Sasol Fibres (Pty) Ltd v Solvista Investments (Pty) Ltd (11443/2004) [2009] ZAKZDHC 27 (6 July 2009)

IN THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL, DURBAN

CASE NO: 11443/2004

In the matter between:

SASOL FIBRES (PTY) LIMITED Plaintiff

and

SOLVISTA INVESTMENTS (PTY) LIMITED Defendant

JUDGMENT

MSIMANG, J:

1] During September of 2003 the parties herein, both incorporated companies, concluded a written agreement of sale of land the purchase price in respect of which being payable by the purchaser upon registration of transfer and, pending the said transfer, the amount of the purchase price to be secured by means of a bond guarantee acceptable to the seller.

2] The resolution of the substantial part of the dispute between the parties herein depends on the interpretation of the provisions of clause 5.2 of the said agreement which runs as follows :-

“5.2 The risk in and to the property, and liability to pay all rates, taxes and other outgoings, shall pass to the purchaser on the date of transfer. Current rates and taxes shall be adjusted between the parties pro rata as at the date of transfer. The benefit of the property, including the right to receive all rents and other income (if any) shall likewise pass to the purchaser on the date of transfer.”

3] Clause 5.1 provides that the purchaser would be entitled to take possession of the property on 1 October 2003 and that it would, pending transfer, pay to the seller occupational interest as rental calculated at the rate of prime less two percent of the full purchase price.

4] Indeed, on 1 October 2003 the defendant took possession of the property but transfer was only effected in June 2004.

5] Plaintiff’s claim against the defendant is for payment of the amount of R359 375,00, being the amount of the occupational interest for the months of January 2004 to May 2004, calculated at the rate of R71 275,00 per month.

6] Much as it admits its liability to the plaintiff for the occupational interest in the original sum of R542 983,56, the defendant avers that it has since liquidated a substantial portion of the said liability as follows :-

“6.1 a sum of R215 625,00 which it paid directly to the plaintiff;

6.2 a sum of R271 227,66 which, in terms of clause 5.2, had been due to various service providers by the plaintiff and which had been paid to those service providers, on behalf of the plaintiff, by the defendant.”

7] In the premises, the defendant concludes, a balance of only R48 330,98 is presently due and payable by it to the plaintiff in respect of its liability for occupational interest, the payment of which balance is being tendered.

8] It is common cause between the parties that the amount of R271 227,06 allegedly expended by the defendant on behalf of the plaintiff constituted payment for services provided to the property for the six-month period commencing in December 2003 until and including May of 2004, in other words, after the defendant had taken occupation of the property. The services constituted security services (R141 520,00), garden services (R68 400,00), general cleaning services (R6 840,00), fire protection services (R3 162,36) and other maintenance services (R1 305,30).

9] In holding the plaintiff liable for payment of those services, the defendant relies on the provisions of clause 5.2 of the agreement which provides, inter alia, that the risk in and to the property, and liability to pay all rates, taxes and other outgoings, shall pass to the purchaser only on the date of transfer. According to the defendant, the services concerned constitute “outgoings” as contemplated in the said clause. As the expenses in respect thereof had been incurred prior to the date of transfer of the property into the name of the defendant, the clause decrees that the plaintiff is liable for the same.

10] Not so, submits the plaintiff. What was contemplated by the word “outgoings” in the clause were expenditures of a like or similar nature as or which resembled rates and taxes. The word should therefore be restrictively interpreted to refer only to those types of expenditures. It could never have been the intention of the parties to include all the expenditures made in respect of the property, regardless of the nature and purpose thereof. The expenditures in respect of which the defendant seeks

to hold the plaintiff liable in casu are clearly not of a like or similar nature as the rates and taxes and can therefore not fall within the ambit of the expenditures contemplated in the provisions of the clause.

11] In the South African Concise Oxford Dictionary the word “outgoings” is defined as “one’s regular expenditure”. Clearly therefore the word bears a general meaning

capable of encompassing all forms of regular expenditures. In clause 5.2 the word is, however, preceded by the words “rates,

taxes” which refer to specific types of expenditure. It is one of our acknowledged principles of construction that where words of limited meaning are followed by others of general application the latter are limited to things ejusdem generis with those enumerated before them. 1 The principle is known as the ejusdem generis rule and before it can be applied some common quality or common denominator must be found which belongs to each limited meaning.

12] In the South African Concise Oxford Dictionary the word “rates” is defined as “a tax on commercial and private land and buildings paid to a local authority” and the word “tax” as “a compulsory contribution to State revenue levied by the government on personal income and business profits or added to the cost of some goods, services, and transactions”. In the Black’s Law dictionary 2 the word “tax” is defined as “to impose a tax; to enact or declare that a pecunious contribution shall be made by the persons liable, for the support of government.”

13] In a number of jurisdictions within the United States of America realm the courts have also emphasized the element of support for the government in the system of exacting of tax. For instance, in District Court, N.D. Texas, Wichita Falls Division. In re Mytinger 3 a District Court Judge remarked as follows :-

“Generally speaking, a tax is a pecuniary burden laid upon individuals, or, property, to support the government. A payment exacted by legislative authority.”

In City of Newark v Jos. Hollander, Inc, et al 4 Vice Chancellor Stein pronounced himself as follows on the subject :-

“It is argued by counsel for the defendants that we have consistently held in this State that a tax is not a debt. A tax, in its essential characteristics, is not a debt. A tax is an impost levied by authority of government, upon its citizens or subjects, for the support of the State. It is not founded on contract or agreement. It operates in invitum.”

14] The golden thread therefore running through the specific words preceding the general word in casu is that the “rates and taxes” are exacted by and for the support of a government, a characteristic which is missing in respect of the types of expenditures in respect of which the defendant wishes to hold the plaintiff liable. It is for this reason that I have been driven to the conclusion that those expenditures fall outside the purview of the word “outgoings” as contemplated by the parties in clause 5.2 and therefore that the plaintiff cannot be held liable for the same.

15] As I understood Mr. Ungerer who appeared for the plaintiff, the parties are now agreed that the total amount for which the defendant had been liable in respect of occupational rent is R542 983,56 and that the defendant has, to date, paid a sum of R215 625,00 to the plaintiff, leaving a balance of R327358,56. Also, the plaintiff formally admitted liability for defendant’s counterclaim. I accordingly order as follows :-

In respect of the claim-in-convention :-

Judgment is granted in favour of the plaintiff and against the defendant for –

payment of the amount of R327 358,57;

interest on the aforesaid amount calculated at the legal rate as from 1 June 2004 until and including date of payment;

costs of suit.

In respect of the claim-in-reconvention :-

Judgment is granted in favour of the defendant against the plaintiff for :-

payment of the amount of R7 800,00;

interest on the said amount at the rate of 15.5% a tempore morae;

costs of suit.

For the Plaintiff Mr. R G Ungerer (instructed by Hamilton Attorneys)

For the Defendant: Ms. U Lennard (instructed by Lockhat & Associates)

Matter argued: 9 & 10 February 2009

Judgment delivered: 6 July 2009

1 Colonial Treasurer v Rand Water Board 1907 TS 479 at 484; R v Nolte 1978 AD 377 at 382.

2 Fifth Edition a 1307;

3 31 F. Supp. 977;

4 35 Bailey, 136 N.J. Eq. 539, 42 A, 3rd 872;