Saldosol Investments (Pty) Ltd v Amathole District Municipality
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Norman J |
| Judgment Date | 13 June 2023 |
| Citation | 2023 JDR 2127 (ECGEL) |
| Hearing Date | 13 April 2023 |
| Docket Number | EL 705/2021 |
| Court | East London Circuit Local Division |
Norman J:
This is an application for summary judgment. Plaintiff claims payment of an amount of R8 087 241.74 in respect of arrear rental and other charges pursuant to a lease agreement concluded between it and the defendant together with interest thereon and legal costs.
Common cause facts
It is common cause that the parties entered into a written lease agreement concluded on 1 August 2014 in respect of an immovable property, known as Phase 4 Waverly Office Park, Phillip Frame Road, Chilselhurst, East London for a period of three (3) years commencing on 1 November 2014. On 1
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November 2014 the parties concluded a written addendum to the lease agreement which related to further tenant installation items and to provide the defendant with hygiene services. They further entered into a second addendum to the lease which was concluded on 15 December 2014 extending the lease for a period of two (2) years to December 2017 with plaintiff undertaking to attend to further tenant installations as referred to in the second addendum.
On 24 August 2016, the parties concluded a third addendum to the lease agreement where the plaintiff undertook to attend to further tenant installations. The parties agreed that the further tenant installations and services referred to in the first to third addenda would be amortized over the lease period.
On 8 February 2018 the parties concluded a written renewal of the lease agreement where they agreed to renew the lease for a further period of three (3) years with an option to renew for a further two (2) years.
Alleged breach
Plaintiff alleges that the defendant breached the lease agreement in that it failed to make payments of the monthly rentals and other charges as and when they fell due. It alleged that as of 4 June 2021 the defendant was in arrears in the amount of R4 782 838.30 in respect of outstanding rental and other charges. It also claimed an amount of R3 304 403.50 in respect of accumulated interest. The total sum allegedly owed is R8 807 241.74. Plaintiff relies on a statement attached to its particulars of claim, marked "POC6".
Defendant defended the action and it raised two special pleas. The first one is based on the plaintiff's failure to comply with the provisions of section 3 and 4 of the Institution of Legal Proceedings against Certain Organs of State Act 40
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of 2002 (the Institution Act). The defendant contended that without compliance with the provisions of this Act, the plaintiff is non-suited.
The second special plea raised is that of prescription. The defendant contends that the entries made in "POC6" were made in December 2014 and that summons was only served on 10 June 2021 and therefore a period of more than three (3) years had lapsed. It contended that any amount that would have been payable more than three (3) years before service of the summons, had prescribed.
Plaintiff's replication
In respect of the prescription point, the plaintiff replicated on the basis that prescription of the debt claimed from defendant was interrupted in terms of section 14 of the Prescription Act 68 of 1969 in that the defendant acknowledged indebtedness of its liability before the debt became prescribed.
In so far as the non-compliance with sections 3 and 4 of the Institution Act, plaintiff contends that the claim is for specific performance arising out of the defendant's breach of contract and not for a debt as defined in the Institution Act (for payment of damages). It further contends that there was no obligation on the plaintiff to comply with the aforesaid provisions of the Institution Act or to allege compliance therewith.
Summary judgment application
In the application for summary judgment, deposed to by the director of the plaintiff, Jean Prieur du Plessis, plaintiff addressed the defences raised by the defendant. It contends that the defence that there was no demand for interest is meritless. Plaintiff makes a point that "I am advised that it is the function of
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the Court to interpret the relevant provisions of the lease and not that of the parties." However, it proceeded to give an interpretation to certain clauses, namely 4.1 and 4.3. It further contends that interest charged on arrear rental was reflected on the monthly invoices and statements issued to the defendant as reflected on annexure "POC6".
In relation to the prescription plea, plaintiff alleged that the plea is vague because the defendant has not indicated which portion of the claim has become prescribed. The defendant never disputed the statements and invoices issued to it by the plaintiff and instead made payments in respect thereof, and by so doing, such conduct constitutes acknowledgement of the defendant's liability.
Prescription was interrupted by an express or tacit acknowledgement of liability by the defendant. In this regard it relies on various documentation such as the emails exchanged between the plaintiff and the Senior Manager: Accounting Officer of the defendant, a Mr Sicelo Kweleta, where the defendant expressed an intention to settle the arrears.
Plaintiff relied and drew the attention of the Court to clause 4.2 of the lease in terms of which the plaintiff has a discretion to allocate payments made by the defendant. It then produced an updated statement marked "JP5".
Plaintiff disputed the defendant's defence that no demand was made because according to it all the invoices and monthly statements issued during the subsistence of the lease constituted legitimate means of demand. It relied on the letters sent to the defendant on 16 February 2021 and 21 April 2021, as letters of demand.
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It stated that the Institution Act is not applicable in the action and there was accordingly no obligation to comply therewith. In the alternative, it submitted that if it is found that the notice was necessary then it sought condonation for its non- compliance with the Institution Act.
It concluded by stating that
"the defendant's attempted defences alleged in the amended plea, are vague, sketchy and laconic and demonstrate that the defendant does not have any bona fide defence to the plaintiff's claim nor does it raise any triable issues in its amended plea."
Defendant's opposing affidavit
Defendant in resisting the summary judgment application filed an opposing affidavit deposed to by Thandekile Themba Mnyimba, its municipal manager. He raised the following preliminary points:
That the plaintiff failed to comply with the provisions of section 3 and 4 of the Institution of Legal Proceedings against Organs of State Act 40 of 2002;
That the claim where it refers to amounts which are more than three (3) years before the institution of a claim have become prescribed.
That according to the initial lease agreement it provided that any other amounts other than those listed in clauses 4.1.1 to 4.1.3 were payable on demand. That clauses 4.1.1 to 4.1.3 do not provide for the payment of interest and therefore interest is only payable on demand."
Defendant contended that:
Annexure "POC6" represents account entries commencing on 1 December 2014, a period of more than three (3) years from the date upon which plaintiff's summons was served on the defendant. Plaintiff's claim has prescribed or alternatively, a portion thereof has become prescribed in terms of section 11 of the Prescription Act 86 of 1969.
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Any claim for accumulated interest which is not supported by demand, which the plaintiff was obliged to make before any rights thereof vested, is not payable because plaintiff has not complied with its obligations.
That plaintiff has claimed a total sum of R3 304 403.54 for accumulated interest and it only relied on a demand made in its letter dated 21 April 2021.
The letters that were sent on 16 February 2021 and 21 April 2021, to the defendant by the plaintiff, did not comply with the provisions of sections 3(1) and 4(1) read with sections 4(2) of the Institution Act. Those letters, he averred, were not addressed to the municipal manager as contemplated in the Institution Act.
The plaintiff's attempt to seek condonation for its non-compliance with the provisions of sections 3 and 4 of the Institution Act in the affidavit for summary judgment, is impermissible.
Plaintiff, in its particulars of claim, failed to give the exact dates and months when rentals were not paid. Plaintiff failed to indicate precisely when any debt became due and payable. It also made reference to further invoices issued but failed to state which invoices were not paid and in respect of which months those invoices related to and/ or which rentals were outstanding in respect of which months.
The municipal manager submitted that the defendant's defence to the claim is bona fide. The defendant relied on certain invoices and a reconciliation of utilities from July 2020 to March 2022 as annexures "MM1" to "MM3".
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The plaintiff invoked the provisions of clause 4.2 of the lease agreement for the first time in the summary application whereas that clause is not pleaded in its particulars of claim.
Plaintiff's legal submissions
Mr Pretorius appeared for the plaintiff and Mr Matotie for the defendant.
It was submitted on behalf of the plaintiff that the defences raised are not bona fide. To the extent that there are differences in figures, it was argued, this court must simply deduct what has been paid and grant summary judgment on the outstanding amounts.
It was argued that clause 4.2 is not pleaded in the particulars of claim because plaintiff does not rely on...
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