IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CIRCUIT LOCAL DIVISION, THEMBALETHU)
Case No: 60/26
In the matter between
STUART HOLDING NO 1ST APPLICANT
BAREND FERREIRA NO 2ND APPLICANT
JANET MARY HOLDING NO 3RD APPLICANT
DAX SIMON HOLDING NO 4TH APPLICANT
TESSA KENZA HARDING NO 5TH APPLICANT
AND
NICE NEIGHBOUR (PTY) LTD RESPONDENT
Date of Hearing : 17 March 2026
Date of Delivering : 30 March 2026
JUDGMENT
THULARE J
ORDER
(a) The application proceedings are stayed and the disputes are referred to
arbitration as envisaged in the lease agreement.
(b) The applicants pay the costs jointly and severally, the one to pay the other to
be absolved, on a scale as between attorney and client, including counsels
fees on scale C.
[1] The applicants are trustees of the Holding Family Trust (the Trust) , which is
applying for declaratory orders that the written lease agreement concluded between
the parties was not lawfully renewed, has terminated, and that the respondent was
currently in unlawful occupation of the leased premises and also for the ejectment
of the respondent from the premises. The respondent opposed the application . The
respondents case was that the matter was not semi -urgent; that the renewal clause
only required that the respondent should not be in breach of the lease on the date
when the notice to exercise its right to renew was given; that the respondents
notice to exercise the option on 27 May 2025 was tacitly and finally accepted by
the Trust by virtue of its conduct; that the lease was revived or tacitly relocated on
or about 15 December 2025 and that the matter should be referred for arbitration.
The court decided that the question of urgency , renewal and arbitration be dealt
with first. The respondent was in possession and occupation of the leased property
since the agreement commences on 16 December 2020 and was to endure for 5
years. The respondent, on 27 May 2025, delivered a written election to exercise the
option to renew the lease, to the Trust.
Clause 4.3 of the lease agreement
[2] Clause 4.3 of the lease agreement reads:
4.3 During the subsistence of this lease but provided that the lessee has complied with all its
obligations to the lessor in terms hereof and provided further that the lessee shall have given the
lessor at least 6 (six) months written notice of the exercis e of its option to renew the lease, the
lessee shall have the right to renew the lease for a further period of 5 (five ) years in which event
the lease shall endure for such further period of 5 (five) years on the same terms and conditions
as herein contained including the annual escalation of rental referred to in sub-clause 5.1 below.
[3] There are now disputes between the parties about the interpretation of clause
4.3 and the application of clause 13 of the agreement. The Trust interprets clause
4.3 to mean that for the whole duration of the lease agreement, the respondent was
to faithfully and diligently perform its obligations under the lease agreement . Its
case is that the respondent has on various occasions during the duration of the
agreement breached the terms thereof by inter alia failing to pay its rental
timeously or in full and moreover by failing to deliver the requisite certificates of
the annual turnover figures in terms of the agreement. According to the Trust, the
respondent has forfeited its right to renew the lease and that the lease therefore
expired on 16 December 2025 and as a result the r espondent was in unlawful
occupation and the Trust was entitled to an ejectment order.
[4] The respondents answer is that it was never contemplated that the renewal right
would be conditional upon continuous and timely compliance for the entire five-
year period in the strict sense asserted by the Trust. Had it been the case, clause 4.3
would have been drafted in clear and express terms to that effect, for example, by
recording that the right of renewal would automatically lapse upon any breach
(whether material or not) by the lessee, even if later remedied. Clause 4.3
contained no such language . The Trust s attempt to read those additional
requirements into the clause was therefore strained and inconsistent with both the
wording and the commercial purpose of a renewal provision. The clear purpose of
the clause was to protect the Trust against a lessee who was in default at the time
the option was exercised or at expiry but nonetheless purporting to renew the lease.
In other words, according to the respondent, the clause was aimed at preventing a
lessee who is then in breach, and who has not remedied that breach, from securing
a further five -year term , rather than creating an inflex ible, historical forfeiture
mechanism by which any past breach, even if cured and accepted, automatically
extinguished the right of renewal. Consequently, according to the respondent, any
breach prior to (and not including) 27 May 2025 was irrelevant with reference to
the right to renew and cannot serve as a disqualifying factor.
[5] The respondent, in the alternative , indicated that its exercise of the option to
renew on 27 May 2025 was tacitly and finally accepted by the Trust due to their
complete inaction. The conduct of the Trust was plainly inconsistent with any
intent to dispute the renewal. The parties, after 15 December 2025 , conducted
themselves in a manner which disclosed a clear desire to revive the former
contractual relationship on the same terms. It was against this background that the
respondent’s case was that there was a material dispute of fact between the parties ,
which triggered clause 13 of the lease agreement. The respondent submitted that
the presence of cl ause 13 of the lease agreement and the extant dispute resulted in
the fact that the final relief sought by the Trust could not be adjudicated by this
court.
[6] In OK Bazaars (1929) Limited v Cash-Inn CC [1994] 3 All SA 570 (AD) at 581
(1) where it was said:
The issue here is not whether the appellant "forfeited" or "lost" a right to renewal. The simple
question is whether the appellant ever acquired it. It was for the appellant, as the party claiming
something from the respondent, to satis fy the court that it was entitled to what it claimed. The
first proviso stipulated satisfaction of a prerequisite. In this connection the appellant was unaided
by any presumption in his favour, and in my opinion he was clearly saddled with the onus of
establishing that the prerequisite to the exercise of the option had been satisfied.
In the penultimate paragraph, the court continued:
The first proviso to clause 3.1 reflected the respondent's desire to be quite sure that the appellant
was an exemplary tenant before it could renew the lease. In considering whether the appellant
discharged the onus which it bore the following consideration should not be overlooked. During
the currency of the lease the appellant appreciated that renewal of the pe riod of the lease was
conditional upon punctilious performance by it. It therefore had a powerful incentive to render
such performance. Despite that incentive it persistently failed timeously to deliver the certificate.
Were the period of the lease to be renewed the said incentive would no longer operate.
Earlier on the court had said:
The language of the clause means no less, so it seems to me, than that in considering whether the
prerequisite for renewal has been established, the lessee's whole track record up to the date of the
expiry of the lease is relevant.
On the. other hand the words in which the first proviso is couched are, I think, naturally and
reasonably susceptible of indicating a test less onerous to the appellant. That less stringent test
requires the making of a value judgment as to the broad merits and demerits of the apellant as a
lessee based on an objective assessment of the appellant's whole conduct and overall
performance of its contractual obligations during the currency of the lease. Such an appraisal
must take into account the length of the period of the appellant' s tenancy and the full range of its
obligations as
lessee. In weighing the significance of such breaches as may have occurred relevant
considerations will include the nature and extent of any breach, the frequency of its recurrence,
and the appellant's response or lack of response to the respondent's complaints and its insistence
upon strict compliance by the appellant.
[7] The respondent bore the onus to satisfy the c ourt that it acquired the right to
renew the lease for a further term of 5 (five) years based on that it has complied
with all its obligations to the lessor in terms of the lease agreement . T he entire
track record of the lessee must be considered when establishing whether the
conditions of renewal have been fulfilled. The lease agreement, read as a whole, is
not susceptible to an interpretation for the clause to envisage that a tenant’s
conduct should only be considered at the d ate of the notice of intention to renew
[OK Bazaars]. The terms of the lease, and especially the clause , must consider the
inconvenience and the prejudice against the parties . The respondent’s suggestion
that clause 4.3 required that it should not have been in breach of the terms of the
that clause 4.3 required that it should not have been in breach of the terms of the
lease only on the date of its notice of intention to renew the lease has no merit. The
respondents conduct throughout the lease were relevant and had to be reviewed.
Tacit acceptance of renewal
[8] The Trust s position was that the respondent’s case that there was a tacit
acceptance of the renewal despite the express pro visions of clause 4.3 would
inevitably entail a variation of the terms of the written agreement. Clauses 12.2 and
12.3 of the agreement read:
12.2 The document contains the entire agreement between the lessor and the lessee and the lessee
acknowledges that no warranty, representation or conditions which are not herein contained will
be binding on the lessor or will affect the validity of the terms of this agreement, unless in
writing and signed by the lessor and the lessee. In addition, no variation or amendment or mutual
cancellation of the agreement shall affec t the terms hereof unless such variation, amendment
mutual cancellation has been reduced to writing and signed by both the lessor and the lessee.
12.3 No extensions of time or indulgence by the lessor to the lessee in respect of any matter or
thing under this agreement shall be deemed in any way to affect, prejudice or derogate from the
rights of the lessor under the agreement nor shall it any way be regarded as a waiver of the
lessors rights in terms hereof nor as a novation of the agreement nor of any term thereof.
[9] Once parties to a written agreement bind themselves that the agreement cannot
be altered unless certain conditions are met, no amendment will be valid unless the
prescribed condition has been met [SA Sentrale Co-op Graanmaatskappye Beperk
v Shifren en Andere 1964 (4) SA 760 (A) at 765]. The purpose of non -variation
clauses was to curtail disputes and to protect parties to the contract [ Brisley v
Drotsky 2002 (4) SA 1 (SCA). In its simplest form the principle reinforces the
rights of individuals to freely contract and to be held to contracts that they freely
and competently conclude [Brisley para 23]. No tacit acceptance of renewal was
possible unless such renewal complied with the provisions of the non -variation
clause or unless it was not in conflict with the clear provisions of clause 12.3.
Furthermore, a revival of the lease was not possible unless the parties agreed in
writing on or before 15 December 2025 that the Trust waived its right to keep the
respondent to the conditions in clause 4.3 and elected to revive the lease. The valid
revival of an already terminated contract could occur in very limited
circumstances. Firstly, if the revival was brought about by the withdrawal of the
earlier (valid) act of cancellation and its consequences, and this withdrawal related
to matters extraneous to the writing of the contract. Secondly, the revival of the
contract in no way affected its terms, or, if it did, the variation resulting from the
revival did not relate to a material term of the contract. Contracts which have come
to an end, because of the fulfilment or non -fulfilment of a condition (whether
suspensive or resolutive) embodied in the written contract itself, cannot be revived
without complying with the provisions of the other terms of the contract it self.
Importantly such revival cannot by itself effect any changes to the material terms
of the written agreement, unless the other requisites of the contract and the law are
met [Cronje v Tuckers Land and Development Corporation (Pty) Ltd 1981 (1) SA
256 (W) at 259D-E].
Arbitration
[10] Clause 13 of the lease provides:
13. Any dispute at any time between any parties hereto in regard to any matter arising out of this
agreement or its interpretation or rectification shall be submitted to and decided by arbitration.
An arbitration clause cannot oust the jurisdiction of the court [ Universiteit van
Stellenbosch v JA Louw (Edms) Bpk 1983 (4) SA 321 (A) at 333G; PCL Consulting
(Pty) Ltd t/a Phillips Consulting SA v Tresso Trading 119 (Pty) Ltd 2009 (4) SA 68
(SCA) at para 7]. At PCL para 7 it was said:
[7] The mere fact that parties have agreed that disputes between them shall be decided by
arbitration does not mean that court proceedings are incompetent. If a party institutes
proceedings in a court despite such an agreement, the other party has two options:
(i) It may apply for a stay of the proceedings in terms of s 6 of the Arbitration Act 42 of
1965; or
(ii) it may in a special plea (which is in the nature of dilatory plea) pray for a stay of the
proceedings pending the final determination of the dispute by arbitration.
The definitive statement of the law in this regard is to be found in Rhodesian Railways Ltd v
Mackintosh where Wessels ACJ said:
'All that sec 6(1) lays down is that you cannot adopt the cheaper and speedier procedure
therein provided when once you have delivered pleadings or taken any other step in the
proceedings. If you have taken any step in the proceedings, then you can no longer adopt the
speedier and less costly procedure of applying to the Court to stay proceedings but you must file
your pleadings in the ordinary way. In pleading, however, you can raise the defence that the case
ought to be decided by arbitration; this can be done by a special preliminary plea.'
In the present proceedings, the defendant has simply pointed out that the lease contains an
arbitration clause in wide terms. That is not sufficient. The defendant was obliged to go further
and set the terms of the dispute. As Didcott J succ inctly pointed out in Parekh v Shah Jehan
Cinemas (Pty) Ltd and Others:
'Arbitration is a method for resolving disputes. That alone is its object, and its justification. A
disputed claim is sent to arbitration so that the dispute which it involves may be determined. No
purpose can be served, on the other hand, by arbitration on an undisputed claim. There is then
nothing for the arbitrator to decide. He is not needed, for instance, for a judgment by consent or
default. All this is so obvious that it does not surprise one to find authority for the proposition
that a dispute must exist before any question of arbitration can arise. It includes Re Carus-Wilson
and Greene (1887) 18 QBD 7 (CA); London and Lancashire Fire Assurance Co v Imperial Cold
Storage and Supply Co Ltd (1905) 15 CTR 673; King v Harris 1909 TS 292.'
The passage just quoted was approved by this court in Telecall (Pty) Ltd G v Logan 7 and
Plewman JA went on to say:
'[12] I conclude that before there can be a reference to arbitration a dispute, which is capable of
proper formulation at the time when an arbitrator is to be appointed, must exist and there can not
be an arbitration and therefore no appointment of an arbitrator can be made in the absence of
such a dispute. It also follows that some care must be exercised in one's use of the word
''dispute''. If, for example, the word is used in a context which shows or ind icates that what is
intended is merely an expression of dissatisfaction not founded upon competing contentions no
arbitration can be entered upon.'
[11] The respondent raised a special plea which is a dilatory plea. The respondent
did not request for a stay of the proceedings pending the final determination of the
dispute by arbitration. Whilst the respondent claimed that the dispute was
arbitrable in the body of its answering affidavit , it did not request a stay, which
would have been a proper answer in terms of the common law for its dilatory plea.
The respondent in its conclusion prayed for the dismissal of the relief that the Trust
sought. A party seeking to utilise, or to insist upon the utilisation of, arbitration
proceedings instead of court procee dings should lodge a substantive application
under the Arbitration Act, 1965 for the requisite stay, or file a special plea asking
for a stay in terms of the common law. The objector must actively request a stay of
the proceedings [South Paradigm v Mquqo and Another (2732/2021) [2022]
ZAECMKHC 41 (14 April 2022 ]. I have my doubts that a court would have the
ZAECMKHC 41 (14 April 2022 ]. I have my doubts that a court would have the
power to dismiss a lessor’s application for the eviction of a lessee s olely on the
strength of an arbitration clause raised in a dilatory plea which sought such
dismissal and not a stay of proceedings.
[12] On the other hand, I am not persuaded that South Paradigm is authority for
the proposition that an arbitration clause does not cover ejectment of the lessee
from the premises and that a dispute of ejectment is beyond an arbitrator’s powers.
On the facts of that case, th e arbitration focused on the issue of non-payment of
arrear rental and did not deal with the lessee’s continued unlawful occupation of
the property or with the matter of eviction. As such, the court held that it would in
any event have served no purpose for the respondents to seek a stay of the eviction
proceedings pending the o utcome of arbitration proceedings focused on the issue
of non -payment of arrear rental. It was for that reason that the first point in
limine must be dismissed.
Urgency
[13] The original lease agreement expired due to effluxion of time on 15 December
2025. On 27 May 2025 the respondent, in writing, gave the Trust its intention to
exercise the option of renewal of the lease when it ended due to effluxion of time.
The Trust did not respond to this notice at all. The Trust did not reject the renewal
at that time or at any time during the subsistence of the lease. The Trust did not
dispute the renewal of the lease for longer than 8 (eight) months and allowed the
respondent to fully implement the deed of lease for over a month after the date of
effluxion of time. I am not persuaded that the sudden realization of the need to find
a suitable tenant, on 26 January 2026, obviously based on legal advice, renders the
Trusts application semi- urgent. It is simply risible to have a view that this would
earn condonation in terms of rule 6(12). The public service of urgent attention to
matters need not be seriously disrupted by belated and retrospective considerations
which a party to disputes realise after effluxion of time. Such party simply does not
make out a case to interpose at the top of the queue to justify the disruption of the
court rolls. Upon receipt of the notice of intention to exercise renewal in May, or
around the end of the original lease by effluxion of time on 15 December 2025, the
need for intervention by the Trust arose. To intervene more than a month after the
lease came to an end and then claim urgency is simply to be stated to be rejected.
Discretion of the Court
[14] The failure to include a prayer does not debar a Court from awarding costs
[Singh v Singh 1911 TPD 1034 at 1038-1039]. The Trust had clear notice from the
answering affidavit of the dilatory relief the respondent sought and could not claim
surprise or prejudice. In this application the Trust sought an order that the
agreement terminated on 15 December 2025 and was not val idly renewed. There
must be primary facts to establish the disputed invalidity of renewal and the
forfeiture of the right to renew. The Trust also sought an order that the respondent
was in unlawful occupation of the premises. A decision whether the respondents
renewal notice of 27 May 2025 was effective can only be answered after
examination of the facts. The question whether breaches were remedied or waived,
and whether the post notice conduct of the Trust could be fully explained, required
ventilation through evidence.
[15] Final findings on disputed facts on papers were ill-suited for urgent motion
proceedings. From 16 December 2025 to 26 January 2026 the Trust continued to
conduct itself and allow ed both parties to conduct themselves on the footing that
the lease relationship survived its end due to effluxion of time. The legal
consequences of the parties’ conduct were a fact -based answer to the ejectment
claim and I have my doubts that it was capa ble of final determination on motion ,
especially urgent application. Paragraphs 4, 6 and 7 of Golden Fried Chicken (Pty)
Ltd v Sirad Fast Foods CC and Others 2002 (1) SA 822 (SCA) reads:
[4] After the termination of the initial agreement and prior to this letter the parties (in the light of
the facts recited) conducted themselves in a manner that gave rise to the inescapable inference
that both desired the revival of their former contractual relationship on the same terms as existed
before. Taken toget her, those facts establish a tacit relocation of a franchise agreement
(comparable to a tacit relocation of a lease) between the appellant and Sirad ( Shell South Africa
(Pty) Ltd v Bezuidenhout and Others 1978 (3) SA 981 (N) at 984B - E). A tacit relocation of an
agreement is a new agreement and not a continuation of the old agreement ( Fiat SA v Kolbe
Motors 1975 (2) SA 129 (O) at 139D - E; Shell at 985B - C). The fact that the appellant had
forgotten that the agreement had lapsed is beside the point because in determining whether a tacit
contract was concluded a court has regard to the external manifestations and not the subjective
workings of minds (Fiat SA at 138H - 139D).
[6] In order to meet this conclusion the appellant relied upon two provisions of th e initial
agreement. The first provided that no amendment, cancellation or waiver of any term of the
agreement would be effective unless in writing and signed by both parties, and the second that no
relaxation or indulgence granted in respect to a party's B obligations would constitute a waiver.
Relying on the principle that non -variation and non-waiver clauses are binding ( SA Sentrale Ko-
op Graanmaatskappy Bpk v Shifren en Andere 1964 (4) SA 760 (A)), the submission was that the
conditions for renewal of the initial contract were entrenched and that unless they were complied
with the contract could not have been extended.
[7] In my judgment the argument misses the point. It is common cause that the initial contract
was not extended and accordingly since 31 October 1998 at an end. Its non -variation and non -
waiver provisions likewise lapsed, simply because there was nothing l eft to vary or waive. An
entirely different point is whether a tacit contract was concluded afterwards, albeit on much the
same terms. Counsel correctly accepted that the parties, in spite of the clauses relied upon, could
have entered into a new written f ranchise agreement for whatever term and in whatever form
without the preceding notice as required by the original agreement. Once that is conceded it has
to follow that a tacit franchise agreement could likewise have been entered into. The initial
contract did not preclude the conclusion of contracts, tacit or otherwise, at least not once it had
expired. (I have already mentioned that a tacit relocation is a new agreement and not an
extension of the old one.) The conditions for extending the initial agreem ent cannot govern the
conclusion of a new and independent agreement. (Compare Fiat SA for a comparable conclusion
under similar circumstances.)
[16] On the respondent’s version the Trusts conduct after the alleged expiry,
viewed as a whole, was consistent with an ongoing lease relationship between the
parties. This was a dispute of fact that could not be resolved in motion proceedings.
This renders the matter unsuitable for final relief. I am not persuaded that there are
exceptional circumstances that warrant a refusal to stay the proceedings and not to
enforce an agreement to arbitrate . In Crompton Street Motors CC t/a Wallers
Garage Service Station v Brig ht Idea Projects 66 (Pty) Ltd t/a All Fuels 2022 (1)
SA 317 (CC) at para 41 it was said:
[41] Section 6(2) of the Arbitration Act allows a court to stay proceedings 'if [upon application in
terms of s 6(1)] the court is satisfied that there is no sufficient reason why the dispute should not
be referred to arbitration in accordance with the agreem ent'. The language of s 6(2) directs a
court acting under that section to stay proceedings where such an application is made unless
court acting under that section to stay proceedings where such an application is made unless
sufficient countervailing reasons exist for the dispute not to be referred to arbitration. The words
'no sufficient reason why the dispute should not be referred to arbitration' denote that the standard
position is that a stay should be granted upon request. The onus of satisfying the court that the
matter should not be referred to arbitration and instead heard by the High Cou rt is on the party
who instituted the legal proceedings. 43 In Universiteit van Stellenbosch 44 the then Appellate
Division held that, when a court is faced with a stay application, the discretion to refuse
arbitration in the circumstances should be exercised judicially, and only when a 'very strong case'
has been made out. 45 This high threshold for refusal is because the party who does not want the
matter referred to arbitration 'is seeking to deprive the other party of the advantage of arbitration
to which the latter is entitled'.
[16] Against the background of my approach to the question of urgency , and the
order that I deem in the interests of justice, I deem it no t necessary to engage with
the application to strike out, as it would serve no purpose. Suffice it to state that
new allegations to justify the Trusts conduct appear to me to form part of the
factual material in the dispute between the parties , which can be properly
ventilated, without the prejudice of the respondent being confronted therewith in
reply in an urgent motion. For these reasons I make the order.
___________________________
DM THULARE
JUDGE OF THE HIGH COURT
Lawfulness of the respondent occupation from 16 December 2025 and whether the
respondent should be ejected. Discretion
In any event, and to the extent that it may be necessary for this court to express
itself further on the point, the court considers it appropriate to exercise a discretion
to proceed and deal with the dispute, rather than call a halt to proceedings and refer
this particular matter to arbitration.
.