THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 250/2022

In the matter between:
DANIEL NEL PRETORIUS                                                       APPELLANT
and
AGRICULTURAL RESEARCH COUNCIL                           RESPONDENT

Neutral citation: Pretorius v Agricultural Research Council (Case no 250/22)
[2023] ZASCA 76 (29 May 2023)
Coram:
SCHIPPERS,
CARELSE,
MABINDLA-BOQWANA,
GOOSEN and MOLEFE JJA
Heard:
18 May 2023
Delivered: 29 May 2023
Summary: Law of contract – lease of farm – agreement allowing renewal
provided lessee not in default of its terms – purported renewal by lessee whilst in
default of obligations – invalid – counterclaim for lost profits arising from
sublease – unsustainable as purported renewal of agreement of no force or effect
– lessee issuing cheque for arrear rental – payment stopped – claim on
dishonoured cheque upheld.

________________________________________________________________
ORDER
________________________________________________________________

On appeal from: Gauteng Division of the High Court, Pretoria (Louw J sitting
as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel.

________________________________________________________________
JUDGMENT
________________________________________________________________
Schippers JA (Carelse, Mabindla-Boqwana, Goosen and Molefe JJA
concurring)

[1] This is an appeal against an order of the Gauteng Division of the High
Court, Pretoria (the high court), directing the appellant, Mr Daniel Nel Pretorius
(the defendant), to pay the sum of R439 300.92 together with interest and costs
to the respondent, the Agricultural Research Council (the plaintiff), in respect of
arrear amounts owing under a lease agreement. The high court (Louw J) also
dismissed the defendant’s counterclaim for payment of R4 860 000 for lost
profits, with costs. The appeal is with its leave.

[2] The basic facts are largely common ground and can be briefly stated. On
1 August 2001 the parties concluded a written lease agreement in terms of which
the plaintiff let a farm known as Plot 103, Kameeldrift, Pretoria (the property), to
the defendant for a period of nine years and 11 months, which commenced on
1 August 2001, terminating on 30 June 2011 (the initial agreement).

[3] The initial agreement contained the following terms. The defendant would
be invoiced for rental (R350 per hectare per year with an annual escalation of
10% on the ground only) during March of every year, ending on 31 March. The
rental invoice had to be paid by no later than 31 May of each year. The defendant
was given an option to renew the lease, subject to the express condition that the
right of renewal could not be exercised while he was in breach or default of any
of the terms of the agreement.

[4] At first the rental was paid annually in accordance with the terms of the
initial agreement. However, that changed when the defendant made arrangements
with the plaintiff to make frequent payments during the course of the year, instead
of paying an annual amount. The defendant fell into arrears with his payment
obligations and on 13 October 2009, the outstanding balance owed to the plaintiff
was R206 219.43. Consequently, the defendant signed an acknowledgement of
debt (AOD) on 2 November 2009, in terms of which he admitted that he was
indebted to the plaintiff in respect of municipal services to the property in the sum
of R206 219.43. The defendant paid this amount in instalments to the plaintiff.

[5] Subsequently, the defendant again fell into arrears with his payment
obligations under the initial agreement. On 15 October 2010 he signed a second
AOD in terms of which he acknowledged his indebtedness to the plaintiff in the
amount of R203 043.95, in respect of municipal charges (the second AOD). The
defendant undertook to pay this amount by way of a minimum monthly
instalment of R20 000 and to settle the outstanding balance by 31 March 2011.
The first monthly instalment was payable by 25 November 2010 and each
subsequent instalment had to be paid on or before the 25th day of each succeeding
month, until the arrears and interest were paid.

[6] On 25 November 2010, whilst in arrears with his obligations under the
initial agreement, the defendant purported to exercise the option to renew that
agreement in writing. The plaintiff therefore contended that the purported renewal
was of no force and effect, and that the initial agreement came to an end by the
effluxion of time on 30 June 2011.

[7] After 30 June 2011, the defendant continued to occupy the property. The
plaintiff’s case was that this occupation was in terms of a month-to-month
agreement. The defendant denied this. He claimed that the initial agreement had
been renewed and that he was entitled to occupy the property until 31 May 2021.

[8] On 28 March 2014 the plaintiff’s attorneys informed the defendant that the
plaintiff had cancelled the lease agreement, gave him notice to vacate the property
by 30 July 2014, and demanded payment of arrear amounts arising from his lease
of the property in the sum of R439 300.92. The defendant’s response to the
termination notice was that it was a repudiation of the agreement, which was not
accepted, and he tendered payment of the arrears. On 20 June 2014 the defendant
issued the plaintiff with a cheque for the arrears in the sum of R439 300.92. When
the plaintiff presented the cheque for payment, it was dishonoured – the defendant
had stopped payment.

[9] The plaintiff then sued the defendant in the high court for payment of arrear
rental in the amount of R502 707.84, founded on an alleged month-to-month lease
agreement; alternatively, for payment of R439 300.92 based on the dishonoured
cheque. The defendant brought a counterclaim for payment of R4 860 000 for lost
profits, allegedly arising from an oral agreement which he had entered into on
2 July 2012, to sublease the property to a third party until 31 May 2021. The
plaintiff raised a special plea of prescription to the defendant’s counterclaim,

namely that it was served more than three years after the date on which the claim
arose.

[10] The high court decided the issue of prescription in limine, on the
assumption that the defendant had exercised his right to renew the lease in
accordance with the terms of the initial agreement. The plea of prescription was
upheld. The court found that prescription began to run on 28 March 2014, ie the
date on which the plaintiff allegedly repudiated the agreement, and that a period
of more than three years had elapsed before the defendant’s counterclaim was
served on the plaintiff on 6 July 2017. Consequently, the counterclaim was
dismissed with costs. The high court dismissed the plaintiff’s claim for arrear
rental based on a month-to-month agreement. The alternative claim for payment
of R439 300.92, founded on the dishonoured cheque, succeeded.

[11] The main issue on appeal is the validity of the defendant’s purported
renewal of the initial agreement on 25 November 2010. As already stated, he was
precluded from exercising the option to renew the lease if he was in breach or
default of any of its terms. When the defendant ostensibly exercised that right, he
was in arrears with his payment obligations under the initial agreement. He signed
the second AOD in which he accepted that he owed the plaintiff R203 043.95,
being arrears in respect of municipal charges.

[12] Counsel for the defendant however argued that the option was validly
exercised, because he ‘was not in breach of the second AOD’. That AOD, so it
was argued, ‘was a pactum non petendo in the form of a waiver of the plaintiff’s
right to cancel the agreement’, and ‘an alteration of the defendant’s payment
obligations’, which ‘constituted an amendment of the initial agreement’. Then it
was submitted that the AOD was ‘not merely a concession by the plaintiff to the
defendant, but a waiver that was contractual in form’.

[13] The argument is misconceived. First, a defence of waiver must be pleaded,
which the defendant failed to do.1 What is more, the party relying on the waiver
of a contractual right bears the onus to allege and prove that the other party had
full knowledge of that right when it allegedly abandoned it.2 Clear proof of a
waiver is required: it must be shown that the party alleged to have waived not
only acted with full knowledge of its rights, but that its conduct is irreconcilable
with the continued existence of such rights, or with the intention of enforcing
them.3 The defendant neither alleged nor proved that the plaintiff had waived any
right under the initial agreement.

[14] Secondly, the argument that the second AOD amended the initial
agreement is directly at odds with clause 24.1 of the agreement. It provided:
‘24
Non-waiver
24.1
Neither party shall be regarded as having waived, or be precluded in any way from
exercising, any right under or arising from this lease by reason of such party having at any time
granted any extension of time for, or having shown any indulgence to, the other party with
reference to any payment or performance hereunder, or having failed to enforce, or delayed in
the enforcement of, any right of action against the other party.’

[15] Thus, the initial agreement was not altered in any way by the execution of
the second AOD, which was nothing more than an indulgence granted to the
defendant. In any event, the agreement contained a non-variation clause, designed
to prevent informal or oral variations without a written agreement between the
parties, and which eliminates any disagreement about whether any amendment to
the initial agreement was concluded. Clause 23.1 provided that the lease
‘constitutes the entire agreement between the parties’. Clause 23.3 stated:

1 Montesse Township and Investment Corporation (Pty) Ltd and Another v Gouws NO, and Another [1965] 4 All
SA 285 (A); 1965 (4) SA 373 (A) at 381B-C.
2 Feinstein v Niggli and Another [1981] 2 All SA 92 (A); 1981 (2) SA 684 (A) at 698F; Borstlap v Spangenberg
en Andere [1974] 4 All SA 25 (A); 1974 (3) SA 695 (A) at 704E-H.
3 Borstlap fn 2 at 704E-H; Road Accident Fund v Mothupi [2000] 3 All SA 181 (A); 2000 (4) SA 38 (SCA)
para 19.

‘No variation or consensual cancellation of this agreement shall be of any force or effect unless
reduced to writing and signed by both parties.’
A clause such as this, described as ‘the doctrine that contracting parties may
validly agree in writing to an enumeration of their rights, duties and powers in
relation to the subject-matter of a contract, which they may alter only by again
resorting to writing’,4 remains enforceable.5

[16] The second AOD was the clearest admission by the defendant: (i) that he
was in default of his obligations under the initial agreement; (ii) as to how the
default arose; and (iii) of the steps taken to cure the default. The high court thus
correctly found that the defendant was in default of his obligations under the
initial agreement when he purported to exercise the option to extend the lease.

[17] This finding has four consequences. The first is that on 2 July 2012, the
defendant could not have entered into any sublease of the property until 31 May
2021, for the simple reason that he had no right to do so: the main lease had not
been extended. The second is that the foundation of the defendant’s counterclaim
has been destroyed. The third is that the issue of prescription does not arise, and
no more need be said about it. And the fourth is that the cheque which the
defendant issued to the plaintiff for payment of arrear amounts, could never have
been subject to the condition he purportedly imposed – that the plaintiff should
honour the terms of the initial agreement, which had expired on 30 June 2011 and
was not validly renewed.

[18] What remains is the plaintiff’s alternative claim for payment of
R439 300.92, based on the dishonoured cheque. The defence that the cheque was
issued subject to the condition that the plaintiff honours the terms of the lease

4 Brisley v Drotsky 2002 (4) SA 1 (SCA) para 89 per Cameron JA; SA Sentrale Ko-Op Graanmaatskappy Bpk v
Shifren en Andere 1964 (4) SA 760 (A) at 767A-B.
5 G B Bradfield Christie’s Law of Contract in South Africa 7 ed (2016) at 518.

agreement, and that it should not persist with its cancellation of the defendant’s
lease and vacation of the property on 30 July 2014, falls away. The defendant’s
counsel, relying on Saambou-Nasionale Bouvereniging,6 submitted that the claim
based on the dishonoured cheque could not succeed because there was no
underlying agreement that justified its issue.

[19] The submission however is unsustainable on the evidence and the law. As
in the case of waiver, the defendant did not plead that there was no reasonable
cause to issue the cheque. On the contrary, he testified that as at 28 March 2014,
his account with the plaintiff was in debit in the sum of R439 300.92. He said that
he ‘was in arrears in an amount of R439 000 in terms of the extended lease
agreement’, and that he had never denied that he owed the plaintiff money.

[20] The defendant’s reliance on Saambou-Nasionale Bouvereniging is
misplaced. It is authority for the proposition that reasonable cause for the issue of
a cheque exists where the drawer and the payee agree as to what the proceeds of
the cheque are to be used for. By this agreement the bond between the negotiable
instrument contract and the underlying relationship is established.7 That is the
case here: the parties agreed that the cheque for R439 300.92 was in settlement
of the defendant’s indebtedness arising from his lease of the property. It matters
not that the plaintiff did not establish that his continued occupation was in terms
of a month-to-month lease: the fact is that the defendant continued to lease the
property after the initial agreement had come to an end, and he became indebted
to the plaintiff in the amount of R439 300.92 under that lease.

[21] The plaintiff established the requisites for its claim on the cheque in the
sum of R439 300.92. A cheque is a bill payable on demand, which can be

6 Saambou-Nasionale Bouvereniging v Friedman 1979 (3) SA 978 (A).
7 Saambou-Nasionale Bouvereniging fn 6 at 992G-H.

presented for payment on any date within a reasonable time after its issue.8 The
plaintiff was the legal holder of the cheque signed by the defendant as drawer, as
a result of which he incurred personal liability on the cheque.9 It was presented
for payment but dishonoured by non-payment. Notice of dishonour is dispensed
with because the defendant countermanded payment.10

[22] In the result, the appeal is dismissed with costs, including the costs of two
counsel.

__________________
A SCHIPPERS
JUDGE OF APPEAL

8 Navidas (Pty) Ltd v Essop; Metha v Essop 1994 (4) SA 141 (A) at 152E. Section 43(2)(b) of the Bills of Exchange
Act 34 of 1964 provides:
‘A bill is duly presented for payment if it is presented in accordance with the following rules, namely-
. . .
(b)   if the bill is payable on demand, presentment must, subject to the provisions of this Act, be made within a
reasonable time, within the meaning of subsection (3), after its issue, in order to render the drawer liable, and
within such a reasonable time after its endorsement, in order to render the indorser liable.’
9 Marshall and Another v Bull Quip (Pty) Ltd [1983] 1 All SA 96 (A); 1983 (1) SA 23 (A) at 28A.
10 Braz v Afonso and Another [1997] 4 All SA 428 (SCA); 1998 (1) SA 573 (SCA) at 579I-580C.

Appearances:

For appellant:

A B Rossouw SC and A P J Bouwer
Instructed by:
MacRobert Attorneys, Pretoria

Honey Attorneys, Bloemfontein

For respondent:

B L Manentsa and Z Ngakane
Instructed by:

Adams & Adams, Pretoria

Phatshoane Henney Attorneys, Bloemfontein
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:

29 MAY 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
Pretorius v Agricultural Research Council (Case no 250/22) [2023] ZASCA 76 (29 May 2023)
Today, the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal
against a decision of the Gauteng Division of the High Court, Pretoria (the high court).
The issue before the SCA was whether the defendant’s purported renewal of a lease agreement
concluded on 25 November 2010 (the initial agreement) between the Agricultural Research
Council (the plaintiff) and Mr Daniel Nel Pretorius (the defendant), was valid. In terms of the
lease, the plaintiff let a farm known as Plot 103, Kameeldrift, Pretoria (the property), to the
defendant for a period of nine years and 11 months, which commenced on 1 August 2001,
terminating on 30 June 2011. It contained a term that gave the defendant an option to renew
the lease, subject to the express condition that the right of renewal could not be exercised while
he was in breach or default of any of the terms of the initial agreement.
The defendant again fell into arrears with his payment obligations under the initial agreement.
On 15 October 2010, he signed an acknowledgment of debt (AOD) in terms of which he
acknowledged his indebtedness to the plaintiff in the amount of R203 043.95, in respect of
municipal charges. The defendant undertook to pay this amount by way of a minimum monthly
instalment of R20 000 and to settle the outstanding balance by 31 March 2011.
On 25 November 2010, whilst in arrears with his obligations under the initial agreement, the
defendant purported to exercise the option to renew that agreement in writing. The plaintiff
contended that the purported renewal was of no force and effect, and that the initial agreement
came to an end by the effluxion of time on 30 June 2011. After 30 June 2011, the defendant
continued to occupy the property. The plaintiff’s case was that this occupation was in terms of
a month-to-month agreement. The defendant denied this. He claimed that the initial agreement
had been renewed and that he was entitled to occupy the property until 31 May 2021.
Counsel for the defendant argued that the option was validly exercised, because he was not in
breach of the AOD; and that the AOD constituted a waiver of the plaintiff’s right to cancel the

agreement and an alteration of the defendant’s payment obligations, which constituted an
amendment of the initial agreement.
The SCA found that the defendant had neither alleged nor proved that the plaintiff had waived
any right under the initial agreement, and that it had not been amended by the AOD. It held
that the AOD was the clearest admission by the defendant: (i) that he was in default of his
obligations under the initial agreement; (ii) as to how the default arose; and (iii) of the steps
taken to cure the default. The SCA concluded that the high court thus correctly found that the
defendant was in default of his obligations under the initial agreement when he purported to
exercise the option to extend the lease. Consequently, the appeal was dismissed with costs,
including the costs of two counsel.

~~~~ends~~~~