Claude Neon Lights (SA) Ltd v Schlemmer

• Jurisdiction: South Africa
• Judge: Muller J and Milne J
• Judgment Date: 03 October 1973
• Citation: 1974 (1) SA 143 (N)
• Hearing Date: 14 September 1973
• Court: Natal Provincial Division

Claude Neon Lights (SA) Ltd v Schlemmer
1974 (1) SA 143 (N)

1974 (1) SA p143

Citation	1974 (1) SA 143 (N)
Court	Natal Provincial Division
Judge	Muller J and Milne J
Heard	September 14, 1973
Judgment	October 3, 1973

Flynote : Sleutelwoorde

Letting and hiring — Rental of a sign — Lessor entitled A to claim sign or balance of rental on default — Lessor claiming balance — Such a penalty under sec. 4 of Act 15 of 1962 — Amount reduced under sec. 3 — Agreement allowing claim for attorney and client costs — Lessor entitled to make such claim — Magistrate's court has power to make necessary order — Collection commission — Such a B penalty — Lessor however entitled to such commission, as he would be liable under Law Society Regulations for such amount — Penalty — What constitutes — Act 15 of 1962 secs. 3,4.

Headnote : Kopnota

Under a rental and maintenance agreement the appellant had leased a sign to the respondent for 60 months at R9 per month. C Clause (g) listed circumstances under which the lessee "shall be deemed to have made default" and then it provided "that in such event the lessor shall be entitled upon notice in writing to the lessee... (i) to take possession of the sign and claim all arrears of rental to the date of such possession and in addition to claim... all damages the lessor has or may sustain by reason for the failure of the lessee to carry out its obligations hereunder, or (ii) to claim from the lessee, immediately on such default, payment of the full balance of rental for the remainder of the unexpired term of this lease, D in which latter event the lessee shall on payment of such full balance be entitled to the use of the sign for the remainder of such unexpired term". Clause (h) provided "that all rentals were due and payable in advance on the first day of each calendar month and all overdue payments should bear interest at the rate of 10 per cent per annum to date of payment". This clause also provided that the lessee "shall be responsible for and undertakes to pay to the lessor all expenses which the E lessor may incur arising out of the default... including any costs of tracing the lessee, 10 per cent collection commission and all legal costs as between attorney and client". When the lessee made default in the payment of certain instalments the lessor did not take possession of the sign but, in terms of the agreement, sued the lessee for the full balance of rental for the unexpired term, for the arrear rentals due, collection commission and costs on an attorney and client basis. The lessee did not enter appearance and the lessor applied for default judgment. A magistrate's court was prepared F to grant judgment save for the arrears and for costs on an attorney and client basis. The plaintiff requested that the magistrate should refuse the application, which he did. In an appeal,

Held, that the appellant was entitled to the arrears claimed as the right to such arrears had accrued due and enforceable as a cause of action independent of any executory part of the contract.

Held, further, that the provisions in clause (g) (ii) for immediate payment of the full balance of rentals meant that the G appellant was receiving in one sum what would only have been payable over a period of five years, and that to that extent it therefore constituted a penalty under section 4 of Act 15 of 1962.

Held, further, that in terms of section 3 of the Act the appropriate discount should be deducted from the amount claimed for the full balance of rentals.

Held, further, that a magistrate's court had the power to grant costs on an attorney and client basis and that the magistrate H had erred in refusing to do so.

Held, further, though the claim for collection commission was a penalty, that the appellant was entitled to recover such commission, as he would be liable for to his attorney under the Law Society Regulations for such commission. Appeal accordingly allowed.

Case Information

Appeal from a decision in a magistrate's court. The facts appear from the reasons for judgment.

D. A. Gordon, for the appellant.

No appearance for the respondent.

1974 (1) SA p144

Cur adv vult.

Postea (October 3rd). A

Judgment

Milne, J.:

The appellant (whom I shall call the plaintiff) sued the respondent (whom I shall call the defendant) in the magistrate's court on a written agreement entitled "rental and maintenance agreement" for the following relief:

"(a)

payment of the sum of R533,25 on payment of which the B lessee shall be entitled to the use of the sign for the remainder of the unexpired term of the agreement;

(b)

an order for costs on the attorney and client scale in terms of para. 6 (d) above;

(c)

an order that defendant pays the collection commission of R53,32 aforesaid;

(d)

C further or alternative relief."

The amount of R533,25 is made up as follows:

(a)

R38,25 which is alleged to be the amount of arrear rental due and unpaid as at 1st March 1973; and

(b)

R495 which is alleged to be

D "the full balance of rental for the remainder of the unexpired term of the agreement".

The amount claimed as collection commission is equivalent to 10 percent of the sum of R533,25.

The defendant did not enter an appearance to defend and the plaintiff accordingly applied for default judgment. The E application for default judgment was refused and the plaintiff has appealed against that refusal.

In his reasons for judgment, the magistrate, under the heading of "Facts Found Proved" sets out the following:

"1.

On 3rd November, 1972, the plaintiff and the defendant entered into a rental and maintenance agreement in respect of a sign.

2.

The defendant made default under the agreement in that F he failed to pay certain instalments of rental.

3.

The plaintiff has given notice in writing to the defendant.

4.

The plaintiff has not taken possession of the sign.

5.

The plaintiff is entitled to claim from the defendant payment of the full balance of rental for the remainder of the unexpired term of the lease, namely R495.

6.

G The plaintiff is not entitled to claim from the defendant payment of the arrears of rental, viz. R38,35.

7.

The plaintiff is entitled to claim from the defendant collection commission of 10 per cent, namely R49,50."

The position is, therefore, that the magistrate was prepared to grant the plaintiff judgment in respect of some of its claims and not others. The magistrate says in his reasons for H judgment, however, that the plaintiff's attorney requested that, if the magistrate was not prepared to grant all the relief claimed, judgment should be refused and as the magistrate was of the view that the claims for arrears of rental and for costs on the attorney and client scale could not be granted, he refused judgment.

His reasons for holding that the plaintiff was not entitled to judgment for the arrear rentals are as follows:

"2.

Para. (g) of the agreement provides that if the defendant makes default in payment of any instalment, the plaintiff may elect either -

1974 (1) SA p145

Milne J

(a)

to take possession of the sign and to claim all arrears of rental to the date of such possession, or

(b)

not to take possession of the sign, but leave the defendant in possession of such sign, and to claim payment of the full balance of rental for the remainder of the unexpired term of the lease.

3.

In the instant case the plaintiff has elected to act A in terms of (b) and not (a). The court is accordingly willing to grant judgment for (b) supra (R495). But the court is not willing to grant judgment for (a) supra (R38,25)."

In his further reasons for judgment, the magistrate expresses the view that the arrear rentals are claimable only in terms of para. (g) (i).

A copy of the written agreement is annexed to the plaintiff's B particulars. In terms of this agreement, the plaintiff agreed to provide at its own cost an illuminated sign at certain premises and agreed to lease the sign to the defendant for a period of 60 months at a rental of R9 per month payable monthly in advance. Para. (g) of the agreement lists the circumstances under which the lessee shall be deemed to have made default under the agreement and then provides as follows:

C "In any such event the lessor shall be entitled upon notice in writing to the lessee which notice shall conclusively be deemed sufficient if signed by any employee, solicitor or other agent of the lessor and mailed or delivered to the premises where the sign was or is located without prejudice to any other rights either:

(i)

to take possession of the sign and to claim from the D lessee all arrears of rental to the date of such possession and in addition to claim from the lessee all damages which the lessor has or may sustain by reason of the failure of the lessee to carry out its obligations hereunder; or

(ii)

to claim from the lessee, immediately on such default, payment of the full balance of rental for the remainder of the unexpired term of this lease, in which latter event the lessee shall on payment of such full balance be entitled to the use of the sign for E the remainder of such unexpired term;

(iii)

on the death of the lessee or in the case of a partnership on dissolution thereof, the balance of rental for the remainder of the unexpired term of this agreement shall ipso facto become due and payable."

Para. (h) of the agreement provides, inter alia, that all rentals are due and payable in advance on the first day of each calendar month and that all overdue payments shall bear F interest at the rate of 10 per cent per annum to date of payment. This clause also provides that the lessee shall be responsible for and undertakes to pay to the lessor all expenses which the lessor may incur arising out of the default of the lessee including...