Presentation on theme: "A Discussion of Business Aviation Corporation (Pty) Ltd v Rand Airport Holdings (Pty) Ltd  SCA 72 RSA HM van den Berg."— Presentation transcript:
A Discussion of Business Aviation Corporation (Pty) Ltd v Rand Airport Holdings (Pty) Ltd  SCA 72 RSA HM van den Berg
Facts of the Case RAH owned Rand Airport and leased parts of the property to BAC in terms of an oral lease agreement. Proceedings started in the Magistrate’s Court in Germiston when RAH sought an eviction order against BAC. RAH claimed that the lease was terminable on one month’s notice and BAC failed to vacate the property when notice was duly given.
Facts of the Case BAC raised two defenses: 1. The lease was not a monthly tenancy, but a long term lease which entitled them to occupy the property for at least another five years. 2. They were entitled to an enrichment lien for necessary and useful improvements of the property for which they had not been compensated.
Facts of the Case The outcome of the main defense depended on issues of credibility, which the magistrate decided in favor of the plaintiff. The alternative defense was also dismissed, based upon the plaintiff’s contention that the lien was abolished by two Placaeten during the 17 th century (articles 10 to 13 of the ‘Placaet vande Staten van Hollandt, tegens de Pachters ende Bruyckers vande Landen’ of 1658, with article 10 being the crux. The provisions of this Placaet were re-enacted in almost identical terms in a ‘Renovatie-placaet’ of 1696.).
Facts of the Case BAC appealed to the Johannesburg High Court. The High Court found that BAC’s criticism for the credibility findings of the first defense could not be sustained. Their argument that article 10 only applied to rural tenements were also rejected and the appeal was dismissed. Appeal to the SCA was granted only ‘in respect of the existence of law, or not, of the lien for which [they] contended’.
Legal Questions (SCA) Are the Placaeten relevant in South African law? Do the Placaeten of 1658 and 1696 apply to rural tenements only? Is the lessee’s enrichment lien abolished by these Placaeten? Should a court interfere with settled legal principles?
Discussion: the Placaeten It is generally accepted that in Roman Dutch Law and Roman Law, lessees were originally in the same position as bona fide possessors as far as claims for improvements to leased properties were concerned. Therefore lessees had an enrichment claim for impensae necessitas and impensae utiles, subject to contractual provisions. Lessees also had an enrichment lien (ius retentionis) over the leased property still in their possession until their claims for compensation had been satisfied.
Discussion: the Placaeten Malpractice amongst lessees led to the promulgation of the Placaeten by the Estates of Holland. These Placaeten restricted the lessee’s right to compensation. Article 11 stated that compensation payable for ‘structures’ was restricted to bare materials, excluding sand and lime and excluding cost of labor as well.
Discussion: the Placaeten A 12 dealt with structures erected without the landlord’s consent: no compensation could be claimed, but lessees were allowed to break the structures down and remove the material before the end of the lease. According to a 13, a lessee’s right to claim for plantings and trees were limited to those planted on the instructions of the owner and then only the original cost of the plants.
Discussion: the Placaeten A 10: “Provided, nevertheless, that whenever the owner of any lands, takes them for himself, or lets them to others, he is bound to pay the old lessee, or his heirs, compensation for the structures, which the lessee had erected with the consent of the owner, as well as for ploughing, tilling, sowing and seed corn, to be taxed by the court of the locality, without, however, the lessees being allowed to continue occupying and using the lands, …
Discussion: the Placaeten “...after the expiration of the term of the lease, under the pretext of (a claim for) material or improvements, but may only institute their action for compensation after vacating (the lands).” W E Cooper Landlord and Tenant 2 ed p 329 note 3, as quoted in Business Aviation Corporation v Rand Airport Holdings par 8 [own emphasis].
Discussion: the Placaeten In terms of a 10, lessees retained their right to claim for improvements, but only for improvements effected with the landlord’s consent. The lessees did, however, lose their right for an enrichment lien: they had to vacate the property before instituting any actions for compensation.
Discussion: relevance in SA law The question now is whether these Placaeten ever became part of South African law and, if so, to what extend. This was discussed by the Appellate Division in Spies v Lombard 1950 (3) SA 469 (A). Spies dealt with a 9 of the Placaeten and the issue of sub-letting. Brand JA stated at par 11 of the current case that ‘…it can…be accepted as being beyond controversy that the provisions of art 10…did become part of our law.’
Discussion: limited to rural tenements? The crucial question now is whether the provisions of a 10 are limited to rural properties. In par 12 the Judge refers to De Vries v Alexander (1880) Foord Rep 43 where De Villiers CJ found that a 9 (prohibition against sub-letting without the owner’s written consent) only applied to agricultural tenements. The same Judge stated obiter in De Beers Consolidated Mines v London and SA Exploration Company (1893) 10 SC 359 that articles 10 – 12 applied to urban tenements as well.
Discussion: limited to rural tenements? De Villiers CJ gave two reasons for stating that articles 10 – 12 applied to urban tenements as well [par 13]: 1. Van der Keessel referred to lessees in general when he discussed these articles in his Theses Selectae, opposed to a 9 where he mentioned praediis rusticis specifically. [Brand mentions in par 16 that Van der Keessel stated clearly in his Praelectiones that the articles applied only to ‘colonis sive conductoribus agrorum’.] 2. The Placaeten do not intend to place agricultural lessees in a better position than urban lessees.
Discussion: limited to rural tenements? In par 14 Judge Brand found that neither of these two reasons can be sustained. The ‘evil’ or ‘mischief’ that the Placaeten were aimed at were clearly described by the legislature: the reason for the promulgation of the Placaeten ‘was to curb the moedwilligheden…by pachters ende huyrluyden’. He further claimed that the second reason was erroneous and stressed (e.g. in par 23) that it was only mentioned obiter. Bodenstein suggested that the reason as to why the Placaeten did not extend to lessees of urban properties, was that ‘van huurders van huizen hooren wij die klacht nooit’. The ‘klacht’ referred to, was one of the ‘moedwillighede’ described in the preamble.
Discussion: limited to rural tenements? The Privy Council, in an appeal of De Beers, agreed with De Villiers’ obiter statements, although they mentioned it obiter as well. Both the Supreme Court and the Privy Council based their decision on a contractual clause. Van der Heever JA in Spies v Lombard par 476H supported the proposition that the provisions of the Placaeten as a whole were limited to agricultural property: ‘The prohibition is directed against “Bruyckers ofte Pachters”’.
Discussion: limited to rural tenements? Kotzé JP (with Van Zyl J concurring) stated in Burrows v McEnvoy 1921 CPD 229 that De Beers did not preclude him from deciding that a 12 ‘does not directly affect the question of an urban lease which is the case with which we have to deal.’ He is of the opinion (at 234) that the Placaat is intended at lessees of land in the country. In Van Wezel v Van Wezel’s Trustee 1924 AD 409, Wessels JA concluded that the issue of the applicability of the Placaeten to urban tenements had been finally decided in De Beers. His argument, however, was only based around a 12.
Discussion: limited to rural tenements? Brand JA stated in par 23 that the statement by Wessels JA with regard to urban leases is insupportable in at least three respects: 1. ‘…[I]t was never really ‘questionable’ whether the placaeten applied to urban leases as well.’ 2. ‘…[T]he statement…by Lord de Villiers… cannot be regarded as authoritative, because it turned out to be both obiter and erroneous.’ 3. ‘..[T]hat statement had not been approved by the Privy Council in a considerable judgment.’
Discussion: limited to rural tenements? It is, however, this dictum by Wessels JA that became the gist of the court a quo’s judgment in this matter. Although Wessels JA only referred to a 12, Goldstein J held that, because of the interrelationship between aa 10 – 12, it must refer to a 10 as well. Brand JA concurred at par 24. Goldstein stated further that the statement by Wessels JA was part of the ratio decidendi and not mentioned obiter. Brand JA discussed the facts of Van Wezel in some detail in par 25 to par 30 and decided that the statement was made obiter.
Discussion: limited to rural tenements? The High Court held in Syfrets Participation Bond Managers v Estate & Co-op Wine Distributors (Pty) Ltd 1989 (1) SA 106 (W) and Palabora Mining Co Ltd v Coetzer 1993 (3) SA 306 (T) that a 10 did in fact extend to urban leases. In Syfrets, Van Zyl J referred to the maxim unius inclusio est exclusio alterius. He also argued the Dutch ‘landen’ was a rendition of the Latin term solum, as used in omne quod inaedificatur solo cedit and superficies solo cedit. He translates it as ‘land, earth, ground or soil or the like’ and states that it is not limited to a particular area.
Discussion: limited to rural tenements? Lastly, he states that it would be unfair to deny agricultural lessees a lien which is afforded to their urban counterparts. Mahomed J, in Palabora, also found that a 10 extended to urban leases. His decision as mainly influenced by this argument by Van Zyl J.
Discussion: limited to rural tenements? Brand JA argues, at par 33, that urban lessees are not excluded from the operation of the Placaeten because of any reliance on this maxim, but because of the wording. He further stated that the landen=solum argument is equally insupportable. The reference in the Placaeten is not merely to ‘landen’ but to ‘pachters en bruyckers van landen’. Brand JA disagreed with Van Zyl’s last argument as well (at par 35).
Discussion: limited to rural tenements? Brand JA concluded, at par 37, that, contrary the court a quo’s finding, a 10 provides an answer to BAC’s reliance on an enrichment lien. A 10, therefore, only applies to rural tenements.
Discussion: should a court interfere with settled legal principles? The plaintiff’s final argument was that, even though the hypothesis that a 10 applied to urban leases as well now turns out to be based on a misinterpretation of the law, parties to urban leases acted for many years on the basis of legal advice that their contracts were subject to the provisions of these ancient enactments. Lessors would hence have deemed it unnecessary to impose contractual limitations on a lessees’ right to claim compensation for improvements or to provide for the exclusion of enrichment liens.
Discussion: should a court interfere with settled legal principles? At par 38, Brand JA stated that the argument that a court should not interfere ‘with what was described as a well-established rule of our law’ was supported by a number of cases, a few of which he mentioned. At par 40, he claimed that what he thought the plaintiff’s argument amounted to, is a reliance on the maxim communis error facit ius.
Discussion: should a court interfere with settled legal principles? This maxim was described by Innes J in Webster v Ellison 1911 AD 73 at 92 as ‘that dangerous maxim’ which can only find application if the usage based on error can be described as ‘uniform and unbroken’. Brand JA is of the opinion that acceptance of the thesis that the Placaeten also extended to urban leases cannot be described as either uniform or unbroken. He referred to De Beers and the commentary by Bodenstein which showed that Lord de Villiers was mistaken. Then came Rubin, but after Rubin came Burrows. Then came Syfrets and Palabora.
Discussion: should a court interfere with settled legal principles? The plaintiff relied on the statement by Wessels JA in Van Wezel. According to the plaintiff, the extension of the Placaeten must be accepted as part of our law, simply because De Beers were confirmed by the Privy Council. This is supported by the fact that many writers considered this as settled principle of our law, based on the statement by Wessels JA.
Discussion: should a court interfere with settled legal principles? Brand JA states again at par 43 that a close analysis of Wessels’ statement would show that it was not part of the ratio decidendi. The obiter statement also lost persuasive force after Spies. After Spies nearly all textbooks aligned themselves to the position that the Placaeten did not apply to urban leases. The plaintiff’s argument of a long-standing, uniform and unbroken practice also failed.
Judgment Appeal is upheld with costs. The order of the court a quo is set aside and replaced by the following: 1. The appeal is upheld with costs. 2. The matter is referred back to the magistrate’s court for continuation of the trial on the outstanding issues.
Comments The effect of this judgment is that a tenant has an enrichment lien over the landlord’s property it (the tenant) has improved. This lien entitles the tenant to remain in occupation of the property until the dispute for compensation for improvements has been settled. Samantha Wirthel, director of Bell Dewar & Hall, stated that the tenant will be entitled to compensation for improvements done without the landlord’s permission, and that improvement can be sub-letting at a higher price. Quoted by Legal Brief, August 10 2006, Issue 1639.