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IN THE KWAZULU-NATAL HIGH COURT, DURBAN

REPUBLIC OF SOUTH AFRICA

CASE NO.12123/07

In the matter between:

NIPPON IMPORT AND EXPORT CC Plaintiff

and

PALADIN PROPERTIES (PTY) LIMITED Defendant

J U D G M E N T

Delivered 29 March 2010

WALLIS J

[1] On 21 April 2004 the parties concluded a written agreement of lease in terms of which the plaintiff leased from the defendant certain business premises situated at 75 Smith Street, Durban. The lease was due to commence on 1 May 2004 and to endure for a period of seven years. However, matters did not proceed smoothly and the plaintiff fell into arrear with the payment of rentals. Notice to remedy this was given and on 30 November 2004 the defendant cancelled the lease. Such cancellation was effected by way of service of a summons for ejectment issued out of the Magistrates’ Court, Durban.

[2] The validity of the cancellation became the subject of extensive legal proceedings. In 2005 the proceedings in the Magistrates’ Court were withdrawn in the light of a counterclaim raised by the present plaintiff and fresh proceedings issued in the High Court. Those resulted, on 31 July 2007, in a judgment by Morley AJ in which he upheld the cancellation of the lease and issued an order for the eviction of the plaintiff from the leased premises. An application for leave to appeal was dismissed by Morley AJ and a further application to the Supreme Court of Appeal was also dismissed. In the result the plaintiff’s occupation of the premises terminated on 30 November 2007.

[3] In the present action the plaintiff contends that the defendant failed to give it possession and beneficial occupation of the leased premises during the period from 1 April 2004 until May 2005 and only gave it possession of part of the second, third and fourth floors of the leased premises during May 2005. As a result it contended that it was unable to use the second, third and fourth floors of the building for the period from 1 May 2004 to May 2005 and was unable to use the ground floor, mezzanine level, first floor and certain additional portions of the premises for the period from 1 March to 31 May 2006. It assessed its damages arising from these alleged breaches in the amount of $8 116 800.00.

[4] At the commencement of the proceedings the effect of the order of Morley AJ was debated. The plaintiff had adopted the stance that the order, insofar as it related to cancellation of the lease, only spoke from the date when its endeavours to appeal against the order of Morley AJ had finally failed. It was on that basis that it sought to pursue a claim for the period beyond 30 November 2004 being the original date of cancellation. That approach was, however, erroneous as such an order does not speak from the date upon which it is pronounced or ceases to become susceptible to a challenge but speaks from the date upon which the aggrieved party sought to put an end to the contract either by a notice of rescission or by way of the service of a summons claiming rescission. Accordingly, insofar as the plaintiff’s claim was based upon a breach of the lease agreement after 30 November 2004 it was inconsistent with the binding decision by Morley AJ that the lease was lawfully terminated on 30 November 2004. In the result the plaintiff revised its claim and confined it to the period from 1 May 2004 to 30 November 2004. So confined, the claim amounted to $1 125 000.00. I will in due course revert to the basis upon which this claim was computed.

[5] The defendant resisted this claim on the merits and lodged a counter-claim. That claim related to the full period from 1 May 2004 to 30 November 2007. For the period up until 30 November 2004 it relates to unpaid rental and other unpaid items in terms of the lease and for the period after that date it is a claim for damages for holding over calculated on the basis of the rentals due in terms of the lease. It is not disputed that those rentals represent fair market value. In computing the amount of the counter-claim credit was given not only for rentals actually paid by the plaintiff but also for amounts paid by other parties in terms of arrangements concluded with the plaintiff during the relevant periods which amounts were paid to the defendant’s agents and credited to the plaintiff’s account. In the result a schedule was tendered in evidence that reflected the total balance as at 1 December 2007 exclusive of interest on late payments or unpaid amounts of R5 567 555.28. When interest is included the amount on that date is R6 885 474.91. The computation of these amounts was not in issue between the parties.

[6] The plaintiff’s claim is dependent upon the proposition that it was not given occupation of the leased premises during the period from 1 May 2004 to 30 November 2004. In support of that case two witnesses were led. They were Mr Waseem Agha who is the principal member of the plaintiff and the driving force behind its activities, and a Mr Rodney Kok. In terms of the lease the plaintiff was entitled to receive occupation of the second, third and fourth floors of the building on 1 May 2004. To its knowledge the balance of the building was to be occupied by McCarthy Limited, who had originally owned the building and had for a number of years been the tenants of the entire building. They were intending to vacate the building entirely and move to new premises that were being built for them in the vicinity of Kingsmead Office Park. However those premises were not yet ready for occupation and hence they needed to retain a portion of their existing premises in order to continue their trading activities as a Toyota dealership.

[7] Mr Agha’s evidence was that the plaintiff was unable to occupy or make use of the premises because, notwithstanding the terms of the lease and indeed the terms upon which McCarthys was occupying its portion of the premises, McCarthys continued to use the second and third floors of the building for the purposes of parking new motor vehicles. According to him the floors were packed with cars so that it was impossible to obtain access and impossible for him to effect certain changes to the building that were necessary for the purposes of the plaintiff’s business. As far as the fourth floor was concerned this was occupied by a carwash and valet service called Super Shield. They were apparently in occupation in terms of a sub-lease from McCarthys. Their activities were likewise such as to prevent Mr Agha from obtaining the occupation of the premises that he required.

[8] The plaintiff’s business involves the importation of used motor vehicles into South Africa for the purposes of onward sale into other African countries. The vehicles would be shipped to Durban from other countries, principally in the Middle and Far East, and would then be sold to dealers and individuals in other African states and transported to those countries. In order to ensure that customs duty is not payable on the importation of the vehicles into South Africa it is necessary for them to be stored here in a bonded warehouse. The leased premises were hired for this purpose but had to be approved as a bonded warehouse by the South African Revenue Service. This in turn, according to Mr Agha, required that certain improvements be effected to the premises principally in the form of the provision of adequate security. However, according to him, the fact that McCarthy Limited was storing vehicles on the second and third floors and the fact that Super Shield was conducting its valet service business on the fourth floor prevented him from effecting the necessary changes to the premises.

[9] In the result, according to Mr Agha, he was unable to secure from SARS the requisite approval of the premises for use as a bonded warehouse. According to him, had he been able to obtain access to the premises this would have been something that could have been done within a matter of two or three weeks. He says that as a result the plaintiff was unable to use the premises for its intended purposes and the damages that it claims are calculated on the basis of a loss of revenue from rentals and sales during the relevant period.

[10] In advancing these claims Mr Agha was supported to some measure by Mr Kok. His evidence was that he works for a firm that manufactures piping and structural steel and undertakes general engineering. Mr Agha contracted with him to construct burglar-proofing and gates at the leased premises to the satisfaction of SARS. Although Mr Kok was unable to be specific about dates he says that he visited the premises on several occasions in about May 2004 and was unable even to measure up for the work that he was supposed to do because the two floors were so packed with cars. The other floor was being used for washing cars and, according to him, panelbeating. Notwithstanding these difficulties he said that he was able to start fabrication of frames and doors but when he went to install them he could not obtain access because of the presence of motor vehicles.

[11] It is relevant to mention at this stage that Mr Agha’s wife, daughter and father-in-law were murdered on 4 March 2004. At that stage he was in the throes of negotiating for the conclusion of the lease of the premises. On 4 August 2004 he was arrested and charged with the triple murder. Throughout the period that is relevant to the present proceedings he was in custody. According to Mr Kok that was a relevant factor in his not pursuing attempts to complete the work that he had been employed to perform. He said that the arrangement went sour after Mr Agha’s arrest when he could not get his money and he made no attempt to continue thereafter.

[12] Much of this evidence was hotly disputed by the defendant. It led the evidence of Mr Jimmy Smith, the then managing director of McCarthy Limited, who had a number of dealings with Mr Agha at this time. According to him Mr Agha indicated that it would take him some six months in order to secure SARS’ clearance of the premises for use as a bonded warehouse. In the light of that he says that he entered into an arrangement with Mr Agha in terms of which Mr Agha obtained and used some offices on the ground floor of the building in the portion leased by McCarthys, in return for which he was permitted to park some motor vehicles on the second and third floors for the purposes of the business of McCarthys. He explained that this was convenient for him because it was otherwise necessary for the dealership to store its vehicles at a different location which was disruptive for the smooth running of the business. He said that his arrangement with Mr Agha was that he would remove these vehicles at any time on being given a week’s notice to do so. In regard to Super Shield he said that he gave them one month’s notice to quit in March 2004 and then an arrangement was entered into under which they were entitled to remain for a further two months but at an enhanced rental of R10 000 per month payable to the plaintiff. McCarthys paid this amount on behalf of Super Shield on 7 July 2004.

[13] Apart from Mr Smith the defendant also led the evidence of Ms Julie Hillary, who was at the time the operations director of a firm called Finlay & Associates, the letting and managing agents on behalf of the owners of the building. She did not claim to have any direct personal knowledge of the situation in the building but testified that in accordance with the lease occupation was given to the plaintiff on 1 May 2004 and that at no stage thereafter was there any complaint that the plaintiff was not receiving the benefit of the occupation to which it was entitled. She was aware that some side arrangements had been made between the plaintiff and McCarthys but did not regard these as being of any concern. Her only concerns arose when rental was not forthcoming in terms of the lease, a matter which she tried to resolve telephonically but without success. In the result the plaintiff was handed over to attorneys as a defaulting tenant with a view to collecting outstanding rentals and if default continued terminating the lease.

[14] Some time was spent in the evidence dealing with discussions that took place between, on the one hand, Mr Agha and the agent through whom he had negotiated the lease, one Billy Latham and, on the other, Mr Jimmy Smith and Mr Ray Northend, an internal legal adviser to McCarthys, regarding the terms upon which McCarthys might be entitled to continue to occupy their showroom, mezzanine floor and first floor premises after 1 March 2005. It will be borne in mind in this regard that the plaintiff had leased only the second, third and fourth floors of the building for the period from 1 May 2004 to 28 February 2005. The balance of the building was not available because the defendant and McCarthys had agreed that McCarthys could continue to occupy it until the 28 February 2005. After that date the plaintiff was entitled to occupy the entire building. Some difficulties had arisen, however, and McCarthys foresaw that it would not be in a position to move into its new premises by that date. Accordingly meetings took place on 1 March 2004 and 29 April 2004 in regard to the possibility of McCarthys continuing to occupy its portion of the premises after 1 March 2005. It is not disputed that such meetings took place. Details of the first appear from a note prepared by Mr Northend dated 1 March 2004 and of the second from a letter he addressed to Mr Agha on 3 May 2004. Both the note and the letter reflect that the parties had agreed in general terms that in the eventuality of McCarthys’ new premises not being available from 1 March 2005 an extension of their existing rights of occupation would be granted for a further period at a market related rental. Mr Agha in his evidence did not accept that any such agreements had been concluded but did not dispute the fact of discussions in that regard. It does not seem to me necessary, bearing in mind that I am only concerned with the period up 30 November 2004, to make a definite finding in this regard. It is in any event debatable whether any such agreement as reflected in the note and letter prepared by Mr Northend would have been enforceable. It suffices for present purposes to say that it is plain that the relationship between McCarthys and the plaintiff at the time these meetings took place cannot have been one that was particularly strained or hostile. Clearly Mr Smith and Mr Northend regarded them as taking place on an amicable basis and Mr Agha does not suggest otherwise. No further positive finding is required as to the contents or outcome of these meetings.

[15] The relevance of this evidence seems to lie elsewhere. Had the situation at the time these meetings took place been that McCarthys was wilfully occupying the second and third floors of the building and preventing Mr Agha from obtaining the access that he desired in order to satisfy the requirements of SARS, it seems to me improbable that the parties would at the same time have been conducting amicable discussions about the possible extension of McCarthys’ rights of occupation of the lower floors of the building after 1 March 2005. Had the position been that Mr Agha was being obstructed in obtaining access to the portions of the building that the plaintiff had leased it seems overwhelmingly probable that he would have insisted, as part of any discussion or arrangement concerning what was to happen after 1 March 2005, that McCarthys forthwith vacate the second and third floors of the existing premises in order to enable him to obtain the access to which he was entitled. What is more had that been the situation it seems probable that an astute businessman such as Mr Agha would have recorded his discontent in writing. Certainly one would have expected him to respond vigorously to Mr Northend’s letter of 3 May 2004. That he did not do so lends credence to the evidence of Mr Smith in regard to the nature and contents of these meetings.

[16] The evidence of Ms Hillary was that she received no indication whatsoever that Mr Agha contended that he had not received occupation of the leased premises, that is, the second, third and fourth floors of the building. She was, as she accepts, aware of there being some arrangement between the plaintiff and McCarthys but it caused her no concern. The possibility of a problem existing only arose on 16 July 2004 when she received by facsimile transmission a letter from Mr Latham. In that letter Mr Latham said the following:

“I refer to my conversation with you last week with regard to the above wherein I informed you that Aghar Wasim was having difficulty in getting vacant occupation of the top three floors that he has leased from yourselves.

At his request I met with him yesterday at the premises and took photographs of the three floors that I refer to hereunder namely:

1. the top floor being the 4^th was being washed down by some of McCarthy’s men and there were a number of items that shouldn’t have been there. The DB electrical board has also been tampered with and is in a bad condition with loose wiring coming off the board.

Unfortunately the oil spillage that was being washed down was running through holes in the concrete flooring down to the third floor below.

2. The third floor is also in an unkempt condition together with a number of items that shouldn’t be there.

3. The second floor was parked with approximately 80 cars – some of which were being cleaned and prepped.

Whilst at the premises we met with Jimmy Smith and advised him that during his recent absence from the office whilst on holiday, Aghar had spoken to one of his employees and requested that the cars be removed, his employee replied that there must have been some sort of misunderstanding.

Aghar informs me that he has, on numerous occasions, commencing 21 June 2004 requested that the premises be cleared of all cars.

To this end we also reported the above to yourself and Ray Northend last week.

The Government Bond people have turned Aghar down on a number of occasions in the past three weeks because the premises are not vacant. At a meeting I had with Ray, Jimmy and Aghar with regard to McCarthy’s using the premises, the arrangement was that Aghar would inform them a week in advance when the premises should be vacated.

If there are cars on the floor no bond will be passed.

I hope that the above impasse can be resolved to the satisfaction of all parties.”

[17] Ms Hillary’s unchallenged evidence was that in response to this letter she first telephoned Mr Jimmy Smith about these problems. He advised her that the problems had been sorted out. She then telephoned Mr Agha and informed him that according to Mr Smith the problem had been resolved. She said that Mr Agha did not dispute this or suggest that in fact that the problem was a continuing one. That is consistent with the evidence of Mr Smith who said that within a week of his returning from holiday he had cleared all McCarthys’ vehicles out of the second and third floors of the building so that the plaintiff was free to use them as it wished. There are several pertinent features to the letter by Mr Latham. Firstly, it is consistent with the evidence of Mr Smith that it was the second floor that was being used to park cars and not the third floor. It is also consistent with the evidence of Mr Smith that the valet service that had been using the fourth floor had vacated. Thirdly, it is consistent with the evidence of Mr Smith that his arrangement with Mr Agha in regard to the parking of vehicles on the second floor was that they would be removed on one week’s notice. All of this is inconsistent with the evidence of Mr Agha that the plaintiff was being excluded from occupation against his will.

[18] Two other things are worthy of mention. The first is that Mr Latham records that Mr Agha had only been asking for the premises to be cleared of cars from 21 June 2004. That information could only have been obtained by Mr Latham from his client. It necessarily casts doubt on the evidence of Mr Agha that from the very beginning of the lease he was trying to secure that McCarthys removed its cars from the second and third floors. It is far more consistent with Mr Smith’s evidence that there was an arrangement in terms of which McCarthys could continue to park vehicles on the upper floors, but would remove them on being given a week’s notice to do so. The second pertinent factor is that there is no further document after the letter of the 16 July 2004 complaining that the “impasse” to which Mr Latham referred had not been “resolved to the satisfaction of all parties”. Had the position been that McCarthys refused to remove its vehicles from the upper floors or that Ms Hillary was dismissive of Mr Agha’s complaints, it does not seem likely that Mr Latham would not have recorded this in a letter to Ms Hillary. After all he had taken the trouble to write on 16 July 2004 and had taken photographs to illustrate the causes of his client’s discontent. Had the problems not been resolved one would have expected there to have been some further communication before the end of July 2004. Up to that stage Mr Agha was going about his business and was indeed planning a trip outside South Africa at the beginning of August, portion of which he undertook before returning and being arrested. If there had been significant continuing problems with his rights of occupancy of the leased premises one would have expected Mr Latham to record that but he did not do so. This is consistent with Ms Hillary’s evidence that she was told the problems had been resolved and this was not disputed by Mr Agha.

[19] Ms Hillary’s evidence was that, in her capacity as operations director of Finlay & Associates, the fact that rental had not been forthcoming would have been referred to her. There had initially been difficulties in obtaining the required guarantee for R350 000.00 and she had intervened with the bank in order to obtain the guarantee. Thereafter no rental had been forthcoming in any of May, June or July 2004. She accordingly spoke to Mr Agha telephonically in an endeavour to resolve the problems. She could not recall on how many occasions she spoke to him nor could she recall the reasons advanced for non-payment. Her evidence went no further than saying that the reasons, whatever they were, fell within the usual category of excuses offered by defaulting tenants that were an everyday occurrence in the course of the type of business that she was involved in.

[20] Mr Agha’s evidence in regard to these conversations is significant. He accepts that they took place and says that Ms Hillary was aware of his personal tragedy and was extremely sympathetic towards it. He says that he explained to her that he could not get occupation of the premises and that it was unlikely that the matter could be resolved until he had returned from an overseas visit in the latter stages of August 2004. He says that Ms Hillary accepted that the plaintiff did not have occupation of the premises in accordance with the lease. It was accordingly, so he said, agreed between them that the deposit of R350 000 provided by way of a bank guarantee and a further payment that he would make of R170 000 would be credited on a temporary basis against the payment of rent. However on his return from overseas an addendum to the lease or a revised lease would be prepared with a commencement date effective on 1 September 2004. The guarantee would then be applied to this revised lease and the payment of R170 000 would be credited to the rental payable from 1 September 2004. In substance it would be accepted that the plaintiff had not had occupation of the leased premises since 1 May 2004 and a fresh start would be made with effect from 1 September 2004.

[21] Ms Hillary denied that any such arrangement had been made or even discussed between them. Clearly the dispute over this issue is a fundamentally important part of the plaintiff’s case as it involves an acceptance that the plaintiff was not afforded occupation of the premises in terms of the lease. The differing versions of Mr Agha and Ms Hillary must be weighed against the objective factual material available to the court in accordance with established principles.¹ Insofar as their candour and demeanour in the witness box is concerned Ms Hillary was by far the superior witness. Her evidence was clear and to the point and where she could not speak to a matter she did not hesitate to say so. She has now left the employ of Finlay & Associates so has no direct interest in the outcome of the case beyond defending her own conduct. By contrast with her Mr Agha has a considerable financial investment in the outcome of the case. As a witness he was inconsistent in many respects and was frequently unable to answer penetrating questions. Giving as much weight as one can to the fact that English is not his home language it is the language in which he conducts a highly successful international business and at no stage in his testimony did it appear that he was experiencing difficulties either in expressing himself or in understanding the questions being put to him. Overall he was not an impressive witness.

[22] Turning to the probabilities I start with the letter addressed to Ms Hillary by Mr Latham on 16 July 2004. According to the accepted schedule of payments Mr Agha had caused the R170 000 to be paid on 14 July 2004. That was the day before he and Mr Latham visited the premises and noted the problems reflected in Mr Latham’s letter. It seems to me remarkable to suppose that an agreement in the terms that Mr Agha now contends for could have been concluded only a few days before that meeting and yet, not only was Mr Latham not informed of it because he does not mention it, but Mr Agha allowed him to write a letter that had already been rendered redundant by virtue of his arrangement with Ms Hillary cemented by the payment of the R170 000. What is more as appears from what follows Mr Agha thereafter placed much store on the contents of Mr Latham’s letter in defending legal proceedings brought against him by the defendant.

[23] I next turn to a letter addressed by the plaintiff’s attorneys to the defendant on 6 September 2004. Whilst not expressly stated in that letter it seems probable that the instruction to write it was a response to the letters addressed to both the plaintiff and Mr Agha on 24 August 2004 placing the plaintiff on terms to pay the balance of outstanding rentals. The letter was written by the firm of Amod Attorneys. It was addressed to the defendant at the domicilium chosen in the lease and a copy was sent by fax to Finlay & Associates. The letter records that Amod Attorneys act on behalf of the plaintiff and have been instructed to write to the defendant in regard to the agreement of lease. The material portions of the letter go on as follows:

‘We have been instructed to address you as follows:-

(1) In terms of para 2 of the agreement the commencement date for the second, third and fourth floors was 1 May 2004 but our client was to have been given beneficial occupation of such premises as soon as was possible after signature of the lease agreement.

(2) …

(3) Notwithstanding the date of beneficial occupation, portions of the third and fourth and fifth floors were still occupied by your other tenants until as late as the middle of August 2004.

(4) Despite numerous requests on the part of our client’s representatives, and promises made on your behalf that our client would be given vacant occupation as soon as possible, this only appears to have become possible with effect from 1 September 2004. Our client would obviously have to be satisfied that the premises are indeed vacant.

(5) Relying upon the representations/promises aforesaid made on your behalf, our client’s representative, Mr W.H. Agha was induced to effect payment, under reservation of our client’s rights, of an amount of approximately R170 000.00 during or about the middle of July 2004.

(6) The said payment was requested on the basis that the funds were urgently required by you to meet commitments in respect of the head lease and payment was made on behalf of our client on the express understanding that all occupants of the second, third and fourth floors would move out at the end of July 2004 and our client could take occupation of the said premises immediately thereafter.

(7) …

(8) Despite the payment aforementioned, our client is not liable for the payment of rental until, at the very earliest, 1 September 2004 which is the earliest date upon which you would have been in a position to give our client beneficial occupation of the premises.

(9) An addendum should therefore be prepared or other written confirmation reflecting that the commencement date of the lease would be the actual date on which our client is given occupation of the premises leased in terms of the agreement.’

[24] This letter creates a number of difficulties for the plaintiff. Whilst Mr Agha said, for reasons that were not apparent, that he was only able at the time to give his instructions to the attorneys through an intermediary it is clear from various provisions of the letter that Amod Attorneys had possession of the lease agreement itself. Making every allowance for any difficulties Mr Agha may have had in giving instructions to the attorneys the letter simply does not record any agreement such as that to which he testified. It is also inconsistent with his evidence in regard to his access to the leased premises and the extent to which they were occupied by other persons. The explanation given for the payment of R170 000 is inconsistent with the agreement for which he now contends. The reference to 1 September 2004 arises not because of any agreement between him and Ms Hillary but because it is claimed that it will only be by that date that the plaintiff will obtain beneficial occupation of the premises. Lastly, the production of an addendum to the lease agreement is a suggestion by the attorneys and does not arise from any agreement such as that for which Mr Agha now contends.

[25] Ms Hillary responded to the letter from Amod Attorneys by way of her own letter of 20 September 2004. In substance that letter simply rejects the contentions advanced by Amod Attorneys. It denies that the plaintiff had not had beneficial occupation of the premises and it records that the plaintiff had advised various parties that the area would not be utilised for a period of approximately six months whilst approval to use it as a bonded warehouse was being obtained.

[26] There was no response to Ms Hillary’s letter nor was payment forthcoming. In the result on 6 October 2004 letters were addressed both to the plaintiff and to Mr Agha by attorneys acting on behalf of the defendant demanding payment of the sum of R517 756.18 in respect of the lease agreement for outstanding rental and related charges. Thereafter the lease was cancelled. I disregard in weighing up Mr Agha’s evidence correspondence between the defendant’s attorneys and an attorney who later represented him at his criminal trial as he claims that the letter was sent by his sister and brother-in-law without reference to him.

[27] The next document that is relevant to this issue is an affidavit deposed to by Mr Agha in opposing an application for summary judgment in the initial proceedings in the Magistrates’ Court. In paragraph 7 of that affidavit he stated that the defendant paid the agreed rental for May, June and July 2004 but was not allowed free and undisturbed occupation of the premises “due to the fact that there was still moveable goods (cars) of the previous occupier on the premises”. Insofar as the payment of rental is concerned that statement is palpably untrue. In paragraph 9 of the affidavit Mr Agha says that he contacted Mr Billy Latham who wrote a letter to Ms Hillary being the letter already quoted earlier in this judgment. He said that Ms Hillary was well aware of the issues raised in that letter and went on to say that as at the date of his affidavit (10 March 2005) the plaintiff had still not given vacant, free and undisturbed occupation and possession of the property to the first defendant. There is not the slightest mention in this affidavit of the agreement to which Mr Agha now testifies or of the matters set out in the letter from Amod’s Attorneys.

[28] I turn then to consider the affidavits deposed to by Mr Agha in the ejectment proceedings in the High Court that came before Morley AJ. The first affidavit was deposed to on 11 October 2006. It is wholly silent about the alleged agreement with Ms Hillary. Reliance is again placed on the letter by Mr Latham dated 16 July 2004 and there are general complaints about a failure to afford the plaintiff use and occupation of the leased premises. Nothing is said of any dealings with Ms Hillary.

[29] At a very late stage of the eviction proceedings, the plaintiff applied to submit a further affidavit by Mr Agha. He had by this time instructed fresh attorneys to act on behalf of the plaintiff. The explanation for seeking to file a further affidavit was that in preparing the earlier affidavit there had been difficulties in instructing his attorneys for various reasons. Accordingly he sought the leave of the court to submit a further affidavit in order “to place in its proper perspective the basis of the respondent’s defence (which appears to have been insufficiently pleaded by the erstwhile attorneys) …”. Although that was the avowed purpose of the affidavit it once again makes no mention of the alleged arrangement with Ms Hillary.

[30] In the light of all this the evidence of Mr Agha about his alleged arrangement with Ms Hillary cannot be accepted. It is simply inconsistent with all the probabilities and with what he has said in correspondence and affidavits over the period from 2004, when the first letter was written until 2007 when he deposed to the last affidavit. By that latter stage his criminal trial, at which he was acquitted, was behind him, and there is no good reason why he did not in this affidavit set out fully the terms of this arrangement if in fact any such arrangement had been concluded. That was, after all, the avowed purpose of the affidavit.

[31] The rejection of Mr Agha’s evidence on this point means that the balance of his evidence must be approached with considerable caution. Certainly one cannot accept at face value his claim that throughout the period from 1 May 2004 until May 2005 he was never given any space in the building because the cars being stored there by McCarthy Limited were “jam packed” into the building. Nor can his evidence be accepted when he says that in addition to the vehicles there were oil drums, finished tyres, batteries and old engine blocks stored on the second and third floors so that it was impossible to obtain any access to them. Nor can it be accepted that throughout this period the fourth floor was occupied with the valet service operated by Super Shield. That is inconsistent with the evidence given by Mr Wright from Super Shield that, after being given notice to vacate by Mr Smith of McCarthys, he was able to remain only for a further two months in addition to the one month notice period. It is also inconsistent with the observations recorded by Mr Latham in his 16 July 2004 letter.

[32] What can be accepted is that for a period after the commencement date of the lease McCarthys parked some new Toyota vehicles and some second-hand vehicles on the second and possibly the third floors of the building. It can also be accepted that Mr Wright’s business, Super Shield, occupied the fourth floor of the building until about the end of July 2004. At an early stage there may also have been some BMW and Land Rover vehicles parked on the third and fourth floors. The question is whether any of this occurred in consequence of a breach by the landlord of its obligations to afford the plaintiff undisturbed use and possession of the leased premises.

[33] In my view, the plaintiff has wholly failed to discharge the onus of proof that rested upon it in this regard. For the reasons I have given it failed to establish that Ms Hillary on behalf of the landlord accepted that there had been such a failure. It was therefore necessary for it to prove that the matters set out above arose because the landlord was in breach of its obligation to give use and occupation of the premises to the plaintiff. That required it to show that these circumstances arose without its consent and that the landlord failed to take steps to overcome them. This can be dealt with briefly because Mr Choudree SC, who appeared for the plaintiff, found himself unable in argument to contend that the onus had been discharged both because of the weaknesses in Mr Agha’s evidence and because he could not contend that the court should reject the evidence tendered by the defendant.

[34] The evidence on behalf of the plaintiff does not establish either of these requirements. Once it is accepted, as I have, that Ms Hillary’s evidence is to be preferred to that of Mr Agha in regard to her dealings with him, the situation is that no complaint was ever made to the defendant, through its managing agents, that the plaintiff had not been afforded use and occupation of the leased premises in terms of the lease. Nor was it communicated to the defendant that third parties were interfering with its rights and use and occupation and accordingly that the defendant should take steps to remedy the situation. It is clear from all the evidence that insofar as the present contention is advanced that the plaintiff was not given undisturbed use and occupation of the premises that complaint was not conveyed to the landlord and no demand was addressed to the landlord that it should remedy a breach of the lease in this regard. It would be an odd situation were the defendant to be held liable to pay damages to remedy a breach of which it was not made aware and which it was not asked to remedy.

[35] That brings one back to the question whether these alleged interferences with the plaintiff’s right of use and occupation of the premises were indeed interferences because they occurred without its consent. Here consideration must be given to the evidence of Mr Jimmy Smith and Mr Dave Wright about the nature of that occupation. Mr Smith was clear in his evidence that it had been agreed that McCarthys could continue to park vehicles on the second floor and would stop doing so on a week’s notice. He testified that he had been on leave during July 2004 and after the meeting with Mr Latham and Mr Agha referred to in Mr Latham’s letter he cleared the vehicles from the second floor of the building. This was the only floor, according to Mr Latham’s letter where vehicles were still stored. As for Mr Wright the business of Super Shield had left the premises by the end of June 2004. That, too, is in accordance with Mr Latham’s letter.

[36] Both Mr Smith and Mr Wright were perfectly credible witnesses and it was not suggested that there were any grounds on which I could reject their evidence. Indeed, Mr Choudree SC concentrated his argument on submissions that Mr Agha’s evidence that he had reached an agreement with Ms Hillary was plausible.

[37] In the light of the evidence of Mr Smith and Mr Wright it cannot be said that such use of the premises by McCarthys and Super Shield as occurred after 1 May 2004 occurred without the consent of Mr Agha on behalf of the plaintiff. Put differently, unless their evidence can be rejected it cannot be said that there was a breach by the landlord of its obligation to give undisturbed use and occupation of the leased premises to the plaintiff so that such occupation constituted an unlawful interference with the plaintiff’s rights in terms of the lease. It follows that the plaintiff has not discharged the onus of proving that its rights under the lease were breached. That is fatal to its claim for damages.

[38] In the light of that conclusion it is not necessary to examine in any detail the damages claim advanced by the plaintiff. It was calculated on the following basis. The vehicles to be imported into South Africa were to be paid for by outside investors. Those investors would also pay for the vehicles to be shipped to South Africa. On arrival and after they had been cleared into the bond store an amount of $400.00 would be payable to the plaintiff. Thereafter when each vehicle was sold a further commission of $100.00 would be paid to the plaintiff. The claim was advanced on the basis of a calculation of lost rentals and lost commissions.

[39] Manifestly these damages are special damages. The basis upon which such damages are recoverable is dealt with in the recent decision of the Supreme Court of Appeal in Mia v Verimark Limited². It is necessary for the plaintiff claiming such damages to prove, at the very least, that damages of that very type were within the contemplation of the parties at the time of concluding that agreement as a consequence of the plaintiff not being afforded use and occupation of the premises in terms of the lease. It has not yet been settled whether in addition to that requirement it is necessary also that the lease be concluded on the basis of such contemplation so that it was to all intents and purposes agreed that on breach such damages would be payable.³ In my view however the plaintiff’s claim falls at the first hurdle. Whilst the premises were let for the purposes of a “bond depot facilitating the sale of used vehicles” the lease agreement expressly states that the lessor does not warrant that the premises are fit for use for that purpose and that the lessee will be granted a licence in respect of the premises. On the evidence it is clear that before the premises could be used for that purpose SARS needed to inspect them, be satisfied as to their condition and the security available and authorise the use of the premises as a bonded warehouse. Other than a claim by Mr Agha that such approval could be obtained in his experience within three weeks no evidence was produced from SARS to suggest that the premises would have been approved for that purpose or how long it would have taken to secure such approval. There is no evidence that the defendant was aware of the mechanics of the plaintiff’s business or of the consequences for the plaintiff’s business of not obtaining access to the premises. Indeed there was no evidence at all of its impact on the actual operation of the plaintiff’s business. Whilst it was manifestly not conducted from the premises at 75 Smith Street during this period there was no evidence that it was not conducted from the existing premises at Amanzimtoti or from alternative premises and tellingly when cross-examined about the basis for his calculations, Mr Agha claimed that his business records for the period had been stolen, not that there were no records because he had been unable to carry on business. Nor is there any evidence to suggest that the defendant was aware of the consequences insofar as certification by SARS was concerned of a failure to give access. In those circumstances the plaintiff did not discharge the onus of showing that the damages that it claims in this action were within the contemplation of the parties as being a necessary consequence of a failure to afford it undisturbed use and occupation of the leased premises from the date of commencement of the lease.⁴ On that ground also its claim must fail.

[40] I turn then to consider the claim-in-reconvention. Once the contention that the defendant was in breach of the terms of the lease insofar as giving use and occupation of the premises is concerned has been rejected there can be no dispute as to the defendant’s entitlement to the outstanding rental for the period up to 30 November 2004. There can equally be no dispute about its right to claim the damages for holding over for the period from that date to 30 November 2007 when the premises were vacated. The fact that the plaintiff was trying to mitigate its liability does not affect the matter as it has been given credit for these efforts. The quantum of its claim is not disputed and there must accordingly be judgment in its favour for payment of those amounts.

[41] That leaves only the question of costs. In terms of clause 24.1 of the lease agreement the defendant is entitled to recover the costs in respect of its claim for rentals and damages for holding over on the scale as between attorney and own client. It has no such contractual entitlement in respect of its costs of resisting the plaintiff’s claim. Whilst I have rejected that claim and regard it as ill-founded I am not prepared to say that bringing the claim constituted an abuse of process or that the manner in which the claim was pursued was such as to warrant a special order as to costs. In the circumstances the costs to which the defendant is entitled in resisting the plaintiff’s claim must be on the party and party scale.

[42] I make the following order:

1. The plaintiff’s claim is dismissed with costs.

2. There will be judgment for the defendant against the plaintiff in the amount of R6 885 474.91.

3. The plaintiff is to pay interest on the said amount of R6 885 474.91 calculated at a rate two percentage points higher than the prime overdraft rate of ABSA Bank calculated from 1 December 2007 to the date of payment.

4. The plaintiff is to pay the defendant’s costs in respect of the counter-claim on the attorney and own client scale.

For the benefit of the taxing master in apportioning the costs of this action between the defence of the plaintiff’s claim and the counter-claim no more than half a day of the five days on which evidence and argument was heard was devoted to the counter-claim.

DATES OF HEARING 3, 4, 5, 24, 25 MARCH 2010

DATE OF JUDGMENT 29 MARCH 2010

PLAINTIFF’S COUNSEL MR R B G CHOUDREE SC

with MS R SINGH

PLAINTIFF’S ATTORNEYS MOHAMED HASSIM ATTORNEYS

DEFENDANT’S COUNSEL MR A C BOTHA

DEFENDANT’S ATTORNEYS COUZYNS INC

Represented locally by

CALITZ CROCKART & ASSOC

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