The Appellant is Zitonix (Pty) Ltd, a fashion retail company which traded with several different brands, in shopping centres throughout the country. The Appellant, represented by its sole Director, Mr Marcel Joubert (“Joubert”), entered into 5 commercial leases with Old Mutual Property Management Services (Pty) Ltd, acting on behalf of K201250042 (South Africa) (Pty) Ltd, the Respondent and Lessor herein.
All five lease agreements were concluded in respect of premises located at the Gateway Theatre of Shopping in Umhlanga, Kwa Zulu Natal in February 2016. The contracts were however entered into in Cape Town and Joubert signed as surety in respect of all five leases.
Subsequent to concluding the agreements, the Appellant fell into arrears and the lessor cancelled the agreements. The Lessor sent letters of cancellation of the leases in respect of all five leases on 31 August 2016. In these letters, the Lessor relied on a breach of the Agreement as grounds for cancellation i.e. Clause 16.1(e) relating to the final sequestration of the lessee as surety. A final order of sequestration was issued in respect of Joubert on 22 August 2016, which amounted to a breach of Clause 16.1 (e) thus warranting the breach.
In the court a quo; the Appellant had raised numerous defences to the application for cancellation and eviction brought by the Lessor. The Appellants appeal is however based on the arguments of the Court a quo’s lack of jurisdiction and Joubert’s ignorance of the suretyship provision in the leases.
On the issue of jurisdiction, the Appellant submitted that the court a quo did not have jurisdiction as the application for eviction was one in rem (i.e against the property itself) and thus only the court where the property was situated had jurisdiction. The Court however held that application for cancellation of the Agreements was based on the contracts themselves and therefore not in rem. Furthermore, that the application for eviction was entirely contractually founded – in personam. Furthermore, because the domicile and residence of the Appellant were in Hout Bay, Cape Town, the court a quo had concurrent jurisdiction with the Kwa Zulu Natal Division. The Order of the court a quo in this regard was however set aside in as far as the court ordered that the Sheriff or Deputy Sheriff of Kwa Zulu Natal be authorised to execute in the event of the tenants not vacating. The SCA held that the court a quo does not have the authority to make any order against the officers of the court in Kwa Zulu Natal. Instead if the tenants fail to vacate the premises, the lessor would be entitled to obtain a writ of ejectment from the Registrar of the KwaZulu Natal Division of the High Court for execution by the sheriff of that Court in terms of section 42 of the Superior Courts Act 10 of 2013.
On the second defence of Iustus error, Counsel for the Appellant submitted that Joubert had signed the leases oblivious to the consequences of his sequestration. His error was thus reasonable because at the time of signing, the Lessor was aware that he was on the brink of sequestration, yet allowed him to conclude long term leases despite its right to cancel in the event of his sequestration.
Evidence was adduced on behalf of the Lessor that it was not aware of the possibility of final sequestration as alleged and Joubert, an experienced businessman, and duly represented by his attorney, had signed some 25 leases containing the same clause with the Lessor itself. There is therefore no reason to believe that Joubert was misled in this regard or that the clause relating to his sequestration giving the Respondent the right to cancel was “tucked away” in the lease agreement. This defence was also rejected.
The Appeal was dismissed with costs.
Where cancellation of lease agreements and the subsequent eviction application is based solely on the terms of the agreement, and not on ownership, the court within the tenant’s domicillium has concurrent jurisdiction with that of that in which the subject property is situated. Furthermore, ignorance of the terms of the lease agreement does not amount to a iustus error on the facts.
Written by Khotso Mmatli and supervised by Musa Mathebula , 08 October 2018