THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 20023/2014

In the matter between:

MONYETLA PROPERTY HOLDINGS
(PTY) LIMITED

APPELLANT

and

IMM GRADUATE SCHOOL OF MARKETING
(PTY) LIMITED

FIRST RESPONDENT

NIGEL COLIN TATERSALL                               SECOND RESPONDENT

Neutral citation: Monyetla Property Holdings v IMM Graduate School of
Marketing (20023/2014) [2015] ZASCA 32 (25 March 2015)

Coram:
Ponnan, Shongwe and Leach JJA and Dambuza and Mayat AJJA

Heard:
26 February 2015

Delivered: 25 March 2015

Summary: Lease – cancellation by lessor due to lessee’s breach – lessor’s
claim for damages arising on cancellation – prescription running from
cancellation despite lessor remaining in occupation of the leased premises and
continuing to pay rental under a clause in the lease that obliged it to do so if
cancellation disputed – lessor’s claim prescribed.

________________________________________________________________

ORDER
________________________________________________________________

On appeal from: Gauteng Division, Johannesburg (Wepener J sitting as court
of first instance):
The appeal is dismissed with costs.
_______________________________________________________________
JUDGMENT
________________________________________________________________

Leach JA (Ponnan and Shongwe JJA and Dambuza and Mayat AJJA
concurring)

[1] An agreement of lease and its cancellation has proved to be fertile ground
for litigation between the parties to this appeal. In the present matter, the
appellant instituted action against the two respondents, claiming payment of an
amount it alleged it had suffered as damages due to the first respondent having
breached the lease which had led to its cancellation. The claim against the
second respondent was based on his being bound as surety and co-principal
debtor for the damages claimed. In response, the respondents raised two
‘special pleas’: first, that the claim had prescribed and, second,  relying on the
so-called ‘once and for all’ principle,1 that the appellant was precluded from
recovering its alleged damages as such loss ought to have been claimed in
previous proceedings between the parties.

1 As to which see eg Custom Credit Corporation (Pty) Ltd v Shembe 1972 (3) SA 462 (A) at 472A-E and Janse
van Rensburg &others NNO v Steenkamp and another;Janse van Rensburg &others NNO v Myburgh & others
2010 (1) SA 649 (SCA) paras 27-30.

[2]   When the matter came to trial in the Gauteng Division, Johannesburg the
court, acting under the provisions of Uniform rule 33(4), ordered that the two
special pleas be decided at the outset as separate issues. Thereafter, having
received certain documents and heard counsel for both sides, it upheld both
special pleas and dismissed the appellant’s claim.  A subsequent application for
leave to appeal was also dismissed. The appeal to this court lies with its leave.

[3] It is unnecessary to spell out the precise details of the lease that lies at the
heart of the dispute. Suffice it to say that it relates to certain immovable
property in Richmond known as Richmond Forum; that as at 31 July 2007 the
appellant became the registered  owner of the property; that the appellant leased
office space and parking bays situated on the property to the first respondent
under a written agreement of lease and an addendum thereto that was due to
expire on 30 September 2010; and that the second respondent had bound
himself as surety and co-principal debtor for the obligations of the first
respondent arising from the lease.

[4]  Clause 26.1 of the lease provided that in the event of the first respondent
having failed to pay any amount due in terms of the lease within seven days of
being obliged to do so, the appellant would be entitled to cancel the lease on
written notice and to claim immediate repossession of the leased premises.
Clauses 26.2 and 26.3 further provided as follows:
‘26.2 While the Lessee remains in occupation of the Premises and irrespective of any

dispute between the parties, including, but not being restricted to a dispute as to the

Lessor’s right to terminate this lease the ─
26.2.1 Lessee shall continue to pay all amounts due to the Lessor in terms of this
lease on the due dates;

26.2.2 Lessor shall be entitled to recover and accept such payments;

26.2.3 Acceptance by the Lessor of such payments shall be without prejudice to and
shall not in any manner whatsoever affect the Lessor’s right to terminate this
lease or to claim any damages whatsoever.
26.3 Should the dispute between the Lessor and the Lessee be determined in favour of the
Lessor the payments made to the Lessor in terms of this clause 26 shall be regarded as
amounts paid by the Lessee in respect of any loss and/or damages sustained by the
Lessor as a result of the breach.’

[5] Although the first respondent complied with its obligations under the
lease until 31 October 2007, it thereafter proceeded to fall into arrears and by
1 March 2009 had become indebted to the appellant in a sum in excess of
R2 million in respect of unpaid rental and other charges. Consequently, on
6 March 2009 the appellant exercised its right under clause 26.1 to cancel the
lease. The first respondent, however, disputed the validity of the cancellation
and refused to vacate the leased premises.

[6] As a result of the first respondent’s attitude, the appellant instituted
motion proceedings in the high court on 6 October 2009, seeking the eviction of
the first respondent from the leased premises. In addition it sought payment by
both respondents not only of the sum of R2 058 260,60 due at date of
cancellation of the lease but of a further amount of R750 298,04 due under the
provisions of clause 26.2 of the lease in respect of the first respondent’s
occupation of the leased premises from April 2009 to September 2009. For
convenience these proceedings will be referred to as ‘the first application’.

[7] The respondents opposed the first application, contending that the lease
had been unlawfully cancelled. However the court concluded otherwise. On 24
March 2010, it rejected the respondents’ defence and granted the appellant the
relief it sought. Despite this setback, the respondents remained obdurate; they
sought leave to appeal and the first respondent stubbornly continued to remain

in occupation of the leased premises until their application for leave to appeal
was dismissed on 29 April 2010.

[8]   Faced with the inevitable, the first respondent eventually vacated the
premises a few days later. But despite this, the respondents brought further
applications for leave to appeal, firstly, to this court and, thereafter, to the
Constitutional Court. Their view of the strength of their case proved to be
misplaced as both applications were dismissed, on 24 June 2010 and 16 August
2010, respectively.

[9] In the meantime, the appellant had on 20 April 2010 instituted further
motion proceedings in the high court (‘the second application’) in which it once
more sought an order against the respondents for payment under clause 26.2 of
the lease. On this occasion its claim related to the period October 2009 to April
2010 (ie from immediately after the period that was the subject of the claim in
the first application up to the date the first respondent vacated the premises.)

[10]   Although the respondents initially opposed the proceedings, they
subsequently conceded liability. Accordingly, on 29 September 2010, the
parties entered into a written settlement of their dispute that was made an order
of court on 12 October 2010.  In terms of this agreement, the respondents
undertook to pay the appellant R1 741 302 together with interest by way of
agreed instalments.

[11] This still did not bring an end to litigation between the parties. On 16
March 2012, the appellant issued summons in the present case in which it
claimed damages from the respondents in the sum of R1 192 493,81 allegedly
suffered due to the first respondent’s breach of the lease and its resultant
cancellation.  In its particulars of claim the appellant alleged that after the lease

had been cancelled the first respondent had remained in unlawful occupation of
the leased premises until the end of April 2010; that the first respondent had
made payments of all amounts owing by it in terms of the lease until 15 April
2010, and that:
‘As a result of the (first respondent’s) breach of the lease agreement and the resultant
cancellation thereof, the (appellant) has suffered damages in the amount of R1 192 493,81
which damages represent the rental, operating costs, rates, open parking, basement parking,
parking (additional premises), water, refuse, sewerage and electricity which the (appellant)
would have received in respect of the period 16 April 2010 to 30 September 2010 but for the
(first respondent’s) breach of the lease agreement.’

[12]   It was in pleading to this claim that the respondents raised the two special
pleas mentioned at the outset of this judgment that were upheld by the court a
quo. But despite this success, the respondents have since lost confidence in their
second special plea and, in this court, abandoned any reliance on it. In doing so
they conceded that the first and second applications had not involved claims for
damages but the enforcement of the provisions of clause 26 of the lease, and
that the ‘once and for all’ rule relating to claims for damages had therefore been
of no application. Accordingly the appeal turns solely on whether the plea of
prescription was correctly upheld in the court a quo.

[13] Turning to the issue of prescription, the respondents admitted in their
plea that the lease had been cancelled on 6 March 2009 due to the first
respondent’s breach, that the first respondent had remained in unlawful
occupation until the end of April 2010, and that the first respondent had made
payment for all amounts owing under the lease agreement until 15 April 2010
(those payments of course having included the payments made under clause
26.2 pursuant to its enforcement by way of the first and second applications).
However the respondents pleaded that the appellant’s claim had arisen on the

date of cancellation of the agreement on 6 March 2009, that the summons had
been served more than three years later on 19 March 2012, and that the claim
for damages flowing from that breach had therefore prescribed under s 11 of the
Prescription Act 68 of 1969.

[14] It is common cause that the prescriptive period applicable to the
appellant’s claim is three years.  But the appellant, in seeking to avoid the
contention that its claim had prescribed as more than three years had elapsed
after the lease was cancelled before action was instituted, argued both in this
court and in the court below that although the debt sued upon may have arisen
on date of cancellation;
(a) the amounts that became payable from the date of cancellation while the
first respondent was in occupation of the leased premises were due under the
provisions of clause 26.2.1 of the lease;
(b) the damages claimed in the present action relate to the period after the
appellant had vacated the premises;
(c) at the earliest those damages only became ‘due’ as contemplated in s 12 of
the Prescription Act on 30 April 2010 when the first respondent vacated the
premises as, until then, the first respondent was bound to pay for its occupation
under clause 26.2 of the lease;
(d) consequently all the facta probanda necessary for a complete cause of
action were not present until the property had been vacated;
(e) no damages for breach of the lease were therefore due before 30 April 2010,
and as action had been instituted within three years of that date, the claim had
not prescribed.

[15] I accept that there is a difference between the concept of a debt ‘arising’
and a debt ‘becoming due’ as envisaged by the Prescription Act, and that a debt

is only due, owing or payable ‘when the entire set of facts which the creditor
must prove to succeed with his claim against the debtor is in place: when
everything has happened which would entitle the creditor to institute action and
to obtain judgment’.2  But the argument that all the facta probanda necessary
for a complete cause of action were not present until the first respondent had
vacated the leased premises cannot be accepted.

[16]    The appellant’s claim is founded upon a breach of the lease, and the
general rule is that where one party commits a breach of a contract the other is
entitled to claim damages to place it in the position it would have been in had
the contract been properly and timeously performed.3  In the context of a lease
cancelled by the lessor due to a breach by the lessee, the prima facie measure of
damages is the rental that would have been paid for the premises over the
remaining period of the lease4 less any amounts received which would not have
accrued had the lease not been cancelled – and of course a lessor who cancels is
obliged to take reasonable steps, such as re-letting the premises, in order to
mitigate its loss.

[17] It must be remembered that a lease, once cancelled, comes to an end, and
there is thereafter nothing preventing the lessor from immediately instituting
action to place itself in the position in which it would have been had the lease
not been cancelled.  After all, the lessor’s damages amounts to the diminution
of its estate, its so-called interest or interesse,5 caused by the breach and
cancellation. Such loss will have been suffered whether the lessor vacates or
remains in occupation, and constitutes a debt ‘immediately claimable’.6

2 See Laubser Extinctive Prescription (1996) at 51-2.
3 See eg Mostert NO v Old Mutual Life Assurance Company (SA) Ltd 2001 (4) SA 159 (SCA) at 187.
4 Hazis v Transvaal and Deladoa Bay Investment Co Ltd 1939 AD372 at 387.
5 Van der Merwe et al Contract General Principles 4 ed (2012) para 11.5.2.
6 Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd 1991 (1) SA 525
(A) at 532H.

Consequently I endorse the observations in Hyprop7 that ‘continued occupation
of the premises is irrelevant to a claim for damages arising from cancelling a
lease due to the tenant’s breach’8 and that the effect of the lessee remaining in
occupation after cancellation is to preclude it from alleging that the lessor
should have mitigated its loss before it vacated.9

[18]   I do not see how this position can be said to be altered by the provisions
of a clause such as s 26.2 that simply obliges the lessee to pay the amount that
would otherwise have been paid as rental should it remain in occupation and
dispute the cancellation.  If it does so and the cancellation is held to be valid, as
was here the case, any amounts so paid under the clause must be taken into
account (just as the rental from a replacement tenant would be) to determine the
lessor’s actual loss. But that does not mean the loss has not been suffered or that
the claim to recover that loss has not accrued. In the present case, for example,
the fact that the first respondent remained in occupation did not mean that the
loss the appellant claims in these proceedings had not been suffered on
cancellation, even though it relates to the period after the first respondent
eventually vacated. To hold otherwise would confuse the right to claim loss that
has been suffered with what is required to prove the amount thereof.

[19] Consequently, on cancellation of the contract due to the respondent’s
breach, the appellant became entitled to claim damages over the period from the
date of that breach to 30 September 2010 when the lease was due to expire
through the effluxion of time. The measure of its damages was the sum of the
rentals that would have been due during that period, less whatever amounts it
received in mitigation of such loss. Those amounts included the sums paid by
the respondents under clause 26 (albeit pursuant to the orders made in the first

7 Hyprop Investments Ltd v NCS Carriers and Forwarding CC 2013 (4) SA 607 (GSJ).
8 Para 36
9 Pars 38.

and second applications). The damages that are the subject of the present claim
were thus due and payable as at the date of cancellation. On that date everything
had happened which would have entitled the appellant to institute action and to
obtain judgment in respect of the period for which the damages presently being
claimed are calculated. The debt sued upon was therefore due.

[20]  The appellant’s argument that its claim only arose once the first
respondent had vacated the leased premises therefore falls to be rejected. So,
too, does its further argument arising out of the rental for March 2009 having
been included in the amount claimed in the first application. It was submitted
on behalf of the appellant that as the rental for that month had been included in
the amount in respect of which judgment was given and paid pursuant to the
high court’s order in the first application, its patrimony had been affected only
with effect from 1 April 2009 and that prescription could therefore only run
from that date. As that was slightly less than three years before the issue of
summons, so it was argued, the claim therefore could not have prescribed.

[21]   Again this loses sight of the fact that the claim arose when the contract
was cancelled. It was then that the loss was suffered, and while any amount in
respect of rentals due thereafter recovered pursuant to the first and second
applications are to be taken into account in calculating the actual loss suffered,
this does not mean that the claim had not risen or that the loss suffered by the
breach could not be claimed on cancellation.

[22] In the result, as action was instituted more than three years after the debt
sued upon had become due, the special plea of prescription was correctly
upheld in the court a quo. The appeal must therefore fail.

[23]   The appeal is dismissed with costs.

______________________
L E Leach
Judge of Appeal

Appearances:

For the Appellant:

J Both SC

Instructed by:

Kokinis Inc, Blairgowrie, Randburg

Phatshoane Henney, Bloemfontein

For the Respondent:

D C Fischer SC
Instructed by:
Blakes Maphanga Attorneys, Ferndale,
Randburg

Symington & De Kok, Bloemfontein

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:  The Registrar, Supreme Court of Appeal
Date:   25 March 2015
Status:  Immediate

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal

Neutral citation:
Monyetla Property Holdings v IMM Graduate School of Marketing
(20023/2014) [2015] ZASCA 32 (25 March 2015)

The appellant, the owner of certain commercial property in Richmond, had leased office
space and parking bays to the first respondent, a company in respect of whose debts the
second respondent had stood surety. Clause 26.2 of the lease provided that should the first
respondent remain in occupation of the premises pending a dispute as to whether the
appellant had lawfully cancelled the lease, it would continue to pay all amounts due in terms
of the lease.
The first respondent fell into substantial arrears in respect of its rentals and by 1 March 2009
had become indebted to the appellant in a sum in excess of R2 million. Consequently, on
6 March 2009, the appellant exercised its contractual right to cancel the lease. The first
respondent disputed the validity of the cancellation and refused to vacate the premises. This
led to the appellant instituting eviction proceedings in the high court in which it sought also
payment of amounts in respect of rental under clause 26.2 for the period April 2009 to
September 2009. Judgment was granted in the appellant’s favour in respect of the sum.
Eventually the first respondent vacated the premises at the end of April 2010. Shortly before,
the appellant had instituted further proceedings in which it sought further payments under
clause 26.2 of the lease relating to the period October 2009 to April 2010. This claim was
settled with the respondent’s undertaking to pay a sum in excess of R1,7 million.
Thereafter, on 16 March 2012, the appellant issued summons in the present case claiming
damages for the alleged breach of contract which had resulted in the cancellation of the lease,
calculating its loss of the period 15 April 2010 to the date on which the lease had been due to
expire. The amount claimed was therefore additional to the amounts in the two earlier
proceedings.

The respondents pleaded that this claim had prescribed as it was instituted more than three
years after the lease had been cancelled. The appellants sought to meet this by contending
that the claim related to the period after it had vacated the period and that the damages
therefore only became due on 30 April 2010 less than three years before action was
instituted.
The Supreme Court of Appeal today held that the Gauteng Division had correctly upheld the
special plea of prescription. It rejected the contention that the claim only arose after the first
respondent had vacated the property and concluded that prescription had commenced to run
and the debt sued upon had become due when the lease was cancelled.
---ends---