Loch Logan Waterfront (Pty) Ltd v Carwash 4 U (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Rampai J
• Judgment Date: 01 March 2012
• Docket Number: 3618/2011
• Hearing Date: 26 October 2011
• Court: Free State Division, Bloemfontein

Rampai J:

[1]

The matter came to court by way of motion proceedings. The applicant applies for the eviction of the respondents from certain business premises. The respondent resists the relief which applicant seeks.

[2]

A synopsis of the undisputed facts appears to be necessary. The parties concluded a five year lease agreement in Bloemfontein on 27 November 2009. The leased premises were described as the interior of unit mezzanine 1 in the

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building popularly known as Loch Logan Waterfront, Henry Street, Bloemfontein. The building is situated on portion 3 of erf 26408 measuring in extent approximately 126,29 square metres.

[3]

The first respondent was entitled to occupy the leased premises and during its occupation thereof to operate the business of a carwash. That was the purpose for which the premises were leased.

[4]

The first respondent was obliged to pay rental to the applicant at the rate of R34 000,00 per month as well as a proportionate monthly contribution towards certain levies.

[5]

The applicant was entitled to receive regular payment of rental from the first respondent throughout the duration of the first respondent's occupation of the leased premises. Moreover, the applicant was also entitled to look up to the second respondent, as surety and co-principal debtor, for the payment of rental in the event of the first respondent's default.

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[6]

The primary obligation of the applicant was to give the first respondent free, undisturbed and beneficial occupation and enjoyment of the leased premises. Such duty necessarily entailed maintaining the leased premises and continuously keeping them in a good state of repair.

[7]

The effective date of the agreement was 27 November 2009. The lease agreement was signed on behalf of Blonde Trading 24 (Pty) Ltd on 1 August 2009. On 28 October 2009 that co-operate entity underwent a name change and became known as: Carwash 4 U (Pty) Ltd, the first respondent.

[8]

The first respondent has made no regular payments of the rental as agreed upon. The first respondent last made a payment to the applicant on 3 January 2011 in the amount of R34 000,00. At the time these proceedings were set in motion the accumulated arrears were approximately R600 000,00. The figure equated about eighteen months worth of outstanding rental and other related charges levied against the first respondent in terms of the lease agreement.

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[9]

The first respondent was still in occupation of the leased premises when the application was launched. The carwash operations of the first respondent were still in full swing. The first respondent was still trading on the leased premises and generating income from there. In brief, it was still business as usual.

[10]

On 22 June 2011 the applicant caused its attorneys to formally address a letter of demand to the first respondent. The letter was sent to the first respondent's domicilium citandi et executandi. The letter was delivered per manu. By then the first respondent had paid no rental for the period of six months immediately preceding the written demand. The applicant averred that the first respondent had committed a breach of a material clause of the lease agreement.

[11]

The first respondent was then called upon to remedy the breach by making payment of the sum of R185 292,05. The first respondent was afforded three days to do so after the written demand or notice in terms of paragraph 16 of annexure "a" to the lease agreement. The annexure

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embodied the conditions of the lease. The lease agreement was attached to the founding affidavit as annexure "b". Notwithstanding such demand, the first respondent did not make the required payment. Moreover, the first respondent did not reply. On 26 July 2011 the applicant gave the first respondent notice of cancellation of the lease agreement.

[12]

In its founding affidavit the applicant contended that the first respondent was in breach of the lease agreement; that the applicant had the right to cancel the lease agreement forthwith and to retake possession of the leased premises without prejudice to its rights to claim damages and to recover all such sums of money as might be due to it arising out of the breach.

[13]

In its answering affidavit, the first respondent admitted that it had not paid rental since 1 February 2011, but averred that it was entitled to withhold payment thereof. The first respondent averred that the leased property had certain structural defects which materially frustrated its full use and enjoyment of such leased premise. When it rained, the first respondent explained, the property leaked. Such leaks

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affected the electrical equipment. All this had an adverse impact on the first respondent's core operations. Notwithstanding repeated demands the applicant neglected to remedy such material breach.

[14]

In its replying affidavit the applicant denied that it had committed the alleged breach of the lease agreement. It specifically denied the first respondent's allegations: that the leased property had the alleged structural defects; that the first respondent was deprived of the full beneficial use and enjoyment of the leased premise and that the first respondent's business operations were adversely affected by the alleged structural defects. The applicant maintained that the first respondent had no right, whatsoever, to withhold payment of any rental.

[15]

The crisp issue in the case was whether the first respondent was entitled to withhold payment of rental. Mr. Van Rhyn's principally submitted that the answer was in the negative whereas Mr. Benade principally submitted that the answer was in the affirmative. The issue is a narrow one.

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[16]

The learned author A.J. Kerr: The Law of Sale and Lease, Third Edition p. 300/1 comments as follows on the remedy available to a lessee in case of a lessor's breach of the lease agreement:

"What the remedy is in the circumstances of a particular case appears to depend on the seriousness of the lessor's breach of contract. If the breach is a major one cancellation and damages may be claimed. If the breach is a minor one there is, so far as I am aware, no decision of the Appellate Division or of the Supreme Court of Appeal where a proposition on the point now under discussion is part of the ratio decidendi of the case. In principle, however, as there is a remedy for a major breach of contract so also there is one for a minor breach, and for minor breaches remission of rent is one of the options. So is damages."

[17]

The basic obligations of the lessor are well-known. The lessor is obliged to deliver the premises to the lessee, to maintain the leased premises and to ensure that the lessee has undisturbed use and enjoyment of the leased property.

"Since a lease imposes reciprocal obligations upon the parties, a lessor will not be entitled to claim the whole rent, and

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conversely a lessee will be entitled to a complete or partial remission of rent (depending upon the circumstances) if he (the lessor) defaults in his obligations."

W.E. Cooper: Landlord and Tenant, Second Ed p. 200.

[18]

At common law, the legal position is and has always been that an aggrieved lessee is entitled to rent remission, where through the lessor's default, neglect or omission, the lessee is partially deprived of the use and enjoyment of the leased property. Accepting for the moment, that the leased premises were structurally defective, as the first...