IN THE HIGH COURT OF SOUTH AFRICA (GAUTENG DIVISION, PRETORIA)
CASE NO: A647/2015
DATE:   28  JULY   2016

 						NOT REPORTABLE
NOT OF INTEREST TO OTHER JUDGES
REVISED

IN THE MATTER BETWEEN:

BEAUX LANE (S.A.) PROPERTIES
LIMITED...............................................................................APPELLANT                                                 
…………………………………………………………… (Plaintiff  in the Court a  quo)

AND

THE MINISTER OF PUBLIC
WORKS N.O…………………………………………………. FIRST RESPONDENT
……………………………………………… (First defendant in the Court a quo)

THE EXECUTIVE AUTHORITY OF THE DEPARTMENT OF
PUBLIC WORKS…………………………………………SECOND RESPONDENT
…………………………………………….. (Second defendant in the Court a quo)

	
JUDGMENT

KOLLAPEN J:

I. This appeal comes before this Court following the dismissal of an action for damages instituted by the appellant against the respondent in the Court a quo. Leave to appeal was sought and granted by the trial Court in respect of the order as well as paragraphs 17 and  18 of the judgment  of the Court a quo.

2.	Paragraph 17 and 18 of the judgment of the Court a quo read as follows:

17.	This situation clearly concerns the causal link between the  damages claimed and the breach. It therefore also begs the question how it can be said, in the circumstances of the case, that the selling of the property at a so called "reduced" price could have been reasonable foreseeable as a realistic  possibility.

18.	Accordingly it has to befound that there is nofact before this Court substantiating a causal link between the breach of the agreement and the damages claimed.

The issues before the Court a quo and the issues on appeal

3.	By way of background the matter served before the  Court  a  quo in terms  of a stated case in terms of Rules 33(1) and (2) and the following facts are  relevant  for  the purposes of this appeal:

i.	During 2000, the Department of Public Works ('the Department') entered into a written lease agreement with a company known as Leopont 163 Properties (Pty) Ltd ("Leopont") for the period 1 September 2000 to 31 August 2010. During 2007, Leopont sold the property to the plaintiff and in doing so, ceded, assigned and transferred Leopont' s rights and obligations in terms of the lease

agreement to the plaintiff. Clause 23 of the lease agreement expressly contemplated  such a sale of the  property.
11.		Subsequent  to  the  sale  of  the  property  to  the  plaintiff,  the  plaintiff  and the Department  extended the period  of the lease until 30 April  2011.
iii.	The material terms of the lease agreement were that:

a.	The Department would use the property only for the purposes of "official residence";
b.	Upon termination of the lease agreement  the  Department  would immediately vacate the property and restore  free  and  undisturbed possession of the property to the plaintiff.
iv.	The property was leased by the Department of Public Works  to  provide residence to officers of the Department of Correctional Services ('the DOC'), which officers occupied the property from the commencement of the lease agreement in accordance with the terms and conditions that were applicable to their employment with the DOC.
v. During November 2009,  the  DOC  gave  the  officers  notice  to  vacate  the property on or before 31 August 2010, pursuant to  a  decision  taken  by the DOC that the lease agreement would not be renewed.  Despite  such notice  and by 20 January 2011, approximately 70 families of the relevant officers had not yet vacated the  property.
vi.	On March 2011, the plaintiff gave the Department  one month's  written  notice of termination of the lease agreement with effect from 30 April 2011, and simultaneously informed the Department that it had sold the property and that in the event that the Department failed to provide vacant possession of the property by 30 April 2011, the plaintiff would suffer damages.
vii.	On 24 January 2011, the property was sold by the plaintiff to Midnight Storm pursuant to a written agreement of sale concluded on 24 January 2011 in terms of which:

a.	The purchase price for the property was the amount of 40 million Rand;

b.	Vacant occupation and possession of the property would be  given to Midnight Storm on 11 April 2011 and should the  plaintiff  fail  to  give vacant occupation to Midnight Storm on that date, Midnight Storm would have the right to cancel the sale agreement;
viii.	Pursuant to a first addendum to the agreement of sale concluded on  3 March 2011, in terms of which vacant occupation of the property would be given to Midnight Storm on 11 May 2011 and should the plaintiff fail to give vacant occupation to Midnight Storm on that date, Midnight  Storm  would  have the right to cancel the sale agreement;
ix.	Pursuant to a second addendum to the agreement of sale concluded on 12 May 2011, in terms of which vacant occupation of the property would be given to Midnight Storm on 1 June 2011 and should the plaintiff fail to give vacant occupation to Midnight Storm on that date, Midnight  Storm  would  have the right to cancel the sale agreement.
x.	On 24 May 2011, the plaintiff was granted an order  evicting  the  Department and the officers of the DOC from the property, with effect from 1 June  2011 ("the eviction order").
xi.	On 28 June 2011, 54 officers of the DOC who had remained in possession and occupation of the property from at least  August  2010  to  July  2011, successfully procured the reconsideration and setting aside of the  eviction order, on the grounds inter alia that they were involved in an  unresolved labour dispute with the DOC and also that their occupation of the property after the termination of the lease agreement rendered them 'unlawful occupiers of the property' as contemplated  by  the  Prevention  of  Illegal  Eviction from and Unlawful Occupation of Land Act 19 of  199\8  ('the  PIE  Act'),  the procedure specified in the PIE Act not having been followed at the time the eviction order was granted.

xii. On 26 July 2011, the plaintiff and  Midnight  Storm  concluded  a  third addendum to the agreement of sale in terms of which:
a. Midnight Storm would take occupation and possession of the property  whilst the Department remained in occupation of the property;
b. In return for Midnight Storm taking occupation and possession of the property whilst still occupied by the Department, the purchase price for the property would be reduced to an amount of 32,5 million Rand.
xiii. When the third addendum  to the  agreement  of sale was  signed  on  26 July 2011, at least 54 units on the property remained occupied by officers of the DOC.
xiv. Subsequent to the conclusion of the agreement of  sale  and  the  three addendums, Midnight Storm paid the amount of 32,5 million Rand to the plaintiff and the property was transferred into the name of Midnight Storm.

4.	In dismissing the appellants claim, the Court a quo however was satisfied and concluded that the nature of the damages sought were general damages  and not special damages as the respondent sought to contend. In addition the court a quo concluded that the respondent, by failing to restore vacant possession of the property to the appellant, committed a breach of the lease agreement.

5.	The Court a quo however in dismissing the claim concluded that it could not be said that the selling of the property at a reduced price could have been reasonably foreseeable as a realistic possibility within the contemplation of the parties. Having made such a finding the Court then went on to find that there was no causal link between the breach of the agreement and the damages claimed.

6.	That is the crisp issue that this appeal relates to, namely whether the damages suffered by the appellant, constituting a reduction in the sale price of the property, were damages that were reasonably foreseeable as a realistic possibility.

7.	This question of legal causation has been the subject of numerous judgments of our Courts and a particular approach has crystallised over time.
The	Supreme	Court	of	Appeal	m	THOROUGHBRED	BREEDERS' ASSOCIATION  v PRICE  WATERHOUSE 2001  (4) SA 551  (SCA),  dealt  with  the
issue of foreseeability within the context of general damages as follows:

' That approach, postulating as it does not a likelihood (at the upper end of the scale) of the harm complained of occurring but (at the lower end) a realistic possibility thereof appears to me to be sensible and sound. Parties cannot contemplate what they cannot foresee. In the end it will usually turn on the degree of foreseeability of the kind of harm incurred (compare McElroy Milne v Commercial Electronics Ltd [1993] I NZLR 39 (CA) at 43-5). What matters to the law is, of course, not infinite but reasonable foreseeability.  Leaving  aside a typical situation (such as, for instance, a circumstance which was foreseeable by only one of the parties or only at the time of breach and not also at the time of contract, what is required to be reasonably foreseeable is not that  the  type of event or circumstance causing the loss will in all probability occur but minimally that its occurrence is not improbable and would tend tofollow upon the breach as a matter of course.'

9.	In TRANSNET LTD TIA NATIONAL PORTS AUTHORITY v OWNER OF MV SNOW CRYSTAL 2008 (4) SA 111 (SCA), the Supreme Court of Appeal said the following in the context of whether damages flow naturally and generally from the breach:

'To sum up therefore, to answer the question whether damages flow naturally and generally from the breach one must inquire whether, having regard to the subject matter and terms of the contract, the harm that was suffered can be said to have been reasonablyforeseeable  as a realistic possibility.'

10.	In SANDLUNDLU (PTY) LTD v SHEPSTONE AND WYLIE INCORPORATED [2011] (3) All SA 183 (SCA), SNYDERS JA stated that a plaintiff who enforces a contractual claim arising from the breach of a contract needs to prove, on a balance of probability, that the breach was a cause of a  loss.  The  learned  Judge  furthermore stated that:

'In International Shipping Co (Pty) Ltd v Bentley 1990 (I) SA 680 (A) at 700F-G Corbett CJ explained the practical enquiry in thefollowing terms:

'The enquiry as to factual causation  is  generally  conducted  by applying the so-called 'but-for' test, which is designed to determine whether a postulated cause can be identified as a causa sine qua non of the loss in question. In order to apply this test one must make a hypothetical enquiry as to what probably would have happened butfor the wrongful conduct of the defendant. This enquiry may involve the mental elimination of the wrongful conduct and the substitution of a hypothetical course of lawful conduct and the posing  of the question  as to whether upon such an hypothesis plaintiff's loss would have ensued or not. If it would in any event have ensued, then the wrongful conduct was not a cause of the plaintiff's loss; aliter, if it would not  so have ensued '.

Nugent JA in Minister of Safety and Security v Van Duivenboden 2002  (6) SA 431 (SCA) at paragraph 25 pointed to the conceptual  difficulties  that arise when the enquiry is  made:

'There are conceptual hurdles to be crossed when  reasoning  along these lines for, once the conduct that actually occurred is mentally eliminated and replaced by hypothetical conduct, questions will immediately  arise  as to the extent to which consequential  events  would

have been influenced by the changed circumstances. Inherent in that form of reasoning is thus considerable scope for speculation which can only broaden as the distance between the [breach] and  its alleged effect increases. No doubt a stage will be reached at  which  the distance between cause and effect is so great that the connection will become altogether too tenuous, but, in my view, that should not be permitted to be exaggerated unduly. A plaintiff is not required to establish the causal link with certainty, but only to establish that the wrongful conduct was probably a cause of the loss, which calls for a sensible retrospective analysis of what would probably have occurred, based upon the evidence and what can be expected to occur in the ordinary course of human affairs rather than an exercise in metaphysics.'

11.	Thus even though it is settled law that the measure of damages claimable pursuant to holding over is the market rental value of the property, an aggrieved party however is entitled to claim other damages provided that they are foreseeable and not too remote. (See HYPROP INVESTMENTS LTD AND ANOTHER v NCS CARRIERS AND FORWARDING CCAND ANOTHER 2013 (4) SA 607 (GSJ)).

12.	In arguing that the damages were not too remote but in fact reasonably foreseeable as a realistic possibility, the appellant contends that the lease agreement did in fact contemplate a sale which is what happened when Leopont sold the property to the plaintiff in 2007. In addition it argues that the parties must have contemplated the realistic possibility that the sale of the property, which was occupied without there being a lease agreement in place, will result in a seller achieving a lower price than it would have achieved had it been in a position to sell the property with vacant possession. On this basis it contends that the harm (a lower purchase price) would have been reasonably foreseeable as a realistic possibility.
9.	

13.	The court a quo in dealing with this submission took  the  view  that  after the termination of the agreement in December 2010, both parties  would  have  become aware of the uncompromising attitude of the occupiers and that the problem of their continued occupation would only be resolved in terms of legal steps that would be required. It concluded that there was no indication or even a suggestion  that  this situation was reasonably foreseeable by either of the parties at the time the agreement was concluded.

14.	In my view a useful starting point would be the position adopted in HYPROP that the measure of damages claimable for  holding  over  is the  market  value  of the premises but that other damages may well be claimed provided they are foreseeable and not too remote.

15.	Having regard to the  legal  principles  set out above,  can it be  said that the  damages that the appellant suffered were of the type or event that would follow a breach as a matter of course?

16. The appellant's stance is that it must merely  prove  the  extent  of its damages  and not that it was foreseeable as the law presumes such foreseeability. I understand this argument to be premised on the assertion that the damages flowed naturally  and generally from the breach of the lease agreement. However it  cannot  simply  be assumed that the damages flowed naturally and  generally  from the  breach.  While it may well be so that but for the breach the damages  would  not  have  resulted, that cannot be the end of the matter as it only  satisfies  the  requirements  of  factual causation. The requirements of legal causation are what I understood the court a quo found was lacking.

17.	Ordinarily, holding over would deprive the owner of property of the market value of rental that would be obtained for the property. Such deprivation would clearly ground

an action for damages. On the other hand the contemplated sale of a property under such circumstances may stand on a different footing. When  one  has  regard  to the Lease Agreemen t then the sale contemplated therein  was  one  that  would  occur during the currency of the lease. That sale in fact took place during 2007. The second sale which is the subject of this action occurred In January 2011 after the written lease had terminated and took place while the property was the  subject of a monthly  lease and the addendum to that sale reflecting a lower  purchase  price,  occurred  in  July 2011.

18.	While a breach and holding over could have consequences, to suggest however that it could result in a sale at a reduced or lower price, may well extend beyond the scope of what is reasonably foreseeable as a realistic possibility. In THOROUGBRED BREEDERS' ASSOCIATION (supra) the Court  observed  that  one cannot contemplate what one cannot foresee and that very often the question is the degree of foreseeability. In my view the damages resulting in a lower purchase price for the property certainly would fall outside what the parties would  have reasonably  foreseen as a realistic possibility and fall within that category of instances where the distance between cause and effect simply becomes too tenuous as was described by NUGENT JA in VANDUIVENBODEN (supra).

19.	In this regard the consequence of a breach accompanied  by holding over could well  be a factor in the efforts to alienate the property but on the facts  in the  stated  case  it hardly appears that a reduction in the purchase price is  what  was  foreseen  as  a realistic possibility. In this regard even though a sale with the promise of vacant possession by the 11th of April 2011 was concluded on the 24th of January 2011, the plaintiff continued to lease the property to the Defendant on a monthly  basis  until at least the end of April 2011. In addition when  the agreement  was amended  on the  lih of May 2011 to provide for occupation on the 1st of June 2011, it would have been

known to the paiiies to the sale agreement that there were unlawful occupants on the property. Despite this there appears to have been no reason to adjust the purchase price at that stage. Even though it is arguable that the continued occupation of the property would impact on the plaintiff s ability to give vacant possession what at best would have been foreseeable as a reasonable possibility was a delay in doing so. Such a delay would be occasioned by the steps necessary in law to secure vacant possession. Such a delay could well have been contemplated as being reasonably foreseeable as a realistic possibility. I would not however accept the proposition that a breach caused by holding over would give rise to the reasonable foreseeability that a sale already concluded would then have to proceed at a reduced price.

20.	In this regard a contract of sale is a voluntary act between parties whom the law recognises as operating on an equal footing. To suggest that the parties would have contemplated a sale at a reduced price simply on account of a breach resulting in holding over is a suggestion that seeks to stretch and extend the concept of reasonable apprehension to unacceptably wide parameters inconsistent with the dicta of our Courts.

21. In this regard it is trite that a legal framework exists that provides appropriate remedies to secure vacant possession as against unlawful occupiers and that ordinarily speaking an owner or person in charge would be able to utilise such remedies. Under such circumstances a breach in the form of holding over may well give rise to a reasonable foreseeability of some delay in securing vacant possession but in my view this would hardly extend as far as a reasonable foreseeability that such a sale would have to proceed on different terms and conditions in relation to the purchase consideration.

22.	In the context of the facts in the stated case the following would be of relevance:
22.	

a)	The property was leased for the purposes of providing official residence to officers of the Department of Correctional Services;
b)  Upon expiry of the written lease in December 2010, there were still members of the DCS in occupation notwithstanding a request by the DCS as far back as November  2009 that they  vacate  the property;
c) The sale of the property on 24 January 2011 for 40 million  Rand  was  effected after the expiration of the lease and at the time, vacant  possession  was undertaken  to be given by  11 April 2011;
d) It follows that it must have been within the contemplation of the plaintiff  at the time that it would be able to secure vacant possession  by  11 April   2011;
e)	Despite an order for eviction being obtained by  the  appellant  on the  24th of May 2011, the occupiers were  able  to  successfully  challenge  the  eviction on the basis that the provisions of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 were not complied with.
f)	Clause 23 of the Lease Agreement upon  which  the  appellant  relies  in support of its stance that a sale of the property was one of the options the lease contemplated, refers to a sale that occurs during the  currency  of the lease  and not a post-lease sale, which is what occurred here. The property  was sold  after the termination of the written lease. Thus a  reference  to  the  sale  of  the property in Clause 23 of the Lease does not to the extent that the appellant suggests, bolster the argument that a sale without vacant possession  would fetch a lower price and this was a realistic possibility.

21. It could in my view hardly have been reasonably foreseeable that even in the event  of a breach and an unlawful holding over, the eviction process would take as long as it did or be delayed and/or reversed for the reasons given and that a sale of the property at a reduced price was reasonably foreseeable as a realistic possibility and that it would follow from the breach as a matter of course.

22.	While the law does not require the event or occurrence to be reasonably foreseeable as a certainty, at the same time it does not suffice if it is only reasonably foreseeable as a mere possibility. What is required is for that possibility to be realistic which CORBETT JA (as he then was) in HOLMDENE BRICKWORKS (PTY) LTD v ROBERTS CONSTRUCTION CO. LTD 1977 (3) SA 670 (A) at 687 referred to as 'a probable result of the breach '

23.	
h

In Christie 's Law of Contract of South Africa 61
Edition at page 575 the authors offer

the comment that the phrase 'a probable result of the breach' should not be taken as requiring a strong probability but something more like a realistic possibility. They however do not represent separate or different approaches. What is probable and what is realistically possible is in essence what is likely to flow naturally and generally from the breach of contract.

24.	In the context of the facts in the stated case it does constitute stretching the idea of what is natural and general to contend that a likely result of the breach (as in  a realistic possibility) was that post the lease agreement, a sale of the property would be concluded and that as a result of the holding over, the appellant would be forced to sell at a reduced price.

25.	For these reasons I am unable to conclude that the prospect of the plaintiff having to sell the property for a reduced price was reasonably foreseeable as a realistic possibility or that it could be said that such an outcome flowed as a matter of course from the breach. In my view such an occurrence was not only improbable but would certainly not follow from the breach as a matter of course.

26.	What may well have been reasonably foreseeable as a realistic possibility in the face of a contemplated sale was that the sale would be delayed, that proceedings for eviction would be initiated and finalised, after which the sale would be proceeded

with. Under such circumstances damages for holding over would  be  payable  on the basis of the market rental and the sale would proceed  at the  price  originally agreed upon.

27.	In the circumstances the conclusion reached by the court a quo is not assailable and it must follow that the appeal must fail.

ORDER

21.	I make the following order:

1.	

The appeal is dismissed with costs including the costs of senior counsel which costs are to include the costs of the application for leave to appeal.

N KOLLAPEN
JUDGE  OF THE HIGH COURT

I AGREE,

RG TOLMAY

JUDGE  OF THE HIGH COURT

I AGREE,

				D MAKHOBA
ACTING  JUDGE  OF THE HIGH COURT

IT IS  SO ORDERED.

A647/2015

HEARD  ON: 08 JUNE 2016
FOR THE APPELLANT:  ADV. A J EYLES  SC
INSTRUCTED BY: BOWMAN GILFILLAN INC (ref.:F Bhayat/6103935) FOR THE FIRST & SECOND RESPONDENTS:  ADV. J A MOTEPE   SC
INSTRUCTED  BY:  THE  STATE ATTORNEY  (ref.: D P Burger/2339/13/23/nk)