Loch Logan Waterfront (Pty) Ltd v Carwash 4 U (Pty) Ltd and Another (3618/2011) [2012] ZAFSHC 32 (1 March 2012)

FREE STATE HIGH COURT, BLOEMFONTEIN

REPUBLIC OF SOUTH AFRICA

Case No. : 3618/2011

In the matter between:-

LOCH LOGAN WATERFRONT (PTY) LTD ….........................Applicant

and

CARWASH 4 U (PTY) LTD ….....................................First Respondent

STEPHANUS JACOBUS LE ROUX ….................Second Respondent

_____________________________________________________

HEARD ON: 26 OCTOBER 2011

JUDGMENT BY: RAMPAI, J

DELIVERED ON: 1 MARCH 2012

[1] The matter came to court by way of motion proceedings. The applicant applies for the eviction of the respondents from certain business premises. The respondent resists the relief which applicant seeks.

[2] A synopsis of the undisputed facts appears to be necessary. The parties concluded a five year lease agreement in Bloemfontein on 27 November 2009. The leased premises were described as the interior of unit mezzanine 1 in the building popularly known as Loch Logan Waterfront, Henry Street, Bloemfontein. The building is situated on portion 3 of erf 26408 measuring in extent approximately 126,29 square metres.

[3] The first respondent was entitled to occupy the leased premises and during its occupation thereof to operate the business of a carwash. That was the purpose for which the premises were leased.

[4] The first respondent was obliged to pay rental to the applicant at the rate of R34 000,00 per month as well as a proportionate monthly contribution towards certain levies.

[5] The applicant was entitled to receive regular payment of rental from the first respondent throughout the duration of the first respondent’s occupation of the leased premises. Moreover, the applicant was also entitled to look up to the second respondent, as surety and co-principal debtor, for the payment of rental in the event of the first respondent’s default.

[6] The primary obligation of the applicant was to give the first respondent free, undisturbed and beneficial occupation and enjoyment of the leased premises. Such duty necessarily entailed maintaining the leased premises and continuously keeping them in a good state of repair.

[7] The effective date of the agreement was 27 November 2009. The lease agreement was signed on behalf of Blonde Trading 24 (Pty) Ltd on 1 August 2009. On 28 October 2009 that co-operate entity underwent a name change and became known as: Carwash 4 U (Pty) Ltd, the first respondent.

[8] The first respondent has made no regular payments of the rental as agreed upon. The first respondent last made a payment to the applicant on 3 January 2011 in the amount of R34 000,00. At the time these proceedings were set in motion the accumulated arrears were approximately R600 000,00. The figure equated about eighteen months worth of outstanding rental and other related charges levied against the first respondent in terms of the lease agreement.

[9] The first respondent was still in occupation of the leased premises when the application was launched. The carwash operations of the first respondent were still in full swing. The first respondent was still trading on the leased premises and generating income from there. In brief, it was still business as usual.

[10] On 22 June 2011 the applicant caused its attorneys to formally address a letter of demand to the first respondent. The letter was sent to the first respondent’s domicilium citandi et executandi. The letter was delivered per manu. By then the first respondent had paid no rental for the period of six months immediately preceding the written demand. The applicant averred that the first respondent had committed a breach of a material clause of the lease agreement.

[11] The first respondent was then called upon to remedy the breach by making payment of the sum of R185 292,05. The first respondent was afforded three days to do so after the written demand or notice in terms of paragraph 16 of annexure “a” to the lease agreement. The annexure embodied the conditions of the lease. The lease agreement was attached to the founding affidavit as annexure “b”. Notwithstanding such demand, the first respondent did not make the required payment. Moreover, the first respondent did not reply. On 26 July 2011 the applicant gave the first respondent notice of cancellation of the lease agreement.

[12] In its founding affidavit the applicant contended that the first respondent was in breach of the lease agreement; that the applicant had the right to cancel the lease agreement forthwith and to retake possession of the leased premises without prejudice to its rights to claim damages and to recover all such sums of money as might be due to it arising out of the breach.

[13] In its answering affidavit, the first respondent admitted that it had not paid rental since 1 February 2011, but averred that it was entitled to withhold payment thereof. The first respondent averred that the leased property had certain structural defects which materially frustrated its full use and enjoyment of such leased premise. When it rained, the first respondent explained, the property leaked. Such leaks affected the electrical equipment. All this had an adverse impact on the first respondent’s core operations. Notwithstanding repeated demands the applicant neglected to remedy such material breach.

[14] In its replying affidavit the applicant denied that it had committed the alleged breach of the lease agreement. It specifically denied the first respondent’s allegations: that the leased property had the alleged structural defects; that the first respondent was deprived of the full beneficial use and enjoyment of the leased premise and that the first respondent’s business operations were adversely affected by the alleged structural defects. The applicant maintained that the first respondent had no right, whatsoever, to withhold payment of any rental.

[15] The crisp issue in the case was whether the first respondent was entitled to withhold payment of rental. Mr. Van Rhyn’s principally submitted that the answer was in the negative whereas Mr. Benade principally submitted that the answer was in the affirmative. The issue is a narrow one.

[16] The learned author A.J. Kerr: The Law of Sale and Lease, Third Edition p. 300/1 comments as follows on the remedy available to a lessee in case of a lessor’s breach of the lease agreement:

“What the remedy is in the circumstances of a particular case appears to depend on the seriousness of the lessor’s breach of contract. If the breach is a major one cancellation and damages may be claimed. If the breach is a minor one there is, so far as I am aware, no decision of the Appellate Division or of the Supreme Court of Appeal where a proposition on the point now under discussion is part of the ratio decidendi of the case. In principle, however, as there is a remedy for a major breach of contract so also there is one for a minor breach, and for minor breaches remission of rent is one of the options. So is damages.”

[17] The basic obligations of the lessor are well-known. The lessor is obliged to deliver the premises to the lessee, to maintain the leased premises and to ensure that the lessee has undisturbed use and enjoyment of the leased property.

“Since a lease imposes reciprocal obligations upon the parties, a lessor will not be entitled to claim the whole rent, and conversely a lessee will be entitled to a complete or partial remission of rent (depending upon the circumstances) if he (the lessor) defaults in his obligations.”

W.E. Cooper: Landlord and Tenant, Second Ed p. 200.

[18] At common law, the legal position is and has always been that an aggrieved lessee is entitled to rent remission, where through the lessor’s default, neglect or omission, the lessee is partially deprived of the use and enjoyment of the leased property. Accepting for the moment, that the leased premises were structurally defective, as the first respondent contended; that the applicant had failed to remedy the breach and that the applicant has thereby neglected its basic obligation to see to it that the first respondent has undisturbed use and enjoyment of the leased premises, the complete withholding of rental was not a recognised remedy in law.

[19] An apposite course of action for the first respondent to adopt in such circumstances, would have been to claim remission of rental proportionate to the extent of deprivation and to retain the difference between the agreed rental and the reduced rental every month for as long as the diminished use and enjoyment, occasioned by the lessor’s default, endured. (SISHEN HOTEL (EDMS) BEPERK v SUID-AFRIKAANSE YSTER EN STAAL INDUSTRIëLE KORPORASIE BPK 1987 (2) SA 932 (AD) at 955 I – J; NTSHIQA v ANDREAS SUPERMARKET (PTY) LTD 1997 (3) SA 60 (TkS) at 65 H – 66 A and SWEETS FROM HEAVEN (PTY) LTD v STER KINEKOR FILMS (PTY) LTD 1999 (1) SA 796 (W) at 802 I – J)

[20] In ETHEKWINI METROPOLITAN UNICITY MUNICIPALITY (NORTH OPERATIONAL ENTITY) v PILCO INVESTMENTS CC (320/2006) [2007] ZASCA 62; [2007] SCA 62 (RSA) (29 May 2007) par [22] Van Heerden JA said:

“It follows that, upon taking occupation of the property in late 1994, the plaintiff became obliged to pay rent to the defendant, as stipulated in clause 1 of the lease. Of course, because the plaintiff was, until early June 1997, deprived of the use of that portion of the property which was being used by the person making pre-case fencing, the plaintiff would be entitled to a remission of rent over the period in question, proportional to its reduced use and enjoyment of the property. If the amount to be remitted was capable of prompt ascertainment, the plaintiff could have set this amount off against the defendant’s

claim for rent; if not, the plaintiff was obliged to pay the full rent agreed upon in the lease and could thereafter reclaim from the defendant the amount remitted.”

(my emphasis)

[21] In a case where the lessee was, by the share magnitude of the lessor’s default, completely deprived of the entire gainful use and beneficial enjoyment of the leased property, a lessee would be entirely absolved by the court from the obligation to pay any rental. Still in the case of ETHEKWINI, supra, and at the same paragraph the learned judge had this to say about the scenario of absolute deprivation:

“The lessee would be entirely absolved from the obligation to pay rental if he were deprived of or did not receive any usage whatsoever.” (my emphasis)

[22] In MPANGE AND OTHERS v SITHOLE (07/7063) [2007] ZAGPHC 202 (22.06.2007) Satchwell J adopted a similar approach. From the authorities cited in this judgment it can be distilled that the magnitude of the lessor’s default, in other words, unjustifiable (neglect or omission or interference or commission or disturbance) will almost invariably give a fair indication of the lessee’s available remedy. The relative remedy of rental remission applies to cases of minor deprivations whereas the absolute remedy of rental withholding applies to cases of major deprivations. (Kerr, supra)

[23] The first respondent has alleged that as a result of the applicant’s wrongful curtailment of its usage and enjoyment of the property leased, it has suffered certain consequential damages. Notwithstanding the first respondent’s alleged frustration occasioned by diminished usage and enjoyment, the first respondent still had not quantified its damages when the matter came up. It will be recalled that the first respondent last paid the rental on 3 January 2011. I take it, therefore, that not so long afterwards, the first respondent decided to withhold further payment. Over a long period of some nine months the first respondent did not at all put shoulders to the wheel in order to have the quantum of its damages assessed.

[24] The first respondent made no averments whatsoever as to the extent of the wrongful deprivation of the use and enjoyment of the leased premises. The explanation given by the first respondent was that it required the co-operation of the applicant in order to have its damages quantified by mutual agreement between the parties. That was clearly untenable in law. To date the applicant was still in the dark as regards the damages the first respondent had allegedly suffered.

[25] It appeared to me that the damages allegedly suffered by the first respondent were no more than a trivial inconvenience. The disruptive cause complained of was an infrequent event. It was not a perennial event. By its very nature, rain is a seasonal natural occurrence. In the answering affidavit no precise details of the frequency of the disruptive rain were given. As a result of the vagueness of the alleged event, I have no clue as to how many times prior or subsequent to withholding of the rental, the first respondent’s business operations were wholly or partially disrupted.

[26] The fact that the first respondent continues to trade on the premises where its optimal use and enjoyment have been, as alleged, so drastically diminished, strongly tends to suggest that whatever deprivation or frustration there was, did not have materially adverse impact on the first respondent’s operation. The salient principle of law is that, where the lessee’s enjoyment of the merx is merely reduced but not completed impaired the appropriate remedy that corresponds with the degree of reduced enjoyment, is rental remission. The underlying rationale of this relative remedy is to restore the balance between the opposite bargains as was originally agreed upon.

[27] In the absence of proven complete deprivation of enjoyment of the merx the absolute remedy of rental withholding cannot be sanctioned. The court is precluded from entirely absolving the lessee, who, upon the slightest deprivation, withholds the rental. In this instance there is a monumental disparity between the relative reduction of enjoyment allegedly suffered by the first respondent and the absolute remedy claimed by the first respondent. Accordingly the withholding of rental by the lessee in this matter was unjustifiable. The lessee went overboard here.

[28] In this instance the undisputed facts showed that the first respondent was still in occupation of the leased property; was still having some substantially undisturbed use and was still having relatively beneficial enjoyment thereof. Seeing that the first respondent is still trading on the leased premises, the contention that it was under no obligation to pay any rental whatsoever to the applicant, was untenable. On the facts, the absolute remedy is not available to the first respondent. The alleged breach of the lessor obviously did not have such adverse impact on the first respondent’s business that its whole operations came to a complete halt. It follows, therefore, that in this case the first respondent wrongly withheld payment of rental.

[29] So much about the general legal position at common law. I now turn to the specific contractual scenario of the matter. It has to be borne in mind that the issue whether the first respondent was contractually entitled to withhold the rental, as it did, subsequent to 3 January 2011. Certainly the issue was not, as Mr. Benade put it:

“Of die eerste respondent geregtig is, kontraktueel, om verminderde huur te betaal.”

Such characterisation of the issue was incorrect because the first respondent had paid virtually no rent since the said date.

[30] The crux of the matter was whether, in the light of the contractual connection between the parties, the first respondent was entitled to withhold payment of the rental on account of the alleged structural defects of the merx.

[31] The first respondent withheld the payment of the rental for several months before these proceedings were launched. It was interesting to note that the first respondent merely withheld the rental and sat back. Apart from that, the first respondent made no serious attempt to compel the applicant to repair the exterior structure, roof and gutters in terms of clause 19(A)(a) of annexure “b”. The applicant was not sued for specific performance or for the cancellation of the lease agreement and payment of damages. The passive attitude of the first respondent towards applicant’s alleged breach of the contract, fortified the contention that the breach, if there was indeed any, was not material in nature and extent.

[32] It was a defence put up by the first respondent that it was contractually entitled to withhold the rental since, as the first respondent asserted, the applicant had materially impaired its free, undisturbed and beneficial usage and enjoyment of the leased premises. The first respondent heavily relied on clause “q” of annexure “b” in other words, the lease agreement. The clause which, ex facie the contract, has been cancelled, stipulates that the lessee shall not be entitled to withhold or delay any amount due to the lessor in terms of the lease agreement and that by appending the signature to the lease agreement, the lessee thereby abandoned all rights

whatsoever to raise a defence of set-off.

[33] The applicant relied on the same clause for its contention that the first respondent was contractually precluded from withholding the rental. The whole matter may sound strange. The thing is this: The first respondent’s contention was that the clause did not form part of the contract and never did because it had been mutually deleted. The applicant’s argument was that the clause was an integral part of the contract because it was never mutually deleted as the first respondent claimed.

[34] Besides clause “q” which has indeed been deleted, similar deletions, which appear ex facie the contract document can also be found elsewhere in the same contract (annexure “b”). Upon careful perusal of the contract I counted no less than nine deletions. All such deletions were conditions pertaining to the turnover rent (vide par. 5 conditions of lease). An important feature between the nine deletions, on the one hand, and clause “q” deletion, on the other hand, was that the former, unlike the latter, have all been initialled.

[35] The distinctive feature as vividly distilled from the comparative examination of the deletions significantly bolstered the argument of the applicant. Here the edifice of the first respondent’s case completely collapsed. On the scale of objectivity the applicant won the contest against the first respondent by a huge score of 9 – 1. The deletion of clause “q” was not a mutual but rather a unilateral cancellation by the first respondent. In the law of contract it counts for nothing.

[36] The learned author Christie: The Law of Contract in South Africa, Fifth Edition p. 174-5 comments:

“It is It is a matter of common knowledge that a person who signs a contractual document thereby signifies his assent to the contents of the document, and if these subsequently turn out not to be to his liking he has no one to blame but himself.”

In this instance the applicant did not signify his assent to the deletion of clause “q”. Therefore the purported deletion had to be regarded as pro non deletio. By signing the document the first respondent signified his assent to the nine undisputed deletions and no other. Accordingly clause “q” had to stand and be treated as undeleted.

See SOUTH AFRICAN RAILWAYS & HARBOURS v CONRADIE 1922 AD 137.

[37] In the case of INDUSTRIAL & MERCANTILE CORPORATION v ANASTASSIOU BROTHERS 1973 (2) SA 601 (W) at 604 H – 605 A Davidson J said:

“To my mind the document is one of sufficient clarity to stand by itself and to yield from its own printed and written terms the meaning and import without the evidence of the circumstances which gave it birth, or the intention of the parties in signing it.”

That is precisely the case in the instant matter.

[38] In the case of BURGER v CENTRAL SOUTH AFRICAN RAILWAYS 1903 TS 571 on p. 578 Innes CJ eloquently enunciated the legal principle by commenting:

“It is a sound principle of law that a man, when he signs a contract, is taken to be bound by the ordinary meaning and effect of the words which appear over his signature. There are, of course, grounds upon which he may repudiate a document to which he has put his hand. But no such grounds have been shown to exist in the present case. Consider the circumstances under which this note was signed. Neither fraud nor misrepresentation have been alleged; nothing was said by any railway official which misled the signatory, the language of the document was one which the consignor understood: no pressure of any kind was exercised. All that can be said is that the consignor did not choose to read what he was signing, and after he signed did not know the particulars of the regulations by which he had agreed to abide.”

[39] The aforegoing passage applies though not aptly but fairly well to the circumstances of this case. However, in this instance unlike in BURGER’s case the first respondent as the lessee did read what he was signing and after he signed he knew and understood the precise meaning of the particular clause. It was clear and obvious to me that the lessee’s deponent, in other words the second respondent, did not like what he read in the particular clause which was why he unilaterally wished it away and purportedly endeavoured in vain to delete it in Bloemfontein on 1 August 2009. The problem was that he did not solicit the applicant’s assent to such deletion before he signed the document for and on behalf of the first respondent. Therefore the latter is bound by the undeleted clause “q”.

[40] Having deleted the unwanted clause and having signed, the lease agreement was forwarded to the applicant for signing. The alteration of the contract by the first respondent constituted some kind of a counter offer. That counter offer was obviously rejected by the applicant. The rejection was implicit in the applicant’s pertinent and purposeful omission to sign next to the deleted clause so as to signify its positive assent to the deletion of the clause. All that can be said about the respondent’s conduct is that the first respondent signed the contract fully aware that it thereby signed away its right to withhold any money due to the applicant in terms of the lease agreement.

[41] The first respondent’s contention that since its contractual right to use and enjoy the leased premises was, as it alleged, adversely affected by the applicant’s breach, it was under no contractual obligation to make any payment of any monies due to the applicant in terms of the lease agreement, unless the alleged structural defects of the leased property were remedied by the applicant, was untenable in our law.

[42] Nothing more turns on the unilateral deletion of clause “q” by the first respondent. This is so because clause 14 of the schedule, annexed to the lease agreement, states in no uncertain terms that:

“..... rental shall be payable monthly in advance, without any deductions.”

Moreover, clause 17 of the lease agreement totally nullifies the first respondent’s alleged contractual right in terms of clause “q” to withhold rental. When clause “q” is read in conjunction with those other two clauses the uncertainty which Nr. Benade contended existed as to whether or not the disputed clause “q” was still part and parcel of the contract, evaporates into thin air.

[43] The applicant relied on the terms of the lease agreement in exercising its right to cancel the contract. Such terms were clearly set out in the founding affidavit and the replying affidavit. The respondents tendered payment of the arrears to the applicant on condition the defective premises were first repaired. In my judgment such tender was irrelevant for the purposes of adjudicating this application. This was so because, on respondents’ own version, the tender was belated. It was made post ex facto. By the time it was made the applicant had already cancelled the lease agreement and had already notified the respondents about it. No legal consequence flows from a tender made ex post facto the lawful cancellation of the lease agreement by the lessor.

[44] The first respondent continues to trade on the applicant’s property rentalless. The first respondent remains in occupation of the premises leased from the applicant. The first respondent continues to utilise the leased premises for the carwashing operations. The applicant’s premises continue to be used for the precise purpose for which they were leased. Above all these the first respondent continues to gainfully use the leased premises.

[45] No valid grounds exist to justifying the first respondent’s withholding of the rental. The first respondent cannot, on the facts as outlined, examined and analysed, be absolved from paying the agreed rental. The absolute remedy, in other words, the total withholding of the rental, is not there for the taking upon the slightest breach of a material term of the lease agreement. The magnitude of the alleged deprivation in this matter cannot be said to have been a material breach. The remedy claimed by the lessee in casu was not commensurate to the magnitude of the lessor’s alleged breach.

[46] The applicant is the outright owner of the leased premises. The applicant leased these premises to the first respondent. The applicant leased the premises for the purpose of generating income. The applicant’s business purpose has been defeated. The applicant has called upon the first respondent to remedy the breach. The first respondent steadfastly withheld the rental, for at least nine months, and persistently refused to remedy the breach. The refusal prompted the applicant to cancel the lease agreement and to come to court in order to regain possession of its property by having the first respondent evicted.

[47] In these circumstances the first respondent is in unlawful occupation of the leased premises. In my view a proper case has been made out for the eviction of the first respondent from the unlawfully occupied premises. No good argument has been made out for the withholding of the rental.

[48] As regards the costs, I can think of no reason why the general rule should not apply. Therefore, the costs must follow success.

[49] These then are my reasons for the ex tempore order I made. For the sake of completeness, the order, as amended, is repeated. It reads:

“1. The first respondent and all persons claiming occupation of the leased premises through the first respondent are hereby ordered to vacate the following premises before Tuesday 14 November 2011:

The interior of the unit Mezzanine 1, in the building known as Loch Logan Waterfront, Henry Street, Bloemfontein and situated on Portion 3 of Erf 26408, measuring in extent approximately 126.29 square metres.

2. The court sheriff is hereby authorized and directed to take such practical steps as (s)he may consider necessary to evict the first respondent and all persons claiming through such respondent from the aforesaid leased premises and, for this purpose, to solicit the assistance of the South African Police Service, in order to execute this court order, should (s)he deem it necessary.

3. The first respondent is directed to pay the costs of this application on the scale as between attorney and client.

4. The costs referred to in par 3 above shall include the fees occasioned by the employment of two counsels.

5. Any party aggrieved by this order can, within 14 calendar days hereof, apply for the written reasons.”

______________

M.H. RAMPAI, J

On behalf of applicant: Adv. A.J.R. van Rhyn SC

Instructed by:

E G Cooper Majiedt Inc

BLOEMFONTEIN

On behalf of respondents: Adv. H.J. Benade

Kramer Weihmann Joubert Inc

/sp