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Total Lesotho (Pty) Ltd and Another v Thabang (Pty) Ltd and Another (C OF A (CIV) No.35/2009, CIV/APN/114/2008)

Case No: 
CIV/APN/114/2008
Media Neutral Citation: 
[2010] LSCA 23
Judgment Date: 
22 October, 2010

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IN THE COURT OF APPEAL OF LESOTHO



HELD AT MASERU


C OF A (CIV) No.35/2009

CIV/APN/114/2008


In the matter between:


TOTAL LESOTHO (PTY) LTD …......................FIRST APPELLANT

FARAH INVESTMENTS (PTY) LTD …..........SECOND APPELLANT


AND


THABANG (PTY) LTD …..............................FIRST RESPONDENT

MARA HOLDINGS (PTY) LTD …...............SECOND RESPONDENT


CORAM: SMALBERGER, JA

HOWIE, JA

FARLAM, JA


HEARD: 11 OCTOBER 2010

DELIVERED: 22 OCTOBER 2010


SUMMARY


Interdict and declaratory relief sought – alleged lack of urgency irrelevant once respondents had full opportunity to present their cases in opposing final relief – reciprocal contractual obligations – whether one party to perform prior to the other – whether tender to perform equivalent to performance in the instant case – consecutive subleases granted by sublessor to different sublessees – earlier sublessee seeking to restrain later sublessee – whether earlier sublessee confined to damages claim.






JUDGMENT


HOWIE, JA


[1] This is an appeal against an order by Mahase J in the High Court granting an order for certain interdictory and declaratory relief.


[2] At all material times the business of Crossroads Service Station has been operated on Plot 13291-054, Upper Thamae, Maseru. The land constituting the Service Station premises is owned by Mara Holdings (Pty) Ltd. (Mara). Some years before 2006 Mara leased the premises to Total Lesotho (Pty) Ltd. (Total). That lease is referred to in the record as “the Head Lease.” Total then sublet the premises back to Mara which proceeded to conduct the business there, inter alia with petroleum products supplied to it by Total.


[3] As time went by Mara failed to settle its petroleum account with Total and Total sued for payment. Mara then had three directors all of whom were sureties for Mara’s debt to Total. Total’s claim in the action was against Mara and the sureties. In 2004 Total obtained default judgment against two of the sureties and when they failed to pay the judgment debt Total obtained a writ of execution against their movable assets. (The two judgment debtors have since died.) The action is referred to by the case number CIV/T/7/2003.


[4] In 2005, in respect of the same claim, the third surety, Mr. Simon Rasephei, consented to judgment in Total’s favour. He did so on his own behalf and on behalf of Mara. The consents were not acted upon.


[5] In January 2006 an overall arrangement was reached according to which Total’s difficulties in obtaining settlement of its claim against Mara appeared to have become resolved. An outsider to their relationship, Thabang (Pty) Ltd. (Thabang), undertook to pay Mara’s debt as against its becoming the new operator of the service station business. The overall arrangement involved the conclusion and signature of what is referred to as a Memorandum of Understanding (the MOU), a written sublease of the premises from Total to Thabang and, also between the latter two entities, a written petroleum sales agreement.


[6] The MOU was a tripartite agreement, Mara being represented by Mr. Rasephei. Its preamble recorded that Total would sublet to Thabang; that Thabang had agreed to pay Total M580 000 in discharge of Mara’s debt to Total “in terms of the Judgment and Writ of Execution of the High Court Case No.CIV/T/7/2003”; and that Mara agreed to be bound by the agreements between Total and Thabang “wherever applicable, pertaining to the taking over of Crossroads Service Station by Thabang …”. Later the same month the envisaged sublease and sales agreements were concluded.


[7] Central to this case is the proper interpretation of clause 1.4 of the MOU, the terms of which will be quoted in due course. Broadly, it required that on signature of the sublease and sales agreement Total would furnish a formal Notice of Withdrawal and Abandonment of Judgment in CIV/T/7/2003 against which Thabang would be obliged to pay Total M580 000. The MOU ended with the provision that it would become an integral part of the sales agreement and the sublease.


[8] Thabang did not pay Total and as a result, Total, by letter dated 3 April 2006, purported to cancel their contractual relationship, maintaining that non-payment amounted to repudiation by Thabang of the MOU, which repudiation Total accepted.


[9] Having done that, Total, in June 2007, entered into a fresh tripartite contractual arrangement with Mara and a new sublessee, Farah Investments (Pty) Ltd. (Farah), in terms of which it would be the latter that would discharge the Mara indebtedness. Total also proceeded with renovations to the premises.


[10] On 28 March 2008 Thabang, with Mara cited as a co-applicant, lodged an urgent application in the High Court. The relief sought included a Rule nisi in the form of an interim interdict with immediate effect. It aimed to interdict Total and Farah from carrying out further operations or improvements at the premises, or dealing with the premises, pending finalisation of the application. The Rule was also intended to call upon Total to show cause why it should not be compelled to perform its obligations under the MOU and why the replacement agreement with Farah should not be declared devoid of legal force and effect.


[11] For reasons which cannot be established from the appeal record the Registrar issued an order in the terms sought, the order ostensibly having been given by Monapathi J. However, Monapathi J apparently refused to grant a Rule and required service of the application on Total and Farah. Thereafter, opposing and replying affidavits were filed and eventually the matter came before Mahase J.


[12] By the time the application papers were lodged Mr. Rasephei, the sole remaining director and the major shareholder of Mara, had died. However, his widow, as Executrix of his estate, made an affidavit in support of the application. One of the legal contentions in the opposing affidavit (filed on behalf of Total and Farah) was that Mara was not properly before the court, inter alia because its involvement in the litigation had not been properly authorised. On 28 April 2008 a notice of Mara’s withdrawal from the application was filed by Lega Man Chambers Inc., the attorneys representing Thabang throughout this matter and who signified in the notice that they filed it on behalf of both Thabang and Mara.


[13] There is no indication on record that the withdrawal notice on behalf of Mara was not properly authorised and it conveyed clearly enough that Mara sought no participation in the proceedings in the court below. Accordingly, Thabang was the sole applicant before Mahase J. I mention this because counsel for Total sought on appeal to contend that as the MOU was a tripartite agreement Thabang could not, on its own, seek specific performance. I will deal with that in due course.


[14] Mahase J began her judgment by stating that Thabang “has moved” for an order incorporating an interim interdict in the form of a Rule. She nevertheless made no further reference to interim relief, focused on the requisites for a final interdict and concluded the judgment by granting the application “as prayed in the notice of motion”. By the time of that order the competing allegations and arguments had been fully aired and the appeal has been approached by all concerned on the basis that the order was final.


[15] Total and Farah have appealed against the order of Mahase J, Thabang being the respondent. It is appropriate at this point to set out the relief “as prayed in the notice of motion”, to use the phraseology of the learned Judge, to indicate the scope of the appeal. The relevant paragraphs of the notice of motion read as follows:


2. That a Rule Nisi should issue returnable on a date and time determinable by this Honourable Court calling upon Respondents to show cause, if any, why:



  1. The 1st and 2nd Respondents shall not be restrained and interdicted from carrying out any further operations and effecting any further improvements at Crossroads Service Station at Lekhaloaneng pending determination and finalization of this application.


  1. The 1st and 2nd Respondents shall not be restrained and interdicted from interfering with the Crossroads premises at Lekhaloaneng and/or in any manner transact any dealings with any other third party thereof, pending determination and finalization of this matter.


  1. The 1st Respondent shall not be compelled to perform its obligations in terms of the Memorandum of Understanding between Applicants and themselves as fully canvassed in the founding affidavit hereof.


  1. The Agreement signed over the said premises between the 1st and 2nd Respondents shall not be declared null and void and of no effect and force in law.


  1. 1st and 2nd Respondents shall not pay costs of this suit on Attorney and Client scale only in the event of opposition.”


[16] Coming now to the primary issue in the appeal, it is to the effect that Total was entitled to, and did, cancel the MOU. For consideration of this contention it is necessary to set out the terms of clause 1.4 of the MOU. It reads:

That upon the signing of Sales and Sub-Lease Agreements and/or any incidental Agreement to the transaction, inclusive of Deeds of Suretyship and/or Credit Facility Application etc, Total Lesotho (Pty) Ltd shall furnish a formal Notice of Withdrawal and Abandonment of Judgment in CIV/T/7/03 to Mara Holdings (Pty) Ltd, ipso facto, that will absolve Mara Holdings (Pty) Ltd from its capital indebtedness to Total Lesotho (Pty) Ltd against which Thabang (Pty) Ltd will irrevocably be obliged to pay over to Total Lesotho (Pty) Ltd the sum of M580,000.00 (Five Hundred and Eighty Thousand Rand/Maloti) referred to in the preamble and which is presently being held in trust by Lega Man Chambers Inc. In this regard, Thabang (Pty) Ltd hereby authorises Lega Man Chambers Inc. to pay over to Total Lesotho (Pty) Ltd the amount of M580,000.00 (Five Hundred and Eighty Thousand Rands/Maloti) simultaneously with the receipt by it of a copy of the Notice of Withdrawal and Abandonment of Judgement referred to in this paragraph.”


[17] Total contends that it was entitled to payment in terms of the clause because it complied with its obligation as regards furnishing the required notice of withdrawal. Its evidence in this vital respect is confined to the allegation by the deponent to the opposing affidavit, Mr. L.A. Meyer on behalf of Total, that -

On 28 March 2006 and at Maseru, Lesotho I formally tendered to Mr. L.M. Khoboko, attorney of Lega Man Chambers Inc., a Notice of Withdrawal and Abandonment of Judgment and demanded payment of M580,000.”


(The purported cancellation was conveyed in a letter from Total’s attorneys to Mr. Khoboko dated 3 April 2006. The letter referred to the tender and implied that it had been made at a discussion at Total’s offices between Mr. Meyer and Mr. Khoboko.) A copy of the notice referred to by Mr. Meyer – accepting for present purposes that the notice was at some stage in existence – was not annexed to the opposing affidavit. The original notice was not said to have been lost or destroyed but if it had been, no attempt was made to provide secondary evidence of its contents. Nor was any explanation offered why no copies existed.


[18] Total’s allegation quoted above was dealt with in the replying affidavit (by Thabang’s General Manager) by way of the statement that -

My Attorneys dispute that this has happened and in this regard I wish to refer to Annexure T19 which is contrary to the allegations made by the 1st Respondent.”


The deponent then referred to the failure to annex the notice to the opposing papers and concluded with the assertion that no such notice ever existed. The annexure relied on was Mr. Khoboko’s letter of 4 April 2006 in answer to Total’s cancellation letter. He merely said that Total had failed to perform in terms of the MOU and did not directly challenge the allegation that a notice of withdrawal had been tendered. No affidavit by Mr. Khoboko was filed.


[19] Counsel for Total argued that a tender to perform an obligation was, on authority he cited, equivalent in law to performance of that obligation. Assuming for present purposes that that proposition is generally correct, the submission fails to address the difficulty that unless the party entitled to performance knows exactly what it is that is being tendered it cannot be said that the tender is accepted and is therefore equivalent to performance. To be more specific, unless Mr. Khoboko knew what was in the notice he cannot have known what was being tendered and therefore cannot be understood to have accepted the tender.


[20] The matter, however, goes further. Total’s obligation under clause 1.4 was not merely to furnish a notice of withdrawal. A notice of withdrawal may itself be withdrawn and the litigation to which it relates may be continued. In short, it does not amount to a waiver of the claim which the litigation aims to establish. What the clause required was a notice “ipso facto, that would absolve [Mara] from its capital indebtedness to [Total]”. Mara could only have been absolved by way of the notice if it had contained, or on a proper interpretation amounted to, an undertaking permanently to abandon Total’s claim against Mara. In other words the notice had to declare that the claim was waived. In the absence of a copy of the notice or admissible evidence as to its content, it cannot be found that what Mr. Meyer allegedly tendered was a notice in compliance with clause 1.4. It follows that whether it was for Thabang to show non-compliance or Total to prove compliance the result is the same - Total was not entitled to cancel the MOU. In these circumstances it is unnecessary to determine whether “furnish” in clause 1.4 means to tender or to deliver or to file in terms of the Rules.


[21] Cancellation of the MOU was the sole ground advanced by Total and Farah on the papers and in argument as to why the Farah sublease should prevail. It is therefore unnecessary to consider whether the legal position here is comparable with that created by a double sale and, if so, the extent, if any, to which the law applicable to a double sale would apply: cf. Christie, The Law of Contract in South Africa, 5th ed, 525-6. Total not having been entitled to cancel the MOU, it was not entitled to disregard its obligations towards Thabang. It transacted the sublease arrangement with Farah in breach of those obligations and was liable to judicial restraint against that and further breaches of the Thabang contracts. At the same time there is no legal ground on which Thabang can obtain an order nullifying the Farah contracts and this was correctly conceded by counsel for Thabang.


[22] Total and Farah advanced various other arguments in support of the appeal. Mara’s not being a party was said to bar Thabang from enforcing the MOU, seeing that it was a tripartite contract. Nothing on record shows, or justifies the inference, that it would have been of any concern to Mara whether Thabang or Farah leased the premises as long as Total absolved it from its indebtedness. In addition, whether Total had complied with clause 1.4 was not an issue to the resolution of which Mara could have contributed.


[23] Then it was said that Thabang was disentitled to relief because it had brought the application as a matter of urgency. There cannot be any merit in this point. Had Total and Farah raised the alleged lack of urgency in opposing the grant of a Rule nisi, dismissal of the application was not a proper order: Commissioner, South African Revenue Services v Hawker Air Services (Pty) Ltd 2006 (4) SA 292 (SCA) at 299 G. The best they would have achieved, as indeed occurred, would have been refusal of a Rule and deferment of the application to enable the filing of opposing and replying affidavits. Counsel for Total and Farah had to concede, moreover, that their clients had been afforded a full opportunity to present and argue their respective cases. In these circumstances they cannot have been prejudiced. The question now is not whether the matter was urgent in March 2008 but whether the Court below should, on the merits, have made the order it did: cf. Hawker’s case at 300 F-G.


[24] The appellants next contended that Thabang ought to have proceeded by way of action because material disputes of fact had been foreseeable. Allied to this contention was the argument that Thabang had failed to disclose material facts. The short answer to these points is that no other facts, whether alleged and disputed or undisclosed, could have had any bearing on resolution of the essential issue in the appeal.


[25] Lis pendens was then advanced as a bar to the application. It is trite law that lis pendens is a dilatory plea which is aimed at staying the proceedings in which it is raised, pending the determination of other proceedings between the same parties and in respect of the same cause of action and subject matter. The other pending litigation which it was suggested that decision of the present case should await, is the litigation in a case in which Mara and the late Mr. Rasephei had sought rescission of the judgment and writ obtained by Total against the earlier deceased Mara sureties. Mara and the sureties were sued for payment of Mara’s petroleum debt to Total. That case involved different parties from those involved here and had no bearing on the question whether Total complied with the MOU or was entitled to sublet to Thabang or Farah. In any event subletting to either was dependent on Mara’s debt having finally been paid by another entity. There is no tenable basis for saying that the requirements of lis pendens were satisfied.


[26] Finally, it was submitted that if the Farah sublease prevailed, Thabang would have a claim for damages against Total and this would be a satisfactory remedy disentitling Thabang to an interdict. The record shows that for a number of years (until precisely when one cannot determine) no business was being carried on at the premises because they were being renovated. Assuming that Thabang could establish when it would have been able to take possession of the premises and commence business, it would be within the realm of speculation and imponderability to essay an estimate of the profits it would have earned over the initial and any renewal period. In terms of clause 1.2 of the MOU the sublease period was ten years with the option of renewal for two further five year periods. However this was all subject to the provision that the sublease would automatically have terminated had either the lease between Mara and Total, or the petroleum sales agreement between Total and Thabang, been terminated or cancelled for any reason. That consideration is compounded by the difficulties of predicting future income and expenditure especially as the business had not been operated for some years and past figures provided an outdated basis for any future projections. In addition Total failed to produce any evidential basis on which it could be said that a damages claim would be capable of adequate proof. The learned Judge was therefore right to hold - on the authority of National Chemsearch (SA) (Pty) Ltd v Borrowman 1979 (3) SA 1092 (T) at 1123 F - that material difficulty in proving damages deprived Thabang of another satisfactory remedy.


[27] The reasons given thus far dispose of the appeal by Total save in regard to the order for attorney and client costs. Counsel for Thabang, rightly, did not press for the upholding of that order and counsel for the appellants were justified in saying that no circumstances warranted its grant. A litigant cannot be penalised simply because the case it advances is found to be wrong. However, setting aside the order for attorney and client costs will not constitute substantial success warranting by itself the grant to the appellants of their appeal costs. If Thabang had, soon after the appeal was noted, abandoned the attorney and client costs order it is plain that the appellants would still have proceeded with the appeal.


[28] The appeal of Farah stands on a different footing. Nothing shows that it was anything other than bona fide in entering into its contractual relationship with Total and, as I have said, there is no basis for the declaration in paragraph (d) of the order of the court below. Counsel for Thabang conceded as much. On the other hand, Thabang was entitled to interdict Farah from implementing its sublease and consequently entitled to costs in the court a quo. Even if Farah’s appeal will not succeed in obtaining the setting aside of the interdictory relief against it, the declarator in paragraph (d) must be set aside. In my view, this is substantial appellate relief because it will maintain Farah’s contractual rights and remedies against Total of which paragraph (d) of the order would have deprived it. Farah is therefore entitled to its costs of appeal.


[29] Next it is necessary to say something about the record that was filed for purposes of the hearing of the appeal. It was certified as correct by the attorney acting for Farah. However there were material shortcomings in it. Necessary pages were omitted, many were illegible and much that was irrelevant was included. This unacceptable state of affairs led the Court to call for an improved record. It was prepared but was available only on the morning of the hearing. In the course of the hearing of the appeal the Court, being of the prima facie view that the costs of the improved record should be paid by the attorney concerned de bonis propriis, required the Registrar to inform him (he was not present in Court) that he was being afforded the opportunity until the close of business on Wednesday 13 October 2010 to file submissions as to why he should not pay such costs. No submissions have been received from him and accordingly the envisaged order will be made.


[30] There is, finally, the need for the Judge’s order to be clarified and amended. It is apparent from her discussion of the requisites for a permanent interdict, and the relief sought as a whole, that she intended to grant interdictory relief extending beyond finalisation of the application. This would be appropriate to ensuring Total’s observance of its contractual obligations to Thabang as long, of course, as those obligations continue to exist. In addition, because the renovations have been completed - so the record indicates -there is no basis for restraining “further improvements”. It is preferable to redraw paragraphs 2 (a) and (b) of the Notice of Motion so as to focus the required restraint more effectively. The order a quo will therefore be amended accordingly.

[31] This Court’s order is as follows:

1. The appeal of second appellant is upheld, with costs, to the extent that the order of the Court below, in so far as it implements paragraph 2 (d) of the Notice of Motion, is set aside.

  1. The order of the Court below for the payment of the costs of the application on the scale as between Attorney and Client is set aside.

  2. The order of the Court below in so far as it grants relief in terms of the Notice of Motion other than paragraph 2 (d) is amended to read as follows:

1. The respondents are interdicted and restrained from implementing the agreements entered into between themselves in June 2007 in relation to the sublease of the Crossroads Service Station where such implementation is in any respect in conflict with implementation of the agreements (also in respect of a sublease of the service station) entered into by the first respondent with the applicant in January 2006, such interdict to continue as long as the latter agreements remain in force.

  1. The first respondent is declared liable to fulfil its obligations under its said agreements with the applicant.


  1. The respondents are ordered to pay the costs of the application jointly and severally, the one paying the other to be absolved.”


4. Subject to paragraphs 2 and 3 above, the appeal of the first appellant is dismissed with costs.

5. The costs of the improved appeal record are to be paid by the second appellant’s attorney de bonis propriis and may not be recovered from the second appellant.

______________________

C T HOWIE

JUSTICE OF APPEAL




I agree: ___________________

J W SMALBERGER

JUSTICE OF APPEAL



I agree: ___________________

I G FARLAM

JUSTICE OF APPEAL



For First Appellant : Adv. S. Malebanye

For Second Appellan t : Adv. P. Ntšene

For Respondents : Adv. M.J. Motšoari with

Mr. R. Patel