Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others (CCT109/19) [2020] ZACC 13; 2020 (5) SA 247 (CC); 2020 (9) BCLR 1098 (CC) (17 June 2020)

Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others (CCT109/19) [2020] ZACC 13; 2020 (5) SA 247 (CC); 2020 (9) BCLR 1098 (CC) (17 June 2020)

The majority held that the applicants failed to discharge the onus of demonstrating that enforcement of the lease renewal clauses would be contrary to public policy. The renewal clauses were clear, simple, and understandable, and the applicants did not provide a sufficient explanation for their failure to comply. The harsh outcome of eviction and business collapse, absent such explanation, was not enough to render enforcement contrary to public policy. The court reaffirmed that public policy is informed by constitutional values, but that abstract notions of fairness, reasonableness, and good faith do not provide a free-standing basis to refuse enforcement. The principle of pacta sunt...

Citation
[2020] ZACC 13
Parties
Applicant: Beadica 231 CC; Applicant: Beadica 232 CC; Applicant: Beadica 234 CC; Applicant: Beadica 235 CC; Respondent: Trustees for the time being of the Oregon Trust; Respondent: Sale’s Hire CC; Respondent: National Empowerment Fund
Court
Constitutional Court
Jurisdiction
South Africa
Judgment Date
17 June 2020
Case Number
CCT109/19
Procedural Posture
Civil Appeal / Appeal From Supreme Court of Appeal, Following High Court Judgment
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
Khampepe, Froneman, Jafta, Madlanga, Majiedt, Mathopo, Mhlantla, Theron, Tshiqi, Victor
Legal Topics
Public Policy in Contract, Pacta Sunt Servanda, Section 9 Equality, Black Economic Empowerment, Contractual Fairness, Ubuntu
Commercial and Corporate Civil Procedure Constitutional Law Public Policy in Contract Pacta Sunt Servanda Section 9 Equality Black Economic Empowerment Contractual Fairness +1 more

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Parties

Beadica 231 CC

Applicant

Beadica 232 CC

Applicant

Beadica 234 CC

Applicant

Beadica 235 CC

Applicant

Trustees for the time being of the Oregon Trust

Respondent

Sale’s Hire CC

Respondent

National Empowerment Fund

Respondent

Procedural Posture

Civil Appeal / Appeal From Supreme Court of Appeal, Following High Court Judgment

Legal Issues

  1. 1 Whether strict enforcement of lease renewal clauses is contrary to public policy under the Constitution.
  2. 2 Whether the failure to renew leases timeously by the applicants justifies eviction and termination of franchise agreements.
  3. 3 Whether enforcement of contractual terms undermines substantive equality and black economic empowerment initiatives.

Ratio Decidendi

The majority held that the applicants failed to discharge the onus of demonstrating that enforcement of the lease renewal clauses would be contrary to public policy. The renewal clauses were clear, simple, and understandable, and the applicants did not provide a sufficient explanation for their failure to comply. The harsh outcome of eviction and business collapse, absent such explanation, was not enough to render enforcement contrary to public policy. The court reaffirmed that public policy is informed by constitutional values, but that abstract notions of fairness, reasonableness, and good faith do not provide a free-standing basis to refuse enforcement. The principle of pacta sunt...

Court Disposition

Appeal dismissed with costs, including costs of two counsel.

Orders

  • Leave to appeal is granted.
  • The appeal is dismissed with costs, including the costs of two counsel.