Swartzberg v Leon Zwartzberg & Co (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Mahomed CJ, E M Grosskopf JA, Nienaber JA, Howie JA, Streicher AJA
• Judgment Date: 14 March 1997
• Docket Number: 373/95
• Court: Appellate Division
• Hearing Date: 20 February 1997
• Citation: 1997 JDR 0251 (A)

E M Grosskopf JA

1997 JDR 0251 p2

E M Grosskopf JA

The appellant successfully sued the respondent in a magistrate's court for rental and certain ancillary amounts alleged to be due under a lease. An appeal to the Witwatersrand Local Division succeeded. With the leave of that court the appellant now comes on further appeal before us. The point for decision is whether the lease was still current during the month in respect of which the appellant made his claims.

The facts are as follows.

The appellant, to whom I shall for convenience refer as Swartzberg, is a businessman. Some years ago he started the respondent company. It was a merchant of plumbing materials, sanitary ware and ceramic wall and floor tiles. During 1983 Swartzberg and one Newfield sold the major shareholding in the respondent to Boumat Limited, a large public company listed on the Johannesburg Stock Exchange. Swartzberg stayed

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E M Grosskopf JA

on for a while as managing director of the respondent.

The respondent's business was carried on in premises hired from various private companies of which Swartzberg and Newfield were the shareholders. At the time of the take-over the new shareholders of the respondent wished to ensure security of tenure in these premises. A contract of lease was accordingly entered into between the lessor companies and the respondent. In the lower courts this lease was called the Bradmarc lease after one of the lessor companies, and I shall do likewise. The Bradmarc lease was deemed to have commenced on 1 March 1983 and was to continue for five years thereafter, terminating on 28 February 1988. The respondent was granted an option for renewal for a further period of five years, i e from 1 March 1988 to 28 February 1993, on certain conditions. This option was to be exercised by written notice given not later than 31 August 1987.

On 11 October 1983 a meeting of the respondent's board

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E M Grosskopf JA

of directors was held. Among the directors present were Swartzberg and two representatives of Boumat, namely messrs Brittan and Gevisser. These three persons were witnesses at the trial of this matter and I shall have more to say about them later. The minutes of the meeting record the following:

"PREMISES

Mr Swartzberg advised the meeting that he was currently building a warehouse on stand numbers 811, 812 and 813 New Doornfontein, Johannesburg. At a previous informal meeting the proposed warehouse was offered to the group on a lease to run concurrently with the existing lease. This offer was accepted by Messrs Brittan, Gevisser and Newfield on behalf of the group. Mr Swartzberg declared his interest in the project in that he personally is the owner thereof."

By "the group" was presumably meant the conglomeration of companies controlled by Boumat Limited, of which the respondent was one. However, it is clear that it was only the respondent which was interested in the warehouse premises.

These premises adjoined the respondent's existing business.

On 7 May 1984 a lease was concluded between Swartzberg

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E M Grosskopf JA

and the respondent in respect of the warehouse premises. I shall refer to this lease as the Swartzberg lease, as was done in the courts below. The Swartzberg lease was deemed to have commenced on 15 April 1984 and was to "continue for a period of five years thereafter, terminating on 28th February 1989." It is to be noted that the termination date of 28 February appears to be somewhat anomalous - it is not exactly five years after the commencement date. The effect of picking this date was that the initial period of the Swartzberg lease terminated exactly a year later than the Bradmarc lease. In the Swartzberg lease, as in the Bradmarc lease, the respondent was granted an option to renew. In the Swartzberg lease this option was recorded as being for a period of five years, i e, from 1 March 1989 to 28 February 1994. The option was to be exercised by written notice given not later than 31 August 1988. These dates are all a year later than the corresponding dates in the Bradmarc lease.

1997 JDR 0251 p6

E M Grosskopf JA

In 1986 Mr M H Klitzner became joint managing director of the respondent. He had no knowledge of the conclusion of the various leases. In due course (presumably on or before 31 August 1987) he exercised the option to renew the Bradmarc lease. He did not at that stage know that the Bradmarc lease and the Swartzberg lease terminated a year apart.

In 1988 the renewal of the Swartzberg lease came to be considered. At that time the respondent was contemplating opening a new branch in Midrand. If this were done the property let under the Swartzberg lease would no longer be required. During a meeting of the respondent's board on 19 August 1988 the renewal of the lease was discussed. At this time Swartzberg was no longer a director of the respondent company. One member of the board felt that the rent currently charged was excessive. Another...