Syfrets Participation Bond Managers Ltd v Estate and Co-op Wine Distributors (Pty) Ltd

JurisdictionSouth Africa
JudgeVan Zyl J
Judgment Date02 May 1988
Citation1989 (1) SA 106 (W)
CourtWitwatersrand Local Division

Van Zyl J:

This is an application to eject the respondent from a certain property known as erf 648, situate at 6 Strydom Street, Denver Extension No 4, Johannesburg. It is common cause that the registered owner of the property is Tryprop (Pty) Ltd ('Tryprop') while the applicant is the mortgagee of such property by virtue of two participation mortgage I bonds registered on 1 April 1982 and 28 March 1984 as security for the repayment by Tryprop of loans in the amount of R300 000 and R151 000 respectively. Tryprop subsequently defaulted in its obligations in terms of the bonds and the property was declared to be specially executable. A sale in execution was held by the deputy-sheriff on 12 March 1987. The applicant purchased the property and is presently awaiting J registration of transfer into its name.

Van Zyl J

A The respondent came into the picture during 1986, when it was looking for premises from which to operate its wine packaging and distribution operation. On 22 October 1986 Tryprop and the respondent entered into a written agreement of lease in respect of the property for a period of four years and 11 months with an option to renew the lease for a further five years. At the time the respondent was unaware of the fact that B the property had been bonded in favour of the applicant. In terms of this lease agreement the respondent was to pay rental in the amount of R6 000 per month, while Tryprop would spend R100 000 on repairs of and improvements to the property. In terms of clause 11 of the agreement the respondent was entitled to renovate the premises and to C effect improvements thereto at Tryprop's expense. Clause 12, again, empowered the respondent to make structural improvements at its own expense. Shortly thereafter, still in October 1986, the agreement was emended to provide that the respondent would spend R100 000 on improvements, but that the payment of rental would commence only when production could be commenced. Since it was envisaged that this would D take some time, so that rentals would not be forthcoming for a few months, the monthly rental was increased to R7 000 per month. As it turned out, production commenced only in March 1987 and the first rental payment was paid during the second half of that month. According to the respondent the value of the necessary and useful improvements and E renovations completed by the end of February amounted to R122 700.

At the beginning of March 1987 the respondent was given to believe that the said lease agreement was invalid since it had been concluded without the consent of the applicant as bondholder and was therefore in conflict with Tryprop's obligations in terms of the aforesaid bonds. The respondent accepted that the lease agreement was indeed invalid and F it was apparently cancelled by agreement.

Three days prior to the sale in execution of the property on 12 March 1987 the representatives of the applicant and respondent held a meeting to consider, inter alia, the granting of an opportunity to the respondent to acquire the property. After the meeting the respondent wrote a letter dated 9 March 1987 to the applicant in which it G confirmed that the lease agreement had been 'cancelled by mutual consent' and offered to purchase the property for R500 000 subject to certain conditions. In the ante-penultimate paragraph of the letter the following appears:

'Pending fulfilment of the aforegoing provisions, we will occupy the premises on a monthly basis (subject to three months' notice of H cancellation either way) at a rental of R5 000 per month, which lease agreement shall be deemed to commence from the date of first production and bottling in the factory, but in any event not later than 15 March 1987.'

In its reply to this letter the applicant stated that, should it be called upon to consider 'the proposed lease', it would not consent thereto since the suggested rental was regarded as 'less than I the prevailing market rates achievable'.

In a further letter, dated 18 March 1987, and written subsequent to another meeting held on 17 March 1987, the respondent reiterated its intention to purchase the property and emphasised that it had J already spent some R130 000 on renovations and was proceeding with further

Van Zyl J

A renovations and extensions which would bring the ultimate cost to some R300 000. In para 5.1 of this letter the proposed lease is dealt with in the following terms:

'We propose that our company will occupy the immovable property on a monthly tenancy basis at a rental of R6 000 per month, or part B thereof, which lease agreement shall be deemed to have commenced on 15 March 1987.'

Further discussions between the parties did not give rise to any agreement. The respondent accordingly applied to the applicant for a loan to purchase the property, which loan would be secured by a first mortgage bond. Under cover of a letter dated 1 April 1987 the necessary application forms for the loan were submitted, together with a cheque C in the amount of R9 000, being 'occupation charges' for the second half of March and for April 1987. The penultimate paragraph of this letter reads:

'We confirm that we will occupy the premises on a monthly basis and that the charges payable in respect thereof will be R6 000 per month subject, however, to variation in the event of your part/bond interest D rate being reduced or increased in which event a pro rata adjustment will be made in respect of the amount owing to yourselves.'

The parties could not reach an agreement in respect of the proposed loan and the respondent intimated that it would seek financial assistance elsewhere. Some months passed, however, without the respondent making any headway. The applicant consequently addressed E a letter, dated 3 September 1987, to the respondent, giving the respondent until 15 September 1987 to make a 'formal offer' to purchase the property at...

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11 practice notes
9 cases
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    ...v Steyn 1953 (4) SA 193 (O) at 199C - D; Syfrets Participation Bond Managers Ltd v Estate and Co-op Wine Distributors (Pty) Ltd 1989 (1) SA 106 (W) at 110F - H; Bodenstein Huur van Huizen en Landen volgens het Hedendaagsch I Romeinsch-Hollandsch Recht at 116; R W Lee An Introduction to Roma......
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