Swaziland Government v Tuntex Textile (PTY) Ltd and Others (702/2015) [2018] ESHC 214 (05 October 2018);

 IN THE HIGH COURT OF ESWATINI

JUDGMENT

In the matter between:                                                         Case No. 702/2015; 703/2015

 

SWAZILAND GOVERNMENT                                                               Applicant

 

And

 

TUNTEX TEXTILE (PTY) LTD                                                  1^st Respondent

TUNTES GARMENTS (PTY) LTD                                                         2^nd Respondent

LOGICO UNLIMITED (PTY) LTD                                                       3^rd Respondent

 

 

Neutral Citation:      Swaziland Government v Tuntex Textile (PTY) Ltd and 2 Others [2018] ESHC 214 (702/2015;703/2015)

 

Coram:                       M. Dlamini J

Heard:                                    19^th September, 2017        

Delivered:                 28^th  September, 2017

 

Constitution       :                   Section 19 of the constitution – interpretation thereof – key phrase – “compulsory take or acquisition of land or right over it” – section does not infringe upon pacta sunt servanda (freedom to contract) - take or acquisition without consent - duty of lessor to compensate lessee is resonate with section 19

 

Contract             :                   Lease agreement -  principles of interpreting terms of a contract discussed – first port of call is to give words their ordinary day-to-day sense – unless such would lead to manifest absurdity –

                                               Party alleging term of contract not there – court to ascertain if such alleged term is tacit – rules on how to ascertain discussed – court not to imply term if the no ambiguity even though it may be reasonable to import same under the circumstance

                                             

                                               interpretation of preambles and recitals in a contract discussed – court not to treat every provision in a contract as if meant to create contractual obligation – if no ambiguity is found in operative clauses of contract, court not to resort to preamble or recital in order to elucidate the meaning of operative clauses

                                               significance of parties appending signature on a document – caveat subscripto – let he who signs take care principle – consensus imputed

 

                                               Doctrine of election discussed – party electing must be a party to the original document –

 

Summary:  The Government of eSwatini (formerly Swaziland) (Government) contends that Tuntex Textile and Tuntex Garment (Tuntex) have ceased their operation over its leased properties and following clause 5 of their lease agreements, the lease should be declared cancelled.  Tuntex disputes the interpretation and argues that clause 5 is contradictory to clauses 2 and 4 and therefore the court should not give effect to it.  It submits that it closed down its operation following Government’s failure to discharge its obligations under African Growth and Opportunity Act (AGOA).

 

                   The parties

[1]               The applicant is the Government of this Kingdom (Government).  Part of its duties is to engage in active attraction of foreign investors into the Kingdom for the benefit of its people.

           

[2]               The 1^st and 2^nd respondents respectively are Tuntex Textile (PTY) Ltd and Tuntex Garment (PTY) Ltd, companies duly incorporated and registered in terms of company laws of our Kingdom in 1996 and 1998.  Their principal place of business is situate at Matsapha Industrial area, Manzini region.  Following a consolidation order, I shall refer to both 1^st and 2^nd respondents as Tuntex.  Their incorporation and registration is as a result of the mandate by the Government to attract foreign investment.

 

[3]               3^rd respondent is Logico Unlimited (PTY) Ltd (Logico), a company incorporated and registered in accordance with the company laws of eSwatini, conducting its business in the same premises formerly occupied by Tuntex by virtue of a subsisting sub-lease agreement between Tuntex and itself.

 

                   Brief Synopsis

[4]               From the holistic reading of the pleadings serving before me, it appears that following the onerous task by Government to solicit for foreign investment in order to create employment opportunities for its labour force, Tuntex shareholders responded to the call.  Government entered into a lease agreement with Tuntex whose subject were its premises situate at Matsapha Industrial Site, region of Manzini.  Tuntex main business was the manufacturing of textile and garments clothing for overseas’ markets.

 

[5]               In 2013, Tuntex closed down its operation at the said premises.  At that time of closure, its lease with the Government was still subsisting.  It then decided to conclude a sub-lease agreement with Logico.

 

                   Contention by the parties

[6]               The Government’s gravamina is that the lease agreement concluded with Tuntex provided that should Tuntex close down business for whatever reason, the lease agreement shall be cancelled automatically and the premises revert to it.        It asserts that it was contrary to the terms of the lease agreement for Tuntex to sub-lease its premises to Logico. 

 

[7]               In an endevour to defend the sub-lease, Logico decided to join the fray through an application reflecting the Registrar’s stamp of 15^th June, 2015.  Its application to intervene was successful through a consent order.  However, upon the Government’s deposition in answer that it would not eject it from the premises, Logico decided not to pursue the application.  The court considered it withdrawn.  No order of costs was pursued on behalf of the Government in regard to Logico’s withdrawal.

 

[8]               In answer to the Government’s assertion, Tuntex disputed the interpretation of the lease agreement.  It pointed out that the clause relied upon by the Government was in contradiction with two clauses of the lease agreement.  Following that the lease agreement was drafted by the Government, it ought to be interpretation in favour of the lessee, Tuntex.  Further, Tuntex deposed that Government could not rely on the said clause by reason that it created the circumstance which compelled it to cease operations.  On the right to sub-lease the premises to Logico, Tuntex submitted further that the Government consented to the sub-lease.  Tuntex also raised a number of other defences.  I shall deal with them ad seriatim.

 

                   Adjudication

 

1. Section 19 of the 2005 Constitution

[9]               Tuntex contends that the Government leased to it a vacant piece of land.  It therefore had to construct manufacturing structures in order to operate.  Government did not finance the construction.  In an attempt to recover its losses, it then concluded a sub-lease agreement with Logico.  In terms of the sub-lease agreement between Tuntex and Logico, Logico is liable to pay the sum of E2 280 000 for a period of five years.  The sub-lease further points out that Logico paid a deposit of E570 000.   It would be contrary to the provision of section 19 of the Kingdom’s constitution to declare the lease agreement with the Government cancelled without the Government compensating it for its losses as a result of the improvements on the land.  Section 19 of the Constitution is an entrenched provision and therefore peremptory according to Tuntex’s submission.  To emphasis on this point, which was raised for the first time in its Heads of Argument, it was authored on behalf of Tuntex:

 

                              “Section 2(1) and (2) provides as follows:

                                      ‘The Constitution

                                      2.

                                     (1)   This Constitution is the supreme law of Swaziland and if any other law is inconsistent with this Constitution that other law shall, to the extent of the inconsistency, be void.

                                      (2)   The King and iNgwenyama and all citizens of Swaziland have the right and duty at all times to uphold and defend this Constitution.

                                             Section 261 of the Constitution provides that: ‘law’ includes any instruments having the force of law and any unwritten rule of law,’.[sic]  It therefore includes the common law.”      

 

[10]             Section 19 of the constitution (section 19) provides:

 

                         “(1)          A person has a right to own property either alone or in association with others.

                                (2)            A person shall not be compulsorily deprived of property or any interest in or right over property of any description except where the following conditions are satisfied:

                                                  (a)      the taking of possession or acquisition is necessary for public use or in the interest of defence, public safety, public order, public morality or public health,

                                                  (b)      the compulsory taking of possession or acquisition of the property is made under a law which makes provision for-

                                                            (i)         prompt payment of fair and adequate compensation; and

                                                            (ii)        a right of access to a court of law by any person who has an interest in or right over the property;

                                                  (c)      the taking of possession or the acquisition is made under a court order.

 

[11]             From the holistic reading of section 19, the key phrase is “compulsory taking or acquisition of land or right over it”.  In other words, the intention of the Legislature was to address issues where a person’s land or right over it was taken without his consent.  On this note, the question facing this court is whether in the case at hand there was compulsory acquisition of the right to possession by virtue of the lease agreement by the Government against Tuntex.

 

[12]             When the Legislature enacted under section 19, by importing the term “compulsory”, it was fully aware that the taking or acquisition of land or right over it may arise by, for instance, parties entering into a contract.  The Legislature did not wish to prevent such taking or acquisition.  In the legal terminology, the Legislature did not intend to interfere with pacta sunt servanda (freedom of contract).  I guess it was so guided by the wise words of Sir George Jessel MR as follows:

 

“…if there is one thing which more than another public policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice.”[1](Emphasis)

 

[13]             First and foremost, it is common cause that the Government and Tuntex concluded a lease agreement.  In so doing, they were exercising their right under freedom to contract.  Under this right, the parties are at liberty to dictate terms which would be binding to both of them.  The court, in interpreting those terms, cannot import its own term under the guise of a tacit provision, even if it could be said that it is a reasonable one in the circumstances.  In the analysis, the principle of pacta sunt servanda is not in violation of section 19 thereby calling for it to be abrogated.  In fact, the common law principle on freedom of contract resonates with section 19.  The submission that this common law principle is contrary to section 19 has not basis and therefore stands to be rejected on this ground alone.

 

[13]             Secondly, Tuntex’s lamentation for compensation of improvement is totally unjustified in the circumstance of the lease agreement under discussions.  I accept that the general position of our common law is that a lessor has a duty to compensate the lessee for improvements effected by it on the lessor’s property.   However, the circumstances of this case do not justify application of the general principle governing landlords and tenants on improvements.  This finds support from clause 2 of the leasehold document.  The Government provided that Tuntex shall pay as rental a sum of E50.00 per year.   It was so guided by fixing rentals by the requirement of the law that one of the characteristics of a lease agreement is a term on ascertainable rentals (rent must be verum - fixed  and certum – certain)[2].  It surely does not need an eye of a prophet to tell that the rental was a peppercorn sum compared to the size of the land (6 hectares, 300 square metres) and its location, Matsapha Industrial Site albeit without improvement.  This conclusion on the minimal amount on rental cannot be gainsaid by Tuntex as can be gleaned from Tuntex’s conduct when it sub-leased the premises.  Tuntex sub-leased the same property to Logico for rentals of E2, 280, 000 for the duration of five years.  I appreciate that this figure takes into account the improvement on the land.  However, this does not detract from the view that it is in consideration of the land and its location as well.  Compare the ratios of E2, 280, 000 for five years and E2, 500 for fifty years.  The figures in amounts in so far as they pertain to the Government and Tuntex are ante pro rata.  The only reasonable inference that can be drawn in this circumstances is that Government decided to forego fair value rentals in light of Tuntex’s obligation to put up relevant structures on the land.

 

                   (ii) Contradictory clauses

[14]             The cardinal rule in the interpretation of contract, just like in statutory provisions, is that in the first instance words must be read in their ordinary, day-to-day sense.   Innes CJ[3] articulated similarly:

                   “…and in construing the statute the object is, of course, to ascertain the intention which the legislation meant to express from the language which it employed.  By far the most important rule to guide courts in arriving at that intention is to take the language of the instrument, or of the relevant portion of the instrument, as a whole: and when the words are clear and unambiguous, to place upon them their grammatical construction and give them their ordinary effect.”

 

[15]             The learned Chief Justice proceeded to highlight on exceptions:

“But it is universally recognized that though this is what some judges call a golden rule, it is subject to certain exception.  These arise from the difficulty  -a difficulty inherent in the nature of language – that no matter how carefully words are chosen there is a difficulty in selecting language which while on the face of it expressing generally the idea of the framer of the measure, will not, when applied under other circumstances, fall short of it.”

 

[16]             Critically analysing the often quoted position by Lord Esher[4] to the effect that if the words of an enactment are clear they must be construed in their ordinary and natural meaning unless in so doing the results are manifestly absurd, his Lordship the Chief Justice (Innes CJ) espoused:

 

                   “If such words of an Act are clear, you must follow them, even though they lead to a manifest absurdity.  The Court has nothing to do with the question whether the legislature has committed an absurdity.  In my opinion, the rule has always been this-if the words of an Act admit of two interpretations, then they are not clear; and if one interpretation leads to an absurdity, and the other does not, the Court will conclude that the legislature did not intend to lead to an absurdity, and will adopt the other interpretation.”

 

[17]             He then concluded on ambiguous words:

 

“…when to give the plain words of the statute their ordinary meaning would lead to absurdity so glaring that it could never have been contemplated by the legislature, or where it would lead to a result contrary to the intention of the legislature, as shown by the context or by such other consideration as the Court is justified in taking into account, the Court may depart from the ordinary effect of the words to the extent necessary to remove the absurdity and to give effect to the true intention of the legislature.”

 

[18]             It was argued on behalf of Tuntex that the lease agreement concluded with Government contained ambiguous provisions whose result were contradictory.  On the ground that the lease agreement was drawn by the Government, the clause favourable to Tuntex should be given effect.  Tuntex submits that clause 5 relied upon by the Government is contrary to clause 2 in that clause 2 provides that the duration of the agreement is fifty years whereas clause 5 states that the lease shall be cancelled upon Tuntex ceasing operations.  My first duty is to examine the contested lease agreement with a view to ascertaining whether Tuntex’s submission finds support from the terms of the lease agreement itself.  The lease agreement reads:

                                                “LEASE AGREEMENT BETWEEN

                                                THE GOVERNMENT OF THE KINGDOM OF

                                                                        SWAZILAND

                                                (MINISTRY OF HOUSING URBAN DEVELOPMENT)

                                                                        AND

                                                            TUNTEX INCORPORATION

                             WHEREAS the Government of the Kingdom of Swaziland (the Government represented by the Ministry of Housiong and Urban Development is desirous of improving its economy by promoting Direct Foreign Investment (DFI) into the country, particularly in manufacturing, and

                        WHEREAS Tuntex incorporation (Tuntex) of the Republic of China has expressed an interest in assisting the Government in its economic endeavors by investing in the expansion of its garment manufacturing enterprise in Swaziland.

                        Now therefore, the Government and Tuntex have agreed to enter into a long-term lease agreement, as follows:-

1. The Government undertakes to provide to Tuntex and its wholly-owned subsidiary, (namely Tuntex Garment Co. (Pty) Ltd, a compay to be registered in the Kingdom of Swaziland on a long leasehold basis fully serviced land being Plot No. 784, measuring six hectares three thousand square metres (6,3000) at Matsapha Industrial Estate for the purpose of the said garment manufacturing enterprise;

 

1. The said land will be leased for nominal fee of Fifty Emalangeni (E50.00) per year for a period of fifty (50) years;

 

 

1. Tuntex undertakes to take up the land, construct and furnish garment-manufacturing factory and manage the operations for the agreed period of Fifty (50) years.

 

1. At the end of the period of the lease, Tuntex undertakes to hand over the factory and premises to the Government, should the Government so desire, on a twelve months’ notice to Tuntex. Otherwise the lease may be renewed for such further period as may be agreed upon by the Parties.

 

1. In the even Tuntex is for any reason unable to continue the manufacturing operations as agreed, this undertaking shall lapse and become void and the land and the premises shall revert to the Government with all improvements made thereon.

 

1. If Tuntex does not take up the land and commence construction within six months from date of this agreement, the undertaking shall be deemed to have lapsed, unless the Government and Tuntex otherwise agree.”

 

[19]             Is clause 5 contradictory to clause 2?  If the answer is yes, does that warrant an interpretation in favour of Tuntex in that clause 2 be given effect against clause 5?

 

[20]             My first port of call is to apply the golden rule of interpretation as espoused by Innes CJ above.  Clause 2 provides that the lease shall be for a period of fifty years.  It is subject to renewal at the end of that period in the event Government does not give a twelve month notice for termination as per clause 4.  Clause 5 simple states that in the event Tuntex stops operation for whatever reason, the agreement shall be cancelled forthwith.  The land together with improvements therefore shall return to Government.   

 

[21]             It is appropriate that I mention that clause 5 anticipates a certain event happening in the future.  Should that event happen, the relationship between the parties flowing from the agreement would come to an end.  Now there is nothing peculiar in our law of contract for parties to include such a condition in their agreement.  The law of contract recognises two main conditions, viz., suspensive condition and resolutive condition.   A suspensive condition suspends the rights and obligations of the parties to a contract until that condition is fulfilled.  However, the contractual relationship of the parties comes into existence on the date of signing of the contract and not the fulfilment of the condition.[5]  A resolutive condition on the other hand terminates the rights and obligations of the parties flowing from the agreement upon fulfilment of that condition.  Beyers, Rumpff, Botha JJA and Wessels AJA had the following on the two conditions:

 

                   “Conditions are qualifications which either render the operation of the contract dependent upon the occurrence of a future event (suspensive condition) or provide for the dissolution of the contract on the occurrence of such event (resolutive condition).”[6]

 

[22]             Evidently, clause 5 is a resolutive clause.  It is therefore by no means contrary to clause 2 as contended on behalf of Tuntex.  It stands to be given effect upon Tuntex’s ceasing manufacturing.  The doctrine of pacta sunt servanda, which entails as well that parties must honour their contractual obligations is germane to the present case. 

 

 

                   (iii)     Failure by Government to honour its side of the bargain

[23]             Tuntex has urged the court to consider that when the Government solicited for investment, it undertook to provide the investor with markets for the manufactured product.  In 2013, when it closed down operations, the Government, through its failures, lost overseas’ markets under AGOA.  Government should not therefore be allowed to take advantage of its own failures as Tuntex had to close down following that it had no markets to sell its products. 

 

[24]             It is correct that in terms of our law of contract, a party who intends to enforce a term of a contract against another must first satisfy the court that he has discharged his side of the bargain in terms of the contract.  It is further the principle of our law that a party should not be allowed to take advantage of its own failure especially in a contractual relationship.  The question facing this court under this issue is whether it was part of the lease agreement that the Government would provide international markets for Tuntex.  This calls for an enquiry on the intention of the parties to enter into a contractual relationship -animus contrahendi.  That intention must be gathered from the deed itself.

 

[25]             R H Christie[7] highlighted on ascertaining the intention of the parties to a contract:

                   “Three theoretical bases for the enforcement of contracts have been suggested.  The subjective consensus theory (wilsteorie) postulates that enforceability depends on consensus ad idem or the concurrence of the subjective wills of the contracting parties.  The objective declaration theory (verklaringsteorie) postulates that enforceability depends on the concurrence of the declared intentions of the parties.  The reliance theory (vertrouensteorie) postulates that enforceability depends on the reasonable expectations conveyed to the mind of each party by the words or conduct of the other.”

 

[26]             Christie did not accept the view expressed by Innes J[8]:

 

                   “When a man makes an offer in plain and unambiguous language, which is understood in tis ordinary sense by the person to whom it is addressed, and accepted by him bona fide in that sense, then there is a concluded contract.  Any unexpressed reservations hidden in the mind of the promisor are in such circumstances irrelevant.  He cannot be heard to say that he meant his promise to be subject to a condition which he omitted to mention, and of which the other party was unaware.”

 

 

[27]             Christie pointed out that there was no authority for such proposition.  Blackburn J[9] exposition was according to Christie correcting:

 

“If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms.”

 

[28]             In the case at hand, the terms of the contract appear in the lease agreement following that it was reduced into writing.  I must hasten to point out that in reading the entire lease agreement, there is no terms providing that the Government shall ensure that there are markets, let alone for overseas, for Tuntex’s products.  However, the absence of  an expressed provision to this effect does not dispose of the question on whether the parties herein were at consensus that the Government would be obliged to find markets for Tuntex.  This is because our law recognises tacit terms (implied and therefore imported into the written contract). 

 

[29]             The question therefore is whether it was a tacit term of the contract that the Government would find markets for Tuntex.  The approach to this determination is articulated by Lord Esher in Hamlyn & Co. v Wood & Co (1891 (2) QBD 491[10]:

 

“I have for a long time understood that rule to be that a Court has no right to imply in a written contract any such stipulation, unless, on considering the terms of the contract in a reasonable and business manner, an implication necessarily arises that the parties must have intended that the suggested stipulation should exist.  It is not enough to say that it would be a reasonable thing to make such an implication.  It must be a necessary implication in the sense that I have mentioned.”

 

[30]             Corbett JA[11] expressed:         

 

“The implied term …is essentially a standardised one, amounting to a rule of law which the Court will apply unless validly excluded by the contract itself.  While it may have originated partly in the contractual intention, often other factors, such as legal policy, will have contributed to its creation.  The tacit term, on the other hand, is a provision which must be found, it if is to be found at all, in the unexpressed intention of the parties.  Factors which might fail to exclude an implied term might nevertheless negative the inference of a tacit terms… The Court does not readily import tact terms.  It cannot make contracts for people; nor can it supplement the agreement of the parties merely because it might be reasonable to do so.  Before t can imply a tacit term the Court must be satisfied, upon a consideration in a reasonable and businesslike manner of the terms of the contract and the admissible evidence of surrounding circumstances, that an implication necessarily arises that the parties intended to contract on the basis of the suggested terms.”

 

[31]             Now juxtaposing the above approach with the circumstances of the case, could it be said that the contended stipulation was a tacit term of the contract?  The lease agreement between the parties herein has a preamble.  The preamble reads, “Whereas the Government of the Kingdom of Swaziland (the Government) represented by the Ministry of Housing and Urban Development is desirous of improving by promoting Direct Foreign investment (DFI) into the country, particularly in manufacturing and Whereas the Government is further desirous of attracting such DFI as will particularly labour intensive to alieviate the unemployment situation in Swaziland.  Whereas Tuntex Incorporation (Tuntex) of the Republic of China has expressed an interest in assisting the Government in its economic endaeavors by investing in the expansion of the garment manufacturing enterprise in Swaziland.” 

 

[32]             From the wording of the preamble could the court be justified in reasonably drawing the inference that following that Government intended to attract direct foreign investment, by implication, it was obliged to provide markets for Tuntex?  I am guided in this regard by the principle on interpretation of preamble and recitals in contracts.  Christie[12] writes:

“Preambles or recitals in a written contract present more of a problem.  The general principle is that they should be regarded as subordinate to the operative part which, if its meaning is clear, must be taken as expressing the common intention of the parties and so must prevail over anything to the contrary in the preamble.  If the operative part is not clear, recourse may be had to the preamble to assist in elucidating it.”

 

[33]             I am alive to the legal principle that it is wrong for the court to approach a written contract as though every provision is meant to create a contractual obligations.  Applying this guideline to the present case, it is my considered conclusion that the operative part of the contract which is numbered 1 to 6 is clear, without doubt or ambiguity.  There is therefore no need to resort to the preamble in order to ‘elucidate it’.  In a nutshell, the submission by Tuntex that in terms of the lease agreement serving before me the Government was obliged to provide markets is without any support.

 

[34]             Learned Counsel on behalf of Government pointed out that suppose for a second Tuntex was correct in its view that the Government failed to discharge its side of the bargain by not securing markets for it, such view is in actual fact incorrect.  When Tuntex closed shop as it were in May 2013, AGOA was subsisting.  It was only lost in 2015.  It is not clear why Tuntex decided to depose to an affidavit on factually incorrect circumstances.  The court notes that in support of its defence that the Government failed to secure overseas’ markets, it quoted the then Prime Minister’s speech assuring the country that AGOA would be returned.  It boggled the mind as to why Tuntex decided to quote the Prime Minister instead of attaching a copy of the speech by him.  The answer is obvious.  The attachment containing his speech would have revealed the date and thereby weakened its case.  It unfortunately missed that the Kingdom’s loss of AGOA is a fact which needed no debate following its wide publication in this country and beyond.  For this reason the Court took judicial notice of the year which it was lost and that was well after Tuntex had closed its business. 

 

[35]             Worse still, in its own answering affidavit, Tuntex supports the period upon which the Kingdom lost its market under AGOA as follows:

“21.  The Kingdom of Swaziland’s AGOA fate was sealed when on 26^th June 2014 President Obama revoked its AGOA status with effect from 1^st January 2015.

 

[36]             At its paragraph 33, Tuntex then contends:

 

“On its own version at paragraph 8 of the founding affidavit herein, the Government (Ministry of Housing and Urban Development) was aware by not later than July 2013 that Tuntex had ceased all manufacturing operations on the leased premises.”

 

[37]             Paragraph 33 of Tuntex’s answer demonstrates that Tuntex was not disputing the Government’s version that Tuntex had closed production by July 2013.  In fact this version remained uncontroverted.  Juxtaposing paragraph 8 of the Governments assertion with paragraph 21 cited above of Tuntex, it is clear that by 26^th June 2014 let alone 1^st January 2015, Tuntex had long closed its business.  Did it then close on account of want for AGOA? The answer is an obvious, no. Then how can it lay its closure at the doorsteps of the Government?  The answer is that it is erroneous of it to do so in light of the circumstances explained by it.

 

[38]             There is another fallacy in the argument raised by Tuntex on the reason for it to close shop.  It is that despite the return of AGOA, Tuntex has failed to re-open shop.  AGOA returned in 2016 and by the date of hearing (September 2018) Tuntex had not resumed its manufacturing operations.  In the submission that it was compelled to close down due to the Government’s laxity in maintaining markets abroad, it would have quickly re-opened upon the return of the same.

 

[39]             It would be remiss of me not to point at another legal position which does not support Tuntex’s case.  The lease agreement reflects that it was signed by both parties.  The Honourable John Philip Carmichael and Honourable Stella Lukhele both Ministers for Housing and Urban Development appended their signatures as representatives of the Government during the conclusion of the lease agreements in 1996 and 1999 respectively.  Honourable Yang Te-sheng as General Manager and President signed on behalf of Tuntex in both occasions.

 

[40]             Fagan CJ[13] could not have been more precise on the significance of a signature on a contract.  The learned Justice articulated:

 

“When a man is asked to put his signature to a document he cannot fail to realise that he is called upon to signify, by doing so, his assent to whatever words appear above his signature. In cases of the type of which the three I have mentioned are examples, the party who seeks relief must convince the court that he was misled as to the purport of the words which he was thus signifying his assent.  That must, in each case, be a question of fact, to be decided on all the evidence led in that particular case.” (My emphasis)

 

[41]             The learned Justice was commenting on the principle of caveat subscripto – let he who signs take care. Tuntex, having appended its signature to the lease agreement must be taken to have ostensibly demonstrated its intention (animus contrahendi) to be bound by the terms of the agreement.  In the absence of any defence such as fraud or duress raised on its behalf, it cannot resile from the contract.  Our courts frown upon a party who approbates and reprobates at the same time. The end result on the point raised on behalf of Tuntex that the Government failed to discharge its side of the bargain by not securing overseas’ markets thereby forcing it to close down its operations must fall on these grounds.

 

 

 

                   Election

[42]             The doctrine of election was well propounded by Henning J[14] as follows:

“When one party to a contract having full knowledge of all relevant facts is placed in such a position that he has a choice between two inconsistent courses of action, he must, within a reasonable time, decide which course he will pursue.  If he exercises his choice and communicates his decision to the other party to the contract, that choice is irrevocable.  If he does an unequivocal act, i.e. one which would be justifiable if he had elected one way and unjustifiable if he had elected the other way and that act come to the knowledge of the other party, the law presumes that he has exercised an irrevocable choice.”[15]

 

[43]             On the basis of the above doctrine, Tuntex deposes to the events which culminated to Logico taking over as a sub-tenant of the premises.  Tuntex states that on 23^rd December, 2013 Logico wrote to the Chief Executive of Swaziland Investment Promotion Authority (SIPA) and expressed its interest to lease the premises.  On the 4^th February 2014 by email SIPA replied saying Government had no objection to the sub-lease.  I must hasten to point out though that is not exactly what the attach email conveys.  The email reflects that SIPA is “amicable to the discussions” which “are around sub-letting to Logico”. Further, that SIPA was attempting to “facilitate between the Ministry and Tuntex a suitable time for a conference.”  |It is therefore incorrect to state that the email at page 78 marked AA3 is to the effect that “government was amicable to this option,” as asserted by Tuntex at its paragraph 43.

[44]             It was argued on behalf of Tuntex that SIPA who represented Government by this email of 4^th February, 2014, consented to the sub-lease.  From reading the entire email it is clear that SIPA was not an agent of the Government by reason that it sought to arrange a conference with Tuntex and Government.  Obvious that this conference was for the parties to engage each other on the issues.  If however, SIPA was an agent, it is clear that it did not have the full mandate of the principal (Government) as the merits of the sub-lease was left to the principal to discuss in a conference with Tuntex.  At any rate, Tuntex does not say that SIPA did arrange that conference nor does it depose to any result of that conference.  The court is left with the impression that there was no conference. If therefore the court is to accept Tuntex version that SIPA was an agent of Government, SIPA did not carry its task following that there was no outcome of its undertaking to arrange a conference.  This point on SIPA being an agent does not assist Tuntex therefore even if the court was to accept that SIPA was an agent of Government.

 

 

[45]             Tuntex further deposed that on 24^th February 2014 the then Honourable Minister of Commerce and Trade wrote to it stating that it had scheduled a meeting with the deponent to the founding affidavit, Mr. Clifford Mamba (PS) and further requested copies of the two lease agreements signed by Minister John Carmichael and Stella Lukhele in the event the Principal Secretary did not have copies with him.  Notably, nowhere does Minister Lutfo Dlamini in the attached emails at pages 81 indicate that Government had consented to the idea of a sub-lease by Tuntex.   Tuntex proceeds to attest:

 

“47.   On 28^th February 2014 Mr Dlamini (Hounorabe Minister of Commerce and Trade then) wrote to Mr. David Duo stating that he had met the Principal Secretary for Housing, Mr Mamba, and the Under Secretary in the Ministry of Commerce and the Attorney General, Mr Dlamini reported that the Principal Secretary for Housing had indicated that selling the land would be very difficult as it would need approval of His Majesty the King, but that Logico was at liberty to purchase the Tuntex companies, the implication being that Logico would become the new tenant and would effectively pay for the improvements to the properties effected by Tuntex. ….”

 

[46]             It is critical that I point out a further misunderstanding by Tuntex following the discussions between the Minister and the PS.  It appears that from the onset the Minister did not state that the PS consented to sub-leasing of the premises.  To advise that a party may sell its company is certainly different from selling the business of a company.  A company is a legal personae endowed with rights and duties distinct from its business in our law.  The business of a company is not synonymous with the company.  A company is distinct from its business or operation.  In brief, it is a legal misnomer to say selling of a company is akin to selling of its business and therefore taking over the premises where the company operates.  This position was well articulated by their Lordships Ramodibedi JP, Ota and Annadale AJJA[16]  in a case where the respondent had sold its majority shareholding.  The workers viewed this as a takeover of the business and therefore demanded accrued benefits in terms of section 33 bis of the Employment Act.  The court confirming the finding of the court a quo referred to Salomon v Salomon and CO. Ltd (1887) AC 22 as follows:

“The company is at law a different person altogether from the subscribers to the memorandum of articles and, though it may be after incorporation the business is precisely the same as it was before and the same persons are managers and the same hands receive the profits the company is not in law the agent of the subscribers.”

[47]             From the above, their Lordships pointed out that by virtue of the company selling its majority shares to another party, this could not be a takeover of the business.  The business of the company is separate and distinct from the company.  The court dismissed the appeal. Similarly in the case at hand by no means would the PS proposal that Tuntex may sell its company would amount to selling its business and taking over the premises.  This should be obvious  because Tuntex had closed down its business.  In its answering affidavit it pointed out that it lost its customers.  There was therefore nothing to sell.

 

[48]             Tuntex continued under the same paragraph 47 as follows:

“He further recorded that the Attorney General had suggested that the remainder of the leasehold of the two buildings be taken over by Logico, the leases notarized and that Logico pays Tuntex the cost of the buildings.  In the meanwhile they could allow the Housing Ministry to give a letter of comfort required by Logico to lease the factories from Tuntex as a short-term measure while the main lease is sorted out.”

 

[49]             Whatever was said, a takeover of the remainder of a lease is certainly different from consenting to a sub-lease by a lessee.  Startlingly though, Tuntex attached an email marked AA7 and refers to the contents of it in its next paragraph (para 48).  The court observes a portion above the contents which Tuntex refers to.  The contents reads differently from what is authored by Tuntex in its paragraph 47.  It reads:

                                      “in as soon as possible.

                        In all this our wish is for Tuntex to be paid by Logico the agreed purchase price and then they exit the premises.  Logico takes occupation of the premises an the 50 year lease remainder now in their name and not Tuntex any more.  Please advise if this is not the desired position for Tuntex?

“Am eager that we consolidate your position as that will ensure that your wish is achieved and you are paid your dues.

                                                Kind Regards

                                                Mr. Lutfo E Dlamini

                                                Mobile : 0026876191944

                                                “FORTUNE FAVORS THE BRAVE AND VICE VERSA”  

                                                (The underlined sentence convey what the Attorney General said.)

 

[50]             Glaringly from the above contents which obviously inadvertently found their way into the answering affidavit are in contrast with the conclusion reached by Tuntex of what was written by Minister Lutfo Dlamini.  At any rate, the correspondence of 28^th February, 2014 by Minister Lutfo Dlamini concludes:

 

“Would Tuntex be agreeable to this arrangement then we need to draft a letter to government proposing same.”[17]

 

[51]             The above demonstrates clearly that whatever the discussions were between Tuntex and Honourable Minister Lutfo Dlamini, did not bind Government and further neither did Minister Lutfo Dlamini represent Government following that he categorically stated that the a draft letter to government must be written “proposing the same.”  It appears to me that at all material times Minister Lutfo Dlamini was aware that he had no mandate to conclude an agreement with Tuntex outside the Government.  It is further clear that Minister Lutfo Dlamini was fully aware that the party to the relationship with Tuntex was the Government as represented by the Ministry of Housing and Urban Development.  Election presupposes that the person making the election between two courses of action must have been a party to the original contract.  Minister Lutfo Dlamini appreciated that he could not make an election on behalf of the Ministry of Housing and Urban Development.  It is for this reason that from the onset, he requested for the copies of the lease agreements in or der to ascertain not just its terms but the parties therefore.  He then robed the PS from the Ministry of Housing as it became clear to him that he was the party to the original contract.  At the end, he authored that a draft proposal be produced for presentation to the Government.  On 24^th March 2014, he wrote a further correspondence to Tuntex stating that correspondences should be addressed to the Ministry of Housing and Urban Development and copied only to the Ministry of Commerce and Trade.[18]   His actions cannot amount to election in this regard.

 

[52]             The question that remains therefore is whether the Ministry of Housing and Development did make an election thereby novating the original contract.  In terms of annexure AA9 on the 24^th March 2014, Tuntex authored a correspondence addressed to the Ministry of Housing and Urban Development with it heading, “Application for cession of balance of Tuntex Textile Company (pty) Ltd and Tuntex Garment Company (Pty) Ltd lease in respect of Plot 513 and 764 Matsapha with the Swaziland Government to Logico Unlimited (Pty) Ltd.”   In this letter, Tuntex requested for authority to “cede the balance of the rights and duties they enjoy under the lease “in respect of the two properties to Logico.  The Ministry of Housing and Development respondent by pointing out that the lease agreements automatically cancelled upon Tuntex ceasing operations.  In brief, Tuntex request to novate the terms of the lease agreement, more particularly clause 4 fell on deaf ears as evident by annexure AA14 which whose contents are confirmed by the PS at 25 of his reply.  It cannot by law then hold down the Government on election.

 

[53]             In the final analysis, the Government, having discharged its onus on the terms of the lease agreement, its application stands to succeed.  On the principle that cost must follow the event, Tuntex must bear the costs of suit.  The court therefore enters the following orders:

 

1. It is hereby directed and declared that the two lease agreements entered between the applicant and 1^st and 2^nd respondents in 1996 and 1999 in respect of Plot 513 and 764 Matsapha Industrial Site, Manzini region, respectively are automatically cancelled.

 

1. The 1^st and 2^nd respondents are hereby ordered to vacate the said properties within 7 days from date of service of this order.

 

 

3.       The 1^st and 2^nd respondents are hereby jointly and severally ordered to pay applicant cost of suit, one paying the other to be absolved.

 

 

 

 

 

                                     

                                       ______________________________

                                                          M. DLAMINI J

 

For applicant       :         K. Nxumalo from the Attorney General’s Chambers

For respondents   :         L. Howe from Howe Masuku Nsibande Attorneys