Pangbourne Properties Ltd v Gill & Ramsden (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Joubert JA, F H Grosskopf JA, Van Den Heever JA, Harms JA and Olivier JA
• Judgment Date: 21 September 1995
• Citation: 1996 (1) SA 1182 (A)
• Docket Number: 142/94
• Hearing Date: 04 September 1995
• Counsel: J J Gauntlett SC (with him C M Eloff) for the appellant. R D Levin SC (with him A Subel) for the respondent.
• Court: Appellate Division

Harms JA:

The appellant applied to the Witwatersrand Local Division for an order declaring that a valid and enforceable guarantee was contained in an agreement entitled 'Cession' of 22 May 1989 and that, in its terms, the respondent had guaranteed the obligations of M J H Storm's Services (Pty) Ltd ('Storm') to the applicant for the remaining period of a lease J concluded on 13 October 1987. The application was

Harms JA

A dismissed with costs (by Myburgh J) but leave to appeal to this Court was subsequently granted by the Court a quo.

In order to understand the terms of the cession, it is necessary to set out some of the background to it. The lease referred to above was a lease between Valjon Trust as lessor and Gill and Ramsden (Pty) Ltd, the B respondent, as lessee. Valjon Trust, shortly thereafter, sold and transferred the leased premises and the appellant, as a matter of law, became the lessor. The term of the lease is to expire only on 30 May 1997. The initial monthly rental was R20 000 and was to escalate annually at the compound rate of 10% per annum. It also provided that:

C 'The lessee shall -

10.1

not cede any of its rights nor delegate any of its obligations nor mortgage, pledge or encumber any of its rights under this lease without the lessor's prior written consent, which consent shall not be unreasonably withheld;

10.2

not sublet nor permit anyone else to occupy nor part with possession of the leased premises or part thereof without the lessor's prior written consent, D which consent shall not be unreasonably withheld.'

During April 1989 the appellant was approached by the respondent to release it from the lease and to accept Storm as lessee in its stead. In response, the appellant sent to the respondent a draft agreement. It provided for a substitution of Storm but, in addition, contained a E provision requiring the respondent to guarantee the obligations of Storm. The respondent, in reply, requested that the guarantee be removed from the draft agreement and in support of its request provided a favourable bank report on the ability of Storm to pay R23 000 per month for eight years. F This proposal was rejected and the respondent was informed that the appellant required it 'to stand behind' Storm. As an alternative the appellant expressed its willingness to consent to a sublease. The reaction by the appellant was due to the fact that the respondent was a member of a group of companies quoted on the Johannesburg Stock Exchange whilst Storm was, as far as the appellant was concerned, an unknown entity. A sublease did not eventuate, but a delegation did. I quote it G in full and, for the sake of convenience, paragraph numbers have been added.

'Cession

[1] We, Gill and Ramsden (Pty) Ltd, here and after referred to as the H cedent, herein represented by Norman Geoffrey Long being duly authorised by a resolution of the board of directors dated...........................1989 do hereby cede, assign, transfer and make over to M J H Storm's Services (Pty) Ltd here and after referred to as the cessionary as from June 5, 1989, all our right, title, interest, claim and demand in and under the agreement of lease entered into between the Valjon Trust and Gill and Ramsden (Pty) Ltd over the premises I demarcated on the plan attached to the lease dated 13 October 1987 relating to erf 270, Tulisa Park Township, Johannesburg. [2] It is recorded that the property has been sold to erf 270 Tulisa Park Share Block (Pty) Ltd subsequent to the lease being signed and that Pangbourne Properties Ltd is the owner of the share block which has J exclusive use of said premises and is now the lessor in terms of the lease.

Harms JA

A [3] The cedent warrants that it is not in breach of any of its obligations in terms of the lease and that it will not be in breach or in default of such obligations on the effective date. [4] This cession is granted subject to Gill and Ramsden (Pty) Ltd guaranteeing the obligations of M J H Storm's Services (Pty) Ltd to the B lessor for the remaining period of the lease. [5] The cession is subject to the cedent concluding a written sublease with the cessionary in regard to an area of the leased building situated on the premises forming the subject-matter of the lease on such terms and conditions as may be acceptable to the cessionary in its sole discretion, C within a period of 30 days of the date of signature of this agreement. [6] A copy of the lease first mentioned together with annexures is attached and marked annexure A. Dated at Johannesburg this 9th day of May 1989.
As witness	for:	Gill and Ramsden (Pty) Ltd.
D (Signed)		(Signed)
		Director
[7] We, M J H Storm's Services (Pty) Ltd herein represented by Michael John Harrison Storm being duly authorised by a resolution of the board of directors dated 8th May 1989, do hereby accept cession and transfer as from June 5, 1989, of the aforementioned agreement of lease dated 13 E October 1987 from Gill and Ramsden (Pty) Ltd subject to all the terms and conditions thereof which we undertake faithfully to perform and carry out.

...