IN THE HIGH COURT OF SOUTH AFRICA [WESTERN CAPE HIGH COURT, CAPE TOWN]

In the matter between:

and

In their capacities as liquidators of Erf 289, Bantry Bay (Pty) Limited (In liquidation) Master's Reference Number: C757/2008

JUDGMENT DELIVERED: 12 AUGUST 2011

FOURIE, J

[2] The following chronological summary of relevant events, which are either common cause or not disputed, provides the background to the eviction application:
(a) Since approximately 1991, Mr C R Jacobs and Mrs T Jacobs personally owned the property.
(b) In 1997, and for estate planning purposes, the property was transferred to and registered in the name of Exquisite Hotel Properties (Pty) Limited ("Exquisite"). At all relevant times Mr and Mrs Jacobs were the directors of Exquisite.
(c) Since 1997, Exquisite from time to time let the property to Belmont who conducted the business of a boutique hotel from the property. At all material times Mr and Mrs Jacobs were also the directors of Belmont.
(d) On 20 September 2006, the last written agreement of lease of the property ("the lease") was concluded between Exquisite (as landlord) and Belmont (as tenant).
(e) On 6 December 2006, the company became the owner of the property when it was registered in the company's name, pursuant to a deed of sale concluded between Exquisite and the company on 26 May 2006, in terms of which the property was purchased by the company for a purchase price of R10 million.
(f) In January 2007, Belmont ceded and assigned all its rights and obligations in and to the lease, to Exquisite.
(g) On 30 July 2007, an order was made by Allie J under case number 3770/07, confirming that the parties to the lease are the company (as landlord) and Exquisite (as tenant).

(i) On 20 June 2008. the company cancelled the lease with Exquisite.
(j) On 25 June 2008, Exquisite was provisionally wound up at the instance of the company.
(k) During November 2008, the company was provisionally wound up at the instance of Standard Bank, which order was made final on 12 December 2008.

[4] Belmont opposed the eviction application on the following two grounds:

(b) Second, Belmont contended that it is. in any event, vested with an enforceable right to lawfully occupy the property.

[8] I therefore conclude that there is no merit in Belmont's second ground of defence.

"If an action is already pending between parties and the plaintiff brings another action against the same defendant on the same cause of action and in respect of the same subject-matter whether in the same or in a different court, it is open to the defendant to take the objection of lis pendens, that is, that another action respecting the identical subject-matter has already been instituted. Thereupon the court, in its discretion, may stay one action pending the decision of the other. "
It is trite that the exercise of the court's discretion in this regard, is based upon considerations of convenience and the determination of what is just and equitable in the peculiar circumstances of the matter.

[10] In raising this defence, Belmont points to the following proceedings which have also been instituted in this court and are still pending:

This is an action by Exquisite (prior to its liquidation) for the payment of damages by one Kenyon and five other defendants (including the company). caused by misrepresentations allegedly made by the defendants in the course of certain business transactions, including the sale of the property by Exquisite to the company on 26 May 2006. The action is defended.

This is an application by the company (prior to its liquidation) for the winding up of Exquisite. A provisional order was obtained, but the matter became opposed. Opposing affidavits were filed, but to dale no replying affidavit has been forthcoming.

[11] It is Belmont's case that, subsequent to the institution of action by Exquisite under case number 13749/2007. fraud was discovered on the part of a former director (Kenyon) of the company, which would entitle Exquisite to have the original sale of the property by it to the company, set aside. I should add that, to this end, Exquisite addressed a letter of cancellation to the company on 6 May 2008. However, no further steps were taken by Exquisite or its liquidators to pursue any relief consequent upon this purported cancellation of the agreement of sale of the property.

(a) First, the pending application for the liquidation of Exquisite under case number 9762/2008, should be disposed of.
(b) Once the order provisionally winding up Exquisite, has been discharged, the directors of Exquisite will be in a position to pursue Exquisite's claim for restitution of the property against the company, based on the fraudulent misrepresentations previously referred to. This would require the summons in Exquisite's existing action under case number 13749/2007, to be amended to incorporate a cause of action for the cancellation of the original agreement of sale.
(c) When Exquisite succeeds with its amended claim for restitution against the company under case number 13749/2007, the legal effect will be that the lease agreement that existed between Belmont and Exquisite prior to the sate of the property, is restored. This would then enable Belmont to successfully oppose the application for its eviction under case number 15946/2008.

"...the power to do so will be exercised sparingly and only in exceptional cases. This should be done with very great caution and only in clear cases. Proceedings will be stayed when they are vexatious or frivolous or when their continuance, on all the circumstances of the case, is, or may prove to be, an injustice or serious embarrassment to one or other of the parties... ".

"The court has again and again had occasion to point out that it does not administer a system of equity, as distinct from a system of law."

[20] In arriving at this conclusion, the following facts and circumstances are of importance:-

(b) There is no certainty or probability that the other pending matters will be successfully concluded, as envisaged by Belmont. As set out above, the course suggested by Belmont can only be successful:
If the order provisionally winding-up Exquisite, is discharged;
If the directors of Exquisite then succeed in having the summons in case number 13749/2007, successfully amended to incorporate a cause of action for the cancellation of the original agreement of sale concluded by the company and Exquisite;
If Exquisite succeeds with its amended claim for restitution against the company under case number 13749/2007;
If the lease agreement that existed between Belmont and Exquisite prior to the sale of the property, is then restored.
Apart from the uncertainty regarding the fate of the anticipated litigation, it will no doubt also be far more expensive and protracted than the adjudication of the current eviction application, It is impossible to venture a guestimate as to the period of time required for this intended litigation to be finally completed.
(c) In the event of the sale of the property by Exquisite to the company being set aside, as envisaged by Belmont, Exquisite will be required to repay the purchase price of RIO million. There is no suggestion as to how Exquisite, which has been under provisional liquidation for a number of years, will be able to repay the purchase consideration to the respondents. The Standard Bank enjoys a real right in respect of the property, as it has a mortgage bond registered in respect thereof, and it would accordingly not be possible for the property to be re-transferred to Exquisite without this debt being settled. On the papers before the court, there is simply no indication that Exquisite would be in a position to do so.
(d) It is significant that, although Exquisite has been in provisional liquidation for a period of three years, the two erstwhile directors of Exquisite, Mr and Mrs Jacobs, have never attempted to have the Exquisite liquidation application enrolled in order to have the rule nisi discharged. Also, no steps have been taken to prosecute proceedings under case number 13749/2007, based on fraudulent misrepresentation giving rise to a cause of action for cancellation of the original sale of the property and the restitution of the property to Exquisite. On the contrary, Exquisite has, at all relevant times, sought the enforcement of the deed of sale together with a claim for damages.
(e) The bringing of the present eviction application by respondents, was no doubt the correct procedure to be followed by them in the execution of their statutory duties as liquidators of the company. In this regard their conduct can certainly not be branded as vexatious or an abuse of the process of the court.
(f) Considerations of justice and equity certainly militate against the granting of a stay of the present eviction application pending the final determination of the three other matters. Why should the creditors of the company be prejudiced merely to afford Belmont, who has no right in law to possess the property, the opportunity of attempting, at great cost and by means of time-consuming litigation, to enhance its nonexistent claim to possession of the properly?
(g) Even if the litigation under case numbers 9762/2008 and 13749/2007, is successfully determined, as envisaged by Belmont, it will not, as a matter of law, result in the automatic revival of the lease agreement that had existed between Belmont and Exquisite.

[23] it follows that the appeal falls to be dismissed. Respondents as successful parlies, are entitled to their costs of appeal. Counsel for respondents sought a punitive costs order, but. in my view, there are not sufficient grounds for an order of that nature to be made.

[24]   In the result the appeal is dismissed with costs.

I agree

							V Saldanha, J

I agree

							M I Samela, J