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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 11741/18

In the matter between:

GROWTHPOINT PROPERTIES LIMITE D                                                  Plaintiff/Applicant

(Registration Number: 1987/004988/06)

And

MAXISHARE CC                                                                                    1^st Defendant/Respondent

(Registration Number: 1987/012325/23)

JOHN PETER CHRISTIE                                                                    2^ND Respondent/defendant

(Identity Number: 510925 5102 08 3)

 

JUDGMENT

 

CORAM: JOHANN GAUTSCHI AJ

1 The Plaintiff, as landlord of an immovable property, sues the First Defendant as lessee in terms of a written agreement of lease.  The Plaintiff claims damages consequent upon the Plaintiff’s acceptance of the First Defendant’s alleged repudiation of the lease agreement.  The Second Defendant is sued as a surety for the obligations of the First Defendant as principal debtor. 

2 The First Defendant counterclaims on the basis that the lease agreement is null and void by reason of nonfulfilment of a township proclamation requirement and, in the alternative, on the basis of cancellation by reason of misrepresentation relating to a warranty that the property would be correctly zoned for use as an industrial 3-Noxious Industry.

3 The Plaintiff applies to amend paragraphs 20 and 23 in its plea to the First Defendant’s counterclaims.  The Defendants objects to the amendments on the grounds that they would render the pleading bad in law and consequently excipiable.

4 I commence by referring to various clauses in the lease agreement which need to be considered in order to understand the argument underlying the exception. 

5 The Lease agreement was signed by the First Defendant on 7 June 2016 and accepted by the Plaintiff on 13 July 2016.  It is headed “Development Lease Agreement Schedule A.O.L” (hereinafter referred to as Schedule AOL).  Clause 4.2 of Schedule AOL lists the annexures forming part of the lease.  They include Annexure Y, a “Letter of Undertaking”.  Clause 5.4 of Schedule AOL refers to Annexure Y in the following terms:

“The Tenant and Landlord concluded a letter of undertaking, which is the basis upon which the Parties have come to agree to the terms and conditions of this Lease, a copy of which is attached hereto as Annexure Y”.

6 Paragraph 4.2 of Schedule AOL lists Annexure A as the first annexure forming part of lease.  Annexure A comprises 42 pages of “Standard Conditions of Lease”, headed “ANNEXURE A INDUSTRIAL DEVELOPMENT LEASE” (hereinafter referred to as ANNEXURE A).  The standard conditions appear in numbered clauses which commence on page 3 and are identified in the table of contents.  They are preceded on page 2 of Annexure A by a “RECORDAL” clause C, the wording of which is in all material respects identical to the aforementioned clause 5.4 of Schedule AOL. 

7 Page 2 of Annexure A also includes the following provisions under the heading “SUSPENSIVE CONDITIONS”, clause c) of which is the subject of the excipiability argument:

“a) This lease (save for clauses 0, 42 and 43 shall be subject to the following suspensive conditions, namely:

i) Proclamation of the Township Boksburg East Extension 18, and publication by the local authority of the approval of such Township in the Provincial Gazette

ii) The receipt of a Section 82 Certificate from the relevant local authority authorising the Landlord to commence with construction on the site.

b) The suspensive conditions are for the benefit of the Landlord and may be waived by the Landlord, at any time prior to the expiry of the period for the fulfilment of any suspensive condition:

iii) on written notice to the Tenant;

iv) should the Landlord’s town planner confirm in writing that the fulfilment of a suspensive condition is imminent, and is being delayed by purely bureaucratic and administrative processes, in which event the time period for the fulfilment of any or more of the suspensive conditions may be extended by the Landlord, on written advice to the Tenant by a further period or periods totalling 90 (ninety) days.

c) The Landlord shall do all things reasonably required to obtain the fulfilment of the suspensive conditions and at the Landlord’s cost.  Should any of the suspensive conditions not be fulfilled or not be waived by either Party then this Lease shall fall away, and neither Party shall have any claim against the other.”

8 Annexure Y is headed “MAXI SHARE DEVELOPMENT PROPOSAL - DOMINIC CORNER”.  It is dated 11 August 2015 and was signed on 14 September 2015.  Clause 3.12 thereof was inserted in manuscript and reads “ADDENDUM PAGES A & B”.  Addenda A and B consist of one page each.  They contain amendments to the “standard Growthpoint Lease Agreement clauses”.  That is a reference to ANNEXURE A.  Addenda A and B contain numerous reference errors to which I shall revert later. 

9 Clause 1) on Addendum A states “All dates to move out by one calendar month unless the parties mutually agree to other dates.”.

10 Clause 43 on Addendum B to Annexure Y (another clause which is the subject of the excipiability argument) reads as follows:

“Proclamation - should proclamation of the township involving the lease property not have taken place on or before 31 January 2016, then this lease agreement is null and void”.

11 Clause 16.5 on Addendum A of Annexure Y to the lease reads as follows:

“’The landlord warrants that the leased Premises are correctly zoned for purpose (sic) which is Industrial 3-Noxious Industry’ as it is the intention of the Lessee to install a Wire galvanising plant in the phase 2 development”.

12 Clause 3.11 of the printed portion of annexure Y under the heading “GENERAL TERMS AND CONDITIONS” states in the first bullet point: “This offer is subject to township establishment process by no later than 31 October 2015”.

13 Proper interpretation of the lease agreement is likely to be controversial (and, although not contended for by either party, may require rectification in order to arrive at the true intention of the parties) given that it consists of a poorly cobbled together combination of contradictory standard documents and custom drawn documents and is replete with errors.  The assembly of documents comprising the lease agreement came into being over a period of time.  Some, but not all, the changes referred to in Addenda A and B to annexure Y were implemented by way of striking through the clauses so amended in ANNEXURE A.  Clause references in Addenda A and B are clearly references to clauses in ANNEXURE A.  However, in many instances those references are incorrect.  For example, clauses 16.1 and 16.5 in Addendum A should have referred to, respectively, amendments to clauses 15.1 and 15.5 of ANNEXURE A.  Other examples are clauses 37 and 40 in Addendum B which should clearly be references, respectively, to clauses 40 and 43 of ANNEXURE A.  Also clause 43 in Addendum B is incorrect as clause 43 in ANNEXURE A refers to costs and, as mentioned above, is amended by the incorrectly referenced clause 40 in Addendum B.

14 The period of time over which the various documents came into being has given rise to a number of changes to the dates.  Ultimately Schedule AOL provided that the First Defendant would have beneficial occupation and rent-free period from 1 June 2017 until 30 November 2017 and that the 7 year lease would commence on 1 December 2017 and expire on 30 November 2024.  By way of contrast, however, printed clause 3.11 of Annexure Y refers (in the second bullet point) to a rent-free period from 1 September 2016 to 28 February 2017. 

15 Printed clause 3.10 on Annexure Y (“PROVISIONAL PROGRAMME DATES”) states:

“Key dates from Development Programme dependent on agreement being concluded as follows:

· Finalise concept development and lease terms by 31 August 2015.

· Beneficial Occupation on warehouse (Shopfitting) by 1 September 2016: – – –“.

16 On the other hand, clause 26.0 on Addendum B refers, in relation to Electrical Installation, to a “beneficial occupation date of 1 October 2016”.

17 The exciipiability argument falls to be decided within a very narrow compass.  The plaintiff seeks to amend only a few words in each of those two paragraphs of its plea to the counterclaim.  Presently, paragraphs 20 and 23 both read as follows:

“In the alternative, and should the Honourable Court find that the lease agreement is null and void, the Defendant pleads that clause c) to the special conditions of the lease agreement precludes the plaintiff for claiming these amounts.”

18 The plaintiff seeks to substitute the words “under the heading ‘SUSPENSIVE CONDITIONS’ on page 2 of Annexure A to” for the existing words “to the special conditions of”.  Also the word “for” in the last line, an obvious typing error, is to be substituted with the word “from”.  

19 It is apparent from the aforegoing that the clause relied upon, clause c), was correctly referred to in both paragraphs, but was incorrectly described as one of the “special conditions”.  The Plaintiff now seeks to correct the description by referring to it as being under the heading “suspensive conditions”. 

20 It needs to be noted that both parties have confusingly and mistakenly reversed the names of the claiming and defending parties in the counterclaims as well as in the pleas to the counterclaims.  In each instance the reference to “plaintiff” should be a reference to “first defendant” and vice versa.  In due course both parties will need to make appropriate amendments to tidy up their respective pleadings.  In quoting the pleadings I have kept the mistaken references as they appear in the pleadings.

21 Both paragraphs 20 and 23 of the plea to the counterclaim respond to paragraph 13 of counterclaim A which reads as follows:

“Given that the alleged lease agreement is null and void, alternatively, was validly cancelled as result of the material misrepresentations as aforementioned, the plaintiff is entitled to a refund of this deposit”.

22 Paragraph 13 of counterclaim A has its foundation in paragraphs 3.3.2, 3.3.3 and 3.3.4 of the Defendants’ plea to the Plaintiff’ particulars of claim.  Those paragraphs are all repeated in paragraph 11 of the First Defendant’s counterclaims. 

23 In paragraph 3.3.2 of the plea the Defendants allege that the lease agreement was null and void because of clause 43 in annexure Y to the lease which reads as follows:

“Proclamation-should proclamation of the township involving the lease property not have taken place on or before 31 January 2016, then this lease agreement is null and void”.

24 The Defendants then plead in paragraph 3.3.3 that “the township aforementioned was only proclaimed on 14 July 2016.  A copy of this proclamation is attached hereto marked  ‘A’”. 

25 Paragraph 3.3.4 of the plea concludes with the averment that “In the circumstances, the alleged lease agreement is null and void and is accordingly unenforceable”.

26 The defendant did not allege that the lease agreement is null and void because of misrepresentation.  Paragraph 3.4 of the defendant’s plea reads as follows:

“In the alternative, and if the alleged lease agreement is held by this Honourable Court to have been validly concluded, the defendants plead that they were induced to sign the alleged lease agreement by misrepresentations on the part of the plaintiff and/or the plaintiff’s authorised representative/s as set out below: – –“.

27 The misrepresentation relied on relates to clause 16.5 of annexure Y to the lease which reads as follows:

“’The landlord warrants that the leased Premises are correctly zoned for purpose (sic) which is Industrial 3-Noxious Industry’ as it is the intention of the Lessee to install a Wire galvanising plant in the phase 2 development”.

28 The Defendants’ exception relies on two grounds for alleging that the proposed amendments would render the pleading bad in law and thus excipiable.

 

First ground of exception: not a “suspensive” condition

29 The first ground of the exception is that “The provision that renders the alleged lease agreement null and void is not a suspensive condition to the alleged lease agreement”.  The objection is that Clause 43 of annexure Y is not in fact a suspensive condition because the lease agreement was only signed on 13 July 2016, whereas the date by which the township was to be proclaimed in clause 43 was 31 January 2016, i.e. as it is not a date in the future it is incapable of being a suspensive condition of the alleged lease agreement.

30 The Defendants are correct in contending that a clause which is expressed as being subject to an existing state of facts cannot be a suspensive condition.[1]  However, the Defendants did not allege that the lease agreement is null and void because of nonfulfilment of a suspensive condition.  Paragraph 3.3 of the Defendants’ plea (which is incorporated in the First Defendant’s counterclaims) merely relies upon non-compliance with clause 43 of Annexure Y without identifying it as a suspensive condition.  Thus, the mischaracterisation of clause 43 does not in itself render the defence bad in law.

31 Whether the defence raised to the counterclaims is good or bad will ultimately depend on a proper interpretation of clause 43 of Annexure Y.  That cannot be decided on exception.  It will need to be resolved at the trial where a variety of other interrelated issues are likely to arise.  For example, the validity of a cause of action for return of the deposit (which presumably would require proof that it was paid in ignorance of the factual position in order to lay the foundation for a claim based on a condictio indebiti) and whether or not such a cause of action  based on a correct interpretation of the lease agreement.  A proper interpretation of clause 43 would include the issue of whether or not the suspensive conditions subsequently formulated in paragraphs a), b) and c) on page 2 of ANNEXURE A would override clause 43 of annexure Y which was signed almost a year earlier.  Paragraphs a), b) and c) do not contain any stipulated date for fulfilment of the proclamation condition.  Consequently, proper interpretation issues at the trial are also likely to involve issues such as the applicable date by which the proclamation condition had to be fulfilled, e.g., whether by necessary implication the suspensive condition had to be fulfilled by the 13 July 2016 date of conclusion of the lease to enable the tenant to legally exercise its rights from inception of the lease without being in breach of the town planning scheme. 

32 Clearly, the proper interpretation of clause 43 of Annexure Y cannot be resolved by way of exception and consequently the first ground of exception cannot succeed.

 

Second ground of exception: defence premised on “null and void” agreement.

33 The second round of exception also involves clause 43 of annexure Y.  Once again it is to be noted that there appears to be a cross-referencing error as there is no clause 43 in ANNEXURE A. 

34 The Defendants plead in paragraphs 3.3.3 and 3.3.4 that the lease agreement is null and void and unenforceable because in terms of clause 43 of annexure Y township proclamation had to take place by 31 January 2016, whereas township proclamation only took place on 14 July 2016.  Those paragraphs are repeated in the First Defendant’s counterclaims. 

35 Paragraphs 20 and 23 of the Plaintiff’s alternative plea to the counterclaim as proposed to be amended each allege that if the lease agreement is found to be null and void then “clause c) to the special conditions of the lease agreement precludes the plaintiff for claiming these amounts.”

36 The Defendants contend that those paragraphs as proposed to be amended would render the pleading bad in law and excipiable on the following reasoning: that the alternative defence which the Plaintiff seeks to raise is premised on an acceptance that the lease agreement is “null and void” as pleaded by the Defendants.  That being so, argue the Defendants, the “suspensive condition” in clause 5.4 of Schedule AOL and clause c) of ANNEXURE A will similarly be null and void and, consequently cannot be relied upon as a defence to the counterclaims.

37 In my view this ground of exception is well-founded.  Whether or not the First Defendant’s cause of action in its counterclaim is valid, the fact of the matter is that the Plaintiff’s plea to the counterclaim is premised on the First Defendant’s allegation that the lease agreement is null and void.  For purposes of an exception the First Defendant’s averment must be accepted to be correct.  That being so the Plaintiff cannot rely on a provision in the very lease agreement which, for purposes of an exception, must be accepted to be void.  Consequently paragraphs 20 and 23 of the Plaintiff’s plea to the counterclaims as proposed to be amended is clearly excipiable and the amendment should not be allowed.

 

Conclusion and Costs

38 Consequently, the application for amendment is refused and, as the opposition was successful, costs should follow the event.

 

ORDER:

1. The application for amendment is refused.

2. The Plaintiff is ordered to pay the costs of the application for amendment.

3. The Plaintiff is granted leave to amend within 21 days from the date of the handing down of this judgment.

 

 

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Johann Gautschi AJ

10 June 2019 

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