Old Mutual Life Assurance Company (South Africa) Ltd v Glowing Sunset Trading 165 CC t/a English Blazer (37244/05) [2006] ZAGPHC 200 (18 May 2006)

IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

CASE NO: 37244/05

DATE: 18 May 2006

UNREPORTABLE

IN THE MATTER BETWEEN:

OLD MUTUAL LIFE ASSURANCE COMPANY

(SOUTH AFRICA)LTD PLAINTIFF

and

GLOWING SUNSET TRADING165CC,

tla The English Blazer DEFENDANT

JUDGMENT

PATEL. J

[1] This is an application by the plaintiff for summary judgment.

[2] The plaintiff issued a combined summons against the defendant in which it alleged that on 20 October 2004, the plaintiff represented by Aslam Omar, in his capacity as the Centre General Manager, and Aglaea Ventouris,in her capacity as trustee on behalf of a close corporation to be formed, trading as The English Blazer, concluded an agreement of lease. The agreement was signed on behalf of the plaintiff, as lessor, on 20 October 2004 and Ms Ventouris signed the agreement on 2 August 2004.

[3] In terms of the agreement of lease the plaintiff let to the defendant a shop G76a at the Menlyn Park Shopping Centre, Pretoria (the premises) on the terms and conditions set out in the schedule and the General Conditions of Lease, together with annexure thereto, which comprise the composite lease agreement between the parties.

[4] The plaintiff delivered the premises to the defendant, who took possession of it on the commencement date of the lease, being 1

September 2004, and is presently still in beneficial occupation.

[5] The defendant failed to pay the rental and costs, merchants association contribution and usage of eclectic current, gas and water, and is indebted to the plaintiff in the sum of R134 322, 76.

[6] On 8 November 2005 the plaintiff gave a written notice to the defendant to remedy its default of payment. Notwithstanding the notice, the defendant failed to pay the outstanding amount or any part of it to the plaintiff.

[7] Essentially, there are five claims contained in the summons, namely:

1. Confirmations of the cancellation of the lease agreement.

2. Eviction of the defendant or any occupant from the premises.

3. Payment of the amount of R134 322, 76

4. Interest on the aforesaid amount of R134 322,76 at the rate of 2 % per month a tempore morae.

5. Costs of suit on the attorney and own client scale

[8] The defendant entered an appearance to defend the action. Thereupon, the plaintiff delivered a notice that it would apply for summary judgment as prayed for in the summons. Accompanying the notice is an affidavit by Aslam Omar, in which he verified the cause of action and the amount claimed in the summons, and in his opinion the defendant has no bona fide defence to the claims and that the appearance to defend has been entered solely for the purposes of delay.

[9] Subsequently, the defendant filed an affidavit resisting summary judgment. The defendant admitted that it occupies shop G76a in the Menlyn Park Shopping Centre.

[10] The defendant averred that the plaintiff's cause of action for payment was based on a purported contract allegedly concluded on 20 October 2004. The defendant admitted that it did sign the purported contract which it received on 5 July 2005 under cover of a letter dated 13 June 2005. The defendant further averred that the date on the contract originally was alleged to have been 20 October 2005 but it was changed purportedly to 20 October 2004. The defendant's deponent, Ms Ventouris submitted that the inescapable inference is that the contract was signed on or about 5 July 2005 alternatively 13 June 2005.

[11] The defendant also averred that it has a defence to the claim for its ejectment. It alleged that acting on the plaintiff's representation

that a lease in respect of shop GT76a would be concluded, the defendant took occupation and effected reasonable and necessary improvements at a costs of about R145 000.00. Ms Ventouris submitted that the defendant has an improvement lien as a result of the enrichment of the owner in the amount of R145 000.00.

[12] Mr de Villiers, on behalf of the defendant, contended that the defendant wanted to contract with the plaintiff an signed an offer to conclude such a contract on 2 August 2004. It was submitted that the offer was not accepted. The defence raised in the defendant's affidavit resisting summary judgment is that no lease was concluded between the parties since there was merely an offer to enter into a lease.

[13] The fundamental issue for determination is the question whether an agreement of lease was concluded between the parties. In essence, the defendant's contention is that an agreement of lease was anticipated.

[14] It is common cause that the lease agreement was signed on behalf of the defendant at Johannesburg on 2 August 2004. It is also common cause that the agreement was signed on behalf of the plaintiff by Aslam Omar at Pretoria on 20 October 2004. However, the defendant relies on the letter from Judith Pillay, the Financial Administrator for Menlyn Park Shopping Centre, which accompanied the signed franked lease agreement that was forwarded to the defendant. It is on the basis of that letter the defendant's contention is that the agreement was not signed on 20 October 2004. The defendant's contention is flawed and Ms Ferreira SC rightly submitted that the defendant's contention flies in the face of logic that Aslam Omar signed the agreement by choosing a date in the future, that is 20 October 2005, and then choose to send it in its unchanged form to the defendant under cover of the letter of 13 June 2005. There is no reason why Aslam Omar would commit a fraud by inserting a false date in the future and then later altering it from 2005 to 2004. The defendant's contention certainly does not make any sense it is inherently and seriously unconvincing because the defendant would have received an agreement signed on a future date, being 20 October 2005 which is a date later than 13 June 2005. even though the defendant was already in occupation of the premises.

[15] There are other factors which clearly indicate that the agreement of lease was not only adopted but was put into operation by the defendant. These are:

[15.1] On 15 May 2004 the directors of a company to be formed adopted a resolution to the effect that the company enter into an agreement of lease and Ms Ventouris was authorised to execute the lease and any other documents to give effect to the lease. Further, it was noted that the lease was substantially in the form of the lease that was submitted to the directors of the company. Inspite of the defendant's assertion that it never received a signed lease but only received the signed franked lease under cover of the letter of 13 June 2005, however it is apparent from the tenor of the resolution that Ms Ventouris must have been conversant with the material terms of the lease.

[15.2] Ms Ventouris signed a deed of suretyship at Johannesburg on 2 August 2004, that is on the same day when she signed the agreement of lease. The following is stated in the deed:

" for the due and proper fulfilment of all the obligations of:

A COMPANY I CLOSE CORPORATION TO BE FORMED

(Hereinafter referred to as "the tenant")

Its successors-in title or assigns, arising from or out of or in terms of a Lease (to which this surety ship is attached)between the Landlord and Tenant in respect of certain

premises being;

SHOP G76a, MENL YN PARK SHOPPING CENTRE ...

(hereinafter referred to as "the Lease")or any renewal, breach or cancellation of the Lease."

Ms Vetrouris and through her the defendant must have been fully appraised of what the terms of the lease agreement were and hence the defendant gave effect to the agreement. This is clearly discernable from the following conduct on the part of the defendant.

[15.2.1] The defendant paid the stamp duty in the amount of R1935.75 on 5 November 2004. The payment of the stamp duty is stipulated in clause 10 of the schedule to the lease and forms part of the agreement.

[15.2.2] In terms of the clause 11 of the schedule, the defendant was required to pay a deposit or provide a bank guarantee in the amount of R17 640.00. Further, it was provided in clause 24 of the General Conditions of the Lease that the tenant shall on signature pay a deposit in the amount stated in clause 11 of the schedule. The defendant paid the deposit of R17 640.00 during November 2004.

[15.2.3] From the schedule attached to the particulars of claim, it is clear that defendant made certain payments for rent together with marketing fund and operating costs during October and November 2004 and also made further payments in February 2005.

[16] Having regard to the factors alluded to above, this Court finds that the defendant not only adopted but also implemented the terms of lease agreement. Thus, the defendant's contention that it simply wanted to contract with the plaintiff and merely signed an offer to conclude a lease agreement is devoid of any merit.

[17] The defendant in resisting summary judgment also asserted that it has an improvement lien since it effected reasonable and necessary improvements at a costs of amount R145 000.00.

[18] Van Zyl J in Syfrets Participation Bond Managers Ltd v Estate and Co Op Wine Distributors (Pty) Ltd 1989(1) SA 106 (W) held that:

“The bona fide possessor or occupier of another immovable property, in respect of which he has incurred necessary or useful expenditure, has a lien or right to retain possession or occupation of such property until he has been compensated for the expenditure incurred. The position of a lease of immovable property is different: in terms of the placaeten of the State of Holland and West Friesland of 26 September 1658 and 24 February 1698, a lessee had no lien or right of retention in respect of necessary ore useful expenses incurred in effecting improvements to the property during the currency of the lease; he only had the right to claim compensation after he had vacate the property. The placaeten have been received into South African law. Although when promulgated they applied only to rural land, there is no justification in modern law for drawing a distinction between urban and rural tenements, thereby placing an urban lessee in a better position than a rural lessee. In South Africa law, therefore, a lessee of immovable property, whether urban or rural, has no lien or right of retention, and may claim compensation for necessary or useful improvements only after vacating the property”.

[18] In Palabora Mining CO L TO v Coetzer 1993 (3) SA 306(T) at 307E/F-H, Mohamed J (as he then was) said:

“The first defence of the respondent to the application for ejectment is based on certain moneys he says he spent on alterations to the premises during his occupation thereof. The respondent alleges that in the bona fides belief that the premises were to be sold to him, and the knowledge of the applicant's representative, Mr Moore, he effected improvements to the value of some R27 000. He says that the applicant was being unfairly enriched in the circumstances; that he was claim for compensation from the applicant; and that he was a right of retention to the premises because of this claim.

There appear to be a number of answers to this defence.

Assuming the correctness of the respondent's factual averments pertaining to his claim for compensation, is he entitled to resist ejectment on this ground? I think not.”

[20] In our law a lessee of an immovable property, whether urban or rural, has no lien or right of retention and may claim compensation for necessary or useful improvements only after vacating the property.

[21] In the instant case, the defendant contracted out of its lien. Clause 6.2 of the General Conditions of the Lease stipulated that any alterations or additions made with the written consent of the landlord, which are of permanent nature shall become the property of the landlord without reimbursements or compensation to the tenant. However, the defendant reliance on an enrichment claim for its continued occupation of the premises is without any foundation. There is a agreement of lease and it has been breached by the defendant.. Thus, the defendant does not have an enrichment lien and is not entitled to resist its ejectment from the premises.

[21] The defendant did not attack the validity of the plaintiff's reconciliation regarding the outstanding payments. Proper notice was

sent by a letter of 7 November 2005 to the defendant in terms of the clause 17 to remedy the breach within seven days of the notice. It is common cause that the defendant failed to rectify the breach. Accordingly, the plaintiff was entitled to immediately cancel the agreement of lease which it did in the combined summons.

[23] Further, by virtue of clause 17.4 the plaintiff is entitled to recover costs on an attorney and own client scale and a claim for such legal costs was pleaded in the particulars of claim.

[24] In the principle, this Court is not inclined to refuse summary judgment having regard to the overwhelming evidence that the lease agreement was in fact and in law concluded and that the defendant is bound to its terms. In the final analysis the plaintiff has an unanswerable case and the defendant has no bona fide defence valid in law.

[25] Accordingly, summary judgment is granted in terms of prayers 1,2,3,4 and 5 of the application for summary judgment at page 94 of the papers.

E M PATEL

JUDGE OF THE HIGH COURT

HEARD ON: 23 MARCH 2006

FOR THE PLAINTIFF:ADV ACF FERREIRA SC

INSTRUCTED BY: MARK EFSTRATIOU INC

FOR THE DEFENDANT: ADV DP DE VILLlERS

INSTRUCTED BY:E FLEISCHHAUER

DATE OF JUDGMENT: 18 MA Y 2006