ISEP Structural Engineering and Plating (Pty) Ltd v Inland Exploration Co (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Jansen JA, Kotzé JA, Viljoen JA, Van Winsen AJA and Hoexter AJA
• Judgment Date: 03 June 1981
• Citation: 1981 (4) SA 1 (A)
• Hearing Date: 06 May 1980
• Court: Appellate Division

Jansen, JA.:

The facts of this appeal appear from the judgment of VAN WINSEN AJA. The respondent, in claiming the reasonable costs of reinstatement, relies mainly on the case of Verster v Fletcher (1940) 21 SC 660; the appellant, in contending that such costs cannot, in the circumstances of this case, be awarded, relies on the decision of the majority in Swart v C Van der Vyver 1970 (1) SA 633 (A) (a case discussed in 1970 Annual Survey at 246; and Cooper Landlord and Tenant at 201 - 6). Important principles of the law of contract are involved in the questions raised and they require careful analysis.

As a point of departure it may be taken that the respondent has no greater D rights than the City Council of Johannesburg had, as former lessor, on 5 July 1977 when it signed the deed of cession, of which the main provisions read as follows:

"And whereas the Council has agreed to cede to the purchaser all rights which it had to compel the tenants and/or the sub-tenants to remove the ramps or platforms, or any claims for damages arising therefrom, subject to the terms and conditions hereinafter set forth.

E Now therefore the Council does hereby cede, assign, transfer and make over unto and in favour of the purchaser all rights of action which it may have against any person to compel such person to take all such steps necessary to excavate, break up and remove the aforesaid ramps and/or platforms, and to restore the property to the condition it was prior to the erection of the ramp and platforms, as also all rights to claim damages from the tenants and/or subtenants. The purchaser hereby accepts this cession and all the benefits of the rights and claims thereunder. The purchaser however records that this cession has been effected in its favour by the Council without any warranties or guarantees by the Council as to the correctness of the facts as herein set out and without any other warranties whatsoever. The purchaser hereby accepts the benefit of the cession entirely at its own risk and responsibility and does hereby indemnify and holds harmless the Council against all claims G which might be made against it arising herefrom, and against all losses it may suffer as a result hereof, including any legal costs that may be incurred."

The lease between the City Council and the appellant had been terminated on 30 September 1975, the Council had sold the property on 8 March 1976 to the respondent and the latter had taken transfer on 29 March 1977. The cession of the right to reinstatement was, therefore, only done some H months after the transfer had been effected. Summons was issued on 3 October 1977. It is now common cause that it was a term of the lease, implied by law,

"that on the termination of the agreement of lease the said property would be restored to the City Council of Johannesburg in the same good condition in which the defendant (the appellant) received it, reasonable wear and tear excepted",

and that performance of that obligation would have required the removal of the ramps built on the property during the term of the lease.

Jansen JA

For the purposes of this judgment it may be accepted that it was competent for the City Council, at the termination of the lease, to have claimed specific performance of that obligation (subject to a qualification to be A mentioned presently). In the past our Courts have been somewhat reluctant to order specific performance of acts "where it would be difficult for the Court to enforce its decree". (Hayes v Kingwilliamstown Municipality 1951 (2) SA 371 (A) at 378H; Wessels Law of Contract 2nd ed ss 3124, 3118, 3128.) But this is a limitation derived from the English practice, and not consonant with our law (cf De Wet and Van Wyk Kontraktereg 4th ed at 190 - B 191). (It is interesting to note that even in England this limitation appears to have fallen in disfavour):

"In cases of this kind it was at one time said that an order for the specific performance of the contract would not be made if there would be difficulty in the Court supervising its execution: see, eg, Ryan v Mutual C Tontine Westminster Chambers Association (1893) 1 Ch 116, especially at 123, 125, 128. Sir Archibald SMITH MR subsequently found himself unable to see the force of this objection (see Wolverhampton Corporation v Emmons (1901) 1 QB 515 at 523); and, after it had been discussed and questioned in C H Giles & Co Ltd v Morris (1972) 1 WLR 307 at 318, the House of Lords disposed of it (I hope finally) in Shiloh Spinners Ltd v Harding 1973 AC 691 at 724. The real question is whether there is a sufficient definition D of what has to be done in order to comply with the order of the Court. That definition may be provided by the contract itself, or it may be supplied by the terms of the order, in which case there is the further question whether the Court considers that the terms of the contract sufficiently support, by implication or otherwise, the terms of the proposed order."

(Per MEGARRY VC in Tito v Waddell (No 2) 1977 Ch 306 at 321H - E 322B.)

The qualification adumbrated above relates to the fact that in the exercise of its discretion a court will refuse an order for specific performance

"where it would operate unreasonably hardly on the defendant, or where the F agreement giving rise to the claim is unreasonable, or where the decree would produce injustice, or would be inequitable under all the circumstances".

(Hayes v Kingwilliamstown Municipality (supra at 378H - 379).) An example of such a case would be

"where the cost to the defendant in being compelled to perform is out of all proportion to the corresponding benefit to the plaintiff and the latter can equally well be compensated by an award of damages"

G (Hayes v Kingwilliamstown Municipality (supra at 380B); and cf Chitty on Contracts (General Principles) 24th ed s 1648.) Conceivably such a case could arise where, eg, a leased building is to be pulled down at or shortly after the expiration of the lease and the cost to the lessee of reinstatement would be considerable. The cost of, eg, replastering, H painting etc would be out of all proportion to the benefit to the lessor-owner, which would in the case postulated be nil or, at most, negligible.

Whether in the present case a court, in the exercise of its discretion, would have refused to grant the City Council an order for specific performance, in view of the fact that it had sold, or intended to sell, the property "voetstoots, absolutely as it stands" without giving any undertaking that it would be reinstated, is a question not free of difficulty. Obviously, in these circumstances the only real benefit that the

Jansen JA

City Council could have derived from a reinstatement would, conceivably, have been a higher price for the property. However, the indications are A that reinstatement would in fact not have enabled the Council to have sold the property at an appreciably higher price. Souris offered R77 500 for the property, subject to a "warranty" being given that it would be reinstated. When the Council objected to such warranty Souris did not insist, and he was still willing to pay R77 500 (he says, having received a promise by an official of the Council that the rights to reinstatement B would be ceded). At the time Souris made his offer, the management committee had already resolved to recommend that offers by two other parties, of R25 000 and R45 000 respectively, for the two stands constituting the property (stands 360 and 364) should be accepted. The two persons who had made the offers were apparently informed of Souris' offer and invited to improve upon it, but did not wish to do so. In these C circumstances it would seem that reinstatement would not have conferred any substantial benefit upon the City Council, whereas the cost to the appellant would have been R12 500 (the reasonable costs of repair, as agreed upon in para 13 of the pre-trial conference). It would seem that a D court might well have refused an order for specific performance had the City Council claimed such relief. But be that as it may, the City Council never did so (nor does the respondent).

Was there any other remedy open to the appellant save an order for specific performance? It is trite law that plaintiff may claim damages for E a breach of contract, either alone or as an alternative to specific performance (Hayes v Kingwilliamstown Municipality (supra at 378D - E)):

"It is correct, as Mr Miller states, that in our law a plaintiff has the right of election whether to hold a defendant to his contract and claim performance by him of precisely what he had bound himself to do, or to claim damages for the breach. (Cohen v Shires, McHattie and King 1882 F Kotzé's Reports 41)... It is, however, equally settled law with us that although the Court will as far as possible give effect to a plaintiff's choice to claim specific performance it has a discretion in a fitting case to refuse to decree specific performance and leave the plaintiff to claim and prove his id quod interest."

When a prayer for specific performance is joined with an alternative prayer for damages,

G "damages so claimed must, of course, be proved and ascertained in the ordinary way"

(per INNES CJ in Woods v Walters 1921 AD 303 at 310; cf Wessels on Contract 3rd ed at 417).

That a plaintiff may claim either specific performance or damages for the H breach (in the sense of id quod interest, ascertained in the ordinary way) is, on the authorities cited, beyond question. And it would seem that fundamentally these are the only alternatives recognized in our practice (leaving aside the possibility of a combination of the two), particularly in respect of an obligation ad factum praestandum. Certainly no cogent authority has been cited to us to show that there is any other. However, it has been suggested that there is the possibility of a plaintiff claiming "damages" in...