Mpisi Trading 74 (Pty) Limited v Member of the Executive Council for Agriculture, Rural And Social Development and Another (43864/2012) [2014] ZAGPJHC 231 (27 June 2014)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA,

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO. 43864/2012

DATE: 27 JUNE 2014

In the matter between:

MPISI TRADING 74 (PTY) Limited......................................................................PLANTIFF

And

THE MEMBER OF THE EXECUTIVE COUNCIL FOR...........................1ST DEFENDANT

AGRICULTURE, RURAL AND SOCIAL DEVELOPMENT

THE SOUTH AFRICAN SOCIAL SECURITY AGENCY.......................2ND RESPONDENT

J U D G M E N T

MBONGWE, AJ

[1] The plaintiff commenced these proceedings against the 1st defendant by way of summons issued out of this Court on the 24th November 2012.

In the particulars of claim the plaintiff set out its claim for damages founded on an alleged holding over of or failure by the 1st defendant

to vacate premises on termination of a lease agreement. The amount claimed is in the order of R882 428.80 plus interest and costs.

[2] Upon receiving the summons, the 1st defendant served and filed a special plea and a plea. In addition, the 1st defendant issued and served a notice to a third party, basically introducing the 2nd defendant as a necessary party to these proceedings and seeking indemnity from the 2nd defendant. In the special plea, paragraph 5, the 1st defendant alleges that “SASSA is therefore the juristic entity and designated organ of State responsible for defending this claim which arises from the discharge of services relating to social assistance services”.

[3] In its replication, on paragraph 3.2, the plaintiff alleges thus: “It is denied that the defendant’s obligations in terms of the lease agreement

were transferred to SASSA”, and at paragraph 3.3.5 the plaintiff alleges “In the premises the plaintiff does not have a claim against SASSA”.

However, subsequent to the service of the notice to a third party, the plaintiff launched an application for the joinder of SASSA as the 2nd

defendant, but, strangely in Court the plaintiff insisted that it was pursuing settlement of its claim against either the 1st or the 2nd defendant.

[4] For purposes of clarity, I deem it necessary to give background information on this case with a view to highlighting the plaintiff’s stance.

A lease agreement in respect of the premises known as 23 Short Horn Street, City Deep, Johannesburg, was concluded between the 1st

defendant and the erstwhile owners of those premises, Murray and Roberts Properties Services (Pty) Limited in January 2006. The lease

was for a period of 5 years commencing on 1 February 2006 and terminating on the 30th January 2011. The leased premises consisted of

office space as well as a storage area and measured approximately 6 900 m2 in total.

[5] The parties concluded a variation lease agreement on the 20th January 2006. This agreement stated that the leased premises were to be used

as office space and for the storage of files and records. The 1st defendant sought to centralise the management and distribution of

social grants and store beneficiary records in these premises. Of importance in this agreement are the provisions of Clause 12 which

has the heading “Transfer of Rights” and read as follows: “It is recorded that during the tenancy the lease may be ceded to SASSA”.

Clause 37(2) provided for an extension of the lease after the lapse of the initial period. In that instance the parties agreed to the so called

month to month lease which required any of the parties to give one month’s written notice in the event that such party intended to

terminate the lease.

[6] A change in the status of each of the parties occurred during the lease period. On one hand the original landlord sold the premises to

the plaintiff during October 2011. Provision for this eventuality was made in Clause 13 of the agreement which provided thus: “In the

event of a sale of the property by the landlord to any third party, the lessee agrees to be bound to such third party in terms of this lease”.

By virtue of the sale and by operation of the law, the plaintiff became the landlord and acquired all the rights and obligations of the seller in

terms of the lease agreement.

[7] On the other hand, and in line with the provisions of Section 142 of the Constitution of the Republic of South Africa of 1996, two Acts were

passed which brought about a change to the status of the 1st defendant in relation to her function of managing and distributing social grants to indigent South Africans. These Acts are the South African Social Assistance Act, 2004 and the South African Social Security Agency Act, 2004. Section 2 of the latter Act gave birth to SASSA while Section 23 provides for the transfer of all existing assets, liabilities, rights and obligations, including existing contracts that had been entered into by the Department of Social Services and by the provincial MECs for social development, to SASSA as of the date on which these Acts became operational, being 1 April 2006. Thus SASSA became the organ of the State responsible for the management and distribution of social grants from that date and was accorded full legal capacity, although the Minister of Social Development still remains its political head. It follows from the above that SASSA by law stepped into the shoes of the 1st defendant.

[8] Further, undisputed evidence was given in Court that when the plaintiff bought the premises, communication in relation to the lease was direct

with SASSA and that included direct payment of monthly rental by SASSA. The manager of the plaintiff did, during his testimony, refer to

a huge SASSA board displayed at the premises and to a meeting with SASSA officials subsequent to the plaintiff’s purchase of the premises.

There can be no doubt, therefore, that the plaintiff had been aware that SASSA was the tenant as at the date of purchase of the building. Further, the notice to terminate the lease was given by SASSA and accepted by the plaintiff who then engaged SASSA on its exit. The notice required to be given in terms of the Institution of Legal Proceedings Act was addressed by the plaintiff to the 1st defendant and subsequently to SASSA. In a response email SASSA advised the plaintiff that it was the party to be sued and not the 1st defendant. In the same response SASSA gave an address of its offices in Pretoria for service of summons and further drew the plaintiff attention to the provisions of Section 23 referred to above.

[9] Notwithstanding the above facts, the plaintiff proceeded to issue summons and sought settlement of its claim against the 1st defendant. It is to be noted that the 1st defendant did not tender any evidence at the trial. I find that the plaintiff’s denial that there was a transfer of authority from the 1st defendant to SASSA in terms of Section 23 is an unfortunate plea of ignorance of the law; unfortunate particularly in that plaintiff’s manager, Mr Lin, who has been actively communicating with SASSA is himself an attorney and the plaintiff is legally represented by counsel in these proceedings. The plaintiff’s assertion in paragraph 3.3.5 of its replication that it has no claim against SASSA militated against plaintiff’s later application for the joinder SASSA in these proceedings. Worse still was the plaintiff’s persistence in Court that it still sought settlement of its damages against either the 1st or the 2nd defendant. I find that the citation of the 1st defendant in these proceeding was ill-conceived and lacks legal grounding. The court noted that the 2nd defendant could not produce an annexure, requested by the plaintiff, to the written agreement the Minister, the MEC and the CEO of SASSA had concluded. The annexure concerned was said to contain a list of contracts

ceded to SASSA. Any argument by the plaintiff which is grounded on the unavailability of that document or the failure of the 2nd defendant to produce it is of no moment in light of the clear provisions of Section 23 as to what was transferred from the 1st to the 2nd defendant. Based on this finding, the plaintiff’s claim against the 1st defendant stands to be dismissed.

[10] I now turn to consider the plaintiff’s claim against the 2nd defendant. Although this Court was advised that the parties’ dispute regarding the

restoration of the conditions of the premises had been settled and need not be considered in these proceedings, the defence repeatedly referred the Court to correspondence between the parties concerning the very aspect of restoration. The defence’s evidence also pointed to matters relating to the restoration of the condition of the premises as being in the centre of the case before me. After reading the correspondence that was referred to and contained in the plaintiff trial bundle Volumes 1 and 2, and with the benefit of the evidence that was tendered, this Court discovered how useful the contents of such correspondence were in the determination of this case. I now give a summary of the facts drawn from the contents of the correspondence between the parties:

10.1 The 2nd defendant gave the plaintiff written notice of its intention to terminate the lease agreement and vacate the premises in an email dated 30 January 2012. In my understanding, such notice meant that the 2nd defendant would vacate the premises by no later than 29 February 2012, regard being had to the provisions of the lease which required that one month prior notice be given.

10.2 It appears from the correspondence and evidence in court that the 2nd defendant in fact stopped operating from the leased premises much earlier, but only handed back the keys thereto on the 1st February 2012. At that stage the 2nd defendant had not completely removed all its belongings from the premises. The 2nd defendant further disengaged the provision of security guards to the premises on that date. This was confirmed in the plaintiff’s evidence that the handing over of security to plaintiff’s guards was effected at midnight of the 31st January or on 1st February 2012.

[11] The 2nd defendant led evidence that on the 2nd February 2012 its personnel had gone to the premises to collect and remove its remaining belongings, but was refused entry by the plaintiff’s security guards. In this regards the Court heard that two vehicles of the 2nd defendant were involved, a sedan driven by an official of the plaintiff responsible for the removals and a van that was to load the goods. The plaintiff denied these allegations. Cross examining the plaintiff’s guard, the defence referred the Court to the plaintiff’s trial bundle Volume 3, earlier used by the plaintiff, and pointed out that the entries in that occurrence book conveniently commence on the 5th February 2012 whereas the plaintiff’s guards took over the security of the premises on the 1st February. The first guard to testify clearly had difficulty providing an explanation and even suggested that there may be confusion regarding the date the security duties were taken over. However, the next security guard to testify told the Court that an occurrence book had not been immediately available when the plaintiff’s guards assumed the security duties.

[12] The Court was referred to a few other entries in the occurrence book which recorded the registration letters and numbers of vehicles belonging to the 2nd defendant as having been present at the entrance to the premises. This evidence was neither disputed nor refuted by the plaintiff. The 2nd defendant’s evidence in this regard was that those entries referred to the occasions the 2nd defendant’s personnel had been refused entry to the premises.

[13] The absence of a book for the recording of visitations and removal of goods from the premises would, in my view, be a plausible explanation for refusing entry to and the removal of goods from the premises. On the other hand, the evidence of the 2nd defendant’s personnel corroborated each other on the visitations to the premises and the purpose therefor. In this regard a defence witness and official of the 2nd defendant responded to a question by stating that such visitations “had not been for the purpose of greeting”. The court was also referred to various correspondence from the 2nd defendant to the plaintiff bemoaning the events.

[14] The evidence relating to the refusal of entry to the defendant’s personnel was somehow strengthened by Mr Lin’s expressed apprehension and concern that the defendant could remove and “steal” the air conditioning installed in the premises. Considering that Mr Lin was not personally stationed at the premises, but at the Plaintiff’s head office in Bedfordview, how else was he to ensure that the defendant did not remove the air conditioning, except through the use of the guards securing the premises? I find that Mr Lin’s

apprehension and concern aforementioned were the reason for denying the defendant’s personnel access to the premises. I further find that the refusal of access to the premises occurred on the 2nd February 2012 as well as

on the subsequent dates this Court was referred to in the occurrence book. The plaintiff’s evidence in denial in this regard is rejected.

[15] It further appears from the correspondence and in the defence evidence that the real issue on which the restoration dispute turned was the 2nd defendant’s intent to remove its installations which included the air conditioning and a conveyer belt. In this regard the defendant indicated in one email that it needed to remove these items first so that it could attend to the restoration process. The plaintiff disputed the 2nd defendant’s ownership of these and other items. This marked the beginning of protracted arguments in a flurry of emails from February 2012 and had continued until about the 28th April 2012 when the defendant provided the plaintiff with the requested proof of ownership of the air conditioning and the conveyer belt. The plaintiff had called for the production of this proof in an email dated 20th February 2012. It is noted that the plaintiff’s demands had included the production of a document from the Department of Public Works to prove the condition of the premises prior to occupation thereof by the 1st defendant. Taking into account that these demands were made in February 2012 and that the plaintiff had been in occupation of the premises since February 2004, I do

not believe that the delay in time in providing the requested proof was unreasonable. In the interim, the

plaintiff continued to

demand payment of the monthly rental.

[16] Having been furnished with the proof it required late in April 2012, the plaintiff addressed an email dated 2nd May 2012 to the defendant which

read: “Please can you review the quote urgently. I would like them to commence work ASAP. I am hoping to release SASSA from the lease obligations by the end of May”. The third paragraph of this email reads “Please ensure that all SASSA files and tables are removed before commencement of restoration”. The plaintiff’s expressed hope of releasing the defendant from the lease obligations by end of May suggests that the restoration process could be completed within a month, taking into account the date of the email. It is common cause that it took the defendant two days to clear the premises; completing on 21 May 2012. Mr Lin confirmed this in his evidence and stated that the premises became suitable for letting on the 21st May 2012. It is on basis that this Court agrees with the 2nd defendant’s argument and submission that the defendant could have completed the removals of its remaining belongings within the month of February 2012 had the plaintiff not refused it access to the premises.

[17] From the above facts I find that the 2nd defendant had not been in occupation, wilfully or negligently, of the premises to attract the plaintiff’s claim for damages. On the contrary I find that the plaintiff caused the prolonged presence of the 2nd defendant’s belongings in the premises by denying the defendant access to the premises and demanding proof of ownership of the items mentioned hereinbefore as well as of the pre-occupation condition of the premises. The principle applicable in this situation was aptly laid down in SOUTH AFRICAN FORESTRY CO. LTD v YORK TIMBERS LTD 2005(3) SA 323 (SCA) as follows: “There is an obligation on a party not to frustrate the other party in the exercise of its rights under the agreement.” I find in the present case that it was infact the plaintiff who breached the terms of the lease agreement in that it prevented the 2nd defendant from removing, inter alia, its installations as provided for in the agreement. The plaintiff’s allegation of the defendant’s holding over of or refusal to vacate the premises is not supported by the facts in this case. I, therefore, come to the conclusion that the delay in vacating the leased premises at the end of the lease period was due to the plaintiff’s

ignorance of facts relating to the condition of the premises immediately prior to occupation thereof by the

defendant and that the defendant cannot be said to have held over or refused to vacate the premises during that

period. Similarly, the plaintiff cannot lawfully be entitled to charge rental or claim damages in respect of the period of delay occasioned by it while it tried to establish the pre-occupation condition of the premises as well as the ownership of the installations therein at the termination of the agreement.

[18] In the light of the findings in this judgment, the following order is made:

1. The plaintiff’s claim against the 1st defendant is dismissed.

2. The plaintiff’s claim against the 2nd defendant is dismissed.

3. The plaintiff is ordered to pay the costs in respect of each of orders 1 and 2 which costs shall include the costs of the two counsel employed by the defendants.

M MBONGWE

ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA,

GAUTENG LOCAL DIVISION, JOHANNESBURG

DATE OF HEARING : 22 , 23 April and 19 June 2014

DATE OF JUDGEMENT : 27 June 2014

APPEARANCES

1. For the plaintiff : Adv Wilson

Instructed by : Schindlers Attorneys

Johannesburg

2. For the 1st and 2nd defendants : Adv Gcabashe SC

: Adv Jara

Instructed by : The State Attorney, Johannesburg