Do you think that the mutually agreed terms of your lease agreement are absolute? Think again!

In the recent case of AJP Properties CC v Sello (39302/10) [2017] ZAGPJHC 255 (8 September 2017), the Gauteng Local Division of the High Court, Johannesburg had to decide whether the respondent, Ditonkana Abram Sello (Sello), the sole proprietor of Kempton Gate Pharmacy should be evicted by the applicant, AJP Properties CC (AJP Properties). The court further had to determine whether it was in the interests of justice to grant an eviction order with immediate effect, or if the order should be stayed.

15 Nov 2017 3 min read Dispute Resolution Alert Article

The parties concluded a five-year lease agreement in 2010 in terms of which Sello rented premises in the Elgin Shopping Mall for the purposes of operating a pharmacy. The five-year period came to an end, but the lease continued based on a clause in the lease agreement which made provision for the extension of the lease agreement after the expiry of the lease. This clause further stated that in such an event, all the terms and conditions of the lease would remain in force and that the lease would be terminable by either party giving the other one calendar month’s written notice of termination. 

AJP Investments gave Sello one month’s written notice of cancelation on 30 May 2017. However, Sello failed to vacate before 30 June 2017 and consequently AJP Properties instituted an urgent application for the eviction of Sello.

Although the court held that AJP Properties was entitled to an eviction order, the question the court had to consider: Was it in the interests of justice for the eviction order to be made effective immediately or if the order should be stayed? 

The court considered a number of factors before reaching the decision that it was entitled to stay an eviction order under the circumstances, including that:

  • our courts have the discretion to stay or suspend the execution of an ejectment order in terms of the South African common law; 
  • a High Court, in terms of Rule 45A of the Uniform Rules of Court, can suspend the execution of any order for such period as it may deem fit;
  • the principle of freedom of contract is not absolute; and
  • there is no distinction between the delay of an ejectment order from a residential property as opposed to a commercial property. 

The court turned next to the question of whether, under the circumstances, the eviction order should be stayed. The court considered a number of factors:

  • The unequal bargaining power of the parties. The court used the lease agreement as an example to prove this. The standard option to renew clause (although it was not operative in the present case) required the lessee to exercise its option to renew at least three months prior the termination of the lease. According to the court, this indicated the amount of time AJP Properties believed it would need to find a replacement tenant.
  • Sello had not breached any of the terms of the lease and was up to date with the rent.
  • AJP Properties did not inform Sello as soon as it had successfully negotiated a new lease for the same premises with another business. By failing to inform Sello, AJP Properties failed to afford Sello a fair opportunity to relocate. 
  • The economic realities - this included, among other things, that if Sello did not find alternative premises, he faced financial hardship and possibly even financial ruin and the fact that staff were likely to be laid off.
  • The court further held that there was a socio-economic factor namely that the pharmacy provided for the essential medical needs of the people living in the area, which included the elderly.

Consequently, the court held that there were sufficient grounds to justify a delay in the enforcement of the eviction order in the current circumstances.

The court then turned to the issue of what would be the appropriate period to delay the order by. The court, among other findings, found that in terms of AJP Properties’ standard lease agreement, it considered three months to be necessary to secure a new tenant if the lease is not extended. The court thus granted the eviction order but delayed the order for a period of three months in the interest of justice. 

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