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[1992] ZASCA 158
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Benlou Properties (Pty) Ltd v Vector Graphics (Pty) Ltd (185/1991) [1992] ZASCA 158; 1993 (1) SA 179 (AD); [1993] 1 All SA 207 (A) (18 September 1992)
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LL Case No 185/1991
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
BENLOU PROPERTIES (PTY) LTD Appellant
and
VECTOR GRAPHICS
(PTY) LTD Respondent
CORAM: HOEXTER, VAN HEERDEN, KUMLEBEN, F H
GROSSKOPF JJA et KRIEGLER AJA
HEARD: 31 AUGUST
1992
DELIVERED: 18 SEPTEMBER 1992
JUDGMENT VAN HEERDEN JA:
2
On 3 August 1988 the parties entered into a written agreement in terms of
which the appellant let certain premises to the respondent.
They were the first
and second floors and portion of the third floor of a building in Johannesburg.
The initial period of the lease
was five years, and in terms of clause 1.7 the
respondent had to pay a fixed, but escalating, rent for each of those years.
Clause
8.5 provided that should certain "charges" be increased during the
currency of the lease, the appellant would be entitled to recover
74.4% of such
increases from the respondent.
During October 1990 the respondent ini-tiated
motion proceedings against the appellant in the Witwatersrand Local Division. It
sought
an order declaring the lease to be invalid. In the founding affidavit the
respondent relied mainly on the provisions of clause 8.5.
It contended that the
amounts
3 which might become payable in terms of that clause constituted
additional rent; that such amounts were neither determined in nor
determinable
from the written agreement; that clause 8.5 was consequently void, and that it
was not severable from the other provisions
of the lease. The appellant filed a
brief opposing affidavit which in the main traversed the respondent's legal
contentions.
The application was heard by Weyers J. He held that a number of
the provisions of clause 8.5, read with certain other clauses, were
invalid. As
regards severability, Weyers J merely said that it was common cause that if
those provisions were invalid the lease in
its entirety was of no force and
effect. He accordingly granted the declaratory order sought by the respondent
and directed the appellant
to pay the costs of the application. With the leave
of this court the present appeal is directed against
4
those orders.
In so far as clause 8.5 is material, it
reads as follows:
"8.5 ...if any of the charges payable for any of the items listed below are or have ... been increased so as to exceed those in force at, or are imposed after, the date of commencement of negotiations, the LANDLORD shall be entitled to recover from the TENANT ... the TENANT'S proportionate share of such increases or impositions, which the Tenant agrees shall be equal to 74,4% of such increases:
8.5.1 rates, taxes or other charges of any nature whatsoever payable by the LANDLORD to any authority in respect of the premises, the building or the property or for service rendered in respect thereof; 8.5.2 wages and other payments of any nature whatsoever (including contributions to unemployment insurance and pension funds and medical aid schemes) in respect of cleaning, gardening and security services provided to the building and/or the property; 8.5.3 insurance premiums payable by the LANDLORD in respect of the
5
property and/or the building;
8.5.4 any charges relating to the maintenance, repair and upkeep of the building and/or the property including, without limiting the generality of the aforegoing, amounts paid to third parties in respect of lift maintenance, air conditioning or other maintenance contracts or other services rendered; 8.5.5 any levies, taxes or other charges in respect of the building or the premises or the property not in force at the date of commencement of negotiations but subsequently imposed by any authority; 8.5.6 the cost of electricity, water, gas, sanitary fees, refuse removal charges, domestic effluent or other charges used in or relating to the common areas; 8.5.7 all costs incurred in regard to the management, administration and letting of the building."
Reference must also be made to clauses 5.3, 28 and 29. Clause 5.3 provides that in. the lease "common area"
"shall mean those portions of the building
6
and property other than those actually let or capable of being let to individual tenants as determined by the LANDLORD in its sole discretion."
Clause 28 provides:
"The LANDLORD shall take all such steps as it may consider necessary in its sole and absolute discretion for the maintenance and operation of the common areas."
And the material portion of clause 29
reads:
"The nature of the services to be provided to the premises or the building or property by the servants of the LANDLORD or its agents, directors, ... independent contractors or representatives shall be at the sole discretion of the LANDLORD."
Meyers J found that clauses 8.5.2,
8.5.3, 8.5.4, 8.5.7, as well as clause 8.5.6 read in conjunction with clauses
5.3 and 28, were
invalid. His reasoning was that those clauses confer on the
appellant a discretion to determine various costs and charges, a substantial
portion of which will have to
7 be borne by the respondent. By way of example
he pointed out that if the appellant decides to pay increased wages covered by
clause
8.5.2, it may recover 74,4% of such increases from the respondent.
As
will appear, our old authorities were of the view that a lease is invalid if the
rent is to be determined by the lessor - or the
lessee - in his
unfettered discretion. Likewise a sale is void if the price is to be
fixed by either party. It has often been said that these results flow from
the
application of the broader principle that contractual obligations must not be
vague or uncertain (cf Westinqhouse Brake and Equipment (Pty) Ltd v Bilger
Engineering (Pty) Ltd 1986 (2) SA 555 (A) 574, and Genac Properties Jhb
(Pty) Ltd v N B C Administrators CC (previously N B C Administrators (Pty)
Ltd) [1991] ZASCA 188; 1992 (1) SA 566 (A) 576). There was some debate before us as to whether
the increased expenditure recoverable
8 under clause 8.5 forms part of the
rent payable by the respondent. Although it does not appear to me that the
answer has any real
bearing on the outcome of this appeal, I shall assume that,
as contended for by the respondent, that portion of the increased expenditure
payable by the respondent is a component of the rent.
Weyers J relied heavily
on the decision of a full bench of the Transvaal Provincial Division in Kriel
v Hochstetter House (Edms) Bpk 1988 (1) SA 220 (T). In that case it was
common cause in the court below that certain clauses in a lease were invalid.
The dispute between the parties
related solely to the severability of those
clauses. The court of first instance held that they were severable. On appeal
the full
bench of its own accord examined the meaning of the relevant
provisions. It came to the conclusion that the court of first instance
- and
the
9 parties - had correctly construed the clauses in question as conferring
upon the landlord "'n absolute diskresie ... om die omvang
van die teenprestasie
wat ... vir die gebruik van die verhuurde perseel betaal moet word te bepaal"
(at p 226G). It is apparent that
on appeal the appellant in that case did not
argue that the clauses were nevertheless valid. The full bench accordingly said
no more
(at p 226G) than that it is "geykte reg dat 'n huurkontrak ongeldig is
indien die partye ooreenkom dat een van hulle die huurgeld
kan vasstel".
The
provisions of the lease considered in Kriel differ in a number of
respects from those of clause 8.5 of the present lease, and no purpose would be
served by examining the former
in any detail. It suffices to say that on the
approach adopted by the full bench clauses 8.5.2, 8.5.3, 8.5.4, 8.5.6 and 8.5.7
of
the present lease would also be invalid
10 because they confer upon the
appellant the power to "determine" the extent of additional rent payable by the
respondent.
Weyers J also relied upon an unreported decision of Labuschagne
AJ. This decision has, however, since been overruled by this court
on the ground
that the lease in that case provided a mechanism for the objective determination
of the reasonableness of additional
amounts payable by the tenant: Proud
Investments (Pty) Ltd v Lanchem International (Pty) Ltd [1991] ZASCA 60; 1991 (3) SA 738 (A)
751. It was not held or suggested, however, that in the absence of provision for
such a mechanism the impugned clauses would
necessarily have been invalid.
The lease under consideration in Genac
provided for
payment by the tenant of "rental" as
well as (in clause 6) a portion of the
landlord's
actual and reasonable maintenance and running
11
expenses such as wages, insurance premiums, the cost
of maintaining lifts
and air conditioning, etc. It
was argued that the amounts payable in terms
of
clause 6 constituted additional rent, and that the
clause was invalid
because it empowered the landlord
to determine in its discretion the total
rent
payable; particularly because it was left to the
landlord to decide which expenses would be incurred.
This argument was
rejected. On the assumption that
the additional amounts payable by the tenant
were
components of the rent, this court came to the
following conclusion
(at p 579B-C):
"It is question-begging to say that provided the expenses are actually and reasonably incurred, the landlord can without reference to the tenant determine the amounts recoverable under clause 6. The first qualification is that the expenses should be actually incurred. The amount of these, it is true, is within the control of the landlord. The second qualification is that such expenses should be reasonable -reasonable, that is, in relation to both the nature of the expenses and their
12
amount. That is something which is to be objectively ascertained and is not subject to the will or whim of the landlord. It is therefore wrong to say that under clause 6 the landlord determines the amount of the expenses."
It will be observed that this court
relied upon two separate qualifications built into the relevant clause. It did
not, however, hold
that in the absence of the second qualification the clause
would have been invalid. It was indeed unnecessary for it to express a
view on
such an hypothesis.
I revert to the provisions of clauses 8.5.2, 8.5.3, 8.5.4
and 8.5.7 of the present lease. (Clause 8.5.6 differs in a material respect
from
the other clauses and will be considered at a later stage. I shall also deal
later with clauses 28 and 29 upon which counsel
for the respondent relied
heavily in argument before us.) Supporting the reasoning of the court a
quo, counsel for the respon-
13 dent submitted in his heads of
argument that the provisions of clauses 8.5.2, 8.5.3, 8.5.4 and 8.5.7 are
invalid because they leave
it to the appellant to determine in its discretion
amounts of increased expenditure, a portion of which must be paid by the
respondent.
Thus, for instance, so it was argued, the appellant may employ
whatever labour it chooses for the cleaning of the building or in
connection
with security services at wages which it determines, and incur whatever costs it
wishes in relation to the management
or administration of the building.
Subject to three qualifications, it is true that the extent of the
respondent's liability under the above clauses may be dependent
upon a decision
taken by the appellant. The first qualification is that only a defined share -
74.4% - of increased expenditure may
be recovered from the respondent. The
second qualification is that such expenditure
14 must actually be incurred
by the appellant. It must therefore enter into an agreement with a third party
which brings about an
increase in expenditure. In short, the appellant must
incur increased contractual liability.
The third qualification stems from the
condition precedent to the incurring of liability under clause 8.5, viz, "if any
of the charges
payable for any of the items listed below are or have . . . been
increased so as to exceed those in force at, or are imposed after,
the date of
commencement of negotiations ...." (The words "are imposed after", though cast
in a less than perfect grammatical setting,
clearly pertain to "charges" set out
in clause 8.5.5.) Counsel for the respondent submitted that the condition is
fulfilled if, at
any time after the inception of the lease, the total amount
payable for all the listed items exceeds the aggregate payable
15 for such
items at the date of commencement of negotiations ("the relevant date"). I
cannot agree. It seems to me that the submission
ignores the use of the
significant word "any" in the phrase "if any of the charges payable for
any of the items". (My emphasis.) One must therefore compare the
"charges" payable for each listed item at the relevant date with the
"charges"
payable for such an item at a later date in order to determine whether the
condition has been fulfilled in respect of that
item. Hence the respondent
cannot incur liability in regard to a particular item if at the relevant date
nothing was payable for
it (save, of course, for an item listed in clause
8.5.5). Thus, if the appellant did not make use of security services at the
relevant
date, the respondent would not be liable for a share of the costs of
procuring such services after that date.In sum, the third qualification
in
regard to
16 "charges" with a contractual origin amounts to this: the
respondent is only obliged to contribute to increased contractual expenditure
incurred by the appellant after the relevant date in respect of specific listed
items.
The question then arises whether a provision in a lease is void merely
because it confers upon the landlord a measure of discretion
in determining
components of the rent payable by the tenant. With reference to the facts of
this appeal the question can perhaps
be refined to read: can the parties to a
lease validly agree that, as part of his obligation to pay rent, the tenant has
to contribute
to circumscribed expenditure incurred by the landlord in his
discretion?
The concept of an invalid lease strictly speaking involves a
contradiction. It is, however, convenient to use such terminology.
Roman-Dutch
17 writers do not say in so many words that a lease is invalid if
the rent is to be determined by either the lessor or lessee. It
can, however, be
inferred that in their view such a lease was invalid. Firstly, when dealing with
the requirement that rent must
be definite or definable ("certain"), they only
mention a determination by a third party, and not also one by a party to a
lease.
Secondly, relying primarily upon D.18.1.35.1, they clearly state that in
the case of a sale the price may not be left to the determination
of either the
seller or the purchaser, and it is inconceivable that they would have drawn a
distinc-tion between the fixing of a
purchase price and that of rent. See e g
Voet 18.1.23, De Groot 3.14.23, Van der Keessel Th. 636 and
Van der Linde 1.15.8. Indeed, Pothier, who has often been cited by our
courts, says in his Treatise on the Contract of Letting and Hiring
(Mulligan's translation), p 14:
18
"Rent must be certain and fixed, just as, in contracts of sale, price must be certain and fixed, and what we have said as to certainty and fixity of price in contracts of sale, applies to leases"
And in his Treatise on the Contract of Sale
(Cushing's translation) at p 16 Pothier, having
stated at the outset that
the price in a contract of
sale must be certain and determined, goes on to
say:
"If a thing is sold for a price, to be fixed afterwards by one of the parties, the sale is void...."
See also De Groot 3.19.7 read
with 3.14.23.
I must confess to considerable difficulty in grasping why a
price (or rent) to be fixed by one of the parties should be regarded as
less
certain than one to be determined by a third party. As a matter of logic
it is also not clear to me why the requirement that a third party
must act
arbitrio boni viri - as to which see Voet 18.1.23 and
19 Machanick
v Simon 1920 CPD 333, 336-339 - should not also govern the situation where
it has been left to one of the parties to determine the price (or rent). It
is
therefore not surprising that in such other legal systems as I have been able to
consult, an agreement conferring upon a party
the right to determine a
prestation is not regarded with disfavour. In German law a provision empowering
one of the parties to an
agreement to fix the extent of his or the other party's
performance is valid, but in case of doubt as to the parties' intention an
equitable determination must be made (Larenz, Lehrbuch des Schuldrechts,
12th ed, vol 1, p 68, and Palandt, Burqerliches Gezetz-buch, 42nd
ed, pp 355-6). In Dutch and Swiss law such a provision is likewise valid, but
the determination must comply with "redelijkheid
en billijkheid" or be a
"billigem Ermessen" (Asser, Verbintenissen-Recht, De Verbintenis in het
Alqemeen, 9th ed, part
20
1, p 16, and Alqemene Leer der
Overeenkomsten, 8th
ed, part 2, p 296; Von Tuhr, Allqemeiner Teil
des
Schweizerischen Obligationenrechts, 3rd ed, vol 1, p
191.
There is also authority for the view that the
type of provision under
consideration is unassailable
in Scots law: Note to Foley v Classique
Coaches,
Limited (1934) 2 KB 1 (H of L) 21. And the
Uniform
Commercial Code, Sales, sec 2-305 (2), which has
been
enacted by many States in the USA, provides:
"A price to be fixed by the seller or by the buyer means a price for him to fix in good faith."
See Anderson, Uniform Commercial
Code, 2nd ed, vol 1, p 417.
I should also mention that Daube, Studies
in the Roman Law of Sales (edited by Daube), pp 21-22, questions the
interpretation of D.18.1.35.1 which was favoured by Roman-Dutch writers.
According to
Daube there is much to be said for a construction"
21
that the text does not condemn a sale as invalid if the price is to be fixed
by the buyer, but merely provides that the sale is imperfectum until the
price has been fixed.
Be all that as it may, I shall assume that we are bound
by the views of our old authorities; viz, that a sale (or lease) is invalid
if
the price (or rent) is to be determined by one of the parties to the agreement.
However, the important point for present purposes
is that in their reliance on
Roman law they go no further than disapproving of a lease where the
determination of the rent depends
entirely on the will of one of the
parties (cf Murray and Roberts Construction Ltd v Finat Properties (Pty) Ltd
1991 (1) SA 508 (A) 514G-H and Theron NO v Joynt 1951 (1) SA 498 (A)
506G). That is not the situation in casu. In particular the appellant
cannot unilaterally, and simply of its own volition, impose an
22
obligation upon the respondent under clause 8.5. As
has been said, it must first bind itself to a third
party and so incur contractual liability. The third party will look to the
appellant for payment of the amount concerned, and should
the respondent be
unable to contribute its share, the appellant will have to foot the entire
bill.
I am fortified in my view by the distinction drawn in our law between a
pure and a mixed potestative condition. Commonplace examples
of the two types of
conditions are respectively: "I will pay you R500 if I wish to do so" (a
condicio si voluero). And: "I will pay you R500 if I do not visit Cape
Town before the end of the year". The pure condition is invalid because it
depends
entirely upon the will of the promissor whether or not he will pay. The
mixed condition is, however, unobjectionable (D.45.1.99.-1;
D.45.1.108;
D.45.1.115.1; Voet
23
45.1.19). The reason for the benevolent approach to
mixed conditions, is
thus explained by Pothier, A
Treatise on the Law of Obligations
(translation of
Evans), vol 1, p 29:
"Lastly, though I promise something under a condition, which depends upon my will whether I will accomplish it or not . . . as, if I promise to give you ten pistoles in case I go to Paris, the agreement is valid; for it is not entirely in my power to give the money or not, since I can only refuse to do so in case I refrain from going to Paris." (My emphasis.)
Admittedly in the examples of mixed conditions given in the books the prestation is determined or objectively determinable. What is of importance, however, is the distinction drawn between mere volition and a discretion, the exercise of which does not depend entirely upon the will of a party. By a parity of reasoning the rule that the determination of rent - or, for that matter, any prestation -may not be left to one of the parties should be
24
confined to the situation where the determination depends entirely upon the
unfettered will of that party.
The above rule relates, of course, to the
requirement that a prestation must be sufficiently specified. I shall revert to
the question
whether an obligation of one party to pay expenditure incurred by
the other may not be invalid on another ground.
English law also recognises the principle
that rent must be certain. Yet it would appear that
in that system a clause such as clause 8.5 of the
present lease would be
regarded as unobjectionable.
In Greater London Council v Conolly (1970) 1 All ER
870 (CA) 876
Lord Pearson quoted a passage in the
judgment of Sir George Jessel MR in Re Knight, ex
parte
Voisey (1882) 21 Ch D 442, 456. Part of that
passage reads as
follows:
"The kind of improvement most familiar to us in regard to
agricultural leases is
25
drainage. It very often happens that when the landlord does the drainage he puts in a stipulation that he shall receive a certain percentage on what he lays out, and he may be entitled to drain even without the consent of the tenant, and to cause the tenant to pay an increased rent. I do not see the difficulty in law ..."
In commenting on this dictum Lord Pearson
said (at p 877b):
"The importance of that passage is that it shows that the increase of rent may be dependent by the terms of the lease on some unilateral act of the landlord."
By way of analogy reference may also be
made to a clause often incorporated in consent papers
in matrimonial matters, viz, that all future medical
and hospital
expenditure of the wife is to be paid by
the husband. In a very real sense
the wife may in
her discretion incur such expenses and recover them
from
her ex-husband. So, for instance, when she
falls ill she may decide either to
call in a doctor
or, without medical assistance, stoically to suffer
26
pain or discomfort. Then, again, she may either decide to undergo an operation
or choose to live with the suffering brought about
by, say, a degeneration of
her hip joint. Furthermore, if she opts for an operation she may decide to have
it performed in a provincial
hospital or in a more expensive private
institution. And it has rightly never been suggested that such a clause is
invalid merely
because the extent of the husband's obligation depends to a
degree upon the wife's discretion,
Indeed, I am not aware of any authority, save Kriel, for the proposition that an undertaking by one party to compensate the other for expenditure to be incurred by the latter, albeit in his discretion, is necessarily invalid. Nor is there a policy reason why such an undertaking should be void merely because it relates to the exercise of a discretion. Although pronounced in a different context, the
27
following oft-quoted dictum of Sir George Jessel MR
in Printing and Numerical Registering Co v Sampson
(1875) LR 19 Eq 462, 465 is apposite:
"... if there is one thing which more than another public policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice."
An agreement conferring upon A the right to claim from B particularised expenditure incurred by the former may be so worded that the extent, and possibly also the nature, of such expenditure is wholly within A's unfettered discretion. At the other end of the scale the agreement may be so phrased that A is only entitled to recover reasonable expenditure from B; ie, expenditure which is objec-tively reasonable (cf Moe Bros v White 1925 AD 71, 77; and Deetlefs v Deetlefs 1966 (2) PH A58 (at pp
28
210-11). More usually, however, such an agreement will be subject to a term
implied by law; viz, that A must exercise an arbitrium boni viri and that
B is consequently only liable in respect of expenditure which a reasonable man
in the position of A could have incurred
(cf Machanick v Simon 1920 CPD
333, 338; Dharumpal Transport (Pty) Ltd v Dharumpal 1956 (1) SA 700 (A)
707; Nedbank Ltd v Capital Refrigerated Truck Bodies (Pty) Ltd and Others
1988 (4) SA 73 (N) 74G; D.18.1.7 pr; Voet 18.1.23, and Windscheid, Lehrbuch
des Pandektenrechts, 7th ed, vol 2, p 407).
It may be that, depending on
all its terms and other circumstances and considerations, an agreement falling
into the first of the
above three categories will be void as being against
public policy. Counsel for the respondent submitted that the present lease is
indeed one which obliges the
29
respondent to contribute to increased expenditure
incurred by the appellant in the exercise of an unfettered discretion. In
further
submitting that there is no room for implying a term that the appellant
must act arbitrio boni viri, counsel relied exclusively upon clauses 28
and 29 of the lease.
Clause 28 appears in the printed lease under the heading
"Landlord's Maintenance". It will be recalled that in terms thereof the landlord
is obliged to take all such steps as it may consider necessary in its sole and
absolute discretion for the maintenance and operation
of the common areas. In so
far as it is material clause 29, under the heading "Services", stipulates that
the services to be provided
to the leased premises or the building or property
shall be at the sole discretion of the landlord.
In its founding and only affidavit (there
30 being no reply to the opposing affidavit) the respondent did not rely upon
clauses 28 and 29. On the contrary, its contention that
the lease was invalid
was based solely on the provisions of clause 8.5, read with clauses 4 and 7.
Hence the appellant was not called
upon to deal with the effect or application
of clauses 28 and 29. On the assumption that those clauses have a bearing on the
respondent's
liability under clause 8.5, we consequently do not know whether the
former clauses could ever affect the extent of that obligation.
I say so because
if at the relevant date nothing was payable by the appellant for maintenance and
services falling within the ambit
of clauses 28 and 29, the respondent could not
be called upon to contribute to any expenditure later incurred in respect of
those
items. Indeed, counsel for the respondent conceded that, given the
construction of the condition precedent at which I have
31 arrived, he could
not rely on clauses 28 and 29.
There is, however, a more fundamental reason
why counsel's reliance on those clauses is misplaced. It is trite law that,
unless otherwise
provided, a landlord is obliged to maintain the leased property
during the currency of the lease. It often happens, however, that
only a portion
of a building is let to a tenant, or that portions thereof are let to more than
one tenant. In such a case, I conceive,
the landlord will also be obliged to
maintain so-called common areas and to provide services in connection
therewith.
It appears to me that clauses 28 and 29 were intended to limit the
above obligation. They leave it to the appellant to decide in its
sole
discretion what steps should be taken in connection with maintenance and the
provision of services. The appellant must, of course,
exercise an honest
discre-
32
tion, but non constat that expenditure honestly incurred under clauses
28 and 29 will, or may, give rise to liability on the part of the respondent
under
clause 8.5. Indeed, the former clauses, solely designed as they are to
limit the appellant's common law liability, do not have any
bearing on clause
8.5. Were it otherwise, one would have the curious situation where the
respondent in respect of only certain listed
items, such as maintenance, and not
in regard to other items, such as insurance, would have to contribute to
increased expenditure
incurred in the sole discretion of the appellant.
I am
accordingly of the view that the respondent's liability under clause 8.5 is not
determined by increased expenditure incurred
in the unfettered discretion of the
appellant. It is unnecessary to decide whether the respondent is liable to
contribute to increased
expenditure which is objectively
33 reasonable, or to
such expenditure incurred arbitrio boni viri since, on either
construction, clauses 8.5.2, 8.5.3, 8.5.4 and 8.5.7 are unobjectionable.
It
remains to add that in so far as the decision in Kriel is in conflict
with the conclusions at which I have arrived, it should not be followed.
I
turn to clause 8.5.6 which pertains to the cost of electricity, water, refuse
removal etc relating to "the common areas". It is
clear that if those areas are
sufficiently demarcated in the lease, clause 8.5.6 is unassailable. Apart from
the conclusions at which
I have arrived above, the appellant has no say in the
determination of the cost of electricity and related charges. Those charges
are
prescribed by a public body such as a local authority (cf Proud
Investments at p 7491). Counsel for the respondent relied, however, on the
definition of "the common area" in clause 5.3. It will be recalled
that
34
that clause defines "common area" as "those portions of the building and
property other than those actually let or capable of being
let to individual
tenants as determined by the landlord in its sole discretion". (My
emphasis.) The respondent contended that because the appellant may simply of its
own volition determine the common area, he
may likewise determine the extent of
the charges relating to that area.
It is not easy to grasp the import of
clause 5.3. It sets out objective criteria for determining the common area but
the emphasised
words then purport to confer upon the appellant a discretion in
regard to those standards. There seems to be little room for the
exercise of an
honest discretion which will lead to a result different from that flowing from
an application of the objective criteria.
Thus, if a portion of the building
is
35 actually let, it is inconceivable that the appellant could honestly
determine that it is in fact not let. And as regards portions
capable of being
let, there is hardly scope for a genuine difference of opinion.
I shall,
however, assume in favour of the respondent that notwithstanding the enumeration
of the said criteria clause 5.3 confers
upon the appellant an untrammelled
discretion to determine the common area. I shall also assume that this results
in the invalidity
of clause 8.5.6 read in conjunction with clause 5.3. On those
assumptions it is clear that clause 8.5.6 becomes unobjectionable if
the words
emphasised by me are deleted from clause 5.3. The question then arises whether
the offending phrase is severable from the
rest of clause 5.3 and, of course,
the other provisions of the lease.
It admits of no doubt that the phrase is grammatically and nationally
severable. It is also
36 clear that the deletion of the phrase will not have
a substantial effect on the character of the lease, and in particular the ambit
of clause 8.5.6. The crucial question then is whether the parties would have
entered into the agreement of lease if the phrase in
question had been deleted:
Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A) 16-17 and 24.
It is hardly
necessary to say that in the postulated case the respondent would undoubtedly
have become a party to the lease. The deletion
would not have had the slightest
prejudicial effect on its rights and obligations as tenant. I also have very
little doubt that the
appellant would have been prepared to enter into the
"amended" agreement of lease. At the risk of repetition I again emphasise that
clause 8.5.6, as it now reads, leaves very little scope for an honest, but
erroneous, determination of those-"portions of the building
and property
37 other than those actually let, or capable of being let to individual tenants". Hence the offending phrase was, from the appellant's point of view, practically worthless. Its deletion would therefore have been a matter of little consequence to it.
It was rightly not suggested that any other provision of the lease cannot
survive the elimination of the above phrase. It follows
that the attack on
clause 8.5.6 must also fail.
In the result it is unnecessary to
consider
the possible application of the principles enunciated
in the
minority judgment in Sasfin at pp 26-31 and
which, in the present
context, do not appear to be in
conflict with anything decided in the
majority judg
ment. (See also Du Plooy v Sasol Bedryf (Edms)
Bpk
1988 (1) SA 438 (A) 455-7 and Voqel NO v Volkersz
1977 (1)
SA 537 (T) 548-551.) It only remains to add
that those principles, if
sound, may also have been
38
determinative of this appeal even if clauses 8.5.2, 8.5.3, 8.5.4 and 8.5.7
were held to be invalid.
The appeal is allowed with costs, including the
costs of two counsel, and the following is substituted for the order made by the
court
a quo:
"The application is dismissed with costs."
H J O VAN HEERDEN JA
HOEXTER JA
KUMLEBEN JA
CONCUR F H GROSSKOPF JA
KRIEGLER AJA