Pacific Paramount Properties (Pty) Ltd (the Applicant) applied for the eviction of the Respondents from commercial premises in Camps Bay. The Western Cape High Court (the Court) considered whether the Applicant lacked the locus standi to sue for the eviction of the Respondents by virtue of a cession contained in a mortgage bond.
When the Applicant took transfer of the property in December 2013, a mortgage bond was registered in favour of Nedbank for R20 million. Clause 8 of the mortgage bond stated that the right to institute proceedings against lessees for the recovery of unpaid rentals and/or eviction from the mortgaged property are assigned to the Mortgagee (Nedbank). The proviso to this clause stated that the powers conferred in the mortgage bond shall only be acted upon by the Mortgagee with the consent of the Mortgagor (the Applicant).
The Court drew a comparison to the decision of Picardi Hotels Ltd v Thekwini Properties (Pty) Ltd. This case dealt with the question of a cedent’s right to claim rent. It was decided that the cession was not suspended in this case and therefore the cedent did not have the locus standi to recover the rent. The Court drew the distinction that Picardi dealt with the right to sue for rent which is a personal right that may be ceded and not the right to sue for the eviction of unlawful occupiers. The right to evict is based on ownership rather than the assertion of a contractual right to redelivery and is an incident of ownership.
The Court stated that in the present case, the Cessionary (Nedbank) has the irrevocable right to evict unlawful occupants from the property in question and that this is the language of mandate rather than cession. According to the Court the proviso to clause 8 strengthened this distinction by mentioning not only “cession, transfer [and] assignment” but also “authorities and powers”. The Court reasoned that if the right to seek eviction is an irrevocable authority rather than a right acquired by cession, the mandatee would arguably not be entitled to institute eviction proceedings in its own name. The mandatee would instead act on the authority by causing such proceedings to be instituted in the name of the mandatory. The Court stated that, on this basis, it may be that eviction proceedings were rightly instituted in the Applicant’s name.
In its replying papers, the Applicant attached a re-cession agreement executed on 20 August 2018 between itself and Nedbank. In this agreement, Nedbank re-ceded all of its rights to the ceded claims with effect from 20 October 2017. In light of this re-cession agreement, the Court had to decide whether, assuming the Applicant did not have the requisite locus standi prior to the re-cession, the Applicant’s position can be regularised by way of the re-cession. The Court referred to the decision of Lamont J in Pangbourne Properties Ltd and Another v Your Life (Pty) Ltd where Lamont J held that in special and unusual circumstances the Court may allow a litigant who lacked locus standi when launching proceedings to cure this by way of re-cession.
The Court held that such circumstances existed in this case. According to the Court, the Applicant instituted proceedings in good faith as the owner of the property and as the entity which concluded the lease with the Respondents. In all likelihood, clause 8 was overlooked by the Applicant. The Court held that to insist that the Applicant start anew, now armed with the re-cession, would not only be a waste of costs for the Applicant but would also have the effect that the Respondents could remain in occupation of the property for several months without having the right to do so. In the Court’s view this outcome would be unjust. The Court therefore rejected the Respondents’ challenge to the Applicant’s locus standi.
The Applicant had the locus standi to bring the eviction application in light of the circumstances of this case.
The importance of this decision is that it is vitally important to ensure that the party instituting eviction proceedings has the requisite locus standi to do so. Any agreements, such as mortgage bonds and other agreements that affect the ownership rights relating to the property must be considered in deciding whom may institute the eviction proceedings.
Written by Jan – Harm Swanepoel and supervised by Gary Boruchowitz, 09 October 2018