THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable
Case No: 290/2017

In the matter between:

ZITONIX (PTY) LIMITED                                                                         APPELLANT

and

K201250042 (SOUTH AFRICA) (PTY) LIMITED                                 RESPONDENT

Neutral citation:  Zitonix v K201250042 (290/2017) [2018] ZASCA 63 (21 May
2018)
Coram:
Lewis and Swain JJA and Davis, Mothle and Rogers AJJA
Heard:
10 May 2018
Delivered:
21 May 2018

Summary:   Where a claim for the cancellation of lease agreements, and the
eviction of the tenants, is based only on the terms of the agreements, and not on the
title of the lessor, the court of the tenants’ domicile, and of the place where the
contracts were concluded, has concurrent jurisdiction with that of the forum rei sitae.
Ignorance of a term of the leases entitling the lessor to cancel in the event of a
surety’s sequestration not a justus error on the facts.

___________________________________________________________________

ORDER

On appeal from: Western Cape Division of the High Court, Cape Town (Holderness
AJ sitting as court of first instance):
The appeal is dismissed with costs including those of two counsel, save that para 3
of the order of the Western Cape Division of the High Court is set aside.

JUDGMENT

Lewis JA (Swain JA and Davis, Mothle and Rogers AJJA concurring)

[1] This is an appeal against a judgment handed down by Holderness AJ in the
Western Cape Division of the High Court of South Africa, in an application seeking
the confirmation of the cancellation of five leases, and the eviction of the tenants
from the premises hired by them. She made the orders sought in the application, and
authorized the Deputy Sheriff of the High Court to eject the tenants in the event of
their failure to vacate the premises.

[2] The defences to the applications were dealt with comprehensively by the
court a quo and were all rejected. I do not propose to deal with them all, in view of
the fullness of the judgment of the court a quo, which cannot be faulted in any
respect, and because in any event only two were pursued with any vigour on appeal.

[3] The appellant is a company, Zitonix (Pty) Ltd (Zitonix), which had traded in
fashion, with several different South African brands, in shopping centres throughout
the country. By the time the application to the court a quo was heard, Zitonix had
shops in only one shopping centre, the Gateway Theatre of Shopping (the centre) in
Umhlanga, KwaZulu Natal. The controlling mind of the tenant companies is

Mr  Marcel Joubert. The applications for confirmation of cancellation of the leases
and eviction were in respect of these shops, and were brought by the manager of
that centre, Old Mutual Property Manangement Services (Pty) Ltd, acting on behalf
of the owner of the centre, K2012150042 (South Africa) Pty) Ltd, the respondent.
I shall refer to the respondent as the lessor.

[4] It should be noted that Zitonix is part of the Platinum Group (Pty) Ltd, which
owned the brands. Joubert was the sole director of the Platinum Group, and of
Zitonix, until his final sequestration in 2016. The Platinum Group has its registered
office in Hout Bay, Cape Town, and that is Joubert’s residential address as well.
The address in Hout Bay is also the chosen domicilium citandi et executandi of the
tenants of the shops in the centre.

[5] Joubert had concluded leases in respect of the shops in the centre in Cape
Town in February 2016. The shops had leases in the premises before then, and in
order to persuade the lessor to enter into new leases, Joubert had paid what he
called a ‘premium’ to the lessor: in fact, the amount paid was arrear rental in respect
of the shops. And the lessor agreed to backdate the leases to August 2015. Joubert
signed as surety in respect of the five leases.

[6] Zitonix fell into arrears shortly after February 2016, and the lessor cancelled
the leases. The disputes between the parties were resolved, however, and the
leases ‘reinstated’ on the same terms. Zitonix again defaulted, and the lessor gave
the tenants the opportunity to remedy their breaches in terms of clause 16.1(a) of
each of the leases. That did not really assist the lessor because by August 2016 four
of the lessees were again in default.

[7] The lessor sent letters of cancellation of the leases in respect of those four
leases on 25 August 2016, and then further letters of cancellation in respect of all
five leases on 31 August 2016. A new breach was relied on in the five letters
cancelling the leases – the final sequestration of Joubert as surety. A final order of
sequestration of Joubert was issued on 22 August 2016, which, under clause 16.1(e)
of the leases, amounted to a breach warranting cancellation. Clause 16 dealt with
breach generally. Clause 16.1 read ‘should the tenant’ commit any one of a number

of breaches the lessor would be entitled to cancel. Subclause (e) read ‘should any
surety of the Tenant be sequestrated or placed in liquidation’, the lessor had the right
immediately to cancel the lease and resume possession of the premises.

[8] As I have said, Zitonix raised numerous defences to the application for
cancellation and eviction brought by the lessor. These were (a) that the Western
Cape Division did not have jurisdiction to entertain the application since the property
– the centre – is in KwaZulu-Natal which is the forum rei sitae; (b) the deponent to
the founding affidavit did not have authority to depose to it; (c) the letters of
cancellation were deficient in that they did not disclose in detail what was due in
arrear rental and other charges; (d) Joubert had been ignorant of the provisions of
clause 16(1)(e) as a result of iustus error and his sequestration could not therefore
ground cancellation; and (e) that the lessor was engaged in anticompetitive
behaviour, an issue that had to be referred to the Competition Tribunal in terms of
s 65 of the Competition Act 89 of 1998.

[9] Holderness AJ found that each of these defences was lacking in merit and
rejected them. On appeal, Zitonix persists only with the arguments on lack of
jurisdiction, and Joubert’s ignorance of the suretyship provision in the leases. I shall
accordingly deal only with these two issues, and then only briefly, as Zitonix virtually
conceded that the conclusions of the court a quo were correct.

Jurisdiction
[10] The basis for the argument that the Western Cape Division did not have
jurisdiction is that the application for eviction was one in rem and thus only the forum
rei sitae had jurisdiction. It was put to counsel for Zitonix that the application for
confirmation of the cancellations was based on the contracts of lease – a contractual
claim and not one in rem – and that the application for eviction was equally based
not on possession or title, but was entirely contractually founded – in personam.
The lessor did not at any stage of the proceedings allege that it had title – ownership.
The application was not a rei vindicatio. The lessor was not exercising a possessory
remedy either. As the domicile and residence of Zitonix were in Hout Bay, Cape
Town, the court a quo had concurrent jurisdiction with the KwaZulu-Natal Division.
As Holderness AJ said, if the leases were validly cancelled, no issue of title arose.

[11] Counsel for Zitonix conceded, as he had to do, that if the action was not in
rem, then the jurisdiction argument had to fail. I shall accordingly not traverse the
authorities that deal with the jurisdiction of a court that is not the forum rei sitae. The
court a quo did not err in this regard. It considered, correctly, that s 42(1) and (2) of
the Superior Courts Act 10 of 2013, which deal with the execution of process
throughout the country, permits the Sheriff of the KwaZulu-Natal Division to execute
in that Division if the tenants failed to vacate the premises. To the extent that the
court a quo made an order that the Sheriff or Deputy Sheriff of the Western Cape
Division be authorized to execute in the event of the tenants not vacating, that part of
the order must be set aside. The Western Cape Division does not have the authority
to make any order against the officers of the court in KwaZulu-Natal. If the tenants
fail to vacate the premises, the lessor will, by virtue of s 42,  be entitled to obtain a
writ of ejectment  from the Registrar of the KwaZulu-Natal Division of the High Court
for execution by the Sheriff or Deputy Sheriff of that court. No special order to that
effect is needed.

The effect of the surety’s sequestration
[12] Zitonix alleged that Joubert had signed the leases oblivious to the
consequences of his sequestration. He did not know that if he were sequestrated,
the lessor would be entitled to cancel the leases in terms of clause 16.1(e) of the
leases. He had thus erred and his error was iustus because at the time of signing,
the lessor, through its legal representative, knew that he was on the brink of
sequestration, yet allowed him to enter into long term leases despite its right to
cancel in the event of his sequestration.

[13] The evidence adduced by the lessor showed, however, that it was not aware
of the possibility of final sequestration at the time of signing the leases. Moreover,
Joubert, an experienced businessman, who had entered into many similar leases
beforehand, containing similar clauses, was represented in negotiations by his
attorney. He had signed some 25 leases with this same clause with the lessor itself.
There is no reason to believe that Joubert was misled in this regard. And equally
there is no reason to accept the argument that clause 16.1(e) was ‘tucked away’ in

the lease agreement. It appeared in the body of each lease under the heading
‘breach’. This defence must also be rejected.
[14] Holderness AJ dealt comprehensively with the other defences, including the
argument that the lessor’s conduct was anti-competitive and should be referred to
the Competition Tribunal. She declined to do that. Zitonix did not persist with the
arguments regarding the other defences raised in the court a quo at the hearing of
the appeal.

[15] Accordingly, the appeal is dismissed with costs including those of two
counsel, save that para 3 of the order of the Western Cape Division of the High
Court is set aside.

_________________________
C H Lewis
Judge of Appeal

APPEARANCES
For Appellant:

R S van Riet SC, with him S Miller

Instructed by:

Reid W Corin, Cape Town

Lovius Block, Bloemfontein

For Respondent:

I Jamie SC, with him K Reynolds

Instructed by:

Cliffe Dekker Hofmeyer Inc, Cape Town

Honey Attorneys, Bloemfontein