised and directed to take all reasonable steps to ensure compliance with this order.

[13] The relief is sought against Subtinix under the circumstances where Subtinix is said to no longer have any lawful right to occupy the premises given the cancellation of the lease agreement concluded between itself and the Huurkor and the fact that the agreement of lease has terminated due to effluxion of time. Due to the termination of the agreement, either by the cancellation thereof of by effluxion of time, it is contended that Subtinix cannot remain in occupation after the commencement of the new academic year as it will have no right and cannot lawfully conclude any new agreements of lease directly with the students who will enrol for the new academic year that commences in April 2021.

[14] In essence the urgent application rests on two claims, namely the termination of the agreement resulting from its alleged cancellation and the fact that it has run its course due to effluxion of time.

[15] Subtinix is opposing the application. The other parties are not taking part in the proceedings and only the fourth respondent, The Minister of Higher Education Science and Technology, has sent a letter confirming to abide the decision of the court.

[16] Besides the defence on the merits of the application, Subtinix has raised points in limine which ought to be dealt with at the outset.

Non-joinder of NSFAS

[17] The first point in limine of non-joinder does not have any merit. NSFAS has no interest in the agreement entered into between the parties. The fact that it provides funding for the accommodation does not prescribe how the agreement between the parties should be conducted.

Urgency

[18] Subtinix misconstrues the relief sought by the applicant. The relief sought is not for payment of the arrear rental which understandably can be sought at a later date - and such relief will be of use and effect if granted at such later date. However, the relief sought in these proceedings is for the handing over of the property to Huurkor.

[19] The resolution Subtinix is referring to in its argument, authorises one Daniel Johannes Muller to "take all reasonable steps to collect the arrear rent and evict the tenant". Huurkor has opted in these proceedings to first evict the tenant, Subtinix, before collecting the arrear rental. The application, thus, concerns the eviction of Subtinix from the premises and is not for the collection of the rental. There is nothing wrong in law to do so. Huurkor is not obliged to do the two actions at the same time.

[20] In terms of clause 19 of the agreement of lease Huurkor has the right, in the event of breach by Subtinix of the terms of the agreement of lease, to cancel the agreement and to resume possession of the leased premises but without prejudice to its claim for arrear rental and/or damages which it may have suffered by reason of or of the premature cancellation.

[21] The application in my view is urgent. In accordance with uniform rule 6 (12), an applicant must in her or his founding papers set forth explicitly the circumstances under which she or he avers the matter is urgent. More importantly the applicant must state the reasons why she or he claims that she or he cannot be afforded substantial redress at a hearing in due course.

[22] The matter is said to be urgent, correctly so, as it cannot await adjudication in the normal course of the process. Given the impact of the Covid-19 pandemic on tertiary education which includes TUT, the academic year has been extended to the end of March 2021. The current occupants will remain in occupation until the end of this academic year and will have to conclude new agreements of lease if they intend to continue with their respective occupancy in the premises. Students enrolling for the new academic year will in any event have to conclude new agreements of lease for such period with whoever has the lawful right to do so in respect of the premises.

[23] Huurkor needs to be placed in a position to prepare the premises to be handed over to a new tenant in order to ensure that it will be able to meet its contractual obligations at the inception of the new academic year. The premises give accommodation to four hundred and thirty-two (432) students and given the sheer size of the premises, this in itself will be a mammoth task. It is contended that if possession is given now Huurkor will be in a position to prepare the premises in time for the next academic year. The applicant is not seeking the eviction of the occupants of the property and as such the relief sought will not negatively impact on any of their existing rights.

[24] The argument that if the proper process of the filing of papers is allowed and/or followed, by the time the matter is heard the academic year would have already commenced, is thus correct. Should Subtinix remain in occupation of the premises, the occupants' right to occupancy of the premises will be tainted by Subtinix's unlawful holding over of the premises. New students enrolling for the new academic year should enter into lease agreements that are not so tainted.

The Merits

[25] It might or might not be so that the Ministerial Directives on Revision of Payments to Off-Campus Accommodation due to the Covid-19 outbreak which were supposedly brought to the attention of the applicant as suggested by Subtinix, have affected the performance of Subtinix and perhaps amended the terms of the lease agreement by operation of the law.

[26] I do not intend to determine this issue which in my view ought to be decided when the issue of whether or not Subtinix is liable to pay the outstanding rental is decided. Such a defence, in my view, may be brought against Huurkor’s claim for arrear rental. Of importance before me is that the agreement of lease between Huurkor and Subtinix has been cancelled and in any event has lapsed due to effluxion on time and cannot be revived by the court. Without an agreement in place, Subtinix cannot continue to be in possession of the premises which ought to revert to its owner, in this instance Huurkor. Subtinix is, thus, in unlawful possession of the premises.

[27] I am satisfied that Huurkor has complied with the requirements of an interdict in that it has established a clear right, a well-grounded apprehension of irreparable harm if the relief sought is not granted and the balance of convenience favours the granting of the relief sought.

[28] In the circumstances I make the following order –

1. It is directed that the matter be dealt with as one of urgency in terms of Uniform Rule 6 (12) and that the normal Rules relating to applications be dispensed with and that insofar as the applicant has not complied with the Rules of this Court, that its failure to do so be condoned.

2. The agreement of lease concluded between the applicant and the first respondent on 07 December 2018, is declared terminated by effluxion of time.

3. The first respondent is ordered to forthwith restore the applicant's possession of the property known as Casa JJ, situated at Servaas Street, Pretoria-West, Pretoria, Gauteng and also known as the DUBAI RESIDENCE including, but not limited to, the following measures - as against the first respondent:

3.1 Giving effective control of and access to the premises to the applicant;

3.2

Handing over the keys to the premises to the applicant; and

3.3 Handing to the applicant any and all of the first respondent's electronic access devices regulating access to the premises.

4. In the event of the first respondent failing and/or refusing to comply with this order, the Sheriff of the High Court, alternatively his deputy, is authorised and directed to take all reasonable steps to ensure compliance with this order.

5. The first respondent is ordered to pay the costs of the application.

E.M KUBUSHI

JUDGE

OF THE HIGH COURT

GAUTENG DIVISION, PRETORIA

Appearance:

Applicant’s Counsel

: Adv. L W De Beer

Applicant’s Attorneys

: Pretorius Le Roux Inc.

First Respondent’s Counsel

: Adv. M.E. Manala

Adv. H. Legoabe

First Respondent’s Attorneys

: Kholisile Lumka Inc.

Date of hearing

: 26 January 2021

Date of judgment

: 01 February 2021