Sontsele v 140 Main Street Properties CC and Another (328/2019) [2020] ZASCA 85 (6 July 2020)

Sontsele v 140 Main Street Properties CC and Another (328/2019) [2020] ZASCA 85 (6 July 2020)

The court held that while the lessee gave timely notice to renew the lease, this alone was insufficient to create a new lease contract. The essentialia of a lease require agreement on rental, which was not reached between the parties. The lessee failed to invoke the clause for third-party determination of rental before the agreement expired. Consequently, the lease lapsed by effluxion of time on 31 May 2014. Any subsequent occupation was on a month-to-month oral basis, which was validly cancelled by the lessor. The appeal was upheld, and the lessee was ordered to vacate the property.

Citation
[2020] ZASCA 85
Parties
Appellant: Mlungisi Ndodana Sontsele; Respondent: 140 Main Street Properties CC; Respondent: Nedbank Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
6 July 2020
Case Number
328/2019
Procedural Posture
Civil Appeal / Appeal From Eastern Cape Division of the High Court, Mthatha
Outcome
Appeal upheld with costs, including those of two counsel. The order of the court below is set aside and replaced with an order declaring the lease terminated by effluxion of time and directing the first respondent to vacate the property.
Judges
Ponnan, Mbha, Mokgohloa, Plasket, Ledwaba
Legal Topics
Lease Renewal Option, Agreement by Effluxion of Time, Rental Determination by Third Party, Contractual Essentialia
Land and Property Commercial and Corporate Lease Renewal Option Agreement by Effluxion of Time Rental Determination by Third Party Contractual Essentialia

Case Brief

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Parties

Mlungisi Ndodana Sontsele

Appellant

140 Main Street Properties CC

Respondent

Nedbank Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Eastern Cape Division of the High Court, Mthatha

Legal Issues

  1. 1 Whether the notarial lease agreement was validly renewed for a further period after expiry of the initial term.
  2. 2 Whether failure to agree on rental or invoke the third-party determination clause resulted in the lease lapsing.
  3. 3 Whether continued occupation after expiry constituted a valid month-to-month tenancy.

Ratio Decidendi

The court held that while the lessee gave timely notice to renew the lease, this alone was insufficient to create a new lease contract. The essentialia of a lease require agreement on rental, which was not reached between the parties. The lessee failed to invoke the clause for third-party determination of rental before the agreement expired. Consequently, the lease lapsed by effluxion of time on 31 May 2014. Any subsequent occupation was on a month-to-month oral basis, which was validly cancelled by the lessor. The appeal was upheld, and the lessee was ordered to vacate the property.

Court Disposition

Appeal upheld with costs, including those of two counsel. The order of the court below is set aside and replaced with an order declaring the lease terminated by effluxion of time and directing the first respondent to vacate the property.

Orders

  • The appeal is upheld with costs, including those of two counsel.
  • The order of the court below is set aside and replaced by: (i) The application succeeds with costs. (ii) It is declared that the notarial agreement of lease entered into between the parties on 29 June 2004 terminated by effluxion of time on 31 May 2014. (iii) The first respondent is ordered to vacate the property...