Diplobox (Pty) Ltd t/a Pretoria Institute of Learning and Others v Ozmik Property Investments (Pty) (Leave to Appeal) (58806/2020) [2023] ZAGPPHC 2033 (11 December 2023)

Key Facts

Transaction Type

Issues

• Diplobox claimed the lockdown regulations caused supervening impossibility of performance, but the court ruled that the lockdown only reduced profitability, not making performance impossible. The breach occurred before and after the lockdown.
• Diplobox argued it was not bound by the lease's anti-appeal clause, but the court found the clause valid and enforceable, as Diplobox had agreed not to appeal any decision.
• The court found Diplobox's defense lacked bona fides and was a delaying tactic, as their arguments were vague and not seriously challenging Ozmik's claim.
• The court determined that Diplobox's application for leave to appeal did not meet the requirement of a reasonable prospect of success as per Section 17(1)(a) of the Superior Courts Act, and there were no compelling reasons to grant the appeal.
• The court confirmed that Ozmik's claim was for a liquidated amount in money, as it was based on an agreed sum and could be calculated, thus qualifying for summary judgment.

Holdings

• The court dismissed Diplobox's application for leave to appeal, finding no reasonable prospect of success. It held that Diplobox's failure to pay rent prior to and after the lockdown, combined with the lease agreement's terms, left them in breach. The court also determined that the lease agreement's non-variation clause (clause 18) barred Diplobox from unilaterally altering terms, including the arbitration clause (clause 17.6), which they had agreed to. Additionally, the court affirmed that the claimed amount was a 'liquidated amount in money' under the lease agreement, making it eligible for summary judgment.
• The court rejected Diplobox's defense of supervening impossibility due to the Covid-19 lockdown, noting that the lease agreement remained enforceable as the lockdown did not render performance illegal. It emphasized that the regulations restricted operations but did not prohibit the lessee from using the premises or paying rent. Diplobox's non-payment before and after the lockdown was deemed a breach, and their reliance on the lockdown as a justification was found without merit.
• The court found Diplobox's constitutional challenge to clause 17.6 (limiting access to courts) to be without merit, as the argument was not raised in the lower court and was procedurally barred. It highlighted that Diplobox had agreed to the clause, which explicitly waived their right to appeal arbitration or court decisions, and their subsequent appeal violated this contractual undertaking.

Remedies

Monetary Damages

Legal Principles

• The court emphasized the principle of pacta sunt servanda (contracts must be honored), stating that Diplobox was bound by the lease agreement's terms, including the obligation to pay rent in advance and the non-variation clause preventing oral amendments. The judgment underscores that Diplobox's failure to comply with these contractual obligations constituted a breach, and its attempt to avoid liability through the Shifren clause and pandemic-related defenses lacked legal merit.
• The court found Diplobox's defense lacked good faith, noting its vague and non-sensical arguments (e.g., claiming no liability despite prior payments) were designed to delay proceedings rather than present a genuine legal challenge. This conclusion was based on Diplobox's inconsistent positions and failure to raise critical issues (like clause 17.6's constitutionality) during the initial court proceedings.

Precedent Name

• Commissioner of Inland Revenue v Tuck
• Chithi and Others; in re: Luhlwini Mchunu Community v Hancock and Others
• Paddock Motors (Pty) Ltd v Igesund
• Botha v W Swanson & Company (Pty) Ltd
• Slabbert N O & 3 Others v Ma-Afrika Hotels t/a Rivierbos Guest House
• S v Smith
• Herne Bay Steam Boat v Hutton
• Hennops Sport (Pty) Ltd v Luhan Auto (Pty) Ltd
• Brisley v Drotsky
• Mont Chevaux Trust v Goosen and Eighteen Others
• Freeman and Another v Beckett and Another
• Fairtrade Tobacco Association v President of the Republic of South Africa
• MEC for Health, Eastern Cape v Ongezwa Mkhitha and The Road Accident Fund
• Krell v Henry
• Pick 'n Pay Retailers (Pty) Ltd. T/a Hypermarkets v Dednam
• Fatti's Engineering Co (Pty) Ltd v Vendick Spares (Pty) Ltd
• CUSA v Tao Ying Metal Industries and Others
• Taylor v Caldwell
• Notshokovu v S
• SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren and Others
• Fusion Properties 233 CC v Stellenbosch Municipality
• Quality Machine Builders v MI Thermocouple (Pty) Ltd.
• Lester Investments (Pty) Ltd v Narshi

Key Disputed Contract Clauses

• Clause 1.1 of the lease agreement mandates monthly rental payments in advance without deduction. The court found Diplobox breached this by failing to pay rent starting February 2020, weeks before the lockdown, and continuing after restrictions eased.
• Clause 17.6 prohibits the lessee from appealing arbitration or court decisions. The court upheld this clause, noting Diplobox agreed to it but now seeks to appeal despite its explicit terms, which the court deemed unenforceable as a defense.
• Clause 18 states the lease cannot be amended except in writing signed by both parties. The court emphasized this clause's enforceability, rejecting Diplobox's oral or implied modifications to the agreement, including pandemic-related remission claims.

Cited Statute

• Uniform Rules of Court 32(1)(b)
• Disaster Management Act No. 57 of 2020
• Superior Courts Act 10 of 2013

Judge Name

Passage Text

• The LESSEE agrees and understands not to appeal against any decision of such Arbitration or Court of Law.
• The bringing in of Rule 32 (1) (b) does not take this matter any further.
• Leave to Appeal may only be granted where the judge or judges concerned are of the opinion that the appeal would have a reasonable prospect of success.

Damages / Relief Type