---

FORM A

FILING SHEET FOR EASTERN CAPE JUDGMENT

            PARTIES:

FURNITURE HARDWARE SUPPLIES (PTY) LTD

(REGISTRATION NUMBER: 2007/013759/07) APPLICANT

And

SIRGE FOURTEEN CC

REGISTRATION NUMBER: 1996/041734/23) RESPONDENT

• Case Number:   1451/07

• High Court: SOUTH EASTERN CAPE LOCAL DIVISION

Date Heard: 2 August 2007

Date Delivered: 23 October 2007

JUDGE(S):    DAMBUZA J

LEGAL REPRESENTATIVES-      

Appearances:

• Applicant(s): Adv Beyleveld

• Respondent(s):  Adv Mey   

Instructing attorneys:

• Applicant(s):    Kaplan Blumberg

• Respondent(s): Lawrence Mlolomba Vorster Inc 

CASE INFORMATION –

• Nature of proceedings : Application

IN THE HIGH COURT OF SOUTH AFRICA

(SOUTH EASTERN CAPE LOCAL DIVISION)

CASE NO: 1451/07

In the matter between:

FURNITURE HARDWARE SUPPLIES (PTY) LTD

(REGISTRATION NUMBER: 2007/013759/07) APPLICANT

and

SIRGE FOURTEEN CC

REGISTRATION NUMBER: 1996/041734/23) RESPONDENT

______________________________________________________________

JUDGMENT

______________________________________________________________

DAMBUZA J:

1. In this application, brought on a semi-urgent basis, the applicant seeks to enforce an agreement of lease entered into between the respondent as a Lessor and the applicant as a Lessee on 22 May 2007. The respondent opposes the application on the basis that:

1.1 the matter is not urgent;

1.2 there is a dispute of fact which the applicant should have foreseen; and

1.3 the agreement cannot be enforced as it was repudiated by the applicant and the respondent accepted the repudiation.

2. It is common cause that on 22 May 2007 the parties concluded an agreement of lease in terms of which, amongst others:

2.1 The applicant leased from the respondent premises described as 32, 6^th Avenue, Walmer, Port Elizabeth;

2.2 The lease was to commence on 15 May 2007 and terminate on 30 April 2010, with an option for renewal at the expiry of the initial period;

2.3 Rental would be payable by the applicant in advance, on the first day of each month and more particularly as follows:

2.3.1 Pro-rata rental would be payable for May 2007;

2.3.2 R17 000.00 per month for the period 1 June 2007 to 30 April 2008;

2.3.3 R18 700.00 per month for the period 1 May 2008 to 30 April 2009; and

2.3.4 R20 570.00 per month for the period 1 May 2009 to 30 April 2010.

2.4 A further amount equal to a month’s rental plus value added tax was due by the applicant as deposit and was payable within seven days of the date of the last signature of the agreement;

2.5 The premises were to be leased for conducting business as a showroom, a warehouse and offices.

3. The lease agreement was concluded through letting agents known as “Just Letting”, who had been authorized by the respondent to secure a tenant for the premises. The applicant was represented by its shareholder and managing director, Ashley Charles Howarth and the respondent was represented by its sole member Ventizislav Petev.

4. Despite the provisions of the agreement the applicant did not take occupation of the leased premises on 15 May 2007 as the premises were not ready for occupation. The respondent was still in the process of effecting some improvements and/or repairs to the leased premises as stipulated in the agreement. In this regard the agreement provides that:

“2. CONDITION OF LEASED PREMISES

The leased premises are leased in the condition in which they are at present with no obligation on the part of the LANDLORD to carry out any improvements or alterations thereto, save only to:

2.1 Pave front and back of property;

2.2 Install burglar proofing on windows only;

2.3 Permit tenant to choose the colour of paint;

2.4 Fix garage up to good order.”

The applicant was then advised by Just Letting that the premises would be ready for occupation by 1 June 2007.

5. On 1 June 2007 the applicant did not take occupation of the premises. The parties’ versions regarding the reasons for the applicant’s non-assumption of occupancy of the leased premises differ. What is common cause is that on that day (1 June 2007) Howarth met Petev on the premises. Construction work was still in progress on the premises.

6. According to the applicant, by 1 June 2007 the respondent had not yet completed the specified renovations or improvements. Hence the applicant did not take occupation thereof. When it became apparent that the premises were not ready for occupation, Howarth requested that he should be given the keys to the premises so that he could do certain preparatory work thereon in anticipation of the imminent start of business. Petev and Howarth agreed that the latter would collect the keys later on that day. However, when Howarth later returned to the premises, he only found one construction worker on site and could not get the keys.

7. The respondent, on the other hand, contends that all renovations which it was bound to effect in terms of the agreement had been completed. On 1 June 2007 the applicant was, according to the respondent, offered occupation of the premises and it (applicant) refused to take occupation. More specifically the respondent maintains that the keys to the premises, were offered to Howarth on 1 June 2007 whereupon Howarth refused to accept the keys, thereby repudiating the agreement. The respondent contends further that the applicant’s failure to pay rental due in respect of June 2007 constituted repudiation and that such repudiation was accepted by the respondent. It was submitted on behalf of the respondent that even if the premises were incapable of beneficial occupation, the applicant was still obliged to pay the rental in terms of the agreement.

8. On 4 June 2007, Howarth wrote an e-mail to Just Letting enquiring about the keys. The response was a demand that the applicant pay the deposit required under the agreement and the rental due for the first month (June 2007). The applicant paid the deposit and undertook, to pay rental for the first month once the date of occupation was confirmed. The applicant was only prepared to pay rental once the premises were ready “for occupation for commercial trading purpose” and the keys to the premises had been handed to Howarth.

URGENCY:

9. It was submitted on behalf of the respondent that the matter is not urgent. The respondent complains that it was prejudiced as a result of the application being brought on an urgent basis because Petev was out of the country from 16 July 2007 to 30 July 2007 and was therefore only able to consult with the respondent’s attorneys in respect of the application on 30 July 2007. A further submission on behalf of the respondent was that commercial grounds, on which the applicant relies for urgency, do not constitute suitable reasons for the application to be heard on an urgent basis. In any event, so the argument went, the urgency resulted from the applicant’s own conduct in failing to launch the application sooner than 16 July 2007. The issue of urgency was however watered down somewhat during argument as Ms Mey submitted, on behalf of the respondent, that the argument tendered on behalf of the respondent in this regard should be taken into consideration for determination of costs only.

10. The events preceding the launch of this application are that on Monday, 4 June 2007 Howarth sent an e-mail to Just Letting stating that he would arrange for the deposit to be paid the following day but would only pay the first month’s rental only once the date of occupation was “documented”.

11. On the same day, Howarth sent another e-mail to Just Letting saying:

“Martin,

I have created a snag list for outside the building as I don’t have the keys to get inside. I have a small list for inside, but will have to do a more thorough look as soon as I have the keys.

Please don’t forget to get me the bank details so I can pay the deposit.

Ashley.”

12. In response thereto, on the same day, Just Letting responded as follows:

“We refer to the above Agreement of Lease and request that you please arrange to effect payment of the first month’s rental and deposit directly into the landlord’s banking account, the particulars of which are detailed below.”

As I have already stated, the applicant paid the deposit on 5 June 2007. It appears that subsequent to paying the deposit, the applicant was still not given the keys and there was no confirmation of the date on which the applicant could take occupation. The applicant then sent another e-mail to the respondent seeking to have the matter resolved, expressing its desire to take occupation of the premises and intimating that if the matter did not get resolved it might be compelled to take it “further”. The matter could still not be resolved.

13. Ultimately on 11 June 2007 the respondent wrote the following letter to the applicant.

“Mr Howarth,

We refer to the above Agreement of Lease concerning Leased Premises at 6^th Av. Walmer, Port Elizabeth. With this letter sent to you, we cancel the lease agreement between Sirge Fourteen CC and Furniture Hardware Supplies (Pty) Ltd according to clause 12 of our agreement as you failed to effect payment on a first month rental.

Letter requesting that payment was sent to you on our behalf by Just Letting Commercial on 4^th of June 2007 at 04:21pm.

Kind regards:

Sirge Fourteen CC.”

14. In the founding affidavit Howarth states that the attorney who was to handle the matter on behalf of the applicant was only able to consult with him (Howarth) “at the end” of June 2007. On 29 June 2007 the applicant’s attorneys wrote a letter to the respondent regarding the contents of respondent’s letter of 11 June 2007, demanding an undertaking, by 6 July 2007, from the respondent, that the applicant would be given vacant and beneficial occupation of the leased premises by Monday, 9 July 2007, failing which the applicant would approach the court. The letter yielded no positive results.

15. The application was launched on 16 July 2007 and the papers were served on the respondent on 17 July 2007 at 2pm. In the founding papers the respondent was given until 19 July 2007 at 4pm (two days) to notify the applicant’s attorneys of its intention to oppose the application and until 2pm on 25 July 2007 (six days) to file its answering papers. Thus the periods stipulated in the Rules of Court were shortened by three and nine days respectively.

16. Rule 6 (5) provides that a Notice of Application must be in a form as near as possible to Form 2 (a) and that, in it, an applicant shall set forth a day, not less than five days after service thereof on the respondent, on or before which respondent is required to notify the applicant, in writing, whether he intends to oppose the application. A person opposing the grant of an order sought in the notice of motion shall, within fifteen days of notifying the applicant of his intention to oppose the application, deliver his answering affidavit, if any, together with any relevant documents. Under Rule 6 (12), an applicant may deviate from Form 2 (a) to the extent justified by circumstances by, for example, using shortened time periods, adapting the wording and omitting notice to the Registrar. See: Erasmus: Superior Court Practice B1-56A. The issue then becomes whether the applicant was justified in shortening the time periods as it did in this case. It is incumbent upon the applicant to persuade the court that it was justified in doing so.

17. It was submitted on behalf of the applicant and I agree, that the abridgment of the time periods prescribed under the Rules was not so drastic that it can be said that the respondent was not afforded time to respond to the application. Indeed the periods provided by the applicant for filing of the notice of opposition and answering papers deprived the respondent of just more than a half of the periods stipulated in the Rules. However, regard being had to simplicity of the issues involved and the extent to which the periods were shortened, I am satisfied that the respondent could, within the periods stipulated in the application, consult with its legal representative such that its response to the application could be placed before the court within the stipulated period. Most of the evidence is contained or confirmed in documents. It is only the narrow issue regarding the offer and repudiation of occupancy on 1 June 2007 that would require relatively extensive consultation.

18. It is not disputed that as a result of the non-assumption of occupancy of the premises on 1 June 2007 or even earlier, the applicant could not trade and therefore lost income. The applicant contends that it has already expended substantial amounts of money (at least R100 000.00) in preparing the premises for start of business. According to the applicant, it has not been unable to secure suitable alternative premises.

19. Contrary to the respondent’s contention, urgency does not only relate to some threat to life or liberty; urgency of commercial interests may justify invocation of Rule 6 (5) no less than other interests. See: Twentieth Century Fox Film Corporation & Another v Anthony Black Films (Pty) Ltd 1982 (3) SA 582(W) at 586G; Bandle Investments (Pty) Ltd v Registrar of Deeds & Others 2001 (2) SA 203 (SECLD). Whilst I remain mindful that mere existence of some urgency does not necessarily justify an applicant’s deviation from Rule 6 (5) (a), I am satisfied that deviation from the Rule and the extent thereof was justified in the circumstances of this case. It seems to me, that the issues between the parties had to be brought for determination before a court of law sooner rather than later.

20. I am not persuaded that the applicant delayed unduly in launching the application. Where an applicant first seeks compliance from the respondent before lodging an application, it cannot be said that the applicant has been dilatory in bringing the application or that the urgency was self-created. On 10 June 2007 the applicant forwarded an e-mail to the respondent seeking to have the dispute resolved. It is only on 11 June 2007 that the respondent’s intention to cancel the agreement was communicated to the applicant.

21. The application was launched two weeks after the attorneys had written to the respondent and eight days after the respondent had been placed in mora. Having regard to all these issues I am satisfied that the applicant’s conduct in bringing the application on a semi-urgent basis was justified.

DISPUTE OF FACTS:

22. The dispute of fact as raised by the respondent relates to whether on 1 June 2007 occupation of the premises were offered to the applicant; whether the respondent had completed the improvements or repairs specified under the agreement and whether the applicant on that day refused to accept the keys and thus to take occupation of the premises. The applicant’s primary contention in this regard is that there is, in fact, no genuine dispute of fact.

23. It has been held that in every case the court must examine an alleged dispute of fact and see whether in truth there is a real dispute of fact which cannot be satisfactorily determined without the aid of oral evidence; if this is not done a respondent might be able to raise fictitious issues of fact and thus delay the hearing of the matter to the prejudice of the applicant. See: Peterson v Cuthbert & Co Ltd 1945 AD 420 at 428. As a general rule, decisions on existence of dispute of fact cannot properly be founded on a consideration of probabilities unless the court is satisfied that there is no real and genuine dispute of fact or that the one party’s allegations are so far-fetched or clearly untenable as to warrant their rejection merely on the papers, or that viva voce evidence would not disturb the balance of probabilities appearing from the affidavits. See: Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155(T) at 1162.

24. It is common cause, that Howarth and Petev met at the premises on Friday, 1 June 2007, and that this was the day on which the applicant was due to take occupation of the premises. It is also common cause, that the construction work was still in process and that the applicant did not, on that day, take occupation of the premises. The contents of the correspondence exchanged between the parties from 4 June 2007 to 12 June 2007 is also common cause, particularly, that from 4 June 2007 the applicant, more than once, requested keys to the premises.

25. Nowhere in the correspondence between the parties does the respondent refer to the applicant’s refusal to take occupation of the premises (or more particularly to Howarth’s refusal to accept the keys). Instead, correspondence from the respondent, from 4 June 2007, demands of the applicant to perform in terms of the agreement, to the extent of demanding payment of R2 000.00 for connection of electricity to the premises for the applicant’s benefit. This, in my view, confirms the applicant’s version that it never refused to accept the keys on 1 June 2007 and that it, in fact, requested that it be given the keys to prepare the premises.

26. The respondent maintains that construction work still underway on the premises on 1 June 2007 was to merely effect “aesthetic improvements” to the property in order to create “a more aesthetically pleasing area”. Ms Mey submitted that the garage was not included in the lease agreement and the respondent was not obliged to effect any improvements thereto. However, clause 2 of the agreement belies the respondent’s denial that it was bound to effect improvements or repairs to the garage on the premises or that the garage was not included in the agreement. Contrary to paragraph 2.2 of the agreement which specifies the improvements to be effected by the respondent, the photographs of the premises taken by Howarth on 5 June 2007 show no burglar proofing on the windows of the building on the premises; parts of the interior walls of the garage are unplastered; there are cracks on the walls; there is rubble on the floor; the garage is clearly not in “good order”; paving on the exterior of the premises is incomplete and the doors had no handles on the outside. It is clear from the photographs that the premises were not, at the time, capable of beneficial occupation. Construction work underway on the premises on 1 June 2007 could not, in the circumstances, have been for purposes of merely effecting aesthetic improvements to the premises. I am satisfied that by 1 June 2007 the respondent had not complied with its obligations under the agreement and the premises were incapable of beneficial occupation.

27. Contrary to a submission made on behalf of the respondent it is the obligation of a lessor in relation to the condition of a leased property, at the time it is made available for occupation, to ensure that it is in the condition specified in the lease agreement. Even “in the absence of an express or implied term the lessor is obliged to place the leased premises initially in a condition reasonably fit for the purpose for which they are let.” Poynton v Cran 1910 AD 205; Kerr: The Law of Sale and Lease, Second Edition at 270.

28. In any event, even if occupation was offered and the applicant refused to take occupation of the premises, I am not satisfied that the respondent accepted such repudiation.

29. I agree with the submission made by Mr Beyleveld, on behalf of the applicant that the respondent, in cancelling the agreement as set out in the e-mail of 11 June 2007 did not rely on repudiation by the applicant. It clearly only relied on Clause 12 of the agreement, which is the usual default and mora clause providing that in the event of the tenant failing to make any payment or committing any other breach and failing to remedy the breach within seven days of a written notice requiring the tenant to make such payment or remedy such breach, then the lessor will be entitled to cancel the agreement. Reliance by the respondent on Clause 12 of the agreement is, in my view, further confirmation that the applicant did not at any stage repudiate the agreement.

30. Consequently there can be no genuine dispute of fact in this matter. I can only conclude from the record that on 1 June 2007 the applicant did not take occupation of the premises because the respondent had not completed effecting the improvements specified in the agreement, and/or the premises were not ready for occupation. It is for the same reason that the applicant refused to pay rental for the month of June 2007.

31. It seems to me that the question of whether the applicant’s refusal to pay rent for June 2007 constituted repudiation becomes irrelevant in the light of the finding I have already made that there was no acceptance by the respondent, of the alleged repudiation. In any event, I am of the view that the refusal by the applicant to pay such rent, did not constitute a deliberate and unequivocal intention no longer to be bound by the agreement. This is borne out by the contents of the correspondence between the parties from 4 June 2007.

32. The next question is whether the respondent’s purported cancellation of the agreement is valid. Ms Mey submitted that even if the premises were not ready for beneficial occupation, the applicant was not entitled to set off payment in respect of the period during which it did not occupy the premises. I cannot agree with this submission. The lessee is obliged to pay the rent agreed upon less any amount remitted by law. If the amount remitted is capable of prompt ascertainment it may be set off against the lessor’s claim for rent. A lessee who is deprived, wholly or partly, of the undisturbed use and enjoyment of the leased property is not obliged to pay rent. If the lessor does not place the property at the disposal of the lessee he (the lessor) cannot claim rent. See: Kerr (supra) at 319; Poynton’s case (supra) at 227-228; Pothier: Letting and Hiring; paragraphs 145-148; Fourie NO & Ander v Potgietersrusse Stadsraad 1987 (2) SA 921.

33. My view is that even if it were to be accepted that the applicant, in refusing to pay rental, acted in breach of the agreement, the agreement would remain valid until it was properly cancelled.

34. Clause 12 entitles the respondent to cancel the agreement if there is a breach by the applicant AND the applicant fails to remedy such breach within seven days of receipt of a written notice from the applicant (or its agent) requiring the applicant to remedy such breach. (My emphasis). As Mr Beyleveld submitted, the applicant in this case was never placed in mora. Correspondence on which the respondent relies as having placed the applicant in mora (on 4 June 2007) only requests the applicant to arrange for payment of the first month’s rental. This does not, in law, amount to a demand as contemplated in Clause 12 of the agreement. The demand envisaged in Clause 12 is one which informs the applicant of the breach and threatens that failure to remedy the breach within a stipulated period will result in cancellation of the agreement. Nel v Cloete 1972 (2) SA 150 (A). Consequently there was no valid cancellation of the agreement in this case.

35. It appears, from the papers, that the improvements on the premises have since been completed. The agreement between the parties remains valid. The applicant has tendered payment of the rental required by the respondent. I am satisfied that the applicant has made out a proper case for the relief sought.

In the result, the following order will issue:

(a) This application is treated as an urgent application and the non-compliance with the Rules of this court relating to forms, time periods and service is condoned; leave is granted to the applicant to move this application as a matter of urgency in terms of the provisions of Rule 6 (12);

(b) The respondent is ordered to forthwith give occupation of the premises situated at 32 Sixth Avenue, Walmer, Port Elizabeth to the applicant in terms of the agreement of lease concluded between the applicant and the respondent on 22 May 2007;

(c) The agreement of lease concluded by the parties on 22 May 2007 is in full force and effect and is binding upon the parties;

(d) The applicant is ordered to effect payment of the rental payable in terms of the aforesaid lease to the respondent as from the date of occupation of the premises;

(e) The respondent is ordered to pay the costs of this application.

_________________________

N DAMBUZA

JUDGE OF THE HIGH COURT

Applicant’s Counsel: Adv Beyleveld

Applicant’s Attorneys: Kaplan Blumberg

Southern Life Gardens

70 Second Avenue

Newton Park

PORT ELIZABETH

Respondents’ Counsel: Adv Mey

Respondent’s Attorneys: Lawrence Mlolomba Vorster Inc

214 Cape Road

Mill Park

PORT ELIZABETH

Heard on: 2 August 2007

Delivered on: 23 October 2007

---