Namacara Investments CC v Smiley Kids and Another (4621/2019) [2020] ZAFSHC 35 (27 February 2020)

IN THE HIGH COURT OF SOUTH AFRICA,

FREE STATE DIVISION, BLOEMFONTEIN

Case No: 4621/2019

In the matter between:

NAMACARA INVESTMENTS CC

Applicant

and

SMILEY KIDS First Respondent

LEONIE VAN DER WALT

Second Respondent

JUDGMENT

CORAM:

NAIDOO J

HEARD ON:

14 NOVEMBER 2019

DELIVERED ON: 27 FEBRUARY 2020

INTRODUCTION

[1] The applicant and respondents entered into a lease agreement for the lease of the premises in question, from which the respondents were to operate a pre-school. The respondents did in fact do so. The applicant alleges that the respondents breached the lease agreement by either non-payment or late payment of rent due in respect of the leased premises, as a result of which, it cancelled the lease agreement. In the current application, the applicant seeks an order, inter alia, in the following terms:

1.1 Confirmation of cancellation of the lease agreement

1.2 Ejectment of the Respondent from 23 Johan Chard Street, Brandwag, Bloemfontein, Free State Province, within 1 day from the date the final order is granted.

The applicant also seeks other relief such as attachment and removal of the 1st respondent’s assets and removal of the 1st respondent and its employees from the premises, together with costs on an attorney and client scale. The respondents opposed the application. The applicant was represented by Adv AP Berry and the respondents by Adv C Snyman.

BACKGROUND

[2] The parties entered into a lease agreement in terms of which the first and/or the second respondent leased from the applicant, premises belonging to the applicant and situated at 23 Johan Chard Street, Brandwag, Bloemfontein (referred to interchangeably as the premises or the property). The applicant attached to its Founding Affidavit a copy of the agreement it alleges is the one entered into between it and the respondent/s and marked it “S1”.

For convenience, I shall refer to such agreement as S1. I pause to mention that the applicant cites two respondents, but refers to “respondent” in his papers. The first respondent is alleged to be a company but is not cited as such. The second respondent avers that she carries on business as Smiley Kids (the second respondent), from which I gather that the business is a

sole proprietorship. It is somewhat surprising that the applicant did not know this or take the trouble to find out and ensure that it cites the parties correctly. I shall therefore refer the second respondent as “the respondent”.

[3] The details of the tenant are not reflected on the S1 nor is it signed by the tenant. The agreement is initialled, and reflects a number of initials per page. No explanation is forthcoming regarding these initials. The applicant

alleges that the respondent is in arrears in respect of payment of rent to the applicant, and further alleges that the respondent

persistently paid the rent late. As a result, and in terms of the lease agreement, the applicant gave the respondent, by way of an email dated 8 January 2019 written by its agent, seven days to rectify the breach of the lease agreement by making payment of the arrears, after which the applicant’s agent would take further instructions from the applicant.

[4] Subsequently, on 31 August 2019, the applicant, also via its agent, wrote an email to the respondent cancelling the lease agreement and giving the respondent until the last day of September 2019 to vacate the premises. It is this cancellation that the applicant seeks confirmation of. The applicant further alleges that as a result of the respondent’s

breach, he was unable to meet the bond payments, and was obliged to sell the property.

A copy of an offer to purchase the property was attached to the Founding Affidavit, from which it emerges that the purchaser signed the offer on 1 August 2019 and the seller (applicant) signed on 2 August 2019.

[5] The respondent’s opposition is based broadly on the following grounds:

5.1 The deponent to the Founding Affidavit, Norman Thorne Adams (Adams) is one of four members of the applicant. He has not alleged that he is duly authorised to launch the application for or on behalf of the applicant, which is an essential requirement for anyone acting on behalf a juristic person or legal entity such as the applicant;

5.2 The lease agreement S1 relates to a residential property, whereas the respondent specifically leased the premises for commercial purposes and was assured that the property is zoned for business use.

5.3 Neither the respondent nor anyone on her behalf signed S1. She in fact signed a lease agreement in the presence of an agent, Deon Van Tonder of Rawson Properties, who introduced the property to her, and not with the agent reflected in S1. She has not yet received a signed copy from the landlord (applicant).

5.4 The respondent had neither breached the agreement nor failed to pay the rental to the applicant or its agent. The applicant is therefore not entitled to cancel/terminate the agreement.

ISSUES

[6] The issues for this court to decide are:

6.1 Whether S1 was the agreement entered into between the parties

6.2 Whether the applicant validly cancelled the lease agreement

6.3 Whether the applicant has made out a case for the relief it seeks.

THE LAW

[6] It is trite that in application proceedings such as these, the applicant must make out its case in its Founding papers. It is impermissible for it to supplement its case in Reply. An affidavit in support of a notice of motion must set out the statement of facts which must at least indicate the applicant’s locus standi. In Scott v Hanekom 1980(3) SA1182 (C) the court remarked that it is ‘trite law that appropriate allegations to establish the locus standi of an applicant should be made in the launching affidavits and not in the replying affidavits’. The deponent to the affidavit need not be authorized by the party concerned to depose thereto. It is the institution of the proceedings and the prosecution thereof which must be authorized. [See Ganes v Telecom Namibia Ltd 2004(3) SA 615 (SCA)].

[8] More than six decades ago, the position was stated thus in Mall (Cape) Pty Ltd v Merino Ko-operasie Bpk 1957(2) SA 347 (C) at 351H: When notice of motion proceedings are brought by a legal persona such as a company, evidence must be placed before the court that the applicant has duly resolved to institute the proceedings and that the proceedings are instituted at its instance. The best evidence that the proceedings have been properly authorized would be provided by an affidavit made by an official of the company annexing a copy of the resolution [See also Erasmus, Superior Court Practice, D1-55].

[9] Uniform Rule 6(5)(g) provides that

“Where an application cannot properly be decided on affidavit the court may dismiss the application or make such order as it deems fit with a view to ensuring a just and expeditious decision”.

The general rule as stated in Stellenbosch Farmers’ Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA 234 (C) at 235 is that if the material facts are in dispute and there is no request for the hearing of oral evidence, a final order will only be granted on notice of motion if the facts as stated by the respondent together with the facts alleged by the applicant that are admitted by the respondent, justify such an order. This has been followed in numerous cases[1] since then and has become firmly established in our law.

EVALUATION

[10] Adams alleges that he is authorised to depose to the affidavit, without stating and substantiating that the institution of the proceedings have been authorised by the applicant. The respondent in her Answering Affidavit points out that Adams is one of four members of the applicant, and attacks his authority to bring the application in clear and unambiguous terms. No attempt was made by the applicant to reply meaningfully to this attack. The best way to have met this challenge would have been to file a resolution by the applicant authorising Adams to institute these proceedings and to depose to and sign all necessary documents to prosecute the proceedings. This was not done. Instead, the court was requested to look at the document as a whole and to find that the deponent did have locus standi to bring the application.

The applicant clearly has not complied with fundamental rules and principles with regard to the statement of facts (as established by the cases cited above) in the Founding Affidavit regarding the locus standi of its deponent, Adams. The court cannot, in these circumstances come to the applicant’s rescue.

[11] The lease agreement, S1, which the applicant relies on does not support the contentions of the applicant. One of the most fundamental requirements for a valid contract is to state who the parties to the contract are. S1 falls woefully short in this regard as the name and other details of the tenant/lessee are not reflected in the lease agreement. The applicant states in its Founding Affidavit that the premises to which the lease relates is a commercial property and is used as such by the first

respondent. S1 states unambiguously that “The property shall be used for residential purposes only and for no other purpose whatsoever”

The applicant alleges that the rent in respect of the leased premises was subject to an annual escalation. As correctly pointed out by the respondent, S1 makes no mention of an escalation in rent. The applicant’s case is that the respondent fell into

arrears in respect of payment of the rent, which worsened due to the escalation in the rent. I will return to this aspect shortly.

[12] As alluded to earlier in this judgment, each page of S1 is initialled and bears a number of initials, but only the applicant’s representative signed the document. No explanation for this was forthcoming from the applicant, nor was any

cogent explanation given for why the tenant (respondent) or the witnesses did not sign the document.

The manner of rendering statements of account to the respondent also appears to add to the applicant’s woes. Certain debits such as, for example, interest for late payments are not reflected on those statements, but set out in e-mail letters addressed by the applicant’s representative to the respondent.

[13] The respondent confirms that she concluded a lease agreement with the applicant in respect of the premises, from which she runs a pre-school, but that the applicant was represented at the time by a different agency, namely Rawsons Properties. She signed the agreement and was informed by the applicant’s representative, Deon Van Tonder, that she would receive a copy after the applicant signed the agreement. She never received a copy of the lease agreement. The applicant was subsequently informed via e-mail that future payments in respect of rent were to be made not to Rawson Properties but to JD Properties. The latter entity appears to have drawn up S1. I pause to note that the respondent concedes that one of the initials on S1 looks like her initials but she denies placing her initials on S1 or ever having seen S1 before this application was served on her.

[14] The respondent asserted that her recollection of the terms of the agreement is that:

14.1 the period of the lease was five years, renewable for a further five years;

14.2 the monthly rental was R7 800.00, payable to Rawsons Properties for the applicant;

14.3 the leased property was zoned for business use and would be used as such;

14.4 a deposit of R7800.00 was payable together with the first month’s rent, prior to occupation;

14.5 the respondent had the first option to purchase the property or the right of first refusal.

[15] The respondent also attached to her Answering Affidavit a number of statements rendered to her by the applicant’s agent, showing her account to be in credit. Hence she denied being in arrears with payment of the rent. The respondent also attached a schedule of payments that she had made to the applicant from October 2015 to September 2019 in respect of rent. The respondent further relied on this schedule of payments in her denial of having fallen into arrears with her rent. The applicant did not dispute schedule of payments by the respondent, save to say that it was plain to see that such payments were made late. I note that the

respondent did not mention whether the agreement she alleges that she signed, made provision for an escalation in rent. If however, regard is had to her schedule of payments, it is clear that the amount escalated from 2015 to 2019. I also note that applicant’s

assertion that the respondent implies that there should be no escalation in rent. I am unable to find such an allegation or averment by the respondent. She merely pointed out, in support of her contention that S1 is not the agreement entered into between the parties, that while the applicant alleges that the rent escalated annually, the agreement he relies on makes no provision for such escalation.

[16] The respondent has raised a material dispute of fact that is not capable of resolution on the papers, namely that the agreement S1 is not the agreement concluded by the parties. It is also patently clear that the agreement relied upon by the applicant simply does not support its contentions regarding the terms of the agreement between the parties.

The version of the respondent as I have outlined is not improbable nor is it far-fetched, so that this court will not be justified in rejecting such a version. There is a material dispute of facts and no request has been made for a referral of the matter for

the hearing of oral evidence, save a submission that should the court consider referring the matter for oral evidence, it should be referred to trial because of the multiplicity of issues. In any event, my view is that no purpose will be served by such referral as there are many other hurdles that the applicant faces which stand in the way of its obtaining the relief it seeks. Save for admitting that a lease agreement was concluded between the parties in respect of the premises in question, the facts alleged by the applicant are not admitted by the respondent. In applying the well-established rule in the Stellenbosch Farmers’ Winery case, a final order, as sought by the applicant cannot be granted in this matter.

[17] There are a number of other points of contention raised by the respondent in respect of S1, for example, the issue of the statements rendered to the respondent, showing her to be in credit, hence putting paid to the applicant’s contention that she was in arrear with rent payments and the election made by the applicant, after it cancelled the agreement, to keep the

agreement alive by continuing to send statements and receiving payments. The applicant clearly places reliance on S1 in putting its version forward and seeking the relief set out in the Notice of Motion, on the basis that S1 is a valid contract. In view of the material dispute regarding the validity of the agreement and for the reasons I have outlined above, I find that S1 cannot be regarded as the agreement entered into between the parties. Equally importantly, Adams has not, on the papers before me, established his locus standi to bring this application. The application must therefore fail on those grounds alone.

[18] It is therefore unnecessary for me to deal with the further aspects raised by the respondent, which are based on the provisions of S1 and the conduct of the applicant in relation thereto. Having said that however, I should perhaps deal with the issue of cancellation of the agreement. In the light of my finding that S1 cannot be regarded as the agreement entered into by the parties, it is my view that the applicant was not entitled to cancel the agreement in terms of S1. The applicant, was aware,

through the correspondence that flowed between the parties that there was likely to be a dispute regarding the validity of S1. Even if it did not, this would have become abundantly clear upon receipt of the Answering Affidavit in this matter. The applicant persisted with motion proceedings in the face of this.

It would have been more appropriate for the applicant to have proceeded by way of action, so that it could have amended its summons, or sought rectification of the contract or taken any other appropriate step that is permissible in action proceedings. The

applicant chose not to, and must therefore bear the consequences of motion proceedings if it does not make out a case for the relief

sought, which it has failed to do in this application.

[19] The respondent seeks an order for costs on the attorney and client scale against Adams personally, in that it has not been established that he had the authority to institute these proceedings on behalf of the applicant. The order is sought against

Adams on the basis that in the face of material disputes of fact and defects in his papers, he stubbornly pushed ahead with the

application.

The respondent also took the stance that if an order for costs is awarded against the applicant, the respondent may find that she would be unable to recover such costs if applicant alleges that Adams acted without authority. The respondent however, submitted that if the court is not inclined to make such an order against Adams, then the application should be dismissed and the applicant ordered to pay the costs on an attorney and client scale. The issue of costs was not at all addressed by Mr Berry on behalf of the applicant. My view is that, on the papers before me, Adams has not established his locus standi, but that is not to say that he does not, in fact, have such authority but merely neglected to provide the relevant information in substantiation thereof. There is nothing before me in this regard, and I am of the view that the applicant should bear the costs on a party and party scale, as I am not satisfied that a punitive costs order is called for in this matter. In summary, therefore, I find that the cancellation of the agreement S1 is not the agreement entered into between the parties, that the cancellation thereof has no force or effect on the respondent and is consequently not valid and that the applicant has failed to make out a case for

the relief it seeks.

[20] In the circumstances, I make the following order:

The application is dismissed with costs, such costs to be paid by the applicant on a party and party scale

S. NAIDOO, J

On behalf of Applicant: Adv AP Berry

Instructed by:

Van Wyk & Preller Inc

67 President Paul Kruger Ave

Universitas

Bloemfontein

(Ref:QS3486)

On behalf of the 1st

& 2nd Respondents: Adv. C Snyman

Instructed by:

Bokwa Law Inc

121 Pres Reitz Avenue

Westdene

(Ref: JC Strauss/cb/MJCL126)

[1] See Erasmus, Superior Court Practice D1-69for a reference to such cases