Atlantis Property Holdings CC v Atlantis Exel Service Station CC

• Jurisdiction: South Africa
• Citation: 2019 (5) SA 443 (GP)

Atlantis Property Holdings CC v Atlantis Exel Service Station CC
2019 (5) SA 443 (GP)

2019 (5) SA p443

Citation	2019 (5) SA 443 (GP)
Case No	A 5030/2018
Court	Gauteng Division, Pretoria
Judge	Opperman J, Vally J and Windell J
Heard	April 11, 2019
Judgment	April 11, 2019
Counsel	D Vetten for the appellant.; S Ress for the respondent.

Flynote : Sleutelwoorde

Contract — Breach — Remedies — Cancellation — Whether party claiming cancellation obliged to act in good faith as self-standing requirement — Majority decision holding law of contract imposing no such obligation and that test remained whether public policy or identifiable constitutional value C or principle offended — Minority decision holding that Constitutional Court developed such obligation, and that it was bound thereby as opposed to contrary Supreme Court of Appeal authority.

Lease — Cancellation — Right to cancel fixed term lease — Whether party claiming cancellation obliged to act in good faith — Law of contract imposing no such self-standing obligation, nor was such obligation developed by D Constitutional Court.

Headnote : Kopnota

The appellant landlord cancelled the lease agreement between it and the respondent tenant during the agreement's renewal period. When the tenant refused to vacate the leased premises, the landlord applied to the E High Court for the tenant's eviction. The court, however, interpreted the cancellation provision as only applying after expiry of the renewal period and dismissed the application.

In this case, the landlord's appeal to a full bench, all three judges agreed that the court a quo had erred in that the cancellation provision did apply during the renewal period. While the majority would reverse the court a quo's decision on this basis, the minority would not. This because it took the view that the F Constitutional Court had developed the law of contract — particularly in Everfresh and in Botha [*] — to impose an obligation on parties to act in good faith when exercising their rights in terms of a contract; and that the tenant had made out a sufficient case that the landlord had not acted in good faith when he cancelled the agreement (see [55] et seq). G

In the court a quo the tenant had defended the claim on the basis, inter alia, that the impugned provision could only be invoked if it were in breach, and had made a number of allegations in its answering affidavit regarding the landlord's motive for the cancellation, including that it had falsely accused it of breach as a pretext for forcing it to vacate the leased premises (see [5]). The respondent offered only a bare denial of the allegations impugning its motives, so that (applying the Plascon-Evans test) the minority held that H these allegations established as fact that the landlord had not acted in good faith (see [88]).

The majority disagreed, holding the factual substrata for a finding of absence of good faith 'was precarious'; that the absence of good faith in invoking the provision was not raised in the papers, nor as an issue in the court a quo or in the present case (see [32] – [34]); and that it was therefore not appropriate I

2019 (5) SA p444

to A entertain the unenforceability of the provision on that basis (see [36] – [37]). They, however, added that, should they be wrong on this point, they would be compelled to conclude that the minority's construction of the development of the law of contract was misplaced, because it could not in circumstances of the present case be against public policy to apply pacta sunt servanda. In this regard, the majority —

Held B

The minority judgment placed much reliance on the Constitutional Court's dicta in paras 45 – 46 of Botha (quoted at [74]). However, not only were the facts materially different to the current situation, but the case dealt with the interpretation and application of legislation dealing with property acquisition; C and the comments were made in the context of the legislation under discussion and the application thereof to the particular facts (see [30]). In Everfresh the court declined to deal with the issue of good faith because the appellant had failed to properly raise the issue before the High Court, and dismissed the application (see [35]).

The scope and impact of public policy and good faith on private contracts have D been considered by the SCA on more than one occasion; most recently in Trustees, Oregon Trust and Another v Beadica 231 CC and Others the SCA confirmed that the issue remained one of public policy, and that although fairness and reasonableness inform policy, they were not self-standing principles. This was also the position that the Constitutional Court took in Barkhuizen v Napier, where it was stated that 'the proper approach to the E constitutional challenges to contractual terms is to determine whether the term challenged is contrary to public policy as evidenced by the constitutional values'. (See [27].)

Here, there was nothing on the face of the provision, or intrinsically, that offended any constitutional value or principle or was otherwise contrary to public policy (see [31] and [37]).

Cases cited

AB and Another v Pridwin Preparatory School and Others F 2019 (1) SA 327 (SCA) ([2018] ZASCA 150): dictum in para [27] applied

Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA) ([2002] 4 All SA 125): applied

Albutt v Centre for the Study of Violence and Reconciliation and Others G 2010 (3) SA 293 (CC) (2010 (2) SACR 101; 2010 (5) BCLR 391; [2010] ZACC 4): dictum in para [82] applied

Atlantis Property Holdings CC v Atlantis Exel Service Station CC GJ 40742/2017: reversed on appeal

Bank of Lisbon and South Africa Ltd v De Ornelas and Another 1988 (3) SA 580 (A): H dictum at 607B applied

Barkhuizen v Napier 2007 (5) SA 323 (CC) (2007 (7) BCLR 691; [2007] ZACC 5): applied

Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School 2008 (5) SA 1 (SCA) ([2008] ZASCA 70): dictum in para [17] applied

Beadica 231 CC and Others v Trustees, Oregon Unit Trust and Others 2018 (1) SA 549 (WCC): I considered

Bloemfontein Town Council v Richter 1938 AD 195: dictum at 232 applied

Botha and Another v Rich NO and Others 2014 (4) SA 124 (CC) (2014 (7) BCLR 741; [2014] ZACC 11): distinguished

Bredenkamp and Others v Standard Bank of South Africa Ltd 2010 (4) SA 468 (SCA) (2010 (9) BCLR 892; [2010] 4 All SA 113): dictum in J paras [27] – [28] applied

2019 (5) SA p445

Brisley v Drotsky 2002 (4) SA 1 (SCA) (2002 (12) BCLR 1229; [2002] 3 All SA 363; A [2002] ZASCA 35): considered

Cape Town City v Aurecon SA (Pty) Ltd 2017 (4) SA 223 (CC) (2017 (6) BCLR 730; [2017] ZACC 5): applied

Eerste Nasionale Bank van Suidelike Afrika Bpk v Saayman NO 1997 (4) SA 302 (SCA) ([1997] 3 All SA 391): dictum at 326H applied

Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd 2012 (1) SA 256 (CC) B (2012 (3) BCLR 219; [2011] ZACC 30): applied

Mohamed's Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd 2017 (4) SA 243 (GJ): considered

Mohamed's Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd 2018 (2) SA 314 (SCA) ([2017] ZASCA 176): applied

Mutual and Federal Insurance Co Ltd v Municipality of Oudtshoorn 1985 (1) SA 419 (A): C dictum at 433 applied

Napier v Barkhuizen 2006 (4) SA 1 (SCA) (2006 (9) BCLR 1011; [2006] 2 All SA 496): considered

Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): applied

Novartis SA (Pty) Ltd and Another v Maphil Trading (Pty) Ltd 2016 (1) SA 518 (SCA) D ([2015] 4 All SA 417; [2015] ZASCA 111): dictum in para [28] applied

Pharmaceutical Manufacturers Association of SA and Another: In re Ex parte President of the Republic of South Africa and Others 2000 (2) SA 674 (CC) (2000 (3) BCLR 241; [2000] ZACC 1): dictum in para [49] applied

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) E ([1984] 2 All SA 366; [1984] ZASCA 51): applied

Roazar CC v The Falls Supermarket CC 2018 (3) SA 76 (SCA): dicta in paras [20] and [23] applied

Robinson v Randfontein Estates G M Co Ltd 1925 AD 173: dictum at 198 applied

Sasfin v Beukes 1989 (1) SA 1 (A) ([1988] ZASCA 94): dictum at 9B F applied

Shill v Milner 1937 AD 101: referred to

South African Airways (Pty) Ltd v Aviation Union of South Africa and Others 2011 (3) SA 148 (SCA) ([2011] 2 BLLR 112): dictum in paras [25] – [30] applied

South African Police Service v Solidarity obo Barnard (Popcru as Amicus Curiae) G 2014 (6) SA 123 (CC) (2014 (10) BCLR 1195; [2014] ZACC 23): dictum in para [202] applied

Southernport Developments (Pty) Ltd v Transnet Ltd 2005 (2) SA 202 (SCA) ([2005] 2 All SA 16; [2004] ZASCA 94): referred to

Spindrifter (Pty) Ltd v Lester Donovan (Pty) Ltd 1986 (1) SA 303 (A): referred to H

Stead v Conradie en Andere 1995 (2) SA 111 (A): referred to

Thomas v Minister of Defence and Military Veterans 2015 (1) SA 253 (SCA) ([2014] ZASCA 109): dictum in para [8] applied

Trustees, Oregon Trust and Another v Beadica 231 CC and Others 2019 (4) SA 517 (SCA) ([2019] ZASCA 23): applied

Tuckers Land and Development Corporation (Pty) Ltd v Hovis 1980 (1) SA 645 (A): I dictum at 651C – E applied

Wightman t/a JW Construction v Headfour (Pty) Ltd 2008 (3) SA 371 (SCA) ([2008] 2 All SA 512; [2008] ZASCA 6): dictum in paras [12] – [13] applied.

Case Information

D Vetten for the appellant. J

S Ress for the respondent.

2019 (5) SA p446

An A appeal against a decision of the Gauteng Local Division, Johannesburg (Atlantis Property Holdings CC v Atlantis Exel Service Station CC GJ 40742/2017, per Fisher J).

Order

1.

B The appeal is upheld.

2.

The order of the court a quo is substituted with the following order —

'1.

The applicant's termination of the lease...