Ornelas v Andrew's Cafe and Another

• Jurisdiction: South Africa
• Judge: Nestadt J
• Judgment Date: 28 May 1979
• Citation: 1980 (1) SA 378 (W)
• Hearing Date: 28 May 1979
• Court: Witwatersrand Local Division

Nestadt J:

This is an action for provisional sentence against two defendants. It is based on a series of 27 promissory notes, each allegedly made by the first defendant in favour of the plaintiff and endorsed by the second defendant as surety and co-principal debtor. They are each for R570, save for one of R540. The total of the notes is R15 360 and this is H the amount claimed. Certain of them are payable on dates in the future. The plaintiff relies on an acceleration clause, contained on the back of each note, in terms whereof, in the event of any one note not being met on due date, the remaining notes in the series, notwithstanding the due date thereof, immediately become due and payable.

The defendants admit their signatures on the notes; that payment of those notes, the due dates whereof have arrived, has been stopped and that all the notes are, subject to their defences on the merits, accordingly due and payable. At the commencement of argument the identity of the

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first defendant was amended, so that there was substituted 'Andrew's Café'. This was because the notes were made by this entity and not by the (original) first defendant. I should also mention that the action against A the second defendant has not been proceeded with. Provisional sentence is being sought only against the first defendant, namely Andrew's Café, who, as I have said, was the maker of the notes. I refer to the first defendant as the defendant. Initially the summons did not claim judgment jointly and B severally against the defendants, but by way of an amendment this omission was cured.

The defences raised necessitate a consideration of the underlying transaction between the parties, which gave rise to the issue of the notes. The plaintiff and the defendant, being immediate parties to the notes, it is competent to rely on such defences. They emerged from C answering affidavits filed by the defendant. The plaintiff filed a replying affidavit in which he contests certain of the factual allegations made by the defendant. In so far as the defendant relies on facts which are disputed, the onus would of course be on him to show that he is likely to establish them in the principal case. Unless this can be done, they D will not avail him and the matter must be approached on the basis of the plaintiff's allegations. Much of what is said by the defendant is however not disputed and I proceed to detail what this is.

The plaintiff and two other persons carried on in partnership a certain business in Isando, Kempton Park. On 23 December 1976 they, in terms of a E written agreement, sold it to the defendants for the sum of R91 500 which was later (in terms of an addendum) reduced to R90 000. Clauses 1 and 2, following on a preamble which records the name and address of the business, state:

'1.

The sellers hereby sell to the purchasers who hereby purchase from the sellers the said business known as Andrew's Café and Sunny Boy F Restaurant and which business is situated at the address aforesaid and which business consists of two shops.

2.

The purchase price for the said business, including all the assets and stock contained in the said business as at 6 am on 22 December 1976, together with all fixtures, fittings, machinery and equipment as set out in annexure A, is the sum of R91 500...'

G Apparently the shops are adjacent to each other, though whether they were connected by, for example, an interleading door, is not stated. There is a dispute as to whether one or two businesses were thus sold; the plaintiff contending the latter and the defendant the former. I shall have occasion to return to this point later.

H The manner of payment of a certain portion of the purchase price, is then set out. In respect of the balance it is provided that there be monthly payments as from 15 March 1977 and that, by way of security therefor, the purchasers would furnish the sellers with a series of promissory notes. The notes sued on in this action are some of the ones (those due from 15 March 1978) which, in terms hereof, were furnished to the plaintiff, they represent that portion of the balance of the purchase price due to him.

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The defendants took occupation of the business. Before recounting what thereafter took place, it is necessary to say something more about the A nature of the business. Its composition is not described in the agreement, other than what is to be inferred from its name. The papers show, however, that one of its activities was the selling of food and beverages to Black persons, seated at tables on the premises (a so-called native eating house). There were ten tables, each with four chairs. The defendant B alleges that this constituted the main activity of the business. This is denied by the plaintiff who states that customers would also buy food such as fish and chips from the café section for consumption off the premises and that this was the major part of the business. I will come back to this conflict of fact later in this judgment.

C Towards the end of 1977 an inspector from the office of the Bantu Affairs Commissioner called at the premises. He required the defendants to remove the tables and chairs because, so he alleged, the provisions of the Group Areas Act 36 of 1966 were being contravened, in that Black persons were having meals on the premises while seated at tables. It would seem that D the attitude he took up was legally justified. Section 20 (1) of the Act provides:

'No disqualified person shall occupy and no person shall allow any disqualified person to occupy any land or premises in the controlled area, except under the authority of a permit.'

E The premises were in a controlled area and Blacks fell within the category of disqualified persons. Counsel were ad idem that Van Reenen Land, Its Ownership and Occupation in South Africa at 178 and 193 is correct in stating that a diner in a restaurant, whilst he is being served and is partaking of his meal or refreshments, has sufficient control over the F chair and table he has selected as to result in him occupying a portion of the premises for the purposes of s 20 and contrary to Proc R288 of 1973. In these circumstances s 20 applied and a permit authorising such occupation was required. It had never been applied for or obtained. Accordingly that part of the business relating to the native eating house G could not lawfully be carried on, seeing that the occupation referred to was prohibited. It was not suggested that any of the cases referred to in s 20 (2), which provide, where they occur, that the provisions of s 20 (1) will not apply, were relevant. The purchasers were until then unaware of the need for a permit. There is a dispute as to whether the sellers were H equally ignorant. The defendant alleges that they knew a permit was required. There is no probability in this regard favouring the defendant, so that the matter must be decided on the basis that the sellers were innocent. The defendant sought to remedy the position by applying for a permit, but this was refused in January 1978. A subsequent request that the decision be reconsidered was in March 1978 met with a further refusal. The defendant thereupon, by letter dated 13 March 1978, written by attorneys on his behalf, purported to cancel the agreement. It was stated that no further payments on account of the purchase price would be made; repayment of that part of the purchase

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price already paid was claimed and return of the business was tendered (subject to a without prejudice offer - which was accepted - to continue running it so as to preserve it). Payment of the notes was stopped. The A letter purported to be written only on behalf of the defendant and not his co-purchaser. No point was however made of this on behalf of the plaintiff. According to an affidavit filed by the second defendant, the partnership which existed between him and the first defendant, was dissolved in August 1977.

B On 16 March 1978 a telephone discussion took place between attorneys acting for the respective parties, and as a result plaintiff's attorneys, in an endeavour to assist the defendant, undertook, without prejudice to the sellers' rights, to try to obtain the necessary permit. If it was granted, the cancellation would be treated as having been withdrawn. C Thereafter certain discussions took place between, and certain further correspondence was exchanged by, the attorneys. It will be necessary to refer to them in more detail later. Suffice it to say at this stage that by 28 July 1978 no permit had been obtained. On that day the defendant, by letter addressed through his attorneys, called on the sellers to obtain D the necessary permit by 4 August 1978. A permit was granted on 17 August 1978 and the defendant was so notified on 18 September 1978. In the meantime, however, by letter dated 7 August 1978, the defendant's attorneys had written to the sellers' attorneys stating that the defendant 'persists in his attitude'. I take this to mean that he stood by the E cancellation, more particularly seeing that the permit was not obtained by 4 August 1978. Since these events, the defendant had apparently continued to occupy the premises and run the business. The provisional sentence summons was issued in December 1978.

I return now to the defences relied on. They rest on the basis that the F plaintiff is not entitled to claim the purchase price of the business. In summary the submissions of Mr Leveson, on behalf of the defendant, were the following:

(i)

The agreement:

(a)

G involving as it did the grant of an illegal occupation, was prohibited by s 20 and was therefore void for illegality;

(b)

alternatively, was, by reason of no permit having been obtained when it was concluded, or because of the refusal of a permit (in January and March 1978), impossible of performance and...