---

IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)

In the matter between:

SLIMS (PROPRIETARY) LIMITED first appellant

REBEL DISCOUNT LIQUOR STORES

TEASTERN CAPE) (PROPRIETARY)

LIMITED second appellant

and

DAVID MORRIS NO

in his capacity as Trustee in

the Insolvent Estate Juan Ignacio

Marsal respondent

CORAM: CORBETT, BOTHA, VAN HEERDEN, NESTADT JJA

et NICHOLAS AJA.
DATE OF HEARING: 7 September 1987 DATE OP JUDGMENT:

JUDGMENT

CORBETT JA:

I have had the privilege of reading the judgments

/ prepared

2
prepared in this matter by my Brothers BOTHA and NICHOLAS. Unfortunately I am not able to agree with either. In my opinion, for the reasons which follow, the appeal should be dismissed with costs.

Like NICHOLAS AJA, I shall confine my considera-tion of the matter to the case of the Phoenix Hotel on the basis that the position in regard to the Swartkops Hotel is no different. The facts are set out in the judgment of my Brother NICHOLAS and I shall repeat them only where this is necessary for the purposes of my reasoning.

The first question to be considered is whether,
apart from the provisions of sec 37(5) of the Insolvency

Act 24 of 1936, as amended ("the Insolvency Act"), the

first appellant ("Slims"), as sub-lessor of the Phoenix

Hotel, was entitledto an order for the retransfer to it

or its nominee of the hotel liquor licence with off-

consumption authority ("the liquor licence") after the

/ determination

3
determination of the sub-lease in terms of sec 37(2) of the Insolvency Act. This depends to some extent upon the nature of a liquor licence and upon the legal conser quences of the insolvency of the licensee.

The nature of a liquor licence has been discus-sed in a number of cases (see eg Fick v Woolcott and Ohlsson's Cape Breweries Ltd 1911 AD 214; Pietermaritzburg Corporation v South African Breweries Ltd 1911 AD 501; Receiver of Reve-nue, Cape v Cavanagh 1912 AD 459; Solomon v Registrar of Deeds 1944 CPD 319; Weintraub and Weintraub v Joseph and Others 1904 (1) SA 750 (W); Bank Station Hotel (Pty) Ltd v Thomas and Others 1970 (4) SA 411 (T) ). From these judgments it appears that a liquor licence is a statutory privilege granted to a particular person under the liquor laws (the current law being the Liquor Act 87 of 1977 -"the Liquor Act") entitling him to sell liquor at particular premises. It is a purely personal privilege. Its grant

/ involves

4

involves the exercise by the licensing authorities of a
delectus personae so that, save to the extent and in the
manner permitted by the Liquor Act, the licensee cannot
transfer or otherwise deal with his licence. The law
provides for the strict supervision of the grant, trans-

fer and removal of licences. Nevertheless, as pointed

out by INNES J in Fick's case, supra, (at p 230) —

"Contractual undertakings on the part of a holder to transfer his licence to some other person on the happening of certain contingencies are of frequent occurrence. But the expression, though convenient, is inaccurate. No holder can transfer his licence; that is the sole prerogative of the Licensing Court. So that the only way to give any effect to such an underta-king is to treat it as an agreement by the promisor to exercise in favour of the pro-misee such right to apply for a transfer as the statute gives him, and to do all things necessary on his part to enable the Licen-sing Court to deal with the application. And that is what, in my opinion, an agree-ment to transfer a licence amounts to."

(See also Solomon v Registrar of Deeds, supra, at p 325;

/ Bank
5
Bank Station Hotel case, supra, at p 416 A-C). Under
current legislation an application for a transfer of a
licence is dealt with by the Minister of Industries
Commerce and Tourism "or a person acting under his direc-
tions" (see sec 45(1) of the Liquor Act, read with the
definition of "Minister" in sec l); but otherwise the

statement by INNES J is as pertinent today as it was

in 1911. Pertinent too are the remarks of VAN ZYL JP

(with whom JONES J concurred) in Solomon v Registrar of

Deeds, supra (at p 325):

".... a liquor licence is not merely a privilege but is a right of a potential commercial value which may sometimes be very considerable, and a right which is alienable and can be sold. It is, however, not every sale thereof which can be given effect to because when a licence has been sold, transfer thereof to the purchaser will have to be obtained from the Licensing Board; and if the Board does not approve of the purchaser or if the purchaser does not possess one of the essentials required by law, such as e.g. the right to occupy the premises

/to

6

to which the licence relates, transfer of the licence will not be obtained and the sale will fall through. Although, how-ever, there are these limitations to the giving effect to a sale of a liquor licence, the right to sell is there and it can some-times be a very valuable right".

(As to a licence having a commercial value, see also the
Pietermaritzburg Corporation case, supra, at p 517.)
Moreover, where a licence is "sold" by its holder to a
person who wishes to conduct the business elsewhere, it

would appear to be possible to make simultaneous applica-

tion for transfer of the licence to another person and its

removal to other premises (see 15 LAWSA par 190; Singh |

and Others v Chairman National Liquor Board and Others 1977

(3) SA 1088 (N)). In Solomon v Registrar of Deeds,

supra, it was further held that (see p 326) —

"As a right of a commercial value which can be separately held, alienated and sold, a liquor licence under our law can also be mortgaged".

This statement was approved in Nkwana v Hirsch, 1956 (4)

/ SA

7

SA 450 (A), at p 457 H, by SCHREINER JA, who added that the licence could accordingly be sold in execution of a judgment on the bond.

As appears from the aforegoing the licence is granted personally to the licensee and only he can be re-garded as the owner of the licence (see Bank Station Hotel case, supra, at p 416 A). Nevertheless, as already indi-cated, a person other than the licensee may by contract ac-quire a jus in personam against the licensee requiring the licensee to do all in his power to have the licence trans-ferred to such person or his nominee. In addition to the case of a "sale" of a licence, mentioned above, there is the situation created by the leasing of licensed premises and the business conducted thereon. The facts of the pre-sent caae illustrate the point.

Immediately prior to the sub-letting of the Phoenix Hotel and the off-sales premises, and the businesses

/ conducted

8

conducted thereon, to Marsal the liquor licence would have
belonged to the sub-lessor, Slims, as licensee. In terms of the sub-lease (clause 24) the contract was conditional on permission being granted for the transfer of the licence by the relevant authorities. It is implicit in, the sub-lease that the sub-lessor is obliged to do all that is re-quired of him to effectuate the transfer of the licence into the name of the sub-lessee, Marsal. And, as we know, this was done. Once transferred, the licence no longer belonged to the sub-lessor, Slims, but became the property of the sub-lessee, Marsal (see Weintraub's case, supra, at p 754 C-D). In terms of clause 21 of the sub-lease the sub-lessee is obliged, upon termination of the sub-lease, to do all things necessary to ensure that the licence is transferred back to the sub-Iessor. This amounts to a jus in personam created in favour of the sub-lessor against the sub-lessee in the circumstances postulated (see Weintraub's case, supra,

/ at

9

at p 754 D; Bank Station Hotel case, supra, at p 416 A-B).
The provisions of clause 18 of the sub-lease, which in the
event of a breach of the agreement committed by the sub-

lessee give the sub-lessor the right to terminate the
agreement forthwith and "repossess the business and all

relevant licences", can thus not be implemented literally.

At most, in those circumstances, the sub-lessor would be

entitled to demand of the sub-lessee that he co-operate

in the transference of the licence by the appropriate li-

censing authority back to the sub-lessor. The provisions

in clause 14 of the sub-lease for the repossession of the

licence, in the event of the sub-lessee endangering the

continuance of the licence, must be similarly interpreted.

Upon sequestration Marsal was divested of his estate, which vested in his trustee upon the latter's appointment (sec 20(1)(a) of the Insolvency Act). Marsal's estate consisted, inter alia, of all his property at the

/ date

10

date of sequestration (sec 20(2)(a) ). "Property" means movable or.immovable property situated within the Republic and includes contingent interests other than those of a fideicommissary heir or legatee (sec 2). "Movable property" means every kind of property and every right or interest which is not immovable property (sec 2). It is not neces-sary to refer to the definition of "immovable property". It seems to me that the liquor licence in question constitu-ted movable property of Marsal within this definition and that in terms of sec 20(1)(a) it vested in Marsal's trustee upon the latter's appointment (cf Solomon v Registrar of Deeds, supra, at p 324; Ward v Barrett N0 and Another NO 1963 (2) SA 546 (A), at pp 551 G, 554 B). Sec 47(1) of the Liquor Act appears to recognise that upon the sequestration of the estate of the holder of a liquor licence the licence vests in his trustee and it empowers the trustee to carry on the business without formal transfer of the licence for a limited period. This was not disputed.

/ The

11
The sequestration of Marsal's estate did not put an end to the sub-lease (sec 37(1) of the Insolvency Act), but the trustee's failure to notify the sub-lessor of his desire to continue the lease caused it to terminate at the end of three months after his appointment (sec 37(2) ). Such termination brought into operation the provisions of clause 21 of the sub-lease with the result that the sub-lessor acquired a personal right against the trustee that the latter should do all things necessary to ensure the re-transfer of the licence to the sub-lessor. What the appel-lant in this case is, in effect, claiming is specific per-formance of the correlative obligation. The question is: is it entitled to do so?

It is true that had the sub-lease terminated in

some way, without the insolvency of Marsal, Marsal would

have been obliged, in terms of clause 21, to do all that

was necessary to ensure the transfer of the licence back

to Slims. But in fact insolvency has supervened and a

/ concursus
4 12

concursus creditorum has taken place. Generally speaking,

the trustee's duty is, subject to the directions of the

creditors, to liquidate the assets of the insolvent estate

for the benefit of creditors and to distribute the proceeds

among the creditors in accordance with the scheme of pre-

ference laid down by the Insolvency Act. As INNES J once

remarked —

"[A] sequestration order crystallises the insolvent's position; the hand of the law is laid upon the estate, and at once the rights of the general body of creditors have to be taken into consider-ation. No transaction can thereafter be entered into with regard to estate matters by a single creditor to the prejudice of the general body".

(See Walker v Syfret NO 1911 AD 141, at p 166.)

In Consolidated Agencies v Agjee, 1948 (4) SA 179 (N) SELKE J

referred to the above-quoted dictum of INNES J and added (at

p 189):

"It is clear, I think, that, thus, a trustee in insolvency does not stand for all purposes of contract in the shoes of

/ the

13

the debtor or insolvent whose estate he administers, and that he is not bound spe-cifically to perform, or to perform in full, executory contracts made by the deb-tor before insolvency, if his doing so would operate to the prejudice of the other cre-ditors by giving one creditor an improper preference over the other or others."

(see also Ward v Barrett NO and Another NO, supra, at p 552
H - 553 A; Ex parte Liquidators of Parity Insurance Co Ltd

1966 (1) SA 463 (W), at p 471 A - C). And in 11 LAWSA par

220 the following statement is made:

"If the trustee decides to abandon or terminate the contract he need not per-form ahy unfulfilled stipulations of the contract and the other party has a concurrent claim against the insolvent estate for any damages he may have sustained".

Among the assets vesting in Marsal's trustee for the benefit of creditors is the liquor licence re-lating to the Phoenix Hotel. It is the trustee's atti-tude that the licence should be realized, together with

/ the

14

the insolvent's other assets. In this he appears to have the backing of the majority of the major creditors. In the circumstances I do not think that Slims is entitled to obtain specific performance of the right in personam arising from clause 21 of the sub-lease. It must content itself with a concurrent claim for damages.

Although this was disputed on the papers, it was accepted in argument before us by respondent's counsel that the sub-lease comprehended not only the hotel premises (including the off-sales) but also the businesses conduct-ed thereon. The "lease" of a business creates problems of legal classification. In 14 LAWSA par 137 doubt is ex-pressed as to whether incorporeal things can be let. Be that as it may, a "business" is a somewhat amorphous concept. It no doubt includes the right to occupy the premises from or upon which the business is conducted; the use of the fittings, fixtures and furniture upon the premises relating

/ to

15

to the business; the existing stock-in-trade; the service
contracts of employees of the business; the goodwill; the

licences or other permits required for the conduct of the
business; and, where applicable, the right to use a trade

name, trade mark, design, etc. In a "lease" of a business,

such as the sub-lease in the present case, not all of these

elements of the business are transferred to the "lessee"

on the basis that the "lessee" is only to have the temporary

use and enjoyment thereof, is to pay rent therefor and is

to restore the same upon the termination of the lease. Thus,

for example, clauses 8 and 26 of the sub-lease provide that

the sub-lessee is to take over all the movable assets of

the business such as furniture, crockery, cutlery, linen, etc for an amount of R40 000 to be paid in four annual

instalments; and clause 11 provides for the sub-lessee to

take over and pay for cash floats, liquor, food and other

consumable stock at a valuation at cost, the amount to

/ be

16

be paid within 90 days. Upon termination the parties are to take stock of all business assets and to value such stock and movables at book value; and the sub-lessor is to pay the sub-lessee the value so determined (clauses 19 and 20). And, as far as the liquor licence is concerned, the "lease" itself does not, as I have explained, cause the licence to be transferred to the sub-lessee. Accordingly, the "lease" of the business appears to be some form of innominate contract rather than a lease in the true legal sense.

I shall assume in favour of Slims that under a "lease" such as this the lessor retains some form of real right in the goodwiHof the business which entitles. him to the restoration of the goodwill, together with the leased premises, upon the termination of the lease, even as against the lessee's trustee in insolvency. Nevertheless, I do not think, with respect, that it follows from this that in this

/ case
17
case the trustee is not free to deal with the liquor licence
otherwise than by transferring it to the sub-lessor. It
is true that the goodwiHof a licensed business is very
much dependent upon the liquor licence and, as pointed
out by INNES ACJ in Receiver of Revenue Cape v Cavanagh,

supra (at pp 464-5), the cases in which they are separately

dealt with must be "few indeed". Nevertheless, they are

separate entities and may be separately dealt with. As

INNES ACJ said (at p 465);

"An hotel proprietor of long standing and wide repute might quite conceivably dispose on profitable terms of his pre-mises and their relative licences, while expressly retaining the good will for himself".

It is also true that without the licence the goodwill is

deprived of much of its value; and that consequently the

restoration to the sub-lessor by the trustee of the good-

will only (the licence being retained for the benefit of

creditors) will cause the sub-lessor loss (for which the

/ sub-lessor

18

sub-lessor would no doubt have a concurrent claim against the insolvent estate), but it seems to me that this is an inevitable consequence ofthe sub-lessee's insolvency. In short, I am of the view that the vesting of the licence in the trustee for the benefit of creditors cannot be re-.conciled with an obligation upon the trustee to restore the licence to the sub-lessor.

It was argued by counsel for appellant (Slims) that the licence was "encumbered" by the obligation to restore it to the sub-lessor upon termination of the lease and that this obligation was, therefore, binding upon the sub-lessee's trus-tee. In so far as this argument involves the proposition that the obligation to restore is something more than a personal obligation, I can find no basis for it. And, as I have explained, upon insolvency a creditor with a jus in personam cannot claim specific performance as against the debtor's trustee where this conflicts with the interests of the gene-

/ ral . .
19
ral body of creditors.

Reference was made by appellant's counsel to the case of Ohlsson v Kuhr's Trustee (1901) 18 SC 205. Though it (and the case in which it was followed, Commercial Hotels Co Ltd v Davidson's Trustee 1905 TH 348) are in point, they appear to be based upon an acceptance that upon the termina-tion of the lease neither the lessee nor his trustee had "any right whatever" to the licence. These cases were decided before the nature of a liquor licence had been authoritatively con-sidered by this Court and I do not think that the above-stated proposition is sound.

For these reasons the first question posed must, in my opinion, be answered in the negative.

I turn now to the second question, viz. whether a claim for the restoration of the licence can be based upon the provisions of sec 37(5) of the Insolvency Act. The

/ relevant

20

relevant portion of sec 37(5) in the English text of the Act, reads as follows:

"A stipulation in a lease that the lease shall terminate or be varied upon the sequestration of the estate of either party shall be null and void, but a stipulation in a lease which restricts or prohibits the transfer of any

right under the lease shall bind the

trustee of the insolvent estate of the lessee
, as if he were the lessee ".,

As originally enacted, in 1936, sec 37(5) consisted

merely of the first portion, ending with the words "null and

void". The remainder was added by sec 14 of the Insolvency

Law Amendment Act 16 of 1943. Both the original Act and the

amending Act were signed in Afrikaans.

The corresponding words in the Afrikaans text read:

"'n Beding in 'n huurkontrak dat die huur sal eindig of 'n verandering ondergaan met die sekwestrasie van die boedel van een of ander van die partye tot die huur is nietig, maar n beding in 'n huurkontrak wat die oor-drag van enige regwat bestaan kragtens die huurkontrak, beperk of verbied.... verbind die kurator van die insolvente boedel van die huurder.... asof hy die huurder.... was..".

/ For

21

For present purposes we are concerned only with the quoted portion of sec 37(5) introduced by the amending Act of 1943. I shall refer to this as the "latter portion" of sec 37(5).

It was alleged in the founding affidavit that it

was an implied term of the sub-lease that the sub-lessee was

precluded from transferring the liquor licence to third par-

ties of his own choice, assuming that he could obtain per-

mission to do so from the licensing authority. This was ad-

mitted by the trustee in his opposing affidavit. Upon this

foundation it was argued by appellant's counsel that this

implied term (perhaps more correctly to be described as a

tacit term) constituted —

"..... a stipulation in a lease which re-
stricts or prohibits the transfer of any
right under the lease "

and that the tacit term was accordingly binding on Marsal's

trustee. The argument is, in my opinion, fatally flawed.

/ Using,

22

Using, for the moment, the language of the English text, the latter portion of sec 37(5) refers to two concepts, viz. (i) "a stipulation in a lease" and (ii) "any right under the lease"; and provides, in effect, that where the stipulation "restricts or prohibits the transfer of" the right, the sti-pulation is binding on the trustee of the lessee. It is clear, too, that this portion of sec 37(5) is concerned only with stipulations of this nature imposed upon the lessee, or only with such stipulations in so far as they affect the lessee, for,it is only upon the trustee of the lessee that they are made binding. As pointed out by this Court in Durban City Council v Liquidators, Durban Icedromes Ltd and Another 1965 (1) SA 600 (A), at p 612 B-D, prior to the amendment of sec 37(5) by Act 16 of 1943 there had been a number of decisions in our courts (though none of this Court) holding that a provision in a lease prohibiting the sub-letting of the leased property or the assignment of the lease without the

/ consent

23

consent of the lessor was, in the event of the insolvency of the lessee, not binding on his trustee or, in the case of a lessee company, upon the liquidator (see Gardiner NO v London and South African Exploration Company and Another 7 HCG 190 and, on appeal, (1895) 12 SC 225; Stalson v Brook 1922 WLD 143; Heimann v Klempman & Jaspan 1922 WLD 115; Himmelhoch v Liquidators, Fresh Milk and Butter Supply Co Ltd and Others 1925 TPD 958; Mahomed's Estate v Khan 1927 EDL 478). To-wards the end of 1942 this line of authority was referred to in a judgment of this Court and it was assumed that these cases were correctly decided (see Estate Fitzpatrick v Estate Frankel and Others 1943 AD 207, at p 218). In my opinion it is to be inferred that, in adding the latter portion of sec 37(5) in 1943 by means of the amending Act, the Legis-lature intended to reverse the effect of the decisions re-ferred to above. They, or rather the legal situation crea-ted by them, was the mischief aimed at by this part of the

/ amending

24

amending Act and the remedy provided was a provision making sucn a restriction or prohibition binding upon the lessee's trustee in insolvency. And, as was hcld in Durban City Council v Liquidators, Durban Icedromes Ltd and Another, supra, sec 37(5) also renders such á restriction or prohibi-tion binding, in the case of the winding up of a lessee com-pany, upon the liquidator (ie when read with the relevant sec-tion of the Companies Act, which was then sec 130(2)(f) of Act 46 of 1926).

The amendment is formulated in general terms. It does not specifically refer to sub-letting or assignment. No doubt the Legislature wished to include as well restric-tions or prohibitions aimed at transfers of rights of a less comprehensive nature. It is the appellant's contention that the wording is general enough to include the tacit term in the sub-lease concerning transference of the liquor licence.

/ I

25

I shall assume in appellant's favour that the term "stipulation" (Afrikaans: "beding") includes a tacit term of the lease, though there is substance in the view that in the context of sec 37(5) "stipulation" refers to an express term. The question then is: can the liquor licence be regarded as a "right under the lease" ('n reg wat bestaan kragtens die huurkontrak")?

In my view, a liquor licence differs toto caelo

from the type of right which the latter portion of sec 37(5)

was designed to cover, viz the contractual rights of the les-

see under the lease, such as the right to the use and enjoyment

of the leased property. Firstly, such a contractual right

derives its existence and enforceability in law solely from

the lease; whereas the liquor licence is created, not by

contract, but by the act of the licencing authority and

derives its legal efficacy from the Liquor Act. Secondly,

a contractual right under the lease and a liquor licence are

/ jurisprudentially

26

jurisprudentially disparate. Such a contractual right is a

legal right in the strict sense and its correlative is an |
obligation or duty imposed upon the lessor. A liquor licence,
on the other hand, is in my view not a legal right in the strict sense but a liberty or privilege of statutory origin for which there is no correlative duty. (See generally W N Hohfeld, Fundamental Legal Conceptions (ed by W W Cook) pp 38-50; Salmond on Jurisprudence, llth ed, pp 271-3; Paton, Jurisprudence, 4th ed, pp 290-4.) Thirdly, sec 37(5) speaks of the "transfer" of rights. Contractual rights are transferred by agreement, by a cession or assignment. As I have shown, the holder of a liquor licence has no power to transfer his licence by agree-ment. He is granted the licence by the exercise by the li-censing authorities of a delectus personae and only the appro-priate licensing authority can effect a transfer thereof and then only in accordance with a procedure laid down by the Liquor Act. In my view, these differences raise serious

/ doubts

27

doubts as to whether the Legislature intended to include within the ambit of the latter portion of sec 37(5) a "right" such as the liquor licence held by the lessee.

The ultimate test, however, is the meaning to be attributed to the words actually used by the Legislature. In my opinion, the ordinary meaning of the words "right under the lease" is a contractual right created by the lease. In argument counsel for Slims tended to concentrate on the word "under" and submitted that it should be given the wider mean-ing of "in pursuance of". I cannot agree. The word "under" must be viewed in its context: that is, the context of rights and the contract of lease. A lease gives rise to contractual rights and it seems obvious to me that when the Legislature spoke of a "right under the lease" it meant a right arising from, created by or having its origin in, the lease. In other words, a contractual right. And I can see no valid reason for departing from the ordinary meaning of the words used by the Legislature.

/ The

28

The Judge a quo, in coming to the conclusion that the liquor licence was not a right under the lease, relied to some extent on the judgment of this Court in Johnstone v Kommissaris van Binnelandse Inkomste 1960 (4) SA 592 (A). The case is admittedly not in pari materia - as emphasized by counsel for Slims - but I do not agree that it is of no assistance. The question which arose in that case was whether maintenance payable in terms of an agreement entered into by parties to a divorce action, by an exchange of letters, but not incorporated in the decree of divorce, constituted "'n [be]drag betaalbaar by wyse van onderhoud.... ingevolge 'n bevel van egskeiding" in terms of sec 58(3) of the Income Tax Act 31 of 1941. (The English text read: "Any amount

payable by way of alimony under any order of divorce".)

Two passages in the judgment of STEYN CJ should be noted. At page 597 B-D he said:

/ "Die

29

"Die appellant betoog dat die woorde ingevolge' en ,under' in a sinsverband soos hierdie, nie slegs ,kragtens', ooreenkomstig' of ,luidens' beteken nie, maar ook kan beteken ,uit hoofde van die bestaan van' of ,as gevolg van' en dat dit die betekenis is wat hier aan hul toegeskryf moet word. Die gevolg sou dan wees dat die bedrag van £1,500, hoewel die betalingsoor-eenkoms nie deel van die egskeidingsbevel uitmaak nie, nogtans ,ingevolge' die bevel betaal sou wees, omdat die bevel die uit-werking gehad het dat die ooreenkoms van krag geword het en nagekom moes word".

The learned Chief Justice rejected this argument and concluded

(at p 599 B);

"Na my oordeel is die engere betekenis die gewone betekenis van ,ingevolge' (,under') in 'n sinsverband soos die onderhawige. Dit sou selfs betwyfel kan word of die aangevoerde wyere betekenis in so 'n samehang 'n moontlike betekenis is. Ek kan geen voldoende rede vind om van die gewone betekenis af te wyk nie".

From the first of the passages quoted it would

appear that STEYN CJ was of the view that in the context

of the subsection the word "kragtens" would have clearly con-

veyed the narrower meaning of maintenance payable in terms of

/ the

30

the order of divorce. This is of importance because in the present case the Afrikaans (signed) text uses the word "kragtens". I shall return to this point in a moment.

The second of the passages quoted above is signifi-cant because of STEYN CJ's view that the narrower meaning of "ingevolge" ("under") was the ordinary meaning in a context such as the one he was considering. Now an order of court, like a contract, creates rights, of a particular kind. There is thus, in my view, an analogy to be drawn between the ordi-nary meaning of "under any order of divorce" and "under the lease". Consequently Johnstone's case is at least some autho-rity as to the ordinary meaning of "under the lease" in sec 37(5). And it is to be observed that STEYN CJ appeared to be doubtful as to whether the wider meaning was even a possible meaning in the context.

The Afrikaans text of sec 37(5), in my opinion,

/ supports

31

supports the interpretation which I have placed upon the words

"right under the lease". The corresponding words - "reg
wat bestaan kragtens die huurkontrak"- convey to me, if any-
thing more clearly, the concept of a right which owes its
existence to the lease; in other words, a right created by
the lease. And here I would emphasize the use of the words

"bestaan" and "kragtens". "Bestaan", linked as it is with

"die huurkontrak", shows that the Legislature connected the

existence of the right with the lease. And "kragtens" rein-

forces this perception. The meanings given to "kragtens" by

the Handwoordeboek van die Afrikaanse Taal are "Uit krag van,

op gesag van; ingevolge". I have already referred to the

meaning evidently attached to "kragtens" in Johnstone's

case, supra. More recently, in S v Smith 1986 (3) SA 714 (A),

the meaning of the word "kragtens", as conveying the direct

source of a right (in the wide sense), was emphasized. This

case related to the meaning of sec 31(1) of the Road Trans-

/ portation

32

portation Act 74 of 1977. In discussing the words in sec

31(1)(a) "behalwe kragtens 'n permit wat daardie padvervoer
magtig", HEFER JA stated (at p 718 D and F):

"Padvervoer, dws enige handeling soos be-skryf in die definisie van daardie woord in art 1, kan slegs geskied 'kragtens 'n permit wat daardie padvervoer magtig' indien die besondere handeling deur die

permit gemagtig is In elk geval

moet die woord 'kragtens' nie oor die hoof gesien word nie. 'n Handeling kan nie kragtens 'n permit verrig word tensy dit deur die permit gemagtig is nie".

(See also Spinnaker Investments (Pty) Ltd v Tongaat Group Ltd

1980 (2) SA 245 (W), at p 252 G-H.)

It was argued by counsel for Slims, relying upon

the principle referred to,inter alia, in Kinekor Films (Pty) Ltd

v Dial-A-Movie 1977 (1) SA 450 (A), at p 461, in regard to

remedial statutes, viz —

".... in expounding remedial laws, it is a settled rule of construction to extend the remedy as far as the words will admit" (my emphasis),

/ that

33

that the word "under" ("kragtens") should be given the more extended meaning suggested by him. In applying this prin-ciple one must not lose sight of what it was that the Legis-lature sought to remedy and of the limitation imposed by the words which I have emphasized in the above quotation. In my opinion, the background to the amending Act of 1943 and also the wording thereof show that what the Legislature sought to re-medy was the situation created by judicial decisions which rendered stipulations in leases restricting or prohibiting the transfer of contractual rights under the lease not bind-ing on the lessee's trustee in insolvency; and I do not think that the words used will admit of an interpretation as wide as that contended for by the appellant.

At this point it is appropriate to refer to the line of reasoning upon which Slims relies. It is the fol-lowing: (i) the sub-lease, and in particular clause 24 thereof (referred to above), contemplate that the liquor

/ licence

34

licence of the Phoenix Hotel would be transferred from Slims
to Marsal; (ii) this imposed certain (tacit) obligations
upon Slims to do all thatwas required of it to present a
proper application for transfer to the appropriate licensing

authority in terms of sec 45(1) of the Liquor Act; (iii) this

was duly done and Marsal became the holder of the licence; and

(iv) the licence was accordingly a "right" enjoyed by Marsal

"under the lease". It is not disputed that in these circum-

stances the so-called right, the licence, is created not by

the sub-lease but by the grant of the transfer by the licensing

authority. Nor does it necessarily follow that in such cir-

cumstances the licensing authority will grant the application

for transfer. It may refuse it, for some reason. In other

words, the sub-lease does no more than create the rights and

obligations which give the sub-lessee the opportunity to ap-

ply for the transfer. The connection between the sub-lease

and the "right" represented by the licence is thus a tenuous

/ one
tenuous one. Having regard to what I have found to be the

true meaning of the words "right under the lease" ("reg wat bestaan kragtens die huurkontrak"), there is no doubt that the liquor licence is not such a right.

In my view, therefore, the Court a quo correctly concluded that sec 37(5) had no application in a case such as the present.

This disposes of both bases for the claim by Slims for the retranafer to it of the liquor licence. In my opinion, therefore, the Court a quo correctly granted judgment for res-pondent (Marsal's trustee) with costs. Should this be re-garded as an inequitable or undesirable result, then only the Legislature can remedy the position.

I would dismiss the appeal with costs, including the costs of two counsel.

M M CORBETT. NESTADT JA: CONCURS.

---