Rebosis Property Fund Ltd t/a Mdantsane Shopping Centre v Motion Fitness (Pty) Ltd t/a Motion Fitness and Another; Rebosis Property Fund Ltd t/a Mdantsane Shopping Centre v Motion Fitness (Pty) Ltd t/a Motion Fitness and Another (3838/2017; 3839/2017) [2020] ZAECGHC 93 (25 August 2020)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION, GRAHAMSTOWN)

Case No: 3838/2017

In the matter between:

REBOSIS PROPERTY FUND LTD

t/a MDANTSANE SHOPPING CENTRE

(REGISTRATION NO. 2010/003468/06)

Plaintiff

And

MOTION FITNESS (PTY) LTD t/a MOTION FITNESS

(REGISTRATION NO. 2007/023135/07)

First Defendant

NICOLAAS FERDINAND VAN GASS

(ID 560[…])

Second

Defendant

AND

Case No: 3839/2017

(ID 560[….]) Second

Defendant

JUDGMENT

BESHE J:

Introduction

[1] The same parties are involved in the two actions mentioned in the appellation. The two actions involve the same parties. Both actions are concerned with claims for payment of arrear rentals arising out of an alleged breach of lease agreements entered into between the parties. The issues raised in both matters are similar if not the same. The only difference between the matters, lies in the description of the properties that are the subjects of the lease agreements and date of the conclusion of each agreement. I am of the view that the two maters can be appropriately dealt with in one judgment.

The parties

[2] In both matters, the plaintiff is a company that is duly registered in terms of the Companies Act of South Africa. So is the first defendant. First defendant has since fallen away as a party by virtue of the fact that it has since been liquidated. The second defendant is an adult businessman and the director of first defendant.

Background facts

[3] On the 9 September 2016 alternatively 12 September 2016 plaintiff and first defendant entered into a written agreement of lease in respect of premises situated at shops M4A, M4B, M4C and M3B, Mdantsane City Mall, Eastern Cape for a period of ten (10) years commencing on 1 October 2016 and terminating on 30 September 2026. On the same date mentioned above the parties concluded a lease agreement in terms of which the plaintiff let to the first defendant premises situated at shops UG92 – UG95 Hemmingways Mall, East London also in the Eastern Cape. This was also for ten (10) years starting on 1 October 2016 to 30 September 2026. It is common cause that gym or fitness facilities were to be operated from both premises. Both agreements

stipulated the monthly rental as well as incidental payments that were payable by the first defendant to the plaintiff.

[4] On the same date, being the 9 September 2016, second defendant bound himself as surety and co-principal debtor for the due and proper fulfilment of the obligations of first defendant.

[5] Complaining that first defendant had breached the two agreements of lease by failing to pay rentals as agreed resulting in the accumulation of arrears, plaintiff cancelled both lease agreements on the 30 July 2019.

[6] On the 17 August 2017 the two actions in question were instituted against the defendants. At the time of the institution of the actions judgment was sought for the payment of R691 244.26 and R1 955 369.41 respectively. With the passage of time these amounts were amended. At the time of hearing of the matter a further amendment was sought being claims for R8 657 097.92 (Mdantsane City Mall) and R15 407 83137 (Hemingways Shopping Centre). This based on the current certificates of balance which were discovered by the plaintiff earlier this year. The amendment was accordingly permitted.

Defendants’ plea (Both matters)

[7] The defendants denied plaintiff had the necessary locus standi to institute these proceedings on the basis that plaintiff had ceded its rights to its financial institution. That plaintiff failed to comply with Section 129 and 130 of the National Credit Act – no notices in terms of the mentioned sections was transmitted to the defendants. Plaintiff failed to give first defendant occupation of premises that were fit for occupation and in particular, fit for use as a gym facility. This was also the basis of first defendant’s counter-claim against the plaintiff wherein the allegations were made that plaintiff had also materially breached the terms of the lease agreements. Inter alia, the clause requiring plaintiff to keep and maintain the exterior walls and roof of the buildings in good order, repair and condition.

[8] The liability of the second defendant is based on the deed of suretyship he is alleged to have bound himself as surety and co-principal debtor for the fulfilment of the obligations of the first defendant in respect of both agreements. In respect of the Mdantsane City Mall matter, the averment that second defendant bound himself as surety and co-debtor, is admitted.[1] However, in respect of the Hemingways Centre matter paragraph 8 of the particulars of claim which contains a similar averment is denied.

[9] It transpires that first defendant has since been liquidated and fell away as defendant in these proceedings. The claims are now against the second defendant only.

Appearances in court

[10] The matters were initially set down for 6 March 2020. However, they did not proceed on that date. The next date the matters were set down for hearing was the 1 June 2020. On the 1 June 2020 and by agreement between the parties (Plaintiff, first and second defendants) the matter was postponed to a date to be determined by the Registrar. It was also agreed that the postponement would be a final postponement of the matters. That the defendants would pay the wasted costs occasioned by the postponements, jointly and severally.

[11] On the same date, the 1 June 2020, the plaintiff sought a new trial date from the Registrar of this court. Still on that same date, defendants’ attorney of record withdrew as such in respect of in respect of first defendant “which is a company in liquidation”. This was followed on the 2 June 2020 by the withdrawal by the same attorneys, as attorneys of record of the second defendant. On the 5 June 2020 the Registrar issued a notice of set down for the hearings of the matters on the 17 August 2020. Plaintiff’s attorney emailed same to the second defendant on the 6 July 2020. During July 2020, second defendant was served (electronically) with a notice in terms of Rule 35 (7). Second respondent filed an affidavit in response thereto.

[12] During the week preceding the trial, plaintiff’s attorneys sought directions regarding the trial – whether it was going to be held in open court or virtually so as to make the necessary arrangements. The second defendant was copied in the correspondence seeking directions from court. He however did not make submissions in this regard until I directed that the matter will be heard in open court. It was only after this directive that second defendant raised the difficulties in travelling that are brought about by the measures that are applicable as a result of the Covid-19 pandemic. I directed that enquiries be made whether it would suit him to have the matter heard virtually. The enquiry elicited a response that a virtual hearing is not realistic. That it would be difficult for him to arrange same on his side. This without saying why it would be difficult. He concludes by saying:

“Beyond all of this, I really would not mind the opportunity of finding alternative legal counsel which I have yet been unable to do as a result of lack of finding – in this regard there is now some great relief through the President’s announcement that we are moving to lockdown level 2 and with gyms permitted to open.”

[13] In light of what had gone before in this matter, including the agreement and resultant order to this effect, that the postponement of the 6 June 2020 would be a final one, and the absence of a formal substantive application for a postponement, I found myself constrained to order that the matter should proceed in the absence of the second defendant.

The issues

[14] From defendants’ plea, the following issues can be discerned:

Plaintiff’s locus standi to institute these proceedings.

The applicability of the National Credit Act no. 34 of 2005, in particular Section 129 and 130 thereof.

Whether plaintiff complied with its obligations in terms of the lease agreement.

Quantum of plaintiff’s claim.

Plaintiff’s evidence

[15] Evidence from two witnesses was adduced by the plaintiff in respect of each of the matters:

In respect of Mdantsane City Mall, the Centre Manager who amongst other things takes care of the interests of the landlord, being the plaintiff, as well as the problems tenants may have. The Manager is also responsible for collection of rental from tenants.

The General Manager of the Hemingways Centre which is also under Rebosis Property Fund Ltd. As well as the Operations Managers in respect of both centres.

[16] Both Managers took the court through the salient clauses of the lease agreements concerned. As well as a document relating to a cession between Business Venture Investment (BVI) and the plaintiff. The latter being the lessor. Whereas it would appear from Clause 1.3 of the cession that the lessor ceded its rights to BVI, Clause 1.6 makes it plain that BVI has agreed to re-cede its ceded claims in respect of defaulting tenants to the lessor. This in my view answers the question as to whether the plaintiff is possessed of the locus standi to pursue the claims in question. It clearly is. In respect of both lease agreements, the duration of which ten (10) years, the monthly rentals are stipulated. These do not seem to be in dispute. (Clause 7.2). 14.2 The premises are leased to the lessee voetstoets. The following are some of the obligations of the parties in terms of the lease agreement:

The lessee is responsible for the interior of the leased property.

The two witnesses testified that even though a tenant is required to notify the landlord in writing within 14 days after the date on which the premises were made available, of any faults or snag list, no faults were brought to the attention of the landlord. In this case, the tenant is considered to have acknowledged that the interior and the exterior of the leased premises is in a good state of repair and condition. This was in response to defendants’ plea that plaintiff failed to give first defendant premises that were fit for occupation and that plaintiff failed to maintain the premises – exterior walls and roof in good order and state of repair. To this end so the witnesses testified – the lists of membership discovered by the defendants show a steady increase of gym membership on both facilities. The membership lists show that in respect of Mdantsane City Shopping Centre, first defendant has 629 members enrolled at the gym during February 2017 and 1437 in September 2019. In respect of Hemingways Mall, it shows that membership stood at 996 in May 2017 and by September 2019 it had increased to 1357. My attention was also drawn to one of the conditions of the lease agreements: 12.9.22 which stipulates that a tenant is not entitled to withhold or defer the payment of rent by reason of the leased premises or any appliances or other installation; fittings in the leased premises or building being in a defective condition or falling into despair, unless it is proven that the loss has been caused solely by the gross negligence or wilful misconduct of the lessor. The two witnesses testified that the lessor complied with all its obligations in respect of the two premises. That whenever defects such as leaks to the roofs would be reported, they would be attended to timeously.

[17] This was confirmed by Operations Managers in respect of both shopping centres who are employees of the plaintiff.

[18] The lease agreements provide for proof of damages / loss by means of a certificate. In terms of a Certificate of Balance compiled by one Rachel Klaasen, in her capacity as General Manager, Property Finance of the plaintiff. First defendant was indebted to plaintiff as at 9 March 2020 in the amount of R 8 657 097.92. In respect of the Hemingways Mall premises, the amount is R15 407 831.37

as at 9 March 2020. This then takes care of the quantum of plaintiff’s claims against the defendants.

Applicability of the National Credit Act

[20] It appears to be common cause between the parties that the premises in question are immovable commercial properties. The answer to the question whether the National Credit Act> is applicable to the agreements that were concluded by the parties in this regard, lies in Section 8 (2) (b) of the National Credit Act which provides that:

“An agreement, irrespective of its form, is not a credit agreement if it is –

(a) (not applicable);

(b) a lease of immovable property; or

(c) (not applicable).”

In terms of Section 8 (4), an incidental credit agreement if it includes an agreement contemplated in Subsection 2 is excluded. In short therefore, the provisions of the National Credit Act are not applicable to agreements in question.

Conclusion

[21] In my view, the plaintiff has succeeded in proving its claims against the second defendant.

Costs

[22] The agreements that were concluded by the parties make provision for legal costs on the attorney and own client scale.

Orders

[23] Accordingly, the following orders will issue:

Case Number: 3838/2017:

1. Judgment is granted in favour of the plaintiff against the defendant only for:

1.1 Payment of the amount of R8 657 097.92.

1.2 Interest on the said amount at the rate of 2% per annum above the prime lending rate from time to time, alternatively 10.25% per annum a tempora morae to date of final payment.

1.3 Cost of suite on the scale as between attorney and client.

Case Number: 3839/2017:

2. Judgment is granted in favour of the plaintiff against the defendant only for:

2.1 Payment of the amount of R15 407 831.37.

2.2 Interest on the said amount at the rate of 2% per annum above the prime lending rate from time to time, alternatively 10.25% per annum a tempora morae to date of final payment.

2.3 Cost of suite on the scale as between attorney and client.

____________

NG BESHE

JUDGE OF THE HIGH COURT

APPEARANCES

For the Plaintiff : Adv: Wijnbeek

Instructed by : BEN GROOT ATTORNEYS INC. t/a GVS LAW

WHEELDON RUSHMERE & COLE INC. Matthew Fosi Chambers

119 High Street

GRAHAMSTOWN

Ref: M van der Veen/Mich/S20438

Tel.: 046 – 622 7005

For the Defendants : NO APPEARANCES

Date Heard : 17 August 2020

Date Reserved : 17 August 2020

Date Delivered : 25 August 2020

[1] Paragraph 7 of the Particulars of Claim, page 7 of pleadings bundle.