Mohamed's Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd (183/17) [2017] ZASCA 176; 2018 (2) SA 314 (SCA) (1 December 2017)

Mohamed's Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd (183/17) [2017] ZASCA 176; 2018 (2) SA 314 (SCA) (1 December 2017)

The Supreme Court of Appeal held that the cancellation clause in the lease agreement was neither objectively unconscionable nor contrary to public policy. Both parties contracted freely and on equal footing, and the respondent was aware of the consequences of breach. The respondent's failure to pay rental on time,...

Source-derived case information.

Citation
[2017] ZASCA 176
Parties
Appellant: Mohamed's Leisure Holdings (Pty) Ltd; Respondent: Southern Sun Hotel Interests (Pty) Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
1 December 2017
Case Number
183/17
Procedural Posture
Civil Appeal / Appeal From Gauteng Local Division, Johannesburg
Outcome
Appeal upheld; eviction order granted with costs, including costs of two counsel.
Judges
Shongwe, Willis, Mathopo, Meyer, Ploos van Amstel
Legal Topics
Lease Cancellation, Pacta Sunt Servanda, Public Policy in Contract, Good Faith, Ubuntu, Eviction
Commercial and Corporate Land and Property Lease Cancellation Pacta Sunt Servanda Public Policy in Contract Good Faith Ubuntu Eviction

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Parties

Mohamed's Leisure Holdings (Pty) Ltd

Appellant

Southern Sun Hotel Interests (Pty) Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From Gauteng Local Division, Johannesburg

Legal Issues

  1. 1 Whether the cancellation clause in the lease agreement is manifestly unreasonable or unfair and contrary to public policy.
  2. 2 Whether the principle of pacta sunt servanda should be relaxed in light of constitutional values such as ubuntu and good faith.
  3. 3 Whether the respondent's breach, caused by its bank's error, justifies eviction under the contract.

Ratio Decidendi

The Supreme Court of Appeal held that the cancellation clause in the lease agreement was neither objectively unconscionable nor contrary to public policy. Both parties contracted freely and on equal footing, and the respondent was aware of the consequences of breach. The respondent's failure to pay rental on time, even if caused by its bank, constituted a breach that triggered the appellant's right to cancel and seek eviction. The court found no constitutional or public policy grounds to relax the principle of pacta sunt servanda or to infuse the contract with notions of ubuntu or good faith in this context. The hardship to the respondent, including potential job losses and business...

Court Disposition

Appeal upheld; eviction order granted with costs, including costs of two counsel.

Orders

  • The appeal is upheld with costs, including costs of two counsel.
  • The order of the high court is set aside and substituted with an order that the respondent and all persons occupying the property through it must vacate the property on or before 31 March 2018.