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IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE LOCAL DIVISION, PORT ELIZABETH)

Case no.:  1800/14

Date Heard: 29/07/2014

Date Delivered: 31/07/2014

In the matter between

UMMI PROPERTIES (PTY) LTD

(Registration No. 1993/001976/07)                                                                                Plaintiff

and

BRAZILIA FUSION RESTAURANT CC

(Registration No. 2010/107559/23)                                                                           Defendant

J U D G M E N T

BROOKS, AJ:

[1] The plaintiff is the owner of certain immovable property known as Unit 12, Humeway Shopping Centre, Humewood Road, Port Elizabeth and which is the subject of an agreement of lease which the plaintiff has concluded with the defendant.

[2] The plaintiff has issued summons against the defendant for payment of the amount of R412,048.44 which it claims as arrear rental, together with interest thereon calculated in accordance with the terms of the agreement of lease, an order evicting the defendant from the premises, ancillary relief and costs of suit. 

[3] The action has been defended.

[4] The plaintiff brought an application for summary judgment, supported by the customary affidavit required by the provisions of Rule 32 of the Uniform Rules of Court and in which it is alleged on behalf of the plaintiff that the defendant has no bona fide defence to the action and has entered appearance to defend simply to delay the matter.

[5] In response, the defendant has opposed the application for summary judgment and has caused an opposing affidavit to be filed in which the basis for the defence of the action is disclosed.

[6] In argument, Mr Gajjar, who appeared on behalf of the  plaintiff, set great store by the provisions of clause 10.7 of the agreement of lease, which reads as follows:

“The Tenant agrees not to make any deduction or short payment of Rent, Rates, Municipal Charges, Utilities and Services, Insurance and Service Charges no matter what dispute may arise.”

In summary, his argument insists that the acceptance by the defendant of this term, brought about by the signature of the agreement of lease on behalf of the defendant, effectively prohibits the defendant from raising the defence, and the prospect of a claim in reconvention, as set out in the opposing affidavit.  The justification for this submission rests in the principle that public policy demands that contracts, when entered into freely and in the absence of fraud, shall be sacred and shall be enforced by courts of justice even if they contain conditions which are hard and onerous.  (Wells v South African Illuminate Company 1927 AD 69.)

[7] The argument is bolstered by the observation that the apparent limitation or exclusion by agreement of a common law remedy normally available to a tenant for reduced beneficial use of leased premises, such as is contained in clause 10.7 of the agreement of lease, is competent.  (Hyprop Investments v Sophia’s Restaurant 2012 (5) SA 220 (GSJ) at 223F–224C.)

[8] In my view, neither legal principle which finds expression in the preceding two paragraphs can be relied upon in circumstances where a plaintiff may have approached the court with unclean hands.  This must particularly be so where one or other or both legal principles are sought to be relied upon in an application for summary judgment which if successful, would have the effect of preventing a defendant from ventilating a defence which is inextricably interwoven with the issue of the plaintiff’s unclean status.

[9] In the opposing affidavit, the deponent asserts that at the time when the agreement of lease was entered into, certain representations were made on behalf of the plaintiff relating to the paving of areas to the front and rear of the leased premises and which would be available for exclusive use by the defendant.  The representation was included in clause 2.1.3 of the agreement of lease.  Moreover, the allegation is made that an annexure to the agreement of lease, which was an architectural drawing initialled on behalf of the parties, and which demonstrates proposed refurbishment and extension of the lease premises to the front and rear, has not been attached to the agreement of lease annexed to the plaintiff’s particulars of claim.  The representation, which became a material term of the agreement of lease, has not been fulfilled.   The extension proposed by the plaintiff has not occurred.  However, the calculation of the rental due takes cognisance of the extension.  The plaintiff is in breach of a material term of the agreement.  This, says the deponent, precludes the plaintiff from seeking contractual damages against the defendant until such time as the plaintiff has remedied its breach. 

[10] It is apposite at this point to advert to a further concern raised by the defendant.  It is common cause that the plaintiff sought the recovery of arrear rental from the defendant, based upon the same allegations and pursuant to a failure on the part of the defendant to remedy the breach relied upon by the plaintiff as called upon to do by way of the plaintiff’s notice dated 17 July 2013, in an action commenced on 14 January 2014 in the Regional Division of the Eastern Cape at Port Elizabeth.  In that matter too, the defendant gave notice of intention to defend, disputed the plaintiff’s right to cancel the lease and remained in occupation.  The action had been instituted consequent upon an election by the plaintiff to cancel the agreement of lease and to evict the defendant.  In an apparent about face, the plaintiff withdrew the action against the defendant once it had become defended, tendering to pay the defendant’s costs.

[11] The history of the earlier action, now withdrawn, has been pleaded by the plaintiff.  What is not pleaded is an explanation for an apparent recent revival of the earlier election to cancel the agreement of the lease and to seek the eviction of the defendant, which would require another about face on the part of the plaintiff and which it appears, the plaintiff has purported to achieve without a renewed placement of the defendant in mora.

[12] The plaintiff’s activity in the Regional Court and in this court has all been conducted subsequent to the receipt by the plaintiff of a letter addressed to it on behalf of the defendant on 14 August 2013 and in response to the plaintiff’s notice dated 17^thJuly 2013.  A copy of the defendant’s letter is annexed to the opposing affidavit.  It sets out at some length the basis of a defence which would be raised were the plaintiff to institute action.  It pleads for an amicable and extra curial resolution of the issues between the parties.

[13] In argument on behalf of the defendant, Mr Smith urges the court to conclude that, where it has been shown that the plaintiff has been aware of the existence of the defence as a backdrop to both actions which have been instituted against the defendant, the plaintiff is utilising the summary judgment proceedings in terrorem.  In my view, this is not a conclusion which necessarily forms part of the present enquiry.

[14] The question which arises is whether, notwithstanding the content of the opposing affidavit, this court can conclude that no bona fide defence has been raised on behalf of the defendant and that, in those circumstances, it can be said that the plaintiff has an unanswerable case and is entitled to summary judgment without further ado.

[15] I am of the view that, in this matter, the two legal principles relied upon by the plaintiff are not available to it for the purposes of summary judgment.  In circumstances where it has been demonstrated that a plaintiff has not itself performed in accordance with the terms of the contract which it relies upon, and this state of affairs persists notwithstanding written communication identifying this difficulty well prior to the issue of summons, such plaintiff cannot effectively raise at summary judgment stage, contractual provisions such as find expression in clause 10.7 of the agreement of lease to muzzle a defendant whom it pursues for contractual damages which are intimately concerned with the circumstances of the plaintiff’s breach.  The plaintiff seeks to rely upon the dictates of public policy in support of the argument that clause 10.7 of the agreement of lease closes the door against the defendant in these summary judgment proceedings.  In my view, the dictates of public policy require that this point of law and all its ramifications be canvassed and investigated in association with the defendant’s defence at trial.  (Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC) paras [31] to [39] and [50] to [58].

[16] It follows that in my view, the defendant has done enough to demonstrate that it has a bona fide defence to the plaintiff’s claims and that it should be entitled to ventilate this defence in the main action.  It follows that I am of the view that the defendant has not entered appearance to defend in this matter solely for the purposes of delay.

[17] As far as costs are concerned, the usual order in summary judgment proceedings where leave to defend is granted is to direct that these costs be costs in the main action.  However, in light of the peculiar circumstances of the history to this matter, which are common cause between the parties, and particularly the knowledge from various sources which the plaintiff had of the nature and extent of the triable issue raised by the defendant, I am of the view that it would be appropriate were the plaintiff to be directed to pay the costs.

[18] In the circumstances, I make the following order:

1.            The application for summary judgment is dismissed.

2.            The defendant is granted leave to defend the action.

3.            The plaintiff is directed to pay the defendant’s costs of the application for summary judgment on an opposed basis, such costs to include the costs occasioned by the preparation of heads of argument.

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R W N BROOKS

JUDGE OF THE HIGH COURT (ACTING)

 

Appearances

For plaintiff:  Adv G. Gajjar

Instructed by Bowes Loon & Connellan, Cape Road, Port Elizabeth

For defendant:  Adv D. Smith

 

Instructed by Pieterse Cary Finlaison Inc., Bird Street, Port Elizabeth

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