Bryer and Others NNO v Teabosa CC t/a Simon Chuter Properties and Another

• Jurisdiction: South Africa
• Judge: van Deventer J
• Judgment Date: 15 October 1992
• Citation: 1993 (1) SA 128 (C)
• Hearing Date: 17 September 1992
• Court: Cape Provincial Division

I Van Deventer, J.:

In this matter, which was first enrolled as an urgent application on 30 June 1992 and then postponed by agreement to the semi-urgent roll, the applicants claim an order of eviction of the second respondent from certain premises owned and managed by the applicants and known as Shop 7, The Village Square, Main Road, Plumstead ('the premises') J and certain other relief which need not be set out here.

Van Deventer J

A It is common cause that the second respondent was in occupation of the premises on 30 June 1992 as a sublessee of the first respondent; the sole issue to be decided is whether such occupation was lawful or not on that date, ie whether the applicants were entitled to launch this application.

The relevant facts, which are also common cause, are as follows:

B When the application was brought, a written agreement of lease (which has since been cancelled) was in force between the applicants and the first respondent.

In terms of this lease the premises had been let to the first respondent 'only for the purposes of a real estate agency and related services for an initial period of five years as from 1 October 1991 to 30 September 1996'.

C (The lease also contained an option in favour of the lessee (first respondent) to renew the lease for a further five years as from 1 October 1996 'at market related rentals and escalations' subject to certain conditions, but this option is of no relevance in this matter.)

The usual contractual curtailment of a lessee's common law right to D sublet an urban tenement was embodied in clause 15.1 of the lease. The meaning and effect of this clause, which reads as follows, is the crucial issue in this litigation:

'The lessee shall not . . . sublet the leased premises or any part thereof, nor allow anyone else to occupy the leased premises or any part E thereof on any conditions whatsoever or for any reason whatsoever without the lessor's prior written consent, which consent in the case of subletting only shall not be unreasonably withheld . . . .'

On 27 May 1992 the first respondent (through a representative) requested the applicants' permission to sublet the premises for one year as from 1 F July 1992 to the second respondent, who would conduct exactly the same kind of business in the premises as the first respondent, namely a real estate agency.

The request read as follows:

'We write on behalf of Simon Shutter (sic) Properties (Pty) Ltd to obtain your written consent in terms of the agreement of lease to sublet G the abovementioned premises to House It Real Estate (Pty) Ltd on the following terms and conditions:

Occupation Date: 15 June 1992 with rental payment commencing from 1 July 1992

Rental from: 1/7/1992 to 31/12/1992 - R1 250 per month

Rental from: 1/1/1993 to 30/ 6/1993 - R1 350 per month

For record purposes we confirm that the nature of the business is the same that was being used in the original agreement of lease and that signed H documentation has been completed by both parties. In view of the above we look forward to your official consent as expeditiously as possible.'

On 2 June 1992 the applicants replied, refusing consent, as follows:

'We are in receipt of your letter of 27 May and refer to the various I telephonic discussions the writer has had with your Mr Upton in regard to the contents thereof.

We regret to inform you that the lessors of the Village Square have refused consent to the subletting of the premises by Teabosa CC to House It Real Estate (Pty) Ltd.

We have conveyed this information to Mr Simon Chuter of Teabosa CC J personally.'

Van Deventer J

A Further correspondence and negotiations ensued between the parties, from which it appears that the applicants had no real objection to the person or business of the proposed sublessee (the second respondent) but that the actual reason for their refusal was that they wished to relocate an existing tenant ('the Baxters') from shop 6 to shop 7 ('the premises') and B to relet the old Baxters shop to a new tenant. The reason given by the applicants was that they preferred to get rid of an estate agency in shop 7 and wanted to relocate the Baxters' shop in the premises in order to achieve a more favourable tenant mix in their shopping complex.

In the replying affidavit, the applicants sought to justify their attitude as follows: C

'I respectfully submit that applicants were entitled to withhold their consent to the purported sublease in that their rights would be deleteriously affected by same. In this regard, I set forth hereunder certain of the said rights:

1.

The premises are adjacent to a point of entry to the Village Square, and are accordingly in a prime position. The positioning of an estate D agency such as second respondent in the premises would not assist in bringing potential customers into the shopping centre.

2.

First respondent is a firm of stature, having several branches in the Cape Peninsula. Second respondent only has an outlet in Plumstead.

3.

The applicants have the right to ensure that The Village Square is maintained as a successful shopping centre. The inclusion of second E respondent has no positive effect on the shopping centre as it will not:

3.1

draw customers into the centre; or

3.2

add to the variety or mix of tenants as there are three other firms of estate agents in The Village Square.

4.

The applicants have the right to maximise the investment that The Village Square represents to it. The introduction of second F respondent, I respectfully submit, detracts from rather than adds to the value of the premises.

5.

Applicants have the right to screen potential tenants in relation to their field of activity, track record, modus operandi and financial stability in order to:

5.1

prevent a high turnover of tenants, particularly in view of the high profile position of the premises in question; and

5.2

in order to ensure that the correct mix of tenants is obtained for the shopping centre.' G

However, the prospective tenant for shop 6 (ie the Baxters' shop) was only prepared to pay a rental amounting to R200 per month less than the Baxters' lease provided for, and the Baxters in turn were not prepared to pay the same rental as that stipulated in first respondent's lease of shop H 7 for the remainder of its five year term until 1996.

Consequently the transaction that the applicants offered to first respondent in lieu of consent to a sublease to second respondent was

(a)

that first respondent should make good the aforementioned shortfall of R200 per month plus VAT, 'on a monthly basis reducing I as the rental of the new tenant for the Baxters' existing premises increased' and should enter into a separate agreement to this effect directly with the new tenant and

(b)

that first respondent should give the Baxters a sublease for the remainder of its lease, ie until 30 September 1996, at a specified rental, which would fall short of the scale laid down in the main J lease throughout the remaining term thereof and result in an

Van Deventer J

A aggregate loss of R23 335,68 for the first respondent's account, ie a figure agreed between counsel during argument, aside from the loss of R200 per month that might arise from the indemnity referred to in para (a) above.

As compared with the aforegoing losses, the proposed sublease to the B second respondent would operate for one year only with a loss of R10 940.

The first respondent rejected the applicant's offer and proceeded to conclude an agreement of sublease with the second respondent for a period of one year as from 1 July 1992 and at the rental as set out above. The second respondent took occupation on 15 June 1992.

This sublease contained the following special conditions:

'12.1

C The signing of the agreement of sublease is subject to the landlord's consent which in terms of clause 15.1 of the principal agreement of lease may not be unreasonably withheld.

12.2

Indemnity

The attached annexure marked "C" indemnifies Teabosa CC trading as Simon Chuter Properties of any legal costs which it may necessarily D incur where the landlord is to take action for breach of the principal agreement of lease arising out of the leased premises being sublet to House It Real Estate (Pty) Ltd.'

The provisions of the sublease were amended and added to in some respects in a letter dated 9 June 1992 from the second respondent to the E first respondent and confirmed by the latter, from which the following passage is relevant:

'Both sublessor and sublessee are aware that in terms of the...