Phasha v Southern Metropolitan Local Council of the Greater Johannesburg Metropolitan Council

• Jurisdiction: South Africa
• Judge: Satchwell J
• Judgment Date: 13 October 1999
• Citation: 2000 (2) SA 455 (W)
• Docket Number: 98/19460
• Counsel: S Kuny for the applicant. A R Gautschi SC (with him A J Eyles) for the respondent.
• Court: Witwatersrand Local Division

Satchwell J:

Introduction B

This is an application for an interim interdict which requires determination of two issues: the first under the Prescription Act 68 of 1969 and the second under the Conversion of Certain Rights into Leasehold or Ownership Act 81 of 1988. C

In terms of an agreement dated 16 January 1985, the applicant purchased from the respondent a right of provisional leasehold over stand 11900, Orlando, Soweto, together with improvements thereon for the sum of R228 222. The applicant has made no payment to respondent in respect thereof and respondent has not registered the right of leasehold against the property in favour of the applicant. In the course of 1996 or 1997 the respondent decided to sell the D property to a third party and in June 1998 advertised for tenders. The applicant now seeks to interdict the respondent from selling or disposing of the garage and filling station constituting the property pending an action to be instituted by the applicant for an order that the respondent register a right of provisional leasehold over the E property in favour of the applicant and pending the finalisation of an enquiry to be held under s 2 of the Conversion of Certain Rights into Leasehold or Ownership Act.

The crux of the dispute between the applicant and the respondent is whether or not the leasehold agreement remains of force and effect notwithstanding that it may have lain 'dormant' for some years [1] or whether or not the leasehold agreement F has lawfully been cancelled by the respondent. [2], [3] These issues are not now to be determined by this Court.

The requirements for an interdict have been frequently stated. [4] In the present instance the respondent has, in the main, founded its opposition to this G application on the contention that the applicant has not and cannot establish any right to the main relief, let alone a prima facie right.

Prescription

The respondent contends that any claim of the applicant to the relief sought in the main action, viz an order that the respondent register a H

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right of leasehold over the property in favour of the applicant, will not succeed because the applicant's cause of action A (if any) has prescribed.

The facts relevant to the issue of prescription which are not in dispute may be summarised as follows:

(a)

The applicant had been in occupation of the property since the issue to him of a trading permit by the predecessor-in-title of the respondent (the West Rand Administration Board) during 1978. B

(b)

The agreement for the purchase of the leasehold of the property and improvements thereon was concluded between the applicant (the leaseholder), the respondent (the board) and Shell (the company) on 16 January 1985. [5]

(c)

The relevant portions of the leasehold agreement reads as follows: C

'3. The board hereby undertakes to grant a provisional grant of leasehold over the stands to the leaseholder subject to the following conditions.

3.1 . . . . [6]

3.2 That a first mortgage bond for the loan amount as is specified in clause 5 hereunder be registered against the right of D leasehold in the name of the board.

3.3 . . .

4. The purchase price for the right of leasehold over the stand as well as the purchase price for the improvements on the stand amount to R228 222 which amount is made up as follows:

(a) Improvements E	R169 662
(b) Right of leasehold (3904 m2 at R15 per m2)	R58 560
Total	R228 222

5. The West Rand Development Board is willing to grant a loan of R182 577 to the leaseholder which loan together with interest thereon calculated at 18% per annum is payable as follows: F

5.1

A deposit of R45 645 on the date of signature thereof.

5.2

The balance of the loan amount together with interest in equal monthly payments of R2 842,42 over 20 years.

6. It is agreed between the parties that this agreement together with the agreement between the company and the leaseholder referred to in clause (3)(1) be registered against the leasehold right of the leaseholder.' G

(d)

The applicant continued in occupation of the premises until 1 March 1995, whereafter he leased stand 11900, Khumalo Street, Orlando West, Soweto, together with the improvements thereon to Shell Company. [7]

(e)

No payment whatsoever in reduction of the purchase price has been made by the applicant pursuant to the terms of the H leasehold agreement.

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(f)

On 2 May 1996 and again in July 1998 he indicated in writing his intention to meet his financial A obligations. [8]

(g)

Until 16 July 1998, when the applicant tendered performance of all his obligations in terms of the agreement and called upon respondent to perform its obligations in terms of the leasehold agreement, the applicant took no steps to enforce his rights under the agreement. B

(h)

During February 1996 Shell made an offer to the respondent to purchase the site and the service station thereon for the sum of R300 000. In January 1997 the respondent passed a resolution that the council resolution adopted on 31 January 1995 which authorised and gave rise to conclusion of the leasehold agreement C be 'rescinded'. [9] Thereafter, in June 1988 the respondent advertised in The Sowetan newspaper for tenders for purchase of the property. It is these activities on the part of the respondent which gave rise to this application brought by the applicant. D

Section 10 of the Prescription Act provides for the extinction of a debt after the lapse of periods determined in s 11 of the Act. The expression 'debt', in the context of s 10(1), has a wide and general meaning and includes an obligation to do something or refrain from doing something. (See Electricity Supply Commission v Stewards and Lloyds of SA (Pty) Ltd 1981 (3) SA 340 (A) at 344F - G; and E Oertel en Andere NNO v Direkteur van Plaaslike Bestuur en Andere 1983 (1) SA 354 (A) at 370B.) Both Mr S Kuny, who appeared for the applicant, and Mr A Gautschi, who appeared for the respondent, were in agreement that the obligation of the respondent to register a right of provisional leasehold in favour of the applicant constitutes a 'debt' for the purposes of s 10(1) of the Act. In Desai NO v Desai and Others 1996 (1) F SA 141 (A) the Court found that 'obligation to procure registration of transfer' was a 'debt' as envisaged in s 10(1).

The period of prescription applicable to such a debt is, in terms of s 11(d), a period of three years while s 12 provides that such period only commences 'as soon as the debt is due'. The G Prescription Act contains no definition of the term 'due debt'. A debt becomes due when it is 'owing and already payable' [10] or 'immediately claimable'. [11]

It is of some importance for this judgment to clarify exactly what is meant by the terminology used in the 1969 Prescription Act, which G provides that prescription 'shall commence to run as soon as the debt is J

Satchwelll J

due' when contrasted with earlier legislation which provides that prescription shall run 'from the date on which the right of action A first accrued against the debtor'. [12]

In The Master v I L Back & Co Ltd and Others 1983 (1) SA 986 (A) at 1004F the Appeal Court accepted as correct the submission that:

'A debt being due in this context involves two things, namely that the creditor is in a position to claim payment forthwith and that B the debtor does not have a defence to the claim for immediate payment. In other words, that the creditor's cause of action is complete. . . .'

In Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd 1991 (1) SA 525 (A) the wording of s 12(1) of the 1969 Prescription Act was stated to mean C

'. . . that there has to be a debt immediately claimable by the debtor, or stated in another way, that there has to be a debt in respect of which the debtor is under an obligation to perform immediately'.

(At 532H.) Differently stated, a debt becomes due 'when the creditor acquires a complete cause of action for its D recovery'. [13] In the context of earlier legislation the expression 'cause of action' has been held to mean

'. . . (t)he entire set of facts which gives rise to an enforceable claim and includes every fact which is material to be proved to entitle a plaintiff to succeed in his claim. It includes all that a plaintiff must set out in his declaration in order to disclose a E cause of action. Such a cause of action does not "arise" or "accrue" until the occurrence of the last of such facts and consequently the last of such facts is sometimes loosely spoken of as the cause of action.'

Per Watermeyer J in Abrahamse & Sons v SA Railways and Harbours 1933 CPD 626 at 637, applying McKenzie v Farmers Co-operative Meat Industries Ltd 1922 AD 16 at 23 where it was said that cause of action meant F

'. . . every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved.' G

The dispute between the respondent (the debtor who raises prescription against the applicant) and the applicant (the creditor who seeks the opportunity to enforce his claim against the respondent) may be stated as follows. The respondent argues that the applicant acquired a complete cause of action on 16 January 1985. From that date onwards the applicant could have demanded registration of the H right of leasehold in his favour either by making payment or tendering payment of the deposit and/or the balance of the purchase price to the respondent. Since the applicant did not make payment or so tender, the applicant's claim prescribed on or...