Nedbank Limited v Firstclinic Properties One Limited and Another (33780/19) [2020] ZAGPPHC 334 (27 July 2020)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

(1) REPORTABLE: NO

(2) OF INTEREST TO OTHER JUDGES: NO

(3) REVISED

CASE NO: 33780/19

In the matter between:

NEDBANK LIMITED

APPLICANT

and

FIRSTCLINIC PROPERTIES ONE LIMITED

FIRST RESPONDENT

DRS MKHABELE AND INDUNAH DIAGNOSTIC

RADIOLOGISTS INCORPORATED SECOND

RESPONDENT

LANCET LABORATORIES

THIRD

RESPONDENT

DR.M.J. TLADI FOURTH

RESPONDENT

DR. N.S. KOMANE

FIFTH RESPONDENT

DR. I. WOSU SIXTH

RESPONDENT

DR. M. POOE

SEVENTH RESPONDENT

DR. S. BASSA

EIGHT

RESPONDENT

DR. S.N. CEBEKHULU

NINTH RESPONDENT

JUDGMENT

COLLIS J:

INTRODUCTION

1. This is an opposed application wherein the applicant seeks to enforce cessions in securitatem debiti registered in its favour by the first respondent, against the current occupying tenants/ occupants of the first respondents’ premises located at the Louis Pasteur Medical Suites 380 Francis Baard Street, Pretoria.[1]

2. The application was initially instituted as an urgent application, but on 30 May 2019 His Lordship Acting Justice Vorster struck the application from the roll, with costs due to lack of urgency.

3. Albeit that the first respondent has subsequently withdrawn its opposition to the application, the applicant is persisting with seeking its relief against not only the first respondent, but also the second, third, fourth, sixth and seventh respondents.[2] In the present application, only the second respondent has filed an affidavit in opposition to the application.[3]

4. At the commencement of the proceedings before this court, the second respondent sought permission from the court to file a further

affidavit in terms of the provisions of Rule 6(5) (f). The further affidavit was served on the applicant on 23 January 2020, a few days after the enrolment of the matter had occurred. As there was no objection to the court permitting the further affidavit, the second respondent’s request was granted.

5. The present application is premised on a final interdict, which the applicant seeks against the respondents and in the alternative an interim interdict.

6. As mentioned, the applicant seeks the current relief pursuant to cessions in securitatem debiti, contained in two mortgage bonds, which the first respondent executed in the applicants’ favour. It is based on these two cessions that the applicant (a bank) seeks an order against the second respondent (a former tenant).[4] The second respondent having rented premises from the first respondent pursuant to a lease agreement which has since been cancelled.[5]

7. On 21 July 2005, the first covering mortgage bond B 101901/2005 was registered at the instance of the first respondent in favour of the applicant in the Deeds Registry.[6]

8. The cession contained in clause 8 of the first mortgage bond provided as follows:

“The Mortgagor cedes, transfers and assigns to the Bank all the Mortgagor’s rights, title and interest in and to all rentals and other revenues of whatever nature, which may accrue from the mortgaged property as additional security for the due payment by the Mortgagor of all amounts owing to or claimable by the Bank at any time in terms if this bond, with the express right in favour of the Bank irrevocably and in rem suam-

8.1.1 to institute proceedings against lessees for the recovery of unpaid rentals, and/or eviction from the mortgaged property;

8.1.2 to let the mortgaged property or any part thereof, to cancel or renew and enter into leases in such manner as the Bank decides, to evict any trespasser or other person from the mortgaged property;

8.1.3 to collect on behalf, the Mortgagor any moneys payable in respect of the alienation by the Mortgagor of the mortgaged property or any portion thereof;

provided, however, that the cession, transfer, assignment and authorities and powers specified above shall not be acted upon by the Bank without the consent of the Mortgagor unless the Mortgagor has failed to comply with any of or condition of this bond or any loan secured thereby or has otherwise committed a breach thereof. The Bank is further entitled to charge a commission of five (5) percentum of the gross amount of all rentals and other revenues collected and to recover such commission under this bond.”[7]

9. On 6 December 2006, a second covering mortgage bond B 204223/2006 was registered at the instance of the first respondent in favour of the applicant in the Pretoria Deeds Registry.[8]

10. The cession contained in clause 4 of the second covering bond provided as follows:

“The Mortgagor hereby cedes, assigns and transfers to the Mortgagee all the Mortgagor’s right, title and interest in and to any rents which do now or hereafter arise in respect of the mortgaged property hereby irrevocably and in rem suam (but as a severable undertaking be given for the purpose of facilitating the enforcement of that right) authorising the Mortgagee acting through any one of its Directors and/or Managers and/or Branch Managers from time to rime with power of substitution to let the mortgaged property and in default of payment of any rents in respect thereof or delivery of the mortgaged property, to institute action and to employ all lawful means for the recovery of the said rents or for possession of the mortgaged property and ejectment of any tenants, to receive any rents due from any present or future tenants of the mortgaged property and to give valid receipts in respect thereof. The Mortgagee shall be entitled to charge 5% on any amount collected in terms of this clause.” [9]

As per the founding affidavit, the applicant alleges that the first respondent breached the loan agreement by failing to make repayment of the monthly instalments in full and punctually towards the applicant.[10]

It is alleged further that as a result of this failure, the applicant is entitled to enforce its cession in securitatem debiti and lay claim of the monthly rental amounts payable towards the first respondent, by the second to ninth respondents.[11]

As part of enforcing the cession, the applicant on 19 December 2018, served a letter on the second respondent in terms of which:

13.1 the applicant advised the second respondent of its entitlement to lay claim on the rental amount payable to the first respondent; and

13.2 the applicant requested the second respondent to make payment into a designated bank account of the applicant on/before 1 January

2019.[12]

Pursuant to this letter and on 10 January 2019, the second respondent made payment of R 100 000 towards the applicant.[13]

On 11 January 2019 Lowndes Dlamini (attorneys acting for the applicant) enquired from the second respondent as to when payment of the balance of the rental could be expected.

In response to the above request, the second respondent directed two (2) electronic mails to the applicant’s attorneys of record, in terms of which the second respondent recorded:

16.1 “………….

Now we as practice would like to meet with the bank to present our case as we cannot afford to pay this ridiculous rental amount which amounts to more than a thousand rands per square metre….I thank you and I ask we arrange a meeting with the bank to settle this impasse…..[14]

16.2 Good day. As I mentioned in the earlier email; we cannot afford to make payments because we cannot afford the amounts stated………”[15]

17. On 24 January 2019, the second respondent wrote to the first respondent placing it on notice to remedy certain breaches in the lease within 15 days, failing which the lease would be cancelled.[16]

18. As no response was received from the first respondent by the 20th February 2019 being the due date, it then proceeded to cancel the lease with immediate effect for the reasons set out in their letter of cancellation.[17]

19. As per the founding affidavit, the applicant contends that despite being possessed with a secured right to receive rental income, the second to ninth respondents failed, refused and/or neglected to pay over such rental amounts to the applicant.

20. Furthermore, that the applicant’s entitlement to lay claim on rentals payable by the second to ninth respondents towards the first respondent, is an absolute and secured right.[18]

21. In addition, that such right exists for as long as the first mortgage bond and second mortgage bond continue to be registered over

immovable property and the first respondent remains indebted to the applicant.[19] As such the argument went that the applicant possesses a clear right and will only by way of a court order be able to compel the second to ninth respondents to pay over such rental amounts due to the first respondent, and that in the event of the court refusing to grant the required interdictory relief, that it will suffer irreparable harm or at least have a reasonable apprehension of harm to be suffered.[20]

22. As previously mentioned, only the second respondent deposed to an affidavit in opposition to the relief claimed by the applicant.

Therein, the second respondent set out the following:[21]

22.1 That the relief claimed by the applicant, is unclear and overbroad;

22.2 One interpretation is that the applicant simply seeks to enforce its rights pursuant to the first and second mortgage bond by stepping into the first respondents shoe, and in so doing is asking the court to direct that any rental payments due and owing which the second and ninth respondents would have paid to the first respondent, now be paid to the applicant.

22.3 The second possible interpretation of the relief sought, is that the applicant seeks an order enforcing payments of the rental under the lease agreement. Having regard to this interpretation, the second respondent disputes that it is liable to pay rental to the first respondent and consequently to the applicant.

22.4 It is on this basis that the second respondent contents, that the relief sought by the applicant should be refused, as the applicant has failed to show that there is no other relief available to it.

22.5 In addition to the above the deponent further sets out that as no relief is sought against the first respondent from claiming or accepting any rental, nor does the applicant seek to interdict the first respondent from frustrating the applicants’ right to receive such rental. It is on this basis that the deponent contends that the relief sought is on too broad terms.

22.6 In the further affidavit deposed to by the second applicant it is alleged that upon cancelling the lease agreement with the first respondent on 20 February 2019, it ultimately vacated the premises on 16 November 2019.

23. In its replying affidavit and in answer to the grounds of opposition, the applicant denies that the relief sought as per its notice of motion is “unclear and overbroad.”

24. It specifically alleges, that the mortgage bonds permit the applicant to step into the shoes of the first respondent (as lessor of the property) and to deal with the property and consequently the rental payments ancillary to that by enforcing payment of the monthly rentals due to the applicant, instead of the first respondent.[22]

25. As for the cancellation of the lease agreement, the applicant in reply alleges, that when the second respondent cancelled the lease

agreement with the first respondent, it as the cessionary of the lease agreement was not informed of the breach committed by the first respondent, neither was the bank informed of the cancellation of the lease agreement at the time. Premised on the fact that upon the cession being effected only the applicant was vested with the right to cancel the lease agreement and not the first respondent. As such the purported cancellation of the agreement of lease on 20 February 2019, is ineffective and of no moment.[23] In addition to the above, the applicant asserts that the relief sought in the notice of motion is against all the respondents known to remain in occupation of the leased premises and to ensure that these tenants honour their commitments to the applicant by paying their required monthly rental instalment to the applicant.[24]

26. In the present matter it is common cause between the parties that the applicant took cession of the first respondent’s rights to receive rental. That is evident from the two mortgage bonds and it was indeed also submitted by counsel for the second respondent.

Furthermore, that on 19 December 2018, the applicant notified the second respondent of its election to exercise the aforementioned

cessions.[25]

LEGAL PRINCIPLES: CESSION IN SECURITATEM DEBITI

27. Cession is defined as an act of transfer by which personal rights (claims) are transferred from one estate to another.[26]

28. The cedent may transfer his right to the cessionary without the co-operation or knowledge of the debtor and even against the debtors

will;[27]

29. The right of the cedent is transferred in its entirety to the cessionary;[28]

30. The cessionary steps into the shoes of the cedent and requires the same right as that of the cedent. The position of the cessionary should be exactly the same as that of the cedent. Neither better not worse. The cessionary should not be in a stronger position against the debtor than what the cedent was;[29]

31. All the privileges, rights and defences pertaining to the transferred right which the debtor had against the cedent, also apply to the cessionary;[30]

32. It is settled law, that unless otherwise agreed, a cession in securitatem debiti results in the cedent being deprived of the right to recover the ceded debt, retaining only the bare dominium or a ‘reversionary interest’ therein;[31] and

33. Only the cessionary has locus standi to deal with the ceded debt.[32]

34. In the present matter the parties referred the court to the decision Picardi Hotels Ltd v Thekwini Properties (Pty) Ltd [2008] ZASCA 128; 2009 (1) SA 493. In the said matter the Court was called upon to interpret a cession securitatem debiti construed on identical terms as the one in casu. The matter of Picardi however is distinguishable from the present matter as in Picardi, it was the landlord (cedent) who had sued the tenant whereas in the present matter, the cessionary (bank) has sued the tenant.

35. In Picardi further, the Court was called upon to interpret the wording of the cession securitatem debiti and in embarking on this exercise, the court concluded that it was important to ascertain the intention of the parties, when the cession was entered into.

36. In casu, it was common cause between the parties that the first respondent breached the loan agreement by failing to make monthly instalments in full and punctually towards the applicant.[33]

37. It was further common cause between them that based on this breach by the first respondent, that the applicant is entitled to enforce its cession in securitatem debiti and lay claim of monthly rental amounts payable by the second respondent towards the applicant.[34]

38. The second respondent as per the answering affidavit has not denied that the first respondent has breach the loan agreement and based on this breach that the applicant would be entitled to enforce its cession securitatem debiti to lay claim of the rental amounts payable towards the applicant. It thus follows that the existence of the cession securitatem debiti, or the validity thereof is not being challenged by the second respondent.

39. The second respondents’ opposition to pay any outstanding rental amount to the applicant is premised on the fact that it denied that there is rental owing to the first respondent and consequently to the applicant by enforcing its cession in securitatem debiti.[35] In addition to this, the second respondent asserts that it has terminated the lease agreement with the first respondent on 20 February 2019 and that it has subsequently vacated the leased premises on 16 November 2019. As such, a challenge is mounted or a dispute exists against the indebtedness by the second respondent as against the first respondent and by extension, against the applicant. Differently put, the second respondent has raised a defence pertaining to the transferred right.

40. The challenge of indebtedness as exercised by the second respondent, this court cannot turn a blind eye too as it will amount to this court refusing to acknowledge that the second respondent could challenge its indebtedness towards the first respondent and that indeed the second respondent has a right to do so.

41. There having been a challenge mounted by the second respondent, it follows that this dispute first needs to be adjudicated upon and resolved and only once a decision in this regard has been made, would the applicant be entitled to approach this court to enforce its cession securitatem debiti, otherwise it will lead to unjust results.

42. It matters not that the second respondent failed to inform the applicant of the breach on the part of the first respondent and their subsequent termination of the lease agreement, as in law they carried no such obligation. The contractual relationship between the first respondent and second respondent which is relevant and in existence, is the relationship between landlord (lessor) and tenant (lessee), in terms of the underlying lease agreement concluded between them. The applicant is not a party to such lease agreement and therefore, no obligation existed upon the second respondent to inform the applicant of any breach or termination.

43. Furthermore, nothing further turns on the fact that the second respondent, upon receipt of the correspondence dated, 19 December 2018 and their subsequent payment on 10 January 2019 towards the applicant. It could very well be that the payment of the amount R 100 000 was made before any dispute to any outstanding rental amount arose.

44. Having regard to what has been alluded to above, I cannot conclude that the applicant has satisfied the requirements of an interdict be it final or interim and as a result it must follow that the application cannot succeed.

ORDER

45. Accordingly, I make the following order: -

The application is dismissed, with costs, including the costs consequent upon the employment of two counsel.

C.J. COLLIS

JUDGE OF THE HIGH COURT OF

SOUTH AFRICA

Appearances as follows:

Counsel for the Applicant

: Adv. L. Van Rhyn Van Tonder

Attorney for the Applicant

: Lowndes Dhlamini Attorneys

Counsel for the Second Respondent : Adv H.F Oosthuzen SC &

Adv .C. Avidon

Attorney for the Second Respondent : Etienne Naude Attorneys

Date of Hearing :

19 February 2020

Date of Judgment

: 27 July 2020

Judgment electronically transmitted.

[1] Notice of Motion prayers 1-4 p 1-3

[2] Index p 340

[3] Index p 338

[4] Second Respondents’ Further affidavit para 6

[5] Answering affidavit para 4 p 406

[6] Founding affidavit para 36 p 29

[7] Annexure “FA 8” p 132 Clause 8

[8] Founding affidavit para 46 p 35

[9] Annexure “FA 13” p 153 Clause 4

[10] Founding affidavit para 56 p 43

[11] Founding affidavit para 58.3 p 44

[12] Annexure “FA22” P 270

[13] Founding affidavit para 79 p 48; Annexure “FA 23” P 273 & Replying affidavit para 10.5 p 438

[14] Founding affidavit para 80-81 p 49; Annexure “FA 24 P 275-276; Replying affidavit para 10.6 p 438

[15] Supra

[16] Answering Affidavit para 21-22 p 412; Annexure “AA2”; Replying Affidavit p 441 para 22-24

[17] Answering Affidavit para 21-22 p 412; Annexure “AA2”; Replying Affidavit p 441 para 22-24

[18] Founding Affidavit para 137 p 61

[19] Founding affidavit para 138 p61

[20] Founding affidavit para 143-147 p 62

[21] Answering affidavit para 7-9 p 407 and para 16 p 409

[22] Replying affidavit para 16-21 p 440

[23] Replying affidavit para 29-36 p 442-443

[24] Replying affidavit para 47-49 p 446

[25] Founding affidavit para 77-78 p 48; Annexure FA22-Letter of Demand p 270; Replying affidavit para 10.4 p 438; Heads of Argument; Second Respondent para 10.

[26] Guman v Latib 1965 (4) SA 715 (A) at 722A

[27]Paterson’s Executor v Webster, Steele & Co (1880-1882) 1 SC 350 at 355.

[28] Lief NO v Dettmann 1964 (2) SA 252 (A) at 271F; LTA Engineering Co. Ltd v Seacat Investments (Pty) Ltd 1974 (1) 747 (A) at 762A

[28] Lief NO v Dettmann 1964 (2) SA 252 (A) at 271F; LTA Engineering Co. Ltd v Seacat Investments (Pty) Ltd

1974 (1) 747 (A) at 762A

[29] Adams v SA Motor Industry Employers Association 1981 (3) SA 1189 (A) at 1200A-C

[30] The Law of Cession, Susan Scott, 2nd Edition, Juta, 1991 p 7

[31] Bank of Lisbon and South Africa Ltd v The Master and Others 1987 (1) SA 276 (A) at 294C.

[32] Retmil Financial Services (Pty) Ltd v Sanlam Life Insurance Company Ltd 2013 (3) All SA 337 (WCC)

[33] Founding affidavit para 56 p 43

[34] Founding affidavit para 58.3 p 44

[35] Answering affidavit para 9 and 11 p 407-408