THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 468/2023
In the matter between:
GLOWING ROOMS (PTY) LTD APPELLANT
and
ARTHUR LEVIN N O FIRST RESPONDENT
ALAN MARK LOCKETZ N O SECOND RESPONDENT
MICHAEL LARRY NOVOS N O THIRD RESPONDENT
SEYMOUR MICHAEL ABRAHAMS N O FOURTH RESPONDENT
(Respondents cited in their capacities as trustees
for the time being of The Woodlands Trust)
Neutral citation: Glowing Rooms (Pty) Ltd v Levin N O & Others (468/2023)
[2024] ZASCA 33 (28 March 2024)
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Coram: NICHOLLS, MBATHA, MABINDLA-BOQWANA, WEINER
and KGOELE JJA
Heard: 20 February 2024
Delivered: 28 March 2024
Summary: Contract law – whether the eviction order was properly granted
– whether the respondents had a right to cancel the lease agreement – whether their
conduct amounted to repudiation of the agreement – whether court should have
developed the common law in accordance with constitutional norms and values to
refuse the eviction.
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ORDER
On appeal from: Western Cape Division of the High Court, Cape Town (Savage J,
sitting as court of first instance):
1 The appeal is dismissed with costs, save for the variation of the date of
eviction.
2 The order of the high court is substituted with the following:
‘1. The respondent, Glowing Rooms (Pty) Ltd, as well as its employees, agents,
assigns and any other person/s that may occupy Unit 16 Gallery, Turf Club Drive,
Milnerton, Western Cape (“the premises”) are to vac ate the premises on or before
30 June 2024.
2. Should the respondent, as well as its employees, agents, assigns and any other
person/s that occupy the premises vis-á-vis the respondent, fail to vacate the
premises voluntarily as set out in paragraph 1 above, the sheriff is authorised to evict
the respondent, its employees, agents, assigns and any other person/s that may
occupy the premises vis-á-vis the respondent on 1 July 2024, or as soon thereafter as
possible.
3. The respondent is to pay the costs of this application on the scale as between
attorney and client.’
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JUDGMENT
Nicholls JA (Mbatha, Mabindla-Boqwana, Weiner & Kgoele JJA concurring):
[1] This is an appeal against a judgment of the Western Cape Division of the High
Court, Cape Town (the high court) , which granted an eviction order against the
appellant from a commercial property, pursuant to a notice of termination in terms
of a lease. The central issue in this appeal is whether the eviction order was properly
granted or whether the respondents repudiated the lease agreement, and whether on
proper interpretation of the agreement as a whole, the respondent s had a right to
‘unilaterally’ cancel the agreement. In addition, whether the court should have
developed the common law in ac cordance with constitutional norms and values, to
refuse the eviction.
[2] The appellant is Glowing Rooms (Pty) Ltd (Glowing Rooms). On 2 July 2016,
Glowing Rooms entered into a lease agreement with the Woodlands Trust (the Trust)
(the first agreement) in terms of which it leased a unit in a retail development, the
Gallery, located in an industrial area near the Milnerton Race Course in Cape Town
(the premises). The premises were utilised as an indoor 3D mini golf course, which
operated only on Saturdays an d Sundays. The trustees of the Woodlands Trust are
the respondents herein. The first agreement of lease was for a period of three years,
commencing on 1 September 2016 and t erminating on 31 August 2019. A second
lease agreement was entered into on 27 February 2020 for another three years,
commencing on 1 September 2019 and terminating on 31 August 2022. In July and
August 2022, the parties attempted to negotiate a new lease agreement.
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[3] It was disputed between the parties whether pursuant to these negotiations, a
new lease came into existence. Glowing Rooms insisted that the parties had entered
into a new lease agreement on the same terms as the previous one. That a new lease
agreement had been concluded was disputed by the Trust , which alleged that once
the second lease agreement was terminated by the effluxion of time, the negotiations
for a new lease agreement during July and August 2022 had been unsuccessful.
[4] Because, at least on the Trust ’s version, no agreement had been reached, it
entered into a lease agreement with a third party, Tambudzai Perky Umer a,
commencing on 1 September 2022. Ms Umera leased not only the premises in
question, but also two other units in the Gallery. As a director of a non -profit
educational institution, she intended to set up a school. To this end, the Trust agreed
to undertake renovations and to give Ms Umera vacant occupation of the premises
on 1 January 2023.
[5] Glowing Rooms refused to vacate the premises and denied that it had any
legal obligation to do so. It claimed that a lease agreement had been concluded on
26 August 2022, pursuant to the acceptance of an offer made by the Trust. As a result,
on 6 October 2022 , the Trust instituted an urgent application to evict G lowing
Rooms from the premises on the basis that the second lease agreement had been
terminated by the effluxion of time and that G lowing Rooms was accordingly in
unlawful occupation of the premises. Glowing Rooms pleaded that a further lease
agreement had been entered into on the same ter ms and conditions as the second
lease agreement, which had commenced on 1 September 2019.
[6] On 28 October 2022, the high court (per Kusevitsky J), dismissed the eviction
application (the first eviction application). No reasons were provided for the order ,
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but it is common cause between the parties that the basis for the dismissal of the
eviction application was that the high court found that the parties had entered into a
new lease agreement pursuant to the negotiations in July and August 2022 , despite
it not having been reduced to writing.
[7] The trustees, apparently having accepted the court ’s ruling, as indeed they
were obliged to, then proceeded on the basis that there was an extant lease agreement
on the same terms an d conditions as the second lease agreement , as contended for
by Glowing Rooms. Of particular significance is clause 2.1 of the lease agreement ,
which provides that the duration of the lease will be three years ‘subject to the
Lessor’s right to cancel this agreement on one month’s notice’. Clause 2.2 provides
that the lessee shall have an option to renew the lease on two months’ written notice.
It is common cause that Glowing Rooms did not give two months’ written notice to
renew the second lease agreement.
[8] On the same day , and immediately after Kusevitsky J’s ruling in the first
eviction application, on 28 October 2022, the Trust sent a notice to Glowing Rooms
terminating the lease agreement in terms of clause 2.1 , on one month’s notice, and
requiring Glowing Rooms to vacate by not later than 30 November 2022. The third
paragraph of the notice reads as follows:
‘Insofar as Glowing Rooms (Pty) Ltd (“Glowing Rooms”) allege that the parties have entered into
a new lease agreement, on the same terms and conditions as the previous lease agreement dated
27 February 2020, save for the change in G lowing Rooms’ rental obligation [the Trust] hereby
gives Glowing Rooms notice, in terms of clause 2.1. of the alleged agreement, that it has elected
to CANCEL the alleged agreement, and this letter serves as notice thereof.’ (Emphasis added.)
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[9] Again, G lowing Rooms refused to vacate in terms of the notice , which
resulted in the Trust instituting the present proceedings, seeking eviction for the
second time. In th e second eviction application, which is the subject matter of this
appeal, the Trust based its case on its contractual right to evict in terms of clause 2.1
of the lease agreement.
[10] The high court, per Savage J, granted the eviction application but determined
that the eviction should take place on or before 31 December 2022 , instead of
30 November 2022. In the exercise of its discretion to determine a reasonable date
for the eviction, the high court took into consideration that Glowing Rooms had been
a tenant for many years and would require some time to relocate. The high court
refused an application for leave to appeal by Glowing Rooms. Leave to appeal was
granted by this Court.
[11] Glowing Rooms’ appeal is based on four grounds. In this appeal, as in the
high court, Glowing Rooms ’ primary defence is that public policy considerations
mitigate against the enforcement of clause 2.1. Aligned to this , is the duty to
negotiate in good faith. The next aspect of G lowing Rooms’ argument is that the
Trust repudiated the lease agreement and was therefore not in a position to assert a
contractual right in terms thereof. The third point related to the validity of the notice
to terminate. Finally, Glowing Rooms contended that on a proper interpretation of
the lease agreement, clause 2.1 should be seen as part of the whole agreement, which
incorporated several other clauses providing for termination on notice, in defined
circumstances. By relying on it in isolation, the Trust impermissibly abrogated to
itself an unfettered discretion to terminate the lease on one month’s notice.
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[12] The starting point should be whether the Trust repudiated the lease agreement,
as this would be dispositive of its claim for eviction. The basis for Glowing Rooms’
argument is that in the first eviction application , the Trust contended that no lease
was concluded after the second lease agreement expired, on 31 August 2022, through
the effluxion of time. It could not, therefore, rely on a term of an agreement, which
it alleged did not exist, to evict G lowing Rooms without expressly disavowing its
initial stance. The notice in terms of clause 2.1 also referred to an ‘alleged agreement’
indicating, according to Glowing Rooms, that the Trust had not accepted that there
was an extant lease agreement, thereby repudiatin g the lease agreement. In fact,
argued Glowing Rooms, nothing short of a written acceptance of an extant lease
agreement would suffice, absent which this Court should find that the Trust had
repudiated the lease agreement.
[13] What this contention overlooks is that the Trust’s first application for eviction
had been dismissed by Kusevitsky J, on the basis that there was an extant lease
agreement. That these were the grounds for the high court’s dismissal of the eviction
application, was emphasised repeatedly by Glowing Rooms. Once the trustees
accepted the decision of the high court, as they were compelled to do, their denial of
the existence of the lease in the first eviction application could have no bearing on
their subsequent conduct in utilising the terms of the lease to procure an eviction in
this application. After the decision of the high court apparently based on an extant
lease agreement, the only avenue open to the Trust, in order to evict Glowing Rooms,
was to do so in terms of the lease agreement. There is, therefore, nothing to prevent
the Trust from relying on a contractual right to cancel the lease agreement.
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[14] This Court , in Datacolour International (Pty) Ltd v Intamarket ,1 held that
repudiatory conduct must be objective . The proper test is whether a notional
reasonable person would conclude that proper performance (in accordance with a
true interpretation of the agreement) will not be forthcoming. The conduct must be
clear cut and unequivocal, as repudiation is not lightly presumed. The Court further
held that repudiation occurs ‘where one party to a contract, without lawful grounds,
indicates to the other party in words or by conduct a deliberate a nd unequivocal
intention no longer to be bound by the contract.’ 2 Repudiation is not a matter of
intention, but rather of perception and the perception being that of the reasonable
person.
[15] The use of the words ‘insofar as Glowing Rooms allege that the parties have
entered in to a new lease agreement . . .’ cannot amount to an unequivocal intention
not to be bound by the lease agreement, particularly once a court had for all intents
and purposes held that there was an existing lease agreement, to which the Trust was
bound. While the Trust might have initially denied the existence of the agreement,
the very fact that it brought its second eviction application in terms of the lease
agreement after the first eviction application was dismissed, points to conduct which
is the exact opposite of a party refusing to perform in terms of a contract. As such,
the defence of repudiation is unsustainable.
[16] The next question is whether the notice of term ination was valid. G lowing
Rooms’ contention, in this regard, is that the notice, by the use of the words ‘insofar
as’ and the reference to an ‘alleged’ agreement being concluded, implied that it did
1 Datacolour International (Pty) Ltd v Intamarket 2001 (2) SA 284 (SCA); [2001] 1 All SA 581 (A) paras 16, 17 and
18.
2 Ibid para 16, quoting Corbett JA in Nash v Golden Dumps 1985 (3) SA 1 (A) at 22 D-F.
10
not consider itself to be bound by the agreement. It was submitted that where there
is no clear and unequivocal intention to be bound by the agreement, a notice of
termination is invalid. For this contention , reliance was placed on Kragga Kamma
Estates CC and Another v Flanagan (Kragga Kamma)3 and Sweet v Ragerguhara
NO and Others (Sweet),4 both dealing with the sale of immov able property. In
Kragga Kamma, the plaintiff claimed that non-payment of a portion of the purchase
price constituted a repudiation of the sale agreement, which repudiation the seller
accepted. This Court held that the notice of demand was a conditional demand and
was incapable of placing the defendant in mora as it was subject to some uncertain
future event. But even if it were, the plaintiff had, for other reasons, not validly
cancelled the sale. The notice was framed in the alternative. It was not clear and
unambiguous. In the present matter, the written notice is clear and unambiguous, it
is not conditional or contradictory.
[17] Similarly, the facts in Sweet are distinguishable. There, the applicant sought
an order that an agreement of sale had been lawfully cancelled on the basis that the
respondent had not given vacant possession of the property in question. A notice was
sent to remedy the defective performance by giving vacant possession. The court
found that the defaulting party was entitled to know how to respond to the notice ,
but in that instance, it was equivocal and inconsistent. Here, there is no demand that
Glowing Rooms remedy its breach, as clause 2.1 is not dependent upon a breach of
the agreement.
3 Kragga Kamma Estates CC and Another v Flanagan 1995 (2) SA 367 (A); [1995] 1 All SA 486 (A) at 374 H-J –
375 A-E.
4Sweet v Ragerguhara NO and Others 1978 (1) SA 131 (D) at 139 E-G.
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[18] There can be no suggestion that the notice sent to G lowing Rooms is in any
manner contradictory or confusing. The notice clearly and unambiguously states that
the Trust is exercising a contractual right in terms of clause 2.1 to terminate the lease
agreement on one month’s notice. The reference to an ‘alleged’ agreement does not
detract from that.
[19] I now deal with G lowing Rooms’ argument relating to the interpretation of
the lease agreement. It proceeds along the following lines. By relying on clause 2.1,
the Trust impermissibly utilised its unfettered discretion to terminate the lease, when
clause 2.1 should have been interpreted in light of the contract as a whole. This was
in circumstances where there are other clauses in the lease agreement which provide
for longer notice periods in different scenarios. For example, in terms of clause 18.1,
the Trust can terminate on three months’ written notice in the case of the building
being sold; clause 18.2 provides for three months’ written notice in the case of
substantial renovations, reconstruction or redevelopment of the building; clauses
18.3 and 18.4 provide 60 days’ written notice, where the lessee is to be moved to
alternative premises in consequence of renovations being carried out; and clause
18.7 provides for three months’ written notice, if the parties fail to reach agreement
within 30 days on an alternative lease providing for relocation of the business of the
lessee. Clause 22 affords the Trust the right to terminate in the case of destruction of
property or damage which renders it unlettable, upon 60 days’ notice.
[20] In its answering affidavit , Glowing Rooms stated that the lease agreement
grants the Trust an array of unilateral contractual powers as set out in clauses 18 and
22, without any qualification that they be exercised in accordance with the judgment
of a reasonable person. As such, all these clauses were contrary to public policy and
of a reasonable person. As such, all these clauses were contrary to public policy and
invalid, not only clause 2.1 . Further, Glowing Rooms contended that this is
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disproportionate and does not take into account the rights and interests of both
parties.
[21] Significantly, it was not Glowing Rooms’ case in the high court that it ought
to have been given a longer notice period, in line with the other clauses. Nor did it
contend on appeal before this Court , that these other clauses were themselves,
contrary to public policy. In this Court, counsel for G lowing Rooms specifically
stated that clause 2.1 per se is not unlawful and contrary to public policy. Rather, it
was the interpretation and implementation thereof that was the fundamental
problem, thus linking the interpretation of the contract to whether it was contrary to
public policy. Glowing Rooms argued that a contract which provides for a unilateral
right to terminate by written notice and ‘to implement a contracting party’s act of
repudiation’, amounts to ‘abuse of a contractual right’. It was further argued that the
Trust’s abuse of the contractual right to further an act of repudiation or breach , is
contrary to public policy.
[22] This argument is difficult to understand. Our courts have repeatedly
confirmed that public policy demands that contracts freely and consciously entered
into must be honoured.5 The principle of pacta sunt servanda (agreements must be
kept) gives effect to ‘central constitutional values of freedom and dignity’. Th e
qualification is that, in our constitutional dispensation, it is not the only principle to
be applied. Furthermore, where constitutional rights and values are implicated, there
5 Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC); 2007 (7) BCLR 691 (CC); Beadica 231 CC and Others
v Trustees for the time being of the Oregon Trust and Others [2020] ZACC 13; 2020 (5) SA 247 (CC); 2020 (9) BCLR
1098 (CC); Botha v Rich N.O. [2014] ZACC 11; 2014 (4) SA 124 (CC); 2014 (7) BCLR 741 (CC); AB v Pridwin
Preparatory School [2018] ZASCA 150; 2019 (1) SA 327 (SCA).
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must be a careful balancing act .6 While there is recognition of the role of e quity
(encompassing the notions of good faith, fairness and reasonableness), as a factor in
assessing the terms and enforcement of a contract, it has been emphasised that a
court cannot refuse to enforce contractual provisions on the basis that to do so would
be unfair, unreasonable or unduly harsh.7
[23] In our present contractual regime, the starting point is that a contracting party
is entitled to specific performance of any contractual right. Notions of good faith and
fairness have not been elevated to substantive rules of contract. While these values
play an important role in our law of contract, they do not provide a free -standing
basis on which a court may interfere i n contractual relationships. It is only where a
term is so unfair, unreasonable or unjust that it is contrary to public policy that a
court may refuse to enforce it.8 This Court has held that to coerce a lessor to conclude
a lease agreement with a party it no longer wants as a tenant would be contrary to
public policy.9
[24] Applying the above principles to the facts of this case, G lowing Rooms
voluntarily entered into a commercial lease in 2016. It was renewed in 2019 and, as
was successfully argued by Glowing Rooms in the first eviction application, it was
renewed yet again. Clause 2.1 featured in all the agreements. At no point did
Glowing Rooms object to the inclusion of the clause, on the grounds that it was too
onerous or in any manner unfair. It accepted all the clauses of the lease agreement
6 Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others [2020] ZACC 13; 2020
(5) SA 247 (CC); 2020 (9) BCLR 1098 (CC) (Beadica) para 83, quoting Barkhuhizen v Napier [2007] ZACC 5; 2007
(5) SA 323 (CC); 2007 (7) BCLR 691 (CC) para 57.
7 Beadica para 80.
8 Ibid para 79 and 80.
(5) SA 323 (CC); 2007 (7) BCLR 691 (CC) para 57.
7 Beadica para 80.
8 Ibid para 79 and 80.
9 Rozaar CC v Falls Supermarket CC [2017] ZASCA 166; [2018] 1 All SA 438 (SCA); 2018 (3) SA 76 (SCA) para
24.
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without demur. It was not disputed that t he case it advanced in the first eviction
application was that the lease agreement should be accepted in all its terms. It is not
open to G lowing Rooms now to a ssert that the exercise of the terms of the lease
agreement is contrary to public policy and therefore of no force and effect. Despite
Glowing Rooms’ averment that the eviction constitutes an unlawful infringement of
their constitutional right to ‘practice [their] trade and occupation as business
persons’, t his is a purely commercial lease . T here is no element of contractual
oppression or disproportionate bargaining power. There are no grounds for finding
that clause 2.1 is contrary to public policy.
[25] On the aspect of good faith, G lowing Rooms contends that where a lease
agreement provides that the lessor has the unilateral right to terminate the lease, this
should give rise to a duty to negotiate in good faith. Such a duty, as a bare minimum,
should preclude a party from purporting to unilaterally cancel without first
presenting a formal written lease agreement for acceptance. G lowing Rooms calls
on this Court to develop the common law in this regard.
[26] This, too, is premised on a misconception of the Court’s right to develop the
common law. In Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd
(Everfresh),10 the applicant sought to develop the law of contract in light of s 39(2)
of the Constitution, so that the common law would require parties who undertake to
negotiate a new rental for a renewed term of the lease to do so in good faith. The
majority refused the invitation. It held that only where the common law is deficient
are the courts under a general obligation to develop i t. The first inquiry is whether
the common law viewed in the light of s 39(2) requires development, and if so, the
10 Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd [2011] ZACC 30; 2012 (1) SA 256 (CC); 2012
(3) BCLR 219 (CC).
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second inquiry is how. 11 Litigants who seek to in voke provisions of s 39(2) must
plead their case in the court of first instance. The applicant in Everfresh did not plead
dire consequences, commercial or otherwise, that might ensue if the lease were not
renewed. Nor did it suggest that it had lacked proper legal representation or that it
was poorly advised or indeed suffered from any form of vulnerability springing from
unequal bargaining power. The Constitutional Court, while acknowledging that
where there is a contractual obligation to negotiate, it wou ld be unimaginable that
constitutional values would not require that the negotiations be in good faith, drew
a distinction where the dispute was of a purely commercial nature . This is to be
distinguished from Carmichele v Minister of Safety and Security (Carmichele),12
where fundamental rights were at stake.
[27] So, too, this matter, is purely a commercial dispute about commercial
premises. No fundamental rights are implicated. Glowing Rooms makes no case that
if it loses these premises , it will be unable to f ind any other, or that these premises
are of any special value or importance. Quite the contrary, during negotiations in
July 2022, Glowing Rooms’ director wrote to the Trust saying: ‘ [w]e are [al]ready
in negotiations with various agents/landlords and there is a lot of free space available
for a much lower rate at very good locations. ’13 Furthermore, because G lowing
Rooms was obliged to ‘redo/freshen-up’ the mini golf course, ‘a move to another
premises would solve that problem as well.’ This suggests a willingness to relocate.
Nothing on the facts of this matter indicate s that there is a need to develop the
common law. There is no contractual duty to negotiate and any reliance on a general
duty to negotiate in good faith is misplaced.
11 Ibid para 30 quoting Carmichele v Minister of Safety and Security [2001] ZACC 22; 2001 (4) SA 938 (CC); 2001
(10) BCLR 995 (CC) (Carmichele) paras 39-40.
12 Carmichele.
13 See respondent’s heads of argument para 11.
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[28] For the above reasons, the appeal must fail. All that remains is whether this
Court should use its discretion to extend the date of eviction to enable Glowing
Rooms to relocate to new premises. Counsel for the trustees, without conceding,
accepted that it would not be unreasonable to grant Glowing Rooms a three months’
notice of eviction. Insofar as costs are concerned, the scale of costs in the high court
was on the attorney and client scale as governed by the lease agreement. There is no
reason to grant attorney and client costs in this appeal.
[29] In the result, the following order is made:
1 The appeal is dismissed with costs, save f or the variation of the date of
eviction.
2 The order of the high court is substituted with the following:
‘1. The respondent, Glowing Rooms (Pty) Ltd, as well as its employees, agents,
assigns and any other person/s that may occupy Unit 16 Gallery, Turf Club Drive,
Milnerton, Western Cape (“the premises”) are to vacate the premises on or be fore
30 June 2024.
2. Should the respondent, as well as its employees, agents, assigns and any other
person/s that occupy the premises vis -á-vis the respondent, fail to vacate the
premises voluntarily as set out in paragraph 1 above, the sheriff is authorised to evict
the respondent, its employees, agents, assigns and any other person/s that may
occupy the premises vis-á-vis the respondent, on 1 July 2024, or as soon thereafter
as possible.
3. The respondent is to pay the costs of this application on the scale as between
attorney and client.’
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__________________________
C E HEATON NICHOLLS
JUDGE OF APPEAL
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Appearances
For the appellant: H J O (Wallis) Roux
Instructed by: Brits & Matthee Attorneys, Somerset West
Brits & Matthee Inc, Bloemfontein
For the respondent: F S G Sievers SC
Instructed by: Smith Tabata Buchanan Boyes, Cape Town
Webber Attorneys Inc, Bloemfontein.