MEC of Roads And Public Works, Eastern Cape Province v Sakho and Others (437/2010) [2011] ZAECGHC 84 (1 November 2011)

7

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION) Case no: 437/2010

In the matter between:

THE MEMBER OF THE EXECUTIVE COUNCIL

RESPONSIBLE FOR ROADS AND PUBLIC WORKS

IN THE EASTERN CAPE PROVINCE …..................................................APPLICANT

And

MOUSSA SAKHO …......................................................................1ST RESPONDENT

THEODORA XOLISWA BOBANI …..............................................2ND RESPONDENT

ALICE BUSINESS FORUM ….......................................................3RD RESPONDENT

NKONKOBE MUNICIPALITY …....................................................4TH RESPONDENT

J U D G M E N T

DAMBUZA, J:

[1] The applicant seeks a declarator that a lease agreement, purportedly concluded between the Department of Roads and Public Works, Eastern Cape, of which s/he is the head, and the first respondents, in respect of Erf 419 Alice (the property) is null and void. S/he also seeks an order that the respondents be evicted from the property. In terms of the contested

lease agreement, the Department of Roads and Public Works, on behalf of the Eastern Cape Provincial Government, concluded two lease

agreements with the first respondent, in terms of which the first respondent leased the property.

[2] The common cause facts are that the property in question is one of the properties that were the subject of a “verification project” conducted by the Department of Public Works, Eastern Cape (The Department). In terms of this process the Department investigated whether certain immovable properties owned by the Eastern Cape Government were being properly utilised by the occupants thereof.

[3] Regarding the property which is the subject of this application it is not in dispute on the papers that in 2009 the Department ostensibly concluded a lease agreement with the first respondent in respect of the property.1 The agreement was to endure for one year from 1 April 2009 to 31 March 2010. On 25 April 2009 another lease agreement was concluded between the Department and the same respondent in respect of the same property. There is no explanation in the papers as to why the later agreement was concluded prior to the expiry of the earlier agreement; but the later agreement was made effective for a period of five years, starting from 1 April 2009 to 31 March 2015.

[4] Sometime in 2010 the Department purported to enter into another lease agreement in respect of the same property with the third respondent. This (third) agreement was to be effective from 1 April 2010 to 31 March 2012. However the third respondent could not take occupation of the property as the first and second respondents were still in occupation thereof and refused to vacate same.

[5] The first and second respondents are married to each other. They rely, for their continued occupation of the property, on the five year lease agreement.

[6] The applicant maintains that both written lease agreements concluded with the first respondent in respect of the property are invalid on the basis that they were concluded fraudulently, the Government official who negotiated and concluded the agreements having had no authority to do so and he having forged the signature appended thereon on behalf of the applicant.

[7] Dr Phumezo Lupuwana is employed by the Department as the manager of the Amathole Region. In that capacity he is responsible for administration and control of state assets. In the founding affidavit he states that during the period that the relevant lease agreements was concluded he was the only official of the Department authorised to conclude and sign lease agreements on behalf of the Department. He states that the signatures and initials on the agreements, purporting to be his are fraudulent. To this extent, It is common cause that at the time of institution of this application the Department’s internal disciplinary proceedings against Simphiwo Beni, the official alleged to have committed the fraud, were pending.

[8] The first and second respondents resist eviction from the property and contend that the agreement is valid as it was concluded with Mr Beni, an authorised official of the Department. The Department, so these respondents contend, is estopped from repudiating the agreement and may not rely on lack of authority or fraudulent conduct on the part of its employee, Mr Beni. They contend that they were not privy to the limits on Mr Beni’s authority within the Department and that, even if Mr Beni exceeded his authority, the Department should be held bound in respect of the lease agreements. It is common cause that Mr Beni represented the Department in the negotiations preceding the conclusion of the disputed agreement whereas Dr Lupuwana concluded the agreement in which the third respondent is the lessee of the property.

[8] The first and second respondents recount the history of their occupation of the property from February 2000 when they concluded a lease agreement with “Mr Derrick” who had told them that he was the owner thereof. They have always used the property as business premises. They paid rent to Mr Derrick until 2009 when “Mr Bullman,” an employee of the Department, instructed them to stop paying to Mr Derrick. The first written lease agreement was then concluded. According to the first and second respondents, both written lease agreements were not signed in their presence by or, on behalf of the Department. The first respondent would sign his portion and leave the

agreement at the offices of the Department for signature on behalf of the Department.

[9] When the matter came before me the first of the written lease agreements between the parties had already expired. In any event, the remedy sought by the applicant is based on the second written agreement. But it is common cause that Mr Beni facilitated the conclusion of the later five year agreement prior to the expiry of the first lease agreement.

[10] It is stated in the replying affidavit that subsequent to institution of these proceedings the disciplinary proceedings against Mr Beni were finalised and that he pleaded guilty to the charges of fraud against him.

[11] Although ordinarily details of the outcome of the disciplinary proceedings would not be admissible or would carry no weight as they were divulged for the first time in reply, the circumstances in this case are, in my view, such as to justify admission thereof.2 It had already been stated, on behalf of the applicant, in the founding papers that disciplinary proceedings had already been instituted against Mr Beni. The allegation was also made in the founding affidavit that the first and second respondents were, themselves, party to Mr Beni’s fraudulent activities or that they had colluded with him in the conclusion of the fraudulent lease agreement. Therefore the allegations in the replying affidavit that disciplinary proceedings had since been finalised in my view essentially compliment what had already been foreshadowed in the founding papers. Further, the first and second respondents did not attempt or indicate a desire to respond to the allegations relating to the results of the disciplinary proceedings, although they were aware that the applicant also relies on their own participation in the fraud for the relief sought. It appears that the respondents were content in their bare denial, in the answering papers, that they were not party to fraudulent conduct and they did not deem it necessary to respond to specific allegations that Mr Beni, when pleading guilty to fraud, admitted that the first respondent had paid moneys (R450.00 and R250.00) into Mr Beni’s personal bank account. The moneys paid by the first respondent to Mr Beni remain unexplained by the respondents. The applicant contends that the only explanation is that the payments were made to improperly facilitate conclusion of the lease agreement. It is significant that the lease agreement stipulates that rent in respect of the property shall be paid “ through a stop order method or be paid to a cashier at any of the regional offices of the Department of Public Works, or at the head office of the Department of Public Works in Bisho.”

[12] My view is that there can be no real dispute of fact regarding the fraud perpetrated in respect of Dr Lupuwana’s signature. The respondents’ retort, in the answering affidavit, that the signature is that of Dr Lupuwana carries no weight in the light of Dr Lupuwana’s denial that the signature is his and Mr Beni’s admission that he indeed perpetrated fraud as alleged by the applicant.

[13] It is trite law that a contract induced by fraud cannot be treated as binding on the innocent party. I am alive to the fact that on general principles of agency, a principal who instructs or authorizes his agent to make representations is responsible for such representations, and he may become liable for damages for fraud or to have the contract based thereon rescinded against him. The principal is in the same position if he has authorized his agent to conclude a contract on his behalf and the agent, in discharging his duties in terms of that authority, makes certain misrepresentation(s). It is no defence for the principal to prove that the agent, when concluding that contract, also committed a fraud on him. 3 But this principle is, in my view founded on the innocence of the party induced by the misrepresentations to enter into the agreement. The submission that in this case the first respondent is not an innocent party in respect of the agreement does find support in the unexplained payments made into Mr Beni’s bank account The Department is therefore the only innocent party. I am therefore persuaded that a proper case has been made for the lease contract to be rescinded.

[14] Lastly, it appears from the papers that although the application was launched on the premise that the first and second respondents occupied the premises for residential purposes, they infact, conduct the business of a clothing shop thereon. The Prevention of Illegal Eviction from and unlawful Occupation of Land Act, No 19 of 1998 (PIE) has its roots, amongst others, in Section 26(3) of the Constitution of the Republic of South Africa, Act 108 of 1996 which provides that no one may be evicted from their home, or have their home demolished, without an order of court made after considering all relevant circumstances.4 In this case the applicant failure to issue the notice contemplated in section 6 (4) of PIE is irrelevant as the provisions of PIE are not applicable.

The following order is therefore granted that:

The lease agreement concluded between the Provincial Government of the Eastern Cape represented by the Department of Roads and Public Works and the first respondent, for rental of Erf 419, Alice, for the period starting from 1 April 2009 to 31 March 2015 is declared Null and Void;

The first and second respondents are ordered to vacate Erf 419, Alice within one calendar month from the date of this order; thereafter

The first and second respondents are interdicted and restrained from entering Erf 419, Alice;

In the event of the first and second respondent failing to vacate the property as ordered in paragraph 2 of this order, the Sheriff of this Court is authorized to evict the first and second respondents from the property;

Service of this order will be effected by the sheriff in the following manner:

5.1 Personally upon the first and the second respondents;

5.2 By attaching a copy thereof to the main door of the building occupied by the first and second respondent respondents on Erf 419, Alice;

The first and second respondents are ordered to pay the applicant’s costs of this application jointly and severally, the one paying the other to be absolved; such costs to include the costs occasioned by the postponement on 6 June 2011.

_________________________

N. DAMBUZA

JUDGE OF THE HIGH COURT

Appearances:

For the Applicant: Mr Swaartbooi – Instructed by Messrs Makhanya

Incorporated Presented by Potelwa & Company

King Williams Town

For the Respondent: Ms Cossie – Instructed by Mongoato Mavuso & Ass.

Presented by S.Z Sigabi & Ass.

King Williams Town

1It is not clear on the papers when exactly the lease agreement was concluded.

2See Rule 5(e) of the Rules of Practice in this court; Erasmus; Superior Court Practice; at B1-44 and the authorities cited therein.

3Christie R H; The Law of Contract in South Africa; 5th Ed; at 272-273.

4See Port Elizabeth Municipality v Various Occupiers 2005(1) SA 217 CC