Nedcor Bank Ltd v Withinshaw Properties (Pty) Ltd

• Jurisdiction: South Africa
• Judgment Date: 30 May 2002
• Citation: 2002 (6) SA 236 (C)

Nedcor Bank Ltd v Withinshaw Properties (Pty) Ltd
2002 (6) SA 236 (C)

2002 (6) SA p236

Citation	2002 (6) SA 236 (C)
Case No	A591/2001
Court	Cape Provincial Division
Judge	van Zyl J and Meer AJ
Heard	March 22, 2002
Judgment	May 30, 2002
Counsel	W S Coughlan for the appellant.; R G L Stelzner for the respondent.

Flynote : Sleutelwoorde G

Landlord and tenant — Rent — Whether tenant liable to pay rent for period of occupation after termination of lease during which tenant meeting landlord's reinstatement requirements — Lease according H landlord discretionary right to require tenant to reinstate premises to original state upon termination of lease — If landlord waiting until expiry of lease to exercise right to demand reinstatement, tenant requiring time to comply with demand and, of necessity, having to remain in occupation until reinstatement completed — Landlord's reinstatement requirements, which included demolition of reinforced I concrete strongroom, communicated to tenant only two days prior to expiry of lease — Completion of requirements demanding considerable time — Tenant remaining in occupation with landlord's unqualified consent — Thus no unlawful holding over substantiating action for damages — Since tenant's conduct clearly indicating lack of intention J

2002 (6) SA p237

to renew lease, no tacit or implied relocation agreement concluded — Given nature of reinstatement required and fact that A requirements communicated only two days prior to expiry of lease, both parties must have contemplated that reinstatement to take place only after lease expired — Tenant compelled to remain in occupation while complying with landlord's requirements — Parties could not have intended that tenant should pay rent for that period. B

Headnote : Kopnota

The appellant, as lessee, and the respondent, as lessor, had concluded a lease commencing on 1 December 1990 and terminating on 31 October 1999. Under the heading 'termination' clause 32.1 provided that, upon termination of the lease, 'the landlord may require the tenant . . . to reinstate the premises and remove any C alterations, extensions, renovation or the like effected by it so that the premises [would be] restored in the same good order and condition as they [had been] at the commencement [of the lease], fair wear and tear excepted'. Clause 32.3 provided that, '(n)otwithstanding anything to the contrary, the tenant shall upon termination of this lease for any reason restore the premises fit for immediate beneficial occupation and in a clean, neat and tidy condition and in the same good D order and condition as they [had been] at the commencement [of the lease], fair wear and tear excepted'. Clause 50 required that the lessee occupy the premises continuously for the purposes of commercial banking. By the time the lease had expired in October 1999 the appellant had occupied the premises for some 23 years in terms of three separate lease agreements. Shortly after it had taken occupation in E terms of the initial lease it had effected major improvements to the premises, including the construction of a vault or strong room. There was no evidence that it had effected any substantial improvements during the period of the final lease.

Early in October 1999 the respondent had indicated that it required the appellant to reinstate the premises to the same condition in which they had been at the commencement of the original lease 23 years F previously. On 7 October 1999 the appellant sent a fax to the respondent asking the latter to notify it of its 'reinstatement requirements'. After a reminder from the appellant, followed by a meeting between the parties, the respondent sent the appellant a fax on 29 October in which it set forth ten 'reinstatement requirements'. These included that the walls and doors of the strong room and records room 'be removed and made good'. It was clear to G both parties that the reinstatement requirements would be fulfilled only after the termination of the lease, particularly, as it turned out, when the appellant had had to use a front-end loader, a pneumatic drill, a jackhammer and even explosives to demolish the reinforced concrete strong room. In the event, the appellant handed the premises back to the respondent on 17 December 1999. H

The respondent claimed rent in a magistrate's court in the sum of R156 468,44 for the months November and December 1999. It relied upon (a) an implied agreement of lease to the effect that the appellant would remain in occupation of the premises 'in order to remove its property and reinstate the premises' subject to the payment of R78 234,22 per month as rent; (b) alternatively, it I alleged that, by failing to vacate the premises on 31 October and restoring them only on 17 December 1999, the appellant had breached its obligation to restore the premises to the respondent upon termination of the lease in the same condition in which they had been at the commencement of the lease and was liable to pay rent of (i) R78 234,22 per month for November and December or (ii) R78 234,22 for November and J

2002 (6) SA p238

R42 902,52 as a pro rata rental for December; (c) and in the further alternative, that the A appellant was liable to pay damages of R156 468,44, being the 'market rental value', as damages for its failure to vacate the premises.

The court a quo accepted that the appellant had remained in occupation with the respondent's consent from 1 November to 17 December and that during this period the appellant had been engaged in reinstating the premises rather than trading as a commercial B banker, but that by the same token the respondent had been unable to re-let the premises during that period. The court held that, although the respondent had been unable to prove that an implied agreement of lease had been concluded, the appellant had indeed been liable for rent, and not damages, for the period it had remained in occupation. In an appeal against the finding that the appellant had been liable to pay rent and a cross-appeal directed against the C findings that the parties had not concluded a tacit relocation or implied lease, and that there had been no unlawful holding over by the appellant or damages suffered by the respondent,

Held, that an implied agreement could come into existence only if tacit acceptance of a tacit offer, indicating unqualified consensus ad idem on all aspects of the agreement, could D clearly and unequivocally be inferred from the conduct of the parties. (Paragraph [30] at 247B/C - C.)

Held, further, that whether or not there had been an implied agreement to renew an existing lease (a 'tacit relocation') or to conclude a new lease on the same terms as the previous lease was dependent on the facts or circumstances of the case. It therefore had unequivocally to be inferred from the conduct of the parties that a E renewed or new lease had come into existence. Under normal circumstances this would be the case when the lessor allowed the lessee to remain in occupation of the leased premises after termination of the lease and the lessee continued to pay rent that the lessor accepted. (Paragraph [32] at 247G/H - I.)

Held, further, however, that the mere fact that a lessee remained in occupation of the leased premises after the expiry of the F lease did not mean that there had been a tacit renewal of the lease. Similarly, the belief or impression of one of the parties that there had been a tacit relocation was not sufficient to bring a new lease into existence. (Paragraph [36] at 248I/J - 249A.)

Held, further, that a lessee in breach of the obligation to restore the leased premises in good condition, or in substantially the same condition as they had been when occupation had been taken, fair G wear and tear excepted, would be regarded as 'unlawfully holding over'. The lessor could have such lessee ejected or claim damages for breach of contract. (Paragraphs [37] and [38] at 249B - D/E.)

Semble: Whether or not a lessor may claim rental, as opposed to damages, for the period during which a lessee remained in occupation after the termination of the lease is open to debate. Those cases H holding that rental could be claimed have been criticised on the grounds that, if a lease had been terminated by cancellation or otherwise, the rights and obligations attached thereto were terminated. To allow a lessor to claim rental would thus constitute a radical departure from the general rule that an aggrieved party cannot both cancel a contract and claim specific performance. (Paragraphs [39] I and [45] at 249E - E/F and 251D - F.)

Held, further, that it was clear that, after the termination of the lease, the appellant had remained lawfully in occupation of the premises until 17 December 1999. The sole object of its continued occupation, with the respondent's unqualified consent, had been to restore the premises in accordance with what it believed to be its obligations in terms of the J

2002 (6) SA p239

respondent's request, and not to conduct the business of commercial banking. There had thus been no A question of unlawful holding over or of any other form of breach of contract justifying cancellation of the agreement or substantiating an action for damages. (Paragraph [47] at 251I/J - 252C.)

Held, further, that there had also been no indication of the conclusion of any tacit or implied relocation agreement: the appellant had made it clear to the respondent that it had had no intention of renewing the lease and it had notified its customers that the branch B would close at the end of October 1999. (Paragraph [48] at 252C - F.)

Held, further, as to whether the appellant had been liable for rent for November and December, that the nature of the obligation in clause 32.1 (to reinstate the premises by removing 'any...