Waterval Islamic Institute and Others v Johannesburg City Parks and Zoo and Others (41930/16) [2018] ZAGPJHC 90 (20 April 2018)

IN

THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, JOHANNESBURG

Case number: 41930/16

Not reportable

Not of interest to other judges

Revised.

20/4/2018

In the matter between:

WATERVAL

ISLAMIC INSTITUTE First Applicant

WATERVAL

ESTATE LIMITED Second Applicant

IBRAHIM MIA N.O Third Applicant

YAHYA

MUHAMMED AMEEN MIA N.O Fourth Applicant

IBRAHIM MIA N.O Fifth Applicant

ZAKARIA MIA N.O Sixth Applicant

ABDUR-RAHMAAN MIA N.O Seventh Applicant

MUHAMMED

AHMED MIA N.O Eighth Applicant

SALEY

MUHAMMED ISMAIL N.O Ninth Applicant

AND

JOHANNESBURG CITY PARKS AND ZOO First Respondent

THE

CITY OF JOHANNESBURG

METROPOLITAN MUNICIPALITY Second Respondent

JUDGMENT

Molahlehi J

Introduction

[1] This is an application to evict the first respondent, Johannesburg City Parks, from a portion measuring 250 hectors of the remaining extent of farm Waterval 5 IR described as 17 and 18 Jukskei View Extension 9 (the property).

The parties

[2] The first applicant Waterfall Islamic Institute (WII) is a charitable Trust based in Johannesburg. The eight other applicants are trustees of the Trust. The second applicant the Witwaterand Estate Limited, is a company registered in terms of South African Company law and is the owner of the immovable property which is the subject of the lease agreement.

[3] The first respondent, Johannesburg City Parks (City Paks), is an association incorporated and registered in terms of s 21 of the

Companies Act of 1973. The second respondent, the City of Johannesburg Metropolitan Municipality (the City of Johannesburg) is

a local government authority established in terms of the Local Government: Municipal Structures Act 117 of 1998.

Background facts

[4] The issue in this matter concerns the lease agreement concluded between the parties, during September 2003 (the lease agreement). The second respondent leased the property mainly as a cemetery to City Parks.

[5] The applicants contend that they cancelled the lease agreement on 8 October 2014, the respondent having failed to comply with its

obligation under the lease agreement. The applicant instituted the present proceedings because despite the cancellation of the lease agreement the first respondent failed to vacate the property.

[6] As stated above the property was leased for the purposes of a cemetery and was to endure for fifty years, with the right of renewal for a further period of forty-nine years.

[7] The key and relevant clause of the lease agreement for the purposes of this judgment is clause 7 of the lease agreement read with clause 30 thereof. In terms of Clause 7 the City Parks is responsible for the following:

“7.1.1 all assessment rates, sewerage and refuse removal charges and all other levies and charges that may be levied in respect of the property by any . . . municipality or other local or statutory authority and

7.1.2 all charges for the supply of the property of electricity, water, gas and any other services generally; and

7.1.3 any other tax or levy.”

[8] And Clause 30 of the lease agreement which deals with breach of the lease agreement provides:

“30.1 if the tenant fails to make payment of any amount payable by it to the landlord in terms of this lease promptly on due date for payment thereof and thereafter fails to effect payment within 10 (ten) business days of receipt of a written notice, calling upon the defendant to effect payment;

30.2 breaches any other material terms of this agreement and fails to remedy such breach within 20 (twenty) business days (or, if the breach in question is not capable of being remedied within 20 (twenty) business days, within such extended period as the defendant

may prove to be reasonable in the circumstances); or (sic), then the landlord shall be entitled, without prejudice to any other rights which it may have in terms of this agreement, and/or at law, to cancel the agreement with or without claiming damages and to take possession of the property."

[9] The lease agreement further provides in clause 37 for a no variation clause.

[10] The first respondent took occupation of the property during July 2003. The applicant alleges in its founding affidavit that it became aware during August 2014 that the City Parks failed to comply with the provisions of the lease agreement in that it failed to make payments of all the assessment rates, sewerage and refuse removal charges and other levies on the property. The amount owed by the applicant as at 25 June 2014, was R5 410 551.00.

[11] The applicant notified the first respondent of its breach of contract following the failure to pay the rates and taxes on 25 August 2014. The first respondent was given twenty days to remedy the breach.

[12] On 18 October 2014, the applicant notified the first respondent of the cancellation of the lease with immediate effect. The first

respondent, then addressed a letter eight days after the notice of cancellation of the lease agreement, acknowledging receipt of that letter and indicated that the matter had been referred to the City of Johannesburg, for resolution. However, according to the applicants, the issue remained unresolved until the institution of these proceedings.

The respondent’s case

[13] The first respondent contended that the cancellation of the lease was invalid because no debt was due and owing by the applicant. In other words, because there was no debt owing in terms of the levying of rates and taxes and other charges envisaged in clause 7 of the lease agreement, there could not have been the breach of the lease agreement.

[14] Initially, the City of Johannesburg did not oppose the application. It filed its answering affidavit after the applicant had filed its replying affidavit. It was granted leave to file its answering affidavit by this court on 7 August 2017.

[15] The defence of City Parks is that non-payment of the assessment rates, sewerage and refuse removal charges to the City of Johannesburg was an administrative error. According to the deponent to the answering affidavit, Mr Nelana, the error occurred because of the

mischaracterisation of the property by the City of Johannesburg. The property was categorized as "public service infrastructure,"

instead of "municipality." The categorization of the property as "municipality" rests control and management of such property in both City Parks and City of Johannesburg. The invoicing of WII was thus due to the erroneous categorization of the property.

[16] According to Mr Nelana the categorisation of property as "public service infrastructure," is governed by the property and rates policy of the City of Johannesburg 2016/2017 which under (j) provides:

“Property falling within this category shall be rated at a rate determined by applying the prevailing ratio as prescribed by Regulation.”

[17] He further states that property is categorised as "municipal property" in terms of clause 6 (g) of the policy which provides

for the exemption of such property from payment of levies.

[18] The City of Johannesburg does not dispute the assertion of City Parks that it ought not to have invoiced the property assessment rates, including other charges which are levied against WII. It, however, proffered a different reason as to why the property was assessed for rates and taxes and charged various levies. It stated that the levies and charges were erroneously made. The error according to it had to do with "interdepartmental accounting process." The rates ought to have been interdepartmentally accredited.

Evaluation/ assessment

[19] The main issue in this matter is whether the cancellation in terms of clause 7 of the lease agreement is valid. City Parks contends it is not while WII, on the other hand, states that it was valid, based on the letter of cancellation and the acceptance thereof by the conduct of City Parks.

[20] There is no dispute that in terms of clause 7 of the lease agreement the obligation to pay rates and taxes and other charges is the responsibility of City Parks. The payment had to be made to the City of Johannesburg. The validity of the cancellation of the contract depends mainly on whether a debt for the payment of the levies and other charges ever existed.

[21] The defence of City Parks, the party that, as stated above, was responsible for ensuring that those levies were paid for, is that

failure to pay was due to an administrative error.

[22] It is indeed correct, as contended by the applicant that there is some contradiction in the explanation proffered by both the City Parks and the City of Johannesburg as to why the non-payment of the levies and charges were debited on the account of WII. This in my view, does not, however, detract from the real need to inquire into the validity of the cancellation of the lease agreement.

[23] The issue of the cancellation of the lease agreement in terms of clause 7 must be understood in the context of the whole agreement between the parties. City Parks is an entity created in terms of section 21 of the Companies Act. It is wholly owned by the City of Johannesburg. This relationship cannot, in the context of interpreting clause 7 of the agreement be ignored. Whether the payment of the levies was to be accredited by way of a classification of the property as "municipality" or by way of "interdepartmental"

accounting process or not, it is clear that payment was to be made by way of an internal arrangement between City Parks and the City of Johannesburg. The City of Johannesburg has a vested interest in the lease agreement as a party responsible for ensuring services for burials for its citizens. It is, however, not in dispute that City Park is an independent entity in law.

[24] The City of Johannesburg after receipt of the issue of the debit of the account of WII invoked the process of correcting the administrative

error that had occurred. It placed before the Council a proposed resolution that the error is corrected by way of a write-off. The Executive City Mayor was granted the power and authority to write-off the debt in question on the bases that it was erroneously made.

[25] The issue of whether the concept of “write-off” is technically and correctly used is, in my view, irrelevant. What is

important is that the effect of that approach was that there is no debt in the account of WII in relation to the rates and tax and other charges.

[26] The WII contended that the cancellation of the lease was valid, and thus it was entitled to have City Parks evicted from the property. It contended in this respect, firstly that the notice of cancellation was not placed in dispute and, secondly, that City Parks was estopped from disputing the validity of the cancellation.

[27] The contention that City Parks was estopped from contesting the validity of the cancellation of the lease agreement is based on its conduct after receipt of the notice of cancellation, namely:

(i) It sought an indulgence from the WII to continue with the burials on an interim basis.

(ii) It ceased to pay the rentals of the property.

(iii) It stopped the maintenance of the property.

The principles governing estoppel

[28] The approach to adopt when dealing with the doctrine of estoppel is set out in Aris Enterprises ( Finance) v Protea Assurance,[1] as follows:

“The essence of the doctrine of estoppel by representation is that a person is precluded, i.e. estopped, from denying the truth of a representation previously made by him to another person if the latter, believing in the truth of the representation, acted thereon

to his prejudice (see Joubert The Law of South Africa vol 9 para 367 and the authorities there cited). The representation may be made in words, i.e. expressly, or it may be made by conduct, including silence or inaction, i.e. tacitly (ibid para 371); and in general it must relate to an existing fact.”

[29] In my view, considering the facts of this matter, WII has failed to make out a case that would sustain the application of estoppel. The response of City Parks to the purported letter of cancellation is far from providing a basis for the interpretation that City Parks had accepted the cancellation of the lease agreement.

[30] The interim indulgence which was sought by City Parks upon receipt of the letter of the purported cancellation from WII does not provide a basis for inferring conduct that amounts to accepting cancellation. The request was made in the context where the issue was being referred to the City of Johannesburg for resolution. In this context there would have been no reason to refer the matter to the City of Johannesburg for resolution if City Parks believed and was of the opinion that WII was in terms of the lease agreement responsible for the rates and tax and other related charges and was thus indebted to the City of Johannesburg.

[31] As concerning the issue of non-payment of rental after the purported letter of cancellation, City Parks has provided a reasonable

explanation as to how that happened. It could not pay the rental because WII had stopped issuing invoices after the cancellation

letter was issued. The case of City Parks is that rental can only be paid on the bases of an invoice.

[32] The allegation that City Parks has stopped maintenance of the property has been disputed. Applying the Plascon Evans,[2] test, I accept the version of City Parks that it did not stop the maintenance of the cemetery.

[33] In light of the above discussion, I cannot find sufficient evidence to support the proposition that City Parks ostensibly accepted the cancellation of the lease agreement by WII. In the circumstances, the case of the applicants stands to fail.

Order

[34] In the premises, the Applicants’ application is dismissed with costs.

E Molahlehi

Judge of the High Court;

Johannesburg

Representation:

For the Applicants: Adv A O Cook SC

Instructed by: Brooks & Braatvedt Inc

For the Respondents: Adv R Stockwell SC with Adv CJ Bresler

Instructed by: Moodie & Robertson Attorneys

Heard: 31 October 2017

Judgment delivered: 20 April 2018

[1] 1981( 3) SA 274 (AD) at 291D-E.

[2] Plascon-Evans Paints Ltd v Van Riebeek Pty Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A).