Red Coral Investments 117 (Pty) Ltd v Bayas Logistics (Pty) Ltd (D6595/2018) [2020] ZAKZDHC 56 (5 November 2020)

THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL LOCAL DIVISION, DURBAN

Case number: D6595/2018

In the matter between

RED CORAL INVESTMENTS 117 (PTY) LTD

APPLICANT

and

BAYAS LOGISTICS (PTY) LTD

RESPONDENT

ORDER

In the circumstances, the following order is granted:

1. The application is referred for the hearing of oral evidence, at a time and on a date to be allocated by the registrar, for the determination of the following issues:

(a) What were the exact terms of the oral lease agreement?

(b) Whether or not the applicant was entitled to lease and claim rental and utility charges in respect of its property being Rem of Lot 1027 Wentworth, 20 lndustria Street, Jacobs as well as the property being Rem of Lot 1026 Wentworth, 18 lndustria Street, Jacobs.

(c) Whether or not the respondent was in arrears with the payment of its rental and utility charges.

(d) Whether or not the agreement was validly cancelled by the applicant.

2. The evidence shall be that of any witness whom the parties, or either of them, may elect to call, subject, however to what is provided in paragraph 3 below.

3. Save in the case of any deponent to any affidavit in the application, neither party shall be entitled to call any witness unless:

(a) The party has served on the other party at least fifteen (15) days before the date appointed for the hearing (in the case of a witness to be called by the applicant) and at least ten (10) days before such date (in the case of a witness to be called by the respondent), a statement wherein the evidence to be given in chief by such person is set out; or

(b) The Court, at the hearing, permits such person to be called despite the fact that no statement has been so served in respect of this evidence.

4. Any person may be subpoenaed to give evidence at the hearing, whether such person has consented to furnish a statement or not.

5. The fact that a party has served a statement in terms of paragraph 3, or has subpoenaed a witness, shall not oblige such party to call the witness concerned.

6. The provisions of Uniform rules 35, 36, 37 and 37A shall apply at the hearing of oral evidence.

7. The issue of costs incurred to date, which have not already been determined, shall be determined by the court hearing oral evidence.

JUDGMENT

Henriques J

Introduction

[1] This is an opposed application for the eviction of the respondent and all persons from the immovable property described as Rem of Lot 1027, Wentworth, situate at 20 lndustria Street, Jacobs, (the property). As per the Judge President's directive of 1 May 2020, the parties have agreed that the application be decided on the papers without the need for an oral hearing. Both parties have had the opportunity to file heads of argument and make written submissions.

Issues

[2] The parties have not been able to agree on a joint statement of issues despite being directed to do so. The issues for determination on the papers submitted are the following:

(a) Whether the applicant is entitled to an order of eviction;

(b) Whether, given the nature of the defences raised by the respondent, the respondent is entitled to an order dismissing the application with costs, alternatively to an order referring the matter for the hearing of oral evidence.

Factual matrix

[3] The applicant is the owner of an immovable property described as Rem of Lot 1027 Wentworth, in extent 1702 square metres. It is common cause that during or about July 2014, the parties, duly represented, concluded an oral agreement of lease. At the time of the conclusion of the lease agreement, the respondent was under the impression that the applicant was the owner of the property and was entitled to offer the property for lease.

[4] The respondent subsequently learnt that the applicant rented out the property of which it was the owner, being 573 square meters of Rem of Lot 1027 Wentworth, situate at 20 lndustria Street (herein after referred to as 20 lndustria Street), but also rented out property belonging to the eThekwini Municipality (the Municipality) approximately 1200 square meters in extent, this property being described as Rem of Lot 1026 Wentworth, situate at 18 lndustria Street (herein after referred to as 18 lndustria Street).

[5] There is a dispute regarding what the actual terms of the oral lease agreement were. The applicant submits that at the time of conclusion of the oral lease agreement, the express, alternatively implied terms of the agreement were the following:

(a) The applicant would rent property to the respondent;

(b) The respondent would pay rental for the property in the amount of R70 000 per month which would increase by 10% every year;

(c) Rentals would be payable in advance;

(d) The respondent would be liable for municipal charges incurred in respect of the property;

(e) The lease agreement could be terminated by reasonable notice to either party.

[6] Although the applicant alleges that the agreement could be terminated by reasonable notice to either party, this is disputed by the respondent, averring that it had an option to renew the lease agreement for a further five years. The parties are ad idem that the respondent was in advance in its rental payments and payments for municipal charges until August 2016. However, the applicant avers that the respondent subsequently fell into arrears both in its rental payments and payments for municipal charges due and has breached the terms of the oral agreement. It was therefore entitled to cancel the lease agreement which it did by way of the institution of this application.

[7] A separate action has been instituted by the applicant for payment of the arrear rental and utility charges which action has been defended by the respondent. It is also evident from the affidavits filed that the parties attempted to negotiate the sale of the property to the respondent. Howeve,r according to the respondent, when it attempted to raise finance for the purchase of the property, it was unable to do so, as it then discovered that the entire property being leased was not owned by the applicant.

[8] In essence, the respondent's defences may be summarised as follows:

(a) The lease agreement concluded between the parties related to the respondent's occupation of 20 Industria Street and the neighbouring property of 18 lndustria Street which is owned by the Municipality;

(b) The respondent only occupies 573 square metres of the premises owned by the applicant. The applicant also leased 1200 square metres of the property situated at 18 lndustria Street. The respondent subsequently learnt that the applicant was not the owner of 18 lndustria Street and did not have the authority to lease the property, and charge rental and consumption charges for this property;

(c) The total rental which the applicant charged was excessive, based on the market rental for vacant land. The respondent avers that it is entitled to a remission in rental and consumption charges, from the applicant as it was not entitled to lease the entire property;

(d) The applicant is thus not entitled to cancel the agreement based on an alleged breach by the respondent as it was not in arrears with payment of its rental and consumption charges;

(e) The respondent submits that the applicant leased premises, which it did not have the legal authority or the right to lease. The applicant only had the right to lease 20 lndustria Street and not 18 lndustria Street. This, the respondent submits, constitutes fraud;

(f) A further defence proffered by the respondent is that it challenges the applicant's allegation that the lease can be terminated on reasonable notice and alleges that the lease agreement contained an option to renew. The option to renew is disputed by the applicant. The respondent submits that it occupies 573 square metres of the applicant's property and will continue to do so in terms of the option to renew;

(g) In addition, it argues that there is no breach of the oral agreement by virtue of its non-payment of rental as it is in credit, as the applicant was not entitled to levy rental for the property situate at 18 lndustria Street as it was not the owner thereof.

[9] In the replying affidavit, the applicant concedes that the property situated at 18 lndustria Street is owned by the Municipality. However, it contends that the tenancy of the property was assigned to a closed corporation, IVS Container Services CC (IVS) and it was through its relationship with IVS that it was able to make such property available to the respondent to lease. There is however no confirmatory affidavit by the owner of 18 lndustria Street, nor the Municipality nor by the tenant, IVS, confirming this.

[10] In both the applicant's heads of argument and supplementary heads of argument, the applicant indicates that the respondent has admitted the cancellation of the oral lease agreement and therefore its right to occupy the applicant's property has terminated.

Analysis

[11] It is trite that in order to succeed with a rei vindicatio, an applicant must establish that it is the owner of the property in question and that the property is in the possession of the respondent

when the application was instituted before it is entitled to the relief it seeks.[1] The respondent, in order to be successful in challenging the order for its eviction, must allege and prove that it has a right to continued possession.[2]

[12] I propose to deal firstly with the applicant's contention that the respondent has admitted the cancellation of the lease agreement. In my view, the interpretation which the applicant wishes to place on the pleadings and the admissions contained therein, is not correct. In paragraph 6 of the founding affidavit, the applicant alleges it is the owner of the immovable property on which the respondent conducts its business being Rem of Lot 1027, Wentworth, in extent 1702 square metres, namely 20 lndustria Street.

[13] In the answering affidavit in response to the allegations in paragraph 7,[3] the respondent avers as follows:

'Ad pararaph 6

7.1 I admit and deny the allegations contained herein for the reasons as set out herein under.

7.2 1 attach hereto- marked annexure 'BL2', a copy of Plan depicting the Applicant's immovable drawn by Nqobe Konke Surveys & Mapping (Pty) Ltd.

7.3 I further attach hereto- marked annexure 'BL3', an aerial photograph depicting Applicant's immovable property, as well as the immovable property surrounding Applicant's property.

7.4 It would be noted from annexure 'BL2', that the Respondent only occupies 573 square metres (shaded portion) of Applicant's property.

7.5 In terms of annexure 'BL3', it would be noted that the Respondent occupies 573 square metres of Applicant's property and approximately 1200 square metres of Rem of Lot 1026 Wentworth.

7.6 Upon entering into the oral agreement of lease it was agreed, and it is widely accepted in the property market, that vacant land is rented/leased at an average price of R10,00 per square metre.

7.7 The Applicant had informed the Respondent that it owned and would lease 6 000 square metres of its immovable property at a rate of R10,00 per square metres (including Rem 1026). Applicant did not own 6000 square metres of land.

7.8 Applicant has mislead (sic) the Respondent and accordingly charged the Respondent rentals for which it was not entitled to. I aver further as follows.

7.9 In terms of annexure 'BL3', it will be noted that the Respondent occupies the area shaded, such immovable property lawfully belonging to the Ethekwini Municipality.

7.10 The Applicant has committed a fraud in that it has leased premises, which premises do not belong to it. It has received rentals in a large sum of which it is not entitled to.

7.11 I attach hereto - marked annexure 'BL4' a schedule depicting the rentals charged, the rentals paid, the rentals that ought to have

been paid, utilities paid, additional utilities paid and overpayment of rental.

7.12 I aver that there is an overpayment of rentals, as the rental for the Applicant's property and its Applicant's ought to have been the sum of R5 730,00 per month together with utilities at the R10 000, per month and an escalation on the rental at the rate of 10% per annum.

7.13 I aver accordingly the Applicant is liable to the respondent in the sum of R2 155 604, 40.

7.14 In the premises a summons will be issued against the Applicant for the aforesaid sum.

7.15 In the circumstances Applicant is not entitled to an order as prayed for in terms of the notice of motion and the fact of the matter is that Applicant has acted fraudulently and vexatiously and must be penalized with a punitive order for costs.'

[14] Essentially, the respondent avers in paragraph 9 of its answering affidavit that the initial rental of R?0 000 per month included the costs and charges for utilities due to the eThekwini Municipality. In paragraph 13 of the founding affidavit, the applicant alleges the following:

'13

It is clear from this that the Respondent has breached the terms of the agreement and accordingly, we are entitled to cancel the agreement, which we hereby do.'

[15] In response to the allegations of a breach and cancellation of the agreement, the respondent in its answering affidavit alleges the following at paragraph 11:

'11.

Add Paragraphs 10-13

I admit the allegations contained herein and refer the Honourable Court to my allegations contained in paragraph 7 above. I reiterate as a result of the Applicant's unlawful actions, it is the Applicant that is indebted/liable to the Respondent in the sum of R2 155 604,40.'

[16] By virtue of what is contained in the respondent's answering affidavit, the applicant avers that the respondent has admitted that it has cancelled the lease agreement and therefore has no legal right to remain in occupation of the property. I do not agree with this submission. I align myself with the submissions of Mr Naidoo in this respect. In the supplementary heads of argument, the respondent indicates that a correct interpretation of paragraph 11 is that the allegations are admitted in respect of the agreement of lease and the payments related thereto.

[17] Specific reference is made by the respondent to the unlawful actions of the applicant and thus consequently denying a breach of the agreement and consequently denying the right to cancel the agreement. One cannot read the answering affidavit in isolation. It is clear that the respondent disputes the applicant's right to cancel the agreement. This in my view is a valid defence to the vindicatory action as it has set out facts upon which it claims it is entitled to remain on the property. It has not repudiated the agreement in its entirety and has stated that it intends to abide by the terms of the lease agreement in so far as it relates to its occupation of the 573 square metres.

[18] Having reached this conclusion, it must follow that I do not agree with Mr Crampton's submissions in paragraph 4 of his supplementary heads of argument that the lease agreement had been cancelled.

[19] The further defences relate to the actual terms of the lease agreement concluded between the parties. Given the affidavits filed, it is clear that there is a dispute of fact in relation to what the terms of the oral lease agreement were.

[20] What then is the appropriate order given the prevailing circumstances? Uniform rule 6(5)(g) reads as follows:

'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 ensuirng a just and expeditious decision. In particular, but without affecting the generality of the aforegoing, it may direct that oral evidence be heard on specified issues with a view to resolving any dispute of fact and to that end may order any deponent to appear personally or grant leave for such deponent or any other person to be subpoenaed to appear and be examined and cross-examined as a witnessor it may refer the matter to trial with appropriate directions as to pleadings or definition of issues, or otherwise.'

[21] This sub-rule sets out three options which a court can follow, namely, to dismiss the application, to refer the matter for the hearing of oral evidence, or to refer the matter to trial. In Erasmus Superior Court Practice[4] the authors take the view 'that oral evidence in terms of the subrule should be allowed if there are reasonable grounds for doubting the correctness of the [applicant's] allegations'. The court must decide if the alleged dispute of fact cannot satisfactorily be determined without hearing oral evidence.[5]

[22] In deciding to refer a matter for the hearing of oral evidence, a court has a wide discretion.[6] The authors of Erasmus also opine that a

'court must take "a robust, common-sense approach" to a dispute [in motion court proceedings] and not hesitate to decide an issue on affidavit merely because it may be difficult to do so'. This approach must, however, be adopted with caution and the court should not be tempted to settle disputes of fact solely on the probabilities emerging from the affidavits without giving due consideration to the advantages of viva voce evidence.'[7]

[23] In Minister of Environmental Affairs and Tourism & another v Scenematic Fourteen (Pty) Ltd[8] Scott JA at para 29 cited with approval the decisions of Khumalo v Director-General of Co-Operation and Development & others[9] and Moosa Bros & Sons (Pty) Ltd v Rajah[10] regarding the approach to be adopted in applications to hear oral evidence in terms of rule 6(5)(g). The court held the following:

'In Khumalo v Director-General of Co-operation and Development and Others [1990] ZASCA 118; 1991 (1) SA 158 (A) at 167G - 168A the Cour cited with approval the conclusions of Kumleben J in Moosa Bros & Sons (Pty) Ltd v Rajah 1975 (4) SA 87 (D) at 93E - H regarding the approach to be adopted in applications to hear oral evidence in terms of Rule 6(5)(g). The passage is worthy of repetition:

"(a) As a matter of interpretation, there is nothing in the language of Rule 6(5)(g) which restricts the discretionary power of the Court to order the cross-examination of a deponent to cases in which a dispute of fact is shown to exist.

(b) The illustrations of "genuine" disputes of fact given in the Room Hire case at 1163 do not - and did not purport to - set out the circumstances in which cross­ examination under the relevant Transvaal Rule of Court could be authorised. They a fortiori do not determine the circumstances in which such relief should be granted in terms of the present Rule 6(5 )(g) .

(c) Without attempting to lay down any precise rule, which may have the effect of limiting the wide discretion implicit in this Rule, in my view oral evidence in one or other form envisaged by the Rule should be allowed if there are reasonable grounds for doubting the correctness of the allegations concerned.

(d) In reaching a decision in this regard, facts peculiarly within the knowledge of an applicant, which for that reason cannot be directly contradicted or refuted by the opposite party, are to be carefully scrutinised.'"

[24] The authors of Erasmus further state that '[i]f there is a factual dispute, the function of the court is to select the most suitable method of employing vive voce evidence for the determination of the dispute'.[11] Here reference is made to Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd[12] and Standard Bank of SA Ltd v Neugarten & others.[13]

[25] In my view there is a clear dispute on the papers relating to the terms of the oral lease agreement, which cannot be determined on the papers as they stand. I do not believe that the interests of justice and the parties will be served by dismissing the application. In my considered view, it will be necessary for the matter to be referred for the hearing of oral evidence. A court will then be in a position to determine what the exact terms of the agreement between the parties was and whether the agreement has been validly cancelled.

Costs

[26] Given that the matter is being referred for the hearing of oral evidence, it is appropriate that such court determine the aspect of costs.

[27] In the result the following order is granted:

(c) Whether or not the respondent was in arrears with the payment of its rental and utility charges.

HENRIQUES J

APPEARANCES

Counsel for the appellant

: D.P Crampton

Instructed by

: P N Haribhai Attorneys

& Conveyancers

85 Ridgeside Office Pk, 24 Richefond

Cir, Ridgeside, Umhlanga, 4319

Email: pnharibhai@yebo.co.za

Tel: 031 536 8388

Counsel for the respondent

: M.R Naidoo

Instructed by

: Kushen Sahadaw Attorney at Law

44 Walls Ave, Greyville,

Durban. Suite 5. 2ND Floor

Email: vinesh@kslaw.co.za

Tel: (031) 303 8102

Date of Hearing

: 30 June 2020

Date of Judgment

: 5 November 2020

This judgment was handed down electronically by circulation to the parties' representatives by email, and released to Saflii. The date and time to be handed down is deemed to be 09h30 on 5 November 2020.

[1] Chetty v Naidoo 1974 (3) SA 13 (A) at 20C- E

[2] Chetty v Naidoo supra and Woerman and Schutte NNO v Masondo & others 2002 (1) SA 811 (SCA) para 12.

[3] Page 26 of the indexed papers.

[4] DE van Loggerenberg Erasmus: Superior Court Practice, RS 13, 2020, at D1-72.

[5] Erasmus: Superior Court Practice, RS 11, 2019, at D 1-73.

[6] Lombaard v Droprop CC & others 2010 (5) SA 1 (SCA) at 10A-D.

[7] Erasmus: Superior Court Practice RS 11, 2019, at D1-74.

[8] Minister of Environmental Affairs and Tourism & another v Scenematic Fourteen (Pty) Ltd 2005 (6) SA 182 (SCA).

[9] Khumalo v Director-General of Co-Operation and Development & others 1991 (1) SA 158 (A).

[10] Moosa Bros & Sons (Pty) Ltd v Rajah 1975 (4) SA 87 (D).

[11] Erasmus Superior Court Practice RS 5, 2017, at D1-77.

[12] Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1162.

[13] Standard Bank of SA Ltd v Neugarten & others 1987 (3) SA 695 (W) at 699D