Instand Trade 110 CC v Lewis

• Jurisdiction: South Africa
• Judge: Koen J, Vahed J and Nkosi J
• Judgment Date: 25 October 2013
• Docket Number: AR 247/13
• Court: KwaZulu-Natal High Court, Pietermaritzburg
• Hearing Date: 27 September 2013
• Citation: 2013 JDR 2448 (KZP)

Koen J:

INTRODUCTION:

[1]

This is an appeal against a judgment by Ploos van Amstel J discharging a rule nisi [1] issued by Radebe J, with costs.

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Koen J

BACKGROUND:

[2]

The First Respondent is the registered owner of the immovable property situated at Lot 1953, Pinetown, situate at 54 Glenugie Road, Pinetown. The Second Respondent is her husband.

[3]

On 28 June 1999 the Second Respondent, describing himself as 'the Landlord', entered into a written 'AGREEMENT OF LEASE' ('the lease') with George Michael Mouzouris ('Mr Mouzouris') in respect of the property. This lease commenced on 1 August 1999 and continued until 30 July 2004, and contained the following option to renew in clause 4 of the agreement:

'4.1

The tenant, being in compliance with all his obligations hereunder, shall have the option to renew this lease for a period of four (4) years and eleven (11) months upon the same terms and conditions as are contained in this lease excepting this clause and clause 5 as to the amount of rental provided however that the option shall be exercised by notice in writing delivered to the landlord before February 1 2004.'

[4]

Material to the present application is clause 18:

'18.

RIGHT OF FIRST REFUSAL

18.1

While the tenant occupies the premises in terms of this lease (including the option period referred to in 4 but only if the option is exercised) the tenant shall have a right of first refusal to purchase the property;

18.2

The terms and conditions applicable to such right of first refusal are as follows –

18.2.1

The Landlord shall give notice in writing to the tenant of the terms and conditions upon which he is prepared to sell the property or of any offer to purchase the property as the case may be;

18.2.2

Within three (3) days after receipt by the tenant of such notice, the tenant shall give notice in writing to the Landlord of his intention to exercise the right of first refusal;

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Koen J

18.2.3

If the tenant does not give notice of his intention to exercise the right of first refusal within the aforesaid period of three (3) days, the said right of first refusal shall lapse'.

[5]

On 28 February 2001, during the initial period of the lease, the Second Respondent, the tenant Mr Mouzouris and the Appellant concluded a written 'DEED OF ASSIGNMENT OF LEASE: FOUR WAYS KWIKSPAR' ('the assignment'). The effective date of this agreement was 2 April 2001. The operative part of the agreement provided:

'5.1

With the effect from the EFFECTIVE DATE, Mouzouris cedes, assigns and makes over to the ASSIGNEE all of Mouzouris's rights and obligations as tenant under the LEASE AGREEMENT and the ASSIGNEE accepts such assignment;

5.2

The Landlord hereby consents to the assignment as provided for in 5.1'.

[6]

The 'LEASE AGREEMENT' was defined in the assignment to mean the above 'written lease agreement which was concluded between MOUZOURIS and the LANDLORD on 28 June 1999 in respect of which MOUZOURIS leases the PREMISES, a copy of which lease agreement is attached hereto marked "A"'. The 'ASSIGNEE' was defined to mean the Appellant.

[7]

Pursuant to the lease and assignment, the Appellant has occupied the property and is still in occupation.

[8]

No notice in writing to renew the lease for a further period of 4 years and 11 months was given before 1 February 2004, or at all. The original lease, as assigned, accordingly expired by effluxion of time on 30 July 2004.

[9]

On 12 August 2004, after the lease had expired, the Appellant and the Second Respondent concluded an 'ADDENDUM TO LEASE' ('the addendum'). This document is not a model of clarity. It provides:

'The attached document titled, "PROPOSAL FOR ADDENDUM TO LEASE" is to form an addendum to the lease between Emil Alexander Lewis and George Michael Mouzouris with regards to the premises at 54 Glenugie Road, Pinetown.

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Koen J

As detailed in this addendum the ADDENDUM TO LEASE is to be accompanied by the assignment of the lease and as such Mr David Buckingham [2] has effected this ADDENDUM to LEASE.

PROPOSAL FOR ADDENDUM TO LEASE

The following to capture the renewed lease pertaining to the property (54 Glenugie Road, Pinetown) as described in the AGREEMENT OF LEASE between EMIL ALEXANDER LEWIS and GEORGE MICHAEL MOUZOURIS and act as an addendum thereto.

1.

ASSIGNMENT OF LEASE to be signed by all three parties;

2.

PERIOD OF LEASE to commence on 1 August 2004 and terminate on 31 July 2009;

3.

RENTAL

2.1

To be R27 728,59 inclusive of VAT per month for the period of 1 August 2004 to 31 July 2005;

2.2

Escallation to be 7% as of 1 August 2004 per annum.

4.

OPTION TO RENEW

An option to renew the lease for a further five (5) years upon the same terms and conditions contained within the amended lease. With the proviso for the rental and escalation to be adjusted to market related figures.

5.

OPTION TO PURCHASE THE PREMISES

It is the intention of the TENANT Mr David Buckingham to secure an option to purchase the building at an agreed price should the LANDLORD choose to dispose of such. The price or an acceptable formula for defining a price to be agreed by both parties and written into the addendum.

(Below the above typing on the addendum, inserted in manuscript, appear the words 'at a market related price').

6.

MAINTENANCE ISSUES:

……'

[10]

Although this addendum was not signed in any special designated place indicated for the tenant, Mr Buckley did sign the addendum, at a place where

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Koen J

provision was made for witnesses to sign. [3] Nothing was made of this fact in argument.

[11]

The legal position thus is that the original lease, as assigned, came to an end at midnight on 30 July 2004. The Appellant remained in occupation for 31 July 2004, seemingly without there being any formal lease arrangement in place. From 12 August 2004, retrospective to 1 August 2004 the Appellant's occupation has been governed by the terms of the addendum.

[12]

Before 31 July 2009, and more specifically during the period from January to March 2009, written notice was given by the Appellant of its intention to renew the lease for a further five (5) year period to expire on 31 July 2014. This notice, ex facie the papers, was conveyed in letters addressed by the Appellant's attorneys to the First and/Second Respondents attorneys, GDLK on 20 January 2009 and 25 March 2009. It appears from this correspondence that the First and Second Respondents might have disputed the right of the Appellant to extend the lease after the end of July 2009. But be that as it may, the factual reality is that the Appellant remained in occupation throughout and is still in occupation. On the probabilities this is because the lease was renewed for a further period pursuant to the terms of the addendum. Facts pointing to that probability include the allegation in the founding affidavit that the First Respondent accepted payment of the rental arising from the Appellant's continued occupation of the property without protest, which allegation, properly construed, appears to relate to rentals paid after 31 July 2009. This allegation has not been disputed on the papers. Further, in a letter dated 13 December 2010 referring to some incident which occurred at the Appellant's business premises involving their son, the Second Respondent wrote:

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Koen J

'regarding the sale of your business you need my permission. Please take note of the building is definitely not going to be sold ever. July 2014 cannot come soon enough'. [4]

[13]

On 1 June 2012 the Third Respondent and the First Respondent concluded a written agreement of sale in terms whereof the property was sold by the First Respondent for a purchase price of R8 million. This agreement inter alia provides:

'16.

SPECIAL CONDITIONS

1.

Subject to the purchasers being afforded a 28 day due diligence study;

2.

…

3.

Subject to purchasers giving confirmation of the sellers receiving full rental from existing tenant up until the date of transfer.'

[14]

It is the discovery of the existence of this sale which prompted the application in the court a quo. In that application, the Appellant relying on what it maintains is an enforceable right of first refusal, sought the following relief:

'1.

That a rule nisi do hereby issue calling upon the Respondents to show cause on September 2012 why the following orders should not be granted:

(a)

That the Applicant be and is hereby directed to institute an action against the First Respondent, within 21 days of the grant of this order, claiming the relief set out in paragraph 43 of the founding affidavit; [5]

(b)

That First Respondent be and is hereby interdicted by effecting transfer of the immovable property described as Lot 1953, Pinetown, to the Third Respondent;

(c)

That the relief in paragraphs 1(b) hereof shall operate pending the outcome of the action to be instituted in terms of paragraph 1 (a) hereof;

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Koen J

(d)

That the First Respondent and any other Respondent opposing this application pay the Applicant's costs of suit.

2.

That the relief set out in paragraph (1) (b) above operate as interim relief with immediate effect pending the outcome of this application'.

[15]

On 7 September 2012 Radebe J granted the rule nisi returnable on 28 September 2012 with the interim relief as prayed.

[16]

In a letter dated 27 September 2012 from Dickenson and Theunissen Incorporated, the attorneys for the First and Second Respondents, addressed to the Appellant's attorneys it was indicated that the First and Second Respondents

'…consent to the order as set out in paragraph (1) (a) (b) of the Notice of Motion dated 4 September 2012 … (and)… we confirm further that we agree that the question of costs...