Mokone v Tassos Properties CC and Another

• Jurisdiction: South Africa
• Judge: Nkabinde ADCJ, Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla J, Mojapelo AJ, Pretorius AJ and Zondo J
• Judgment Date: 24 July 2017
• Citation: 2017 (5) SA 456 (CC)
• Docket Number: CCT 113/16 and 291/16 [2017] ZACC 25
• Hearing Date: 24 July 2017
• Counsel: T Ngcukaitobi (with F Hobden and I Kentridge) for the applicant.GD Wickins (with WG Pretorius) for the first and second respondents.
• Court: Constitutional Court

Madlanga J (Nkabinde ADCJ, Jafta J, Khampepe J, Mhlantla J, Mojapelo AJ, Pretorius AJ and Zondo J concurring):

Introduction B

[1] These are two applications for leave to appeal against judgments of the High Court of South Africa, Gauteng Local Division, Johannesburg (High Court). The applications raise the following issues:

(a)

whether, when parties renew a lease without saying more (simpliciter), only terms that are 'incident to the relation of lessor and C tenant' are renewed;

(b)

whether a right of pre-emption granted orally or in writing without signature is invalid; and

(c)

the circumstances under which a court may stay proceedings pending finalisation of other proceedings. D

Background

[2] On 1 March 2004 Ms Mokone, the applicant in both applications, entered into a written lease agreement with the first respondent in the first application, Tassos Properties CC (Tassos). In terms of the E agreement, Tassos leased premises to Ms Mokone at 119 Commissioner Street, Boksburg (leased premises), at a monthly rental of R4500. The lease was for an initial period of one year ending on 28 February 2005, renewable for a further period of a year at a rental to be agreed upon. Since the conclusion of the lease to date, Ms Mokone has been conducting a business under the name 'Nick's Bottle Store' on the leased F premises.

[3] Clause 6 of the lease agreement reads:

'The [tenant] shall have the [right of first refusal] to purchase the leased premises when the [lessor wishes] to sell the leased premises. The G purchase price shall be negotiated when the [lessor wishes] to sell the leased premises.'

[4] For the period 1 March 2005 to 3 May 2006 Ms Mokone and Tassos concluded an oral agreement on the same terms and conditions as the written lease. On 3 May 2006 they agreed to an extension of the lease H until 31 May 2014. This they did by means of a manuscript endorsement on the face of the first page of the original written lease signed by only a representative of Tassos. The endorsement reads: 'Extend till 31/5/2014 monthly rent R5500'. [1]

[5] On 15 July 2009 Tassos entered into a deed of sale with Blue Canyon I Properties 125 CC (Blue Canyon) in terms of which it sold the leased premises to Blue Canyon. Blue Canyon is the second respondent in the

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first A application and the only respondent in the second application. Transfer to Blue Canyon took place on 1 March 2010.

[6] In 2010, after becoming aware of the sale, Ms Mokone brought an application in the High Court seeking: a declarator that Tassos was in breach of the right of pre-emption; cancellation of the sale and reversal B of transfer of the leased premises; and an order compelling Tassos to comply with clause 6 of the written lease (the clause containing the right of pre-emption). [2] She later withdrew this application.

[7] On 27 January 2012 Ms Mokone notified Tassos in writing that she was exercising her right of pre-emption. She tendered payment of C R55 886,60. The following documents reflected this amount as the price at which Tassos sold the leased premises to Blue Canyon: the power of attorney to pass transfer; a South African Revenue Service document reflecting the purchase price on which transfer duty was payable; and the deed of transfer. [3] Tassos rebuffed Ms Mokone, arguing that the right of pre-emption was no longer part of the lease. On 3 April 2012 D Ms Mokone initiated action against Tassos and Blue Canyon in the High Court to set aside the sale and transfer of the leased premises and compel a sale of the property to her. In the alternative, she asked for damages. Her contention was that the manuscript endorsement that extended the lease to 31 May 2014 had also extended clause 6 containing the right of E pre-emption. She sought to upset the transfer to Blue Canyon on the basis that Blue Canyon was aware of her right of pre-emption before it took transfer.

[8] The High Court separated issues in terms of rule 33(4) of the Uniform Rules of Court. All that the High Court had to determine was F whether the right of pre-emption had been extended. And it had to do this on the basis of stated facts, which were that —

(a)

'the initial period of the written lease commenced on 1 March 2004 and terminated on 28 February 2005';

(b)

'from 1 March 2005 there existed an oral lease between [Ms G Mokone] and [Tassos] on, essentially, the same terms and conditions as contained in the written lease'; and

(c)

'on 3 May 2006 the initial written lease was extended until 31 May 2014 at a monthly rental of R5 500.00 as per the manuscript on the first page of [the initial written lease agreement]'.

[9] H The High Court held against Ms Mokone. It concluded:

'(T)he word extended is appropriate to the continuance of the period of the lease, and not the continuance of the right of pre-emption, especially if one has regard to the fact that the right of

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pre-emption is collateral [and not an incident] to the relation of A [lessor] and tenant and terms that are collateral to and independent of such relationship are not renewed when a lease is renewed simpliciter, unless the parties make it clear that they intended this.' [4]

[10] In short, the High Court held that the manuscript endorsement did not result in the right of pre-emption being incorporated in the extended B new lease. It made a declarator to that effect. Because there were other issues raised by the pleadings that were still outstanding, the High Court postponed the matter indefinitely.

[11] The High Court and, later, the Supreme Court of Appeal refused leave to appeal. This is what has given rise to the first application before us. C

[12] Whilst the action was pending before the High Court, the latest period of the lease came to an end. Despite this, Ms Mokone continued to occupy the leased premises. Blue Canyon, which had stepped into the shoes of Tassos as lessor after it had taken transfer, continued to accept D rent. There was thus a tacit month-to-month lease between Ms Mokone and Blue Canyon from 1 June 2014. On 10 December 2014 Blue Canyon gave Ms Mokone written notice to vacate the leased premises by 31 January 2015. Ms Mokone refused to vacate. On 17 February 2015 Blue Canyon sought her eviction from the Boksburg Magistrates' Court on the basis that: it was the owner of the leased premises; the lease E had come to an end through effluxion of time; and Ms Mokone had been given due notice to vacate the premises.

[13] Ms Mokone resisted the application on the grounds that: Blue Canyon's alleged ownership was under challenge in proceedings that were pending before the High Court; as a consequence, Blue Canyon F had no right to terminate Ms Mokone's occupation; since issues relevant to the eviction proceedings were pending before the High Court, the eviction proceedings were premature and had to be held in abeyance pending the determination of the action pending before the High Court. The magistrates' court dismissed the eviction proceedings. But Blue Canyon subsequently succeeded on appeal before the High Court. G

[14] The Supreme Court of Appeal refused special leave to appeal. The second application before us is a sequel to this.

Issues H

[15] This matter raises the following issues:

(a)

whether leave to appeal in both applications should be granted;

(b)

whether the right of pre-emption contained in the written lease agreement was renewed when the lease was extended on 3 May 2005;

(c)

whether the endorsement on the face of the lease agreement I extending the lease had to comply with the formalities contained in s 2(1) of the Alienation of Land Act; [5] and

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(d)

A whether, despite the fact that the lease has ended through effluxion of time and Ms Mokone has been given due notice to vacate the leased premises, there is a basis on which she can — in the meantime — resist eviction.

Leave to appeal

[16] B Each application engages our jurisdiction in terms of s 167(3)(b)(ii) of the Constitution. [6] The first application concerns the question whether the right of pre-emption was renewed with the last extension of the lease. Leases with terms similar to clause 6 of the lease at issue here are commonplace. Unsurprisingly, therefore, the question of the effect of an C extension or renewal of a lease on clauses of this nature arises not infrequently. That much is plain from the reported cases on the subject.

[17] I thus conclude that, although in this litigation this question affects only the parties, 'its impacts and consequences are substantial, broad-based, transcending the litigation interests of the parties, and bearing D upon the public interest'. [7] '(I)ssues do not have to be of importance to all citizens or the whole nation in order to be of general public importance.' [8] It is enough if the issues are 'of importance to a sufficiently large section of the public'. [9] The question at issue in the first application meets the test.

[18] E The second application raises two questions. The first is whether a pactum de contrahendo (loosely, a contract whose aim is to conclude another contract) [10] that could lead to a sale of land — like the right of

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pre-emption — must comply with the formalities contained in s 2(1) of A the Alienation of Land Act. The second is whether, outside of certain circumscribed circumstances, [11] a court may stay proceedings pending finalisation of other proceedings. For reasons similar to those I have discussed in relation to the first application, these issues too are of general public importance. B

[19] The issues raised by both applications are arguable [12] and of some import and, as will appear shortly, they bear prospects of success. They ought to be considered by this court. [13] Leave to appeal...