Luxanio Trading 181 (Pty) Ltd v Odendaal and Another (11756/2024) [2024] ZAWCHC 445 (1 March 2024)

begin wrapper begin container begin header begin slogan-floater end slogan-floater - About SAFLII About SAFLII - Databases Databases - Search Search - Terms of Use Terms of Use - RSS Feeds RSS Feeds end header begin main begin center # South Africa: Western Cape High Court, Cape Town South Africa: Western Cape High Court, Cape Town You are here: SAFLII >> Databases >> South Africa: Western Cape High Court, Cape Town >> 2024 >> [2024] ZAWCHC 445 | Noteup | LawCite sino index ## Luxanio Trading 181 (Pty) Ltd v Odendaal and Another (11756/2024) [2024] ZAWCHC 445 (1 March 2024) Luxanio Trading 181 (Pty) Ltd v Odendaal and Another (11756/2024) [2024] ZAWCHC 445 (1 March 2024) Download original files PDF format RTF format make_database: source=/home/saflii//raw/ZAWCHC/Data/2024_445.html sino date 1 March 2024 IN THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE DIVISION, CAPE TOWN) CASE NO: 11756/2024 In the matter between: LUXANIO TRADING 181 (PTY) LTD APPLICANT and IAN ODENDAAL FIRST RESPONDENT ALETTHA CATHARINA ODENDAAL SECOND RESPONDENT Court :        Acting Justice R Barendse Heard :       19 February 2024 Delivered :  Electronically on [01 March 2024] JUDGMENT BARENDSE AJ [1]      The applicant in this matter applied to this court for an order placing the estate of the first respondent under provisional sequestration and for certain ancillary relief. [2]      Applicant sought no relief against the second respondent who was joined to ensure compliance with the requirements of PN30 of this court's Consolidated Practice Notes. FACTUAL BACKGROUND [3]      Applicant averred that the first respondent is factually insolvent, alternatively that a reasonable inference of insolvency should be drawn and that it would be to the advantage of creditors if his estate is sequestrated. [4]      The applicant further averred that the first respondent was indebted to it in the amount of R4 376 821,84. Applicant relied on an agreement of lease and a deed of suretyship which formed an annexure to the agreement of lease, as a cause of action for first respondent's indebtedness. [5]      The lease agreement referred to above was concluded on 29 September 2014 between the Avanti Trust and a legal entity then known as Omnicron Financial Services (Pty) Ltd ("Omnicron"), represented by the respondent.  The lease was for commercial premises at Avanti Office Park, 35 Carl Cronje Drive, Tyger Falls, Bellville. The lease period was for a period of 10 years commencing on 1 March 2015. [6]      The Avanti Trust was described as the landlord and one Daniel Wilhelmus de Goede ("de Goede") signed the agreement on behalf of the Trust as "managing director". It is common cause that a resolution by the trustees of the Avanti Trust was not annexed to the agreement. A resolution by the directors of Omnicron was annexed to the agreement, confirming first respondent's authority to conclude the agreement on its behalf. [7]        Under the deed of suretyship the first respondent bound himself as surety and co-principal debtor with Omnicron for the due fulfillment of the latter's financial obligations flowing from the lease agreement, to the Avanti Trust. [8]      The Avanti Trust sold the leased premises on two occasions during the lease period, first to an entity called Setso Prop Fund (Pty) Ltd ("Setso") and eventually to the applicant who became owner thereof on 5 July 2018. Applicant's ownership of the leased premises is not in dispute. [9]        At this juncture it is apposite to mention that Omnicron underwent two name changes during the period relevant to this matter. On 23 November 2015 it became Omnigro (Pty) Ltd ("Omnigro") and on 28 June 2022 it became Virko (Pty) Ltd. The occupation of the premises pursuant to the agreement concluded during September 2014 continued, these name changes notwithstanding. [10]    On 20 April 2022 the attorneys representing the applicant addressed a letter to ESI Attorneys who represented Omnigro at the time, cancelling the lease, recording that Omnigro was indebted to applicant in an amount of R2 850 110.95 and demanding payment of this amount in terms of section 345 of the Companies Act. [11]    On 3 May 2022 the applicant and Omnigro entered into a written agreement under the heading " ADDENDUM TO MEMORANDUM OF AGREEMENT OF LEASE MADE AND ENTERED INTO BY AND BETWEEN LUXANIO TRADING 181 "PTY" LTD (REGISTRATION….) AS THE LANDLORD AND OMNIGRO (PTY) LTD (REGISTRATION…) AS THE TENANT IN RESPECT OF LEASED PREMISES AT AVANTI…"  in terms of which they inter alia agreed that: 11.1      the written agreement of lease would be "revived" on the same terms and conditions, notwithstanding the cancellation thereof on 20 April 2022; 11.2      applicant became the successor in title to the Avanti Trust and that any reference to Omnicron would be a refence to Omnigro; 11.3   the gross lettable space was amended to 1123 square metres; 11.4      Omnigro admitted being indebted to applicant in the amount of R2 850 110.95 for arrear rental in respect of the period September 2021 to April 2022; 11.5      the conclusion of the addendum should not be construed as a compromise or novation of the rights and obligations contained in the deed of suretyship. [12]    On 26 July 2022 applicant's attorneys addressed a letter to Omnigro (which had by then become Virko) demanding payment of arrear rentals in the amount of R4 062 191.33 in terms of section 345 of the Companies Act, failing which it intended to apply for Virko's liquidation and respondent's sequestration as surety. [13]    It is common cause that on 3 August 2022 Virko was placed under voluntary liquidation. The report filed by Virko's liquidators in terms of section 402 of the Companies Act reflected that applicant's claim was proved in the amount of R4 376 821,84. [14]    Applicant turned to this court for an order sequestrating the first respondent on the basis of the deed of suretyship as it holds no other security for the satisfaction of its claim. THE DISPUTES [15]    First respondent denies that he is lawfully indebted to the applicant. Applicant's position is simply that upon acquiring ownership of the leased property, it became the landlord under the agreement by virtue of the "huur gaat voor koop " rule. Accordingly, and as successor to the previous landlord, the tenant became liable to it for rentals. The first respondent, having bound himself as surety and co-principal debtor to the landlord then became liable to applicant for arrear rentals. Applicant referred the court to Mignol Properties (Pty) Ltd v Kneebone DR (PH 1999 (1) A 411) as support for this contention. In this matter our then Appellate Division of the Supreme Court held that the "huur gaat voor koop" rule remains part of our common law. The effect thereof is that the purchaser of leased property becomes the landlord and acquires the rights which the seller had against a surety for the tenant's obligations under the lease. [16]    Applicant further relies on the addendum that was concluded on 3 May 2022, in terms of which the lease, although cancelled on 20 April 2022, was reinstated. It emphasised that the first respondent, who signed this addendum on behalf of the tenant, acknowledged that the tenant was liable to applicant in the amount of R2 850 110.95 (at the time). [17]    Importantly, applicant contends that paragraph 10 of the 3 May 2022 addendum expressly provided that the addendum shall not in any way be viewed or construed as a compromise or novation of the rights and obligations under the deed of suretyship signed by first respondent. [18]    In his answering affidavit ("AA") first respondent raised a number of disputes which can conveniently be listed as follows: 18.1        that a valid lease agreement was never concluded between Avanti Trust and Omnicron in that there is no evidence that the trustees of the trust authorised de Goede to enter into the agreement and given that de Goede signed the lease as a "managing director"; 18.2        that the deed of suretyship, as an agreement accessory to the lease was consequently invalid and that first respondent did not sign same as a surety in favour of the applicant as is required by the General Law Amendment Act, 50 of 1956; 18.3        that first respondent's ex-wife to whom he was married in community of property at the time when the lease and deed of suretyship were signed, ought to have been joined to these proceedings; 18.4        in the event that a valid lease was entered into between Avanti Trust and Omnicron, whether such lease was ever assigned to applicant given that the lease agreement prescribed the manner in which rights and obligations thereunder had to be transferred to another party; 18.5        whether the dispute ought to have been referred for arbitration as the lease agreement contained provisions to that effect. [19]    At the hearing, Advocate Van Riet SC for the first respondent informed the court that the arguments under points to 18.3 and 18.5 above were abandoned. [20]    It follows that first respondent's opposition to this application mainly rested on what was listed in paragraphs 18.1, 18.2 and 18.4 above. [21]    As for the validity of the original agreement of lease between Avanti Trust and Omnicron, it was argued on behalf of first respondent that a party alleging a contract must prove the terms of the agreement on which he relies, even if this involves proving a negative. [22]    If de Goede was not authorised to enter into the lease, the September 2014 agreement was invalid and first respondent submitted that there was an onus on applicant to prove the validity of the said lease. In this regard, first respondent requested applicant in terms of Rule 35(12) to produce a number of documents, including the resolution passed by the trustees of the Avanti Trust that authorised the conclusion of the lease agreement. [23]    In its reply to the Rule 35(12) notice applicant stated that it acquired the leased property from Setso and not from the Avanti Trust, that it was not in possession of the documents requested and that Omnicron as the party who dealt with Avanti Trust ought to have been in possession of the requested documents. [24]    On behalf of first respondent it was further argued that in the deed of suretyship first respondent bound himself as surety to the landlord on behalf of the tenant and that if there was no valid lease, the deed of suretyship is irrelevant and pro non scripto. [25]    A further contention on behalf of first respondent was that if a valid lease was entered into, it was never assigned to the applicant and that Avanti Trust remained the landlord under the lease, even though ownership of the property passed to applicant. [26]    First respondent's counsel submitted that even if it is accepted that the 3 May 2022 addendum brought into being a new agreement of lease between applicant and Omnigro, this did not amend the deed of suretyship and first respondent remained a surety for the monies that Omnigro owed to the Avanti Trust and not to applicant. [27]    Counsel for applicant pointed out that first respondent in his AA stated that " it is therefore impossible to determine whether the Avanti Trust concluded a lease agreement with Omnicron or not" and that the assertion that the trustees of the Avanti Trust did not authorise the lease was speculative. It is not in dispute that the relevant parties gave effect to the agreement of lease after 1 March 2015. The validity thereof is being disputed for the first time almost nine years later. [28]    Advocate Oosthuizen SC for the applicant submitted that first respondent was in any event estopped from challenging the validity of the 2014 lease and argued that all the elements of estoppel were satisfied. These entailed that a factual representation was made with the intention that it should be acted on and that this representation was made to the applicant. REASONING [29]    The first issue for consideration is whether the first respondent is liable to the applicant. The deed of suretyship formed the basis of such potential personal liability. [30]    It is common cause that the deed of suretyship formed an annexure to the 2014 agreement of lease between Avanti Trust and Omnicron. There is no evidence suggesting that the 2014 lease was invalid. The tenant and first respondent in any event gave effect to the lease for almost nine years. Further, and on the authority referred to in paragraph 15 above, there is no reason why the 'huur gaat voor koop" rule does not find application to this matter. This finding also puts paid to the argument that the deed of suretyship did not conform to the requirements of the General Law Amendment Act, 50 of 1956 to which reference was made in paragraph 18.2 hereof. [31]    With reference to Wightman t/a LW Construction v Headfour (Pty) Ltd and Another [2008] ZASCA 6 ; 2008 (3) SA 371 (SCA) p375 G-J the court finds that the first respondent, as a party to the initial agreement of lease, should have done more than a belated bare denial of the validity of the initial agreement of lease. [32]    Prior to the cancellation of the lease by the applicant on 20 April 2022 the provisions thereof and the provisions of the deed of suretyship were of full force and effect. [33]    It is common cause that on 20 April 2022 the applicant cancelled the 2014 lease agreement. The deed of suretyship was accessory to the lease. The cancellation of one contract will necessarily result in the cancellation of a contract with which it is so interlocked that in effect they amount to a single transaction recorded in two contractual instruments. (See Christie's Law of Contract 7 th edition page 640). [34]    The question is whether cancellation of the lease amounted to a cancellation of the deed of suretyship and if so, whether the deed of suretyship was reinstated by the agreement entered into on 3 May 2022. [35]    The deed of suretyship contained the following relevant provisions: 33.1        it will remain of full force and effect until cancelled in writing by the landlord; 33.2        in the event of the possible insolvency of the tenant, and any consequent termination by the liquidator/trustee of the tenant of the lease, that the surety will remain bound under the deed. [36]    The lease agreement and the deed of suretyship were not indivisible agreements of the kind envisaged in Cash Converters South Africa (Pty) Ltd v Rosebud Western Province Franchise 2002 (1) SA 708 (C). It cannot be said that cancellation of the lease had the effect of the deed of suretyship losing its commercial purpose or function. The provisions of the deed of suretyship, some of which were quoted in paragraph 33.1 above clearly indicate that it was divisible from the agreement of lease. [37]    It is also necessary to have regard to the contents of the notice of cancellation dated 20 April 2022, annexed to the FA as "IP9". In paragraph 5 thereof applicant expressly cancelled the lease only. No mention was made of the deed of suretyship. In paragraph 7 thereof the applicant unambiguously stated its intention to hold the tenant liable for the arrears and reserved the right to sequestrate the estate of the surety. [38]    The court finds that the cancellation of the lease did not cancel the deed of suretyship. This means that when the 3 May 2022 "addendum" was concluded, the deed of suretyship was still of full force and effect. [39]    It is necessary to closely consider and interpret the 3 May 2022 agreement. Counsel for first respondent referred this court to the judgments  in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA), Betterbridge (Pty) Ltd v Masilo and Others NNO 2015 (2) SA 396 (GNP), Bothma-Botha Transport (Edma) Bpk v S Bothma & Seun Transport (Edms) Bpk 2014 (2) SA 494 (SCA) and KPMG Chartered Accountants (SA) v Securefin Ltd 2009 (4) SA 399 (SCA) as they find application to the interpretation of contracts. [40]    The 3 May 2022 agreement annexed and incorporated the lease initially concluded between Avanti Trust and Omnicron. It then continued to set out the additional terms agreed upon. In paragraph 11 of this addendum the first respondent admitted that the tenant was at the time liable to applicant in the amount of R2 850 110,95 for arrear rentals. [39]    It is common cause that a new deed of suretyship was not concluded when the 3 May 2022 agreement was concluded. However, paragraph 10 of that agreement reads as follows: "10. It is recorded that in terms of the Agreement of Lease a deed of suretyship was executed and that this addendum shall not in any way be viewed or construed as a compromise or novation of the rights and obligations contained in terms of such deed of suretyship." [40]    The first respondent filed a supplementary AA on the day before the hearing. This affidavit was allowed and applicant had no objection thereto. What this supplementary AA aimed to demonstrate was that signature of the 3 May 2022 agreement was preceded by a few drafts thereof exchanged between the parties. In applying the unitary approach to interpretation and determining the context in which the agreement was concluded the court had reference to the draft versions. [41]    From the drafts it was clear that the first respondent was intent upon ensuring that the 3 May 2022 agreement did not include any form of personal suretyship or joint and several liability on his part for the obligations of the tenant towards the applicant. All such provisions were deleted at the instance of the first respondent. [42]    At the hearing counsel for first respondent argued that the deed of suretyship was void (for the reasons stated in paragraphs 21 and 24 hereof) or that the notice of cancellation dated 20 April 2022 had the effect of cancelling the deed of suretyship too. The court already found that the lease and deed of suretyship were divisible. It is apposite to mention that the deed of suretyship was signed by first respondent and a witness and this was never denied. [43]    It follows that the absence of a new deed of suretyship when the 3 May 2020 agreement was entered into did not detract from the validity of the deed of suretyship signed by first respondent on 16 September 2014. In fact, there was no need for a new deed of suretyship. [44]    The final question around the deed of suretyship is whether paragraph 10 of the 3 May 2022 agreement in any way cancelled the deed of suretyship. From the language used it is clear that the intention was for the deed of suretyship not to be "novated" or compromised".  It was certainly not cancelled or revoked. [45]    In Christie's Law of Contract in South Africa, 7 th edition on page 522 under the heading "Voluntary Novation" and with reference to the judgment in Swadif (Pty) Ltd v Dyke 1978 (1) SA 928 (A) it is stated that "When parties novate they intend to replace a valid contract by another valid contract".  From the wording of clause 10 it is clear that the parties did not intend to replace or cancel the deed of suretyship. [46]    For the reasons that are apparent from the previous paragraphs hereof the court has to find that the first respondent remained liable to the applicant as a surety for the debt of the tenant, Virko, which went into liquidation three months after the conclusion of the May 2022 agreement. [47]    While the first respondent raised a number of factual disputes in the papers, for the reasons apparent from the reasoning outlined in this judgment, the court finds that the respondent's version is not tenable and that a genuine dispute of fact does not exist. In following the rule in Plascon Evans Paints Ltd v van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51 ; 1984 (3) SA 623 (A)  the court accepts the credibility of applicant's version on the issue of indebtedness. [48]    Having established first respondent's liability it must be considered whether the first respondent's estate should be provisionally sequestrated. [49]    Applicant contends that it has a liquidated claim against the first respondent, that it has satisfied the requirements of section 10 of the Insolvency Act, 24 of 1936 and that there is reason to believe that the first respondent's sequestration will be to the advantage of creditors. [50]    Factual insolvency was alleged on the basis that the first respondent owes the amount of R4 376 821,84 to the applicant, that he owns no immovable property, that his movable property is insufficient in value to satisfy this debt and that he signed a number of other suretyships. [51]    With reliance upon De Waardt v Andrew & Thienhous Ltd 1907 TS 727 at 733, applicant also submitted that failure by the first respondent to pay his debt evidences his inability to do so. [52]    First respondent and his previous spouse entered into a divorce settlement agreement during January 2020. This agreement suggests that he holds a loan account of substantial value in a trust, the Jean-Mandi Trust. Applicant submitted that this and the sale of an immovable property forming part of this trust during 2023 for an amount of R21 000 000,00 point at an advantage to creditors. [53]    In his AA first respondent denied being factually insolvent or that a reasonable inference of insolvency can be drawn. He attached a list of assets illustrating a value of R10 845 132,00 albeit without adducing any documentary proof of such value. [54]    The court finds that the applicant has satisfied the requirements of section 10 of the Insolvency Act and that first respondent's estate should be placed under provisional sequestration. ORDER [55]    It is ordered that: 55.1        The estate of the First Respondent be placed under sequestration in the hands of the Master of the High Court, South Africa; 55.2        That a rule nisi is hereby issued, calling upon all persons concerned to show cause, if any, to this Honourable Court on 11 June 2024 at 10h00 or so soon thereafter as counsel may be heard why: 55.2.1   a final sequestration order should not be granted; 55.2.2   the costs of this application should not be costs in the administration of first respondent's estate; 55.3        That service of this order shall be effected by the sheriff; 55.3.1   on the respondent personally; 55.3.2   on the South African Revenue Service; 55.3.3   on such employees of the respondent as may exist; 55.3.4   by affixing a copy of the application to any notice board to which the sheriff and such employees have access inside the premises of First Respondent; or, 55.3.5   if there is no access to the premises by the sheriff and the employees, by affixing a copy of the application to the front gate of the premises, if applicable, failing which to the front door of the premises from which the first respondent conducted any business at the time of the presentation of the application herein. 55.4        That notice of this Order shall be given by prepaid registered post to all creditors with claims in excess of R5000.00 R BARENDSE Acting Judge of the High Court Appearances: For Applicant: Adv. AC Oosthuizen SC and Adv. J Bence (instructed by: PPM Attorneys) The Respondent: Adv. RS Van Riet SC and Adv. HN De Wet (instructed by: Werksmans Attorneys) sino noindex make_database footer start