SPECFIC CONTRACT:

TOPIC 3: CONTRACT OF LEASE

1 NATURE AND CONCLUSION

• Generally, same principles applicable to movable & immovable property.
o Where different Dr Myburgh will indicate
• Definition: Lease is reciprocal contract in terms of which a lessor agrees to provide
temporary use and enjoyment of the leased object (res) in exchange for payment of the
rental by the lessee
• Essentialia
(a) Agreement on temporary use (ius utendi) & enjoyment (ius fruendi - includes
fruits) of leased object.
(b) Agreement on the rental to be paid

Essentialia 1 Temporary use & enjoyment of the res

• Description of res must be certain OR ascertainable
o Means leased premises must be capable of being
identified without having to refer to parties’ negotiations
• Core aspect: lessee has the Ius utendi AND ius fruendi, but NOT
the ius abutendi (right to consume/destroy res)
o Moment party has ius abutendi → dealing with different
type of contract
o Example: A contract for the right to work a min and extract
the minerals or deposits from the land is commonly referred
to as a "mining lease." However, this is NOT actually a
lease because here the "lessee" has the right to mine and
remove it from the property – they are actually consuming
the res.
o This cannot be a lease because the characteristic to a
lease is merely the right to use and enjoy, not to
consume/use up. Important – this does not mean that this
contract is void!
§ It just means that it is not a lease contract.

Duration?
• Not an essential of a lease contract that the parties agree when it
is going to terminate.
• Defining characteristic of lease (as opposed to COS) → Use &
enjoyment of res is temporary
• COS → use & enjoyment of merx is permanent
• It is not necessary for the parties specifically to agree on a fixed
time period for the lease (although common).
• Different types of lease contracts ito duration
o a) Fixed term contract
§ Either parties agree on a fixed date of termination
or also dealing with a fixed term contract where
 the termination is linked to an event that is certain
to happen but not clear when it will happen.
§ Naturalia: There is no right to cancel the fix term
contract prior to the expiry of that lease. = Thus no
general right to cancel unless there is a contractual
right to cancel included in the agreement or there is
breach of contract and the cancellation
requirements are met.

o b) Leases at will
§ No fixed term
§ Lease contract which can terminate at the will of
either the lessor or lessee or both
§ Note: Lease will automatically expire if e.g. it is a
tenancy at will of the lessor and the lessor dies
(cannot express a will once you die)
§ Problematic as it places all of the power in the
hands of one party.

o c) Periodical lease
§ Either where it is expressly stated that the parties
have a daily/weekly/monthly/yearly lease, but do
not stipulate a termination date.
§ OR can be implicit → E.g. lessee obliged to pay
rental every month, but no termination date in
lease contract. Assumption is that parties are
dealing with a monthly lease
§ General assumption → Time period for which you
must give notice of cancellation runs alongside the
periodical nature of the lease
§ Weekly lease → Must give a week’s notice of
cancellation.
§ BUT yearly lease → Need not give a year’s notice:
• General rule is to give 3 months’ notice.

o Hybrid leases
§ Combine aspects of different types of leases (in
sense of duration).
§ Common hybrid lease → Contract for a fixed term,
but parties also cater for premature cancellation.

Essentialia 2 Agreement on rental:

• Generally, rental must sound in money
o Unless dealing with an agricultural/rural lease → Rental can
be partly in money, and partly in fruits
• e.g. I you R10 000 plus a ton of apples
• Agreement on rental must be certain OR ascertainable
 o Parties can reach an express agreement on rental or can agree
on a formula which amounts to an objective test to calculate
the rental e.g. the amount paid by the previous lessee or an
escalation clause such as “rental will increase with 10% each
year”.
o Parties can also agree to nominate a third party to set rental
(rules are the same as with reasonable price in context of
COS)
o Issue: Agree on reasonable rent → Engen Petroleum v
Kommandonek (specifically deals with lease
agreement); Genac Properties v NBC Administrators

Engen Petroleum Ltd v Kommandoek (Pty) Ltd 2001 (2) SA 170 (W) –
PRESCRIBED
• Although the court made remarks about the "reasonable rental" the case itself deal
with a term providing a discretion to one of the parties to vary the rental based on
reasonable grounds.
• Example of this type of clause:
o “The lessor acknowledges that this agreement has been concluded in a
complex environment of regulated pricing for petroleum products … Should
the lessee on reasonable grounds determine that such environment has
changed to such an extent which might render uneconomic the continued
performance of its obligations in terms of this agreement, then the lessee may
(notwithstanding anything to the contrary herein) vary the rental on written
notice of not less than 90 days to the lessor subject to the other provisions of
this clause...”
• Clause 25.3 of agreement relied on in Engen Petroleum v Kommandonek

Facts:
• This case concerned a lease agreement which contained a clause which gave the
lessee a right to vary the rental.
• The parties had entered into a number of agreements with each other.
• The lessor was the owner of immovable property which the lessee rented to run a BP
service station as well as some other shops.
• The lessor was liquidated.
o The lessee wanted the lease contract to be declared to be in full force –
which meant that they could occupy the property in terms of the lease.
o However, the lessor argued:
§ 1. That because of the clause which provided that the lessee had a
right to vary, the rental was so vague and uncertain that it rendered
the lease contract unenforceable.
§ 2. They further argued that the effect of the clause was to give the
lessee an unfettered right to determine the rental which they were
obliged to pay to the lessor.

Legal Question: was the clause which provided a right to vary the rental void vagueness?
Ratio:
• The court found that the clause was clearly defined, and not too vague or uncertain.
• The lessee’s right to vary the rental was not unfettered but rather controlled by
certain objectively ascertainable factors.
• The right could only be exercised by the lessee on reasonable grounds.
• Moreover, the right to alter the rental by the lessee only arose when circumstances
changed rendering the rental uneconomic.
• The court disagreed with the argument that this created an “unfettered right to vary
the rental”:
o 1. In terms of clause 25.3 (quoted above), the lessee could only exercise the
right on “reasonable grounds”
§ – this brings in an element of objectivity. It is not unfettered.
o 2. Moreover, the clause itself provides for circumstances when this right
would arise - only and to the extent that changed circumstances have
rendered it uneconomic to continue with the performance in terms of the
current obligations.
o 3. Even though the clause does not suggest “how” to vary the rental - looking
at the clause in context – the rental needs to be varied from “uneconomic” to
“economic”. Implicit in this variation is objective factors

• The court refers to the Genac Properties and the NBS Boland Bank-case.
o In the Genac Properties-case the court criticised our current approach to a
contract of sale for a reasonable price and a lease for a reasonable rental.
o The court (in Genac) refers to Adcorp spares v Hydromulch which said that
an agreement to pay a fair and reasonable price was too uncertain to give
rise to a valid contract of sale as the judge in this case asked:
§ 1. What does fair and reasonable mean?
§ 2. How would this be determined/calculated?
§ 3. These questions ultimately depend on the opinion of an
undermined person(s).

o However, academics have argued that it is clear that where the price is
determined by “an unnamed third party” or one of the parties themselves then
it is void due to lack of certainty.
o But, according to the court, it does not follow that a contract of sale cannot be
for a reasonable price as it could be rendered certain if the court is able to
determine what is reasonable in the circumstances of the particular
agreement.
o There is authority that in terms of a service contract service for remuneration
– when the price is not set by the parties the law provides that the price will
be reasonable.
o In other jurisdictions a sale for a reasonable price is not considered too vague
to be enforced e.g. English law.
o Genac DID NOT decide on this matter as in that case the lease contract
which contained a term such that the lessor was liable for “reasonable
expenses”. This was found to be binding because it was capable of objective
ascertainment and not subject to the whim of the lessor.
 § NBS Boland Bank
§ The court here found that a clause in a mortgage bond which allowed
the bank the power to unilaterally vary the interest rates in terms of
the bond was valid, provided it was exercised in a reasonable manner.
§ f a contract grants a discretionary power, if not clearly intended to be
unfettered then the exercise of such a discretion needs to be made
reasonably.
§ In other jurisdictions a clause which empowers one of the contracting
parties to determine a price is unobjectionable as long as the
determination was made in good faith and is reasonable.

• Back to Engen Petroleum

o In the present case, the court found that it is similar to that of NBS Boland
Bank – the same considerations apply in interpreting the clause.
o The court found that the clause was not too vague in order to render it void.
§ Courts do not want to be the destroyer of bargains.
o Moreover, if the clauses of the contract are read together
§ – it provides an agreed-on procedure to vary the rental under a
particular set of circumstance.
§ It also provides for action/escape if no agreement is reached. Thus,
the clause was clearly defined not vague and uncertain

1.2 Formalities
• In principle, no formal requirements for a valid contract of lease generally.
• If oral agreement valid lease between lessee or lessor
• But if dealing with a long term lease, then different
• Long term lease = anything longer than 10 years.
• Must be registered against the Title Deed of the property
• Registration of this lease is no necessarily for the valid for the lease contract
between the parties themselves
§ There is still a leave contract between lessor and lessee
• But for the lessees rights to be enforceable against 3rd parties the lease must be
registered
•
• But there are situations where writing is prescribed EITHER
a. For purposes of affording lessee, a right against 3p’s
§ Formalities iro Leases of Land Act 18 of 1969
• States, IF a lessee wants to have her rights ito LT lease protected
against a 3p (e.g. buyer), that LT lease MUST be in writing and
registered against title deed of the property
§ LT lease: Any lease longer than 10 years
§ ST lease: Any lease shorter than 10 years

b. OR, as a form of consumer protection

§ Rental Housing Act 90 of 1999 → As amended, obliges lessor to reduce
agreement to writing
§ Certain prescribed info that must appear in written agreement.
 § Act first appeared in 1999 → Subsequently amended in 2014, but those
amendments are NOT yet in force.

1 3 Distinction from other types of contracts

• Sale
o Lease: Right to use & enjoy leased object → Temporary.
o COS: Right to use & enjoy object → Permanent.
• Loan for use (commodatum)
o Gratuitous transaction/contract for use of res for a fixed period of time
o Difference between loan for use & lease → Loan for use is gratuitous
• Precarium
o Gratuitous transaction where something is lent to someone else, but terminates
at will of lender
o Distinguish from lease → Precarium is gratuitous
• Loan for consumption
o NOT gratuitous.
o Distinguished from lease → With loan for consumption, borrower has ius
abutendi (right to consume/destroy property) the object that he has borrowed.
o E.g. “mineral lease” is not lease in true sense of the word → Rather, it is a loan
for consumption.
2 DUTIES OF PARTIES

2.1 LESSOR
• Basically has 3 ex lege duties:
a. Duty to deliver the rental property to the lessee
b. Obligation ito condition of res (leased premises / object)
c. Obliged to warrant the undisturbed use & enjoyment of the property

2.1.1 Delivery of rental property

• Fairly common to hear lay people describe the lessor’s duty as a duty to deliver the
rental property
o In this sense it means to make the leased premises or object available so that the
lessee can occupy it.
o Therefore all that is required is to make the rental property available.
• Long-term lease (over 10yrs): Duty to make the rental property available includes
o A duty on the lessor to register the lease agreement against the title deeds of
the property
• Duty to make a rental property available includes: a duty to make those accessories
available that allow the lessee to occupy the property OR at least to allow lessee to use
leased object for the use that is meant for
o Accessories – sometimes what must be provided to the lessee ito a particular
lease agreement is determined by local custom
o EG: Custom in Gauteng that apartments are leased with the stove inside the
apartment. Same custom does not apply in WC

2.1.2 Condition of res

We need to distinguish between a lessor’s duty relating to the condition of a lease property at
the time of delivery and a lessor’s duty to maintain the condition of the lease premises for the
duration of the lease
• This distinction is important because the remedies of the lessee differ depending on
which duty is breached.
• Remember there are two duties here

(i) At delivery
• The duty to deliver the leased premises in the condition that the parties have
agreed upon OR alternatively in a condition that renders that premises
reasonably fit for the purpose for which it was let

(ii) During the currency of the lease

• Ongoing maintenance duty on the lessor to ensure that the leased object/
premises is reasonably fit for the purpose for which it was let
• For the duration of the lease the lessor will maintain the condition agreed
upon.
• Ex lege term so it can be varied, and it usually is.
• Often find in lease contracts is that the parties will agree that
• Lessee - duty to maintain the interior of the leased premises
• Lessor - duty to maintain the exterior of the premises
• REMEDIES when lessor fails to comply with one or the other of these duties, will be
different (at least requirements are different)

What happens if the lessor does not comply with one or both of these duties?
REMEDIES ((i) + (ii))

a) Does lessee have a claim for Specific performance?

• Order that forces the lessor to perform as he agreed to perform
• General rule in SA: Specific performance is primary remedy for BOC à but court has the
discretion to refuse it
o In the development of this remedy
§ There were initially fixed categories where specific performance would not
be awarded such as where it would be difficult for a court to see if the order
was complied with for instance with construction contracts.
§ Another situation where it was felt that the court should not award specific
performance as it is difficult for the court to determine if the order was
complied with was lease contracts.
§ One of these situations was in the event of lease contracts – apparently
because lease contracts in particular were contracts in which it was difficult
for a court to enforce and supervise an order for SP.
• Rule was, where a lessor either delivered the lease premises in a
condition not reasonably fit for purpose /failed to maintain = the rule
was that SP was not available, rather the lessee was required to
notify the lessor of the problems with the leased object (defects) ,
and then if the lessor did not repair in a reasonable time, then the
lessee had to repair those defects and then either deduct the costs
 of repairs from the rental, or where those costs exceeded the rental,
required to claim that amount from the lessor.
§ Major flaw in this alternative option?
• Presupposes that lessee has sufficient funds to make these repairs
which is more often than not, not the case.

• Thus, welcomed dev. that this rigid approach to the unavailability of SP in the context of
lease contracts was RELAXED
o Becomes even more NB that this relaxation has occurred where granting an
order of SP is necessary to give effect to the R’s of lessees
§ EG: R to adequate housing, dignity, privacy as found in the BoR’s

Point is made very well in Mpange v Sithole 2007 (6) SA 578 (W) - PRESCRIBED
• Concerned a number of lessees living in slum conditions, living in a big warehouse that
was partitioned off into rooms.
o Two toilets for about 500 people
§ Toilets don’t have fixed doors
o Water leaking, exposed power cables, windows smashed etc.
o Refuse not collected
o Floors covered in urine
• When lessees asked the landlord (who is an attorney) to repair premises one of the
responses was that the lessees should repair it themselves & deduct the cost from the
rental
• This is one of the situations, which as the court rightly recognises that you should be
allowed to use SP iot give effect to the lessee’s human rights
o But on the fact’s à SP was NOT awarded because the true owner of the
premises had not been joined to the case
§ And an order of SP would have consequences on the true owner and
therefore have to be joined
o So as an alternative the court awarded a deduction in rental.
o But the point remains that a court will not hesitate to grant SP in the event the
§ Lessor either delivers property in defective condition
§ OR fails to repair defects in the property.

b) Cancellation / termination
• Easiest way to ensure you can cancel is to add a cancellation clause.
• Follow 2 different approaches depending on whether the lease premises/res is
o Delivered in a defective condition VS
o Situation when the lessor fails to maintain the leased premises in a reasonable
condition

• 1) Delivered the lease premises in a defective condition:

o The rule is that a party can cancel the contract if the breach was material. Where
you deliver the lease premises in a defective positive, this is positive mal
performance. The rule then becomes that you can cancel if there is a –
cancellation clause or material breach.
o Test? (Singh v McCarthy Retail): The question is whether a reasonable continue
with the contract and be satisfied with a claim for damages? If the answer is no,
 the breach is material and a party may cancel. If the answer is yes, then the
breach is not material.

• 2) Breach of duty maintain (continuous) the property:

o Where the breach pertains to the duty to maintain the condition during the
currency of the lease, the requirements for cancellation are that:
o 1) The lease premises must be practically useless, (does not have to be
completely useless, simply that the lessee should not be able to use that leased
object to a substantial degree for the purpose of which it was let) and
o 2) The lessor must have had a chance to repaid the property BEFORE the lessee
can cancel
o We need to look at what type of breach this is:
§ Possibilities: Positive malperformance or mora
• The issue is the obligation is a continuous one
• If this is positive malperformance, there is, in terms of general
contract law, no automatic right to cure the breach
• Yet in the context of lease, if the breach pertains to the continuous
duty one of the requirements for the cancellation is a right to cure.
• There is a disjunct between the rules of a lease contract and the
general principles of breach of contract.
o The law of lease seems to argue that there is always a right to cure in the event
of the breach of this type of duty, but the general principles of breach of contract,
specifically with positive malperformance does not provide an automatic right to
cure

o How do we align this?

§ MORA – this a continuous duty to maintain the condition of the leased
premises, the idea is that you are dealing with a delay in complying with
this duty, thus not positive malperformance but mora.
§ If you classify this breach as mora, then this means that the lessor always
has a right to cure (principles of mora – automatic right to cure).

b) Damages
• Remedy of damages à what happens in the event of lease contract applies to both
situations of defect.
• General rule when claiming damages for defective performance – the knowledge of the
guilty party is irrelevant – do not have to prove fault to claim damages. The position is
different for claiming damages for lease – have to show lessor knows or should have
known and then deliberately or negligently fails to repair

• Hunter v Cumnor Invesments (PRECRIBED) – is authority for this approach but is

subject to criticism
o Generally speaking, when you are claiming contractual damages fault is not a
requirement before you can claim. Moreover, the idea that a lessor should
have known by reason of their profession of the defective condition
requirement is problematic.
o Issues:
§ 1. How would this work if a roof leaks because the drainage is faulty –
if we assume that the lessor does not know that there is something
wrong with this drainage system and the lessor is an accountant? Will
a lessee be able to claim damages to the extent that they have
suffered loss?
§ 2. The wording means that there could be an instance were the lessor
is not liable for damages because of their profession/trade has nothing
to do with maintenance.
§ 3. This “by virtue of their trade or profession” sounds similar to the law
of sale’s liability for consequential loss due to latent defects in the
merx.
o The court found that a breach of the lessor’s duty to maintain the leased
premises alone does not give rise to a claim for damages.
o The additional requirements need to be met – they need to have been given
the opportunity to repair the breach and they need to know/ought to have
known (by virtue of their trade and profession) of the defect. In the absence of
such knowledge, actual or implied, the lessor is not liable for damages.
§ This case relies on Nannucci v Wilson & Co for apparently providing
support for this approach. Issue, the Nannucci case says that
“knowledge may be imputed to a lessor ‘from the nature of his
occupation, or from other circumstances’” (broader from Hunter)

o Criticism:
§ 1.The authority relied on by the Hunter case – is not actually authority
for the position, it does not act as authority that it needs to have been
“by virtue of their trade or profession.”
§ 2. This approach introduces a fault-based element when proof of fault
is not a requirement for contractual damages
§ This extra tail appears to come from Hunter; through a link between
remedies relating to the defective condition of the lease premises and
then remedies in the law of sale when you are dealing with a defective
merx
• The buyer can claim consequential damages when dealing
with a retailer who professes to the public… This seems to be
the root of this tail.
§ But even though we are talking about the defective condition of the
leased premises it merely refers to some or other imperfection in the
premises “which renders it unfit for the purposes leased, whether it is
a structural defect or a problem occasioned by deterioration over time,
or perhaps extreme weather conditions.”
• It does not mean a defect in the technical sense of the word

§ The combining of the rule of sale (relating to defects) and the rule of
lease is inappropriate and is widely criticised
• See for example Bradfield and Lehmann Principles of the Law
of Sale and Lease 3rd ed 148, Glover Kerr’s Law of Sale and
 Lease 4th ed 398, De Wet & Van Wyk Die Suid-Afrikaanse
Kontraktereg en Handelsreg 5de uitgawe 359 – 360.
• The current position leaves room for a situation where the
lessee will have not remedy to claim the damages they have
suffered.

§ Remarks Dr Myburgh – In the digest, there is a distinction drawn

between a lessor’s duties in relation of the condition of a leased
premises vs what seems to be a further duty, which is the lessor’s
duty to warrant against defects in the leased premised.
• SA modern law there is no separate requirement for a warranty
against defect in terms of lease – defects will rather form part
of the leased premises. However, the knowledge req which
was applicable to warranty against defects in the Digest has
been held onto here?
• Issue that was relevant in a discussion under a warranty
against defects has now been latched onto a completely
different duty
• What do I need to know from this discussion – if you refer
to the aedilitian remedies will reduce marks because they
are not available in a lease because there is no such thing
as a warranty against defect in a lease there unique to a
contract of sale and exchange.

c) Reduction in rent (remissio mercedis) – decreased value of use & enjoyment

• Allows lessee to pay a reduced rent proportionate to their diminished use and
enjoyment of the leased premises
• For a long time, this reduction was NOT available to a lessee who occupied the lease
premises (had occupation) but use and enjoyment thereof was reduced due to the
condition of the property
o The old rule is set out in the case of Arnold v Viljoen
§ If the lessee could occupy the leased premises, regardless of the
condition, the lessee was obliged to pay the full rental even though
they would not have full use and enjoyment of the res.
§ The old test to determine whether the lessee was liable for the rental
was to ask whether they where in occupation of the leased premises
or not?
§ The test did not look at whether or not the occupation was beneficial.
§ If the lessee was in occupation that was not beneficial the remedy
would be damages.
§ This is referred to as the “continuous occupation” approach – if the
lessee could occupy the premises then the lessee needed to pay the
full rental.

• This approached was changed by:

 o This approach was changed by:
§ 1. Ntshiqa v Andreas Supermarket - Exceptio non adimpleti contractus
in terms of a lease contract.
§ 2. Thomson v Scholtz - Remission in rental & exceptio.
§ 3. Mpange and others v Sithole- Remission in rental was awarded
even though the lessees had remained in occupation.

Ntshiqa v Andreas Supermarket (Arnold v Viljoen) - PRESCIRBED

• Court recognized that you could pay reduced rental where use/enjoyment has been
diminished due to failure to maintain condition of the property (for example)
• Solved one problem but created another

FACTS
• Lessee leased premises iot run a supermarket from it
o There were however no toilets available for lessee’s employee
o Lessor decided to divert elec supply to a neighbouring building with the effect that
the elec supply to supermarket was erratic (at best)
• Due to failure to maintain cond of property – lessee contended he was entitled to
withhold rental ENTIRELY for the specific month (withheld the full amount)

CONCLUSION
• Court held lessee was entitled to do this, by relying on the EXCEPTIO NON ADIMPLETI
CONTRACTUS
o Did not refer to the remissio mercedis

DISCUSSION
• Not entirely clear from the case whether
o the court was of the opinion that a lack of ablution facilities and erratic power
supply is so serious that you are entitled to withhold the full rental
§ Ie that failure was so serious that you might as well of had no use
enjoyment or use AT ALL (this would of justified withholding full rental)
o Whether ENAC, is available as an ALTERNATIVE to the remissio mercedis
§ Ie where the lessee has diminished use and enjoyment of lease premises,
does this mean that a lessee, rather than paying a reduced rental is
entitled to WITHOLD the full amount of the rental by relying on the
exceptio
§ Or should they be limited to relying on RM

• ENAC & RM share the underlying basis – that they are available in event of reciprocal
obligations and based on fairness
o No additional need for ENAC because can use RM for same reason
o ENAC, is capable of being relaxed so that a “guilty” party can claim a reduced
contract price
§ Especially where “innocent” party has utilized the performance
• BK Tooling
• But onus is on guilty party (LESSOR) to show WHY court should
award reduced contract price and amount of reduction is based on
OBJECTIVE factors
 • Held GENERALLY the measure to determine reduced contract
price is repair costs (NOT ALWAYS)

o But works slightly differently when working with RM in context of lease agreement
§ Thompson v Scholtz 246 et seq
• Held, where dealing with claim for reduced rental, the onus is on
the innocent party (LESSEE) to show by how much the rental
should be reduced
• Based on factors unique to specific lessees use and enjoyment =
subjective factors
• Concluded à Second proposition of BK (relaxation of ENAC) – is
inappropriate when dealing with continuous obligations because
cant go back in time to fix what was wrong (can’t cure what has
already happened and can’t determine repair costs)
o Basically, doesn’t work with here
o But noted court in BK tooling said GENERALLY the
measure to determine reduced contract price is repair
costs (NOT ALWAYS)
o Share underlying justification of reciprocity and fairness – they adopt different
approaches when comes to reduced rental or contract price

2.1.3 duty to provide UNDISTURBED USE AND ENJOYMENT OF leased object

to the lessee (ex lege duty)
• Lessor does NOT warrant that he is owner OR that he has the right to lease the
premises / object
• All that he undertakes is to provide lessee with a commodus usus
• Undertaking to provide lessee with benefit/snugness the leased object
• Undisturbed use and enjoyment of leased object
• 3 types of disturbance’s by lessor
• 3 ways can infringe on lessee’s use and enjoyment

(i) Disturbance by lessor himself

• The lessor themselves can interfere with the lessee’s use and enjoyment of the
leased premises. This can occur directly or indirectly. Both direct and indirect by the
lessor of the lessor’s use and enjoyment of the leased premises, amounts to breach
of contract.
• Direct: interferes with leased premises itself
• EG: Cut elect supply, change locks on doors, remove front door
• Indirect: conduct not specefically related to leased premises itself, rather conduct
affects other aspects of lessee’s use/enjoyment
• Sishen Hotel v Yskor 1987 2 SA 932 (A)
• Lessee (Sishen Hotel), leased a hotel from Yskor (remote area of
SA), idea it would be to provide upmarket housing to guests in area
• After conclusion of the lease contract, the lessor diverted the one
main road that led passed the hotel.
 • Hotel was no longer right next to the national highway, affected
profitability of the leased premises. Court held that this profitability is
also part of a lessee’s commodus usus.
• = conduct amounted to breach of contract
• There are certain actions of the lessor which do NOT amount to a disturbance of
the lessee’s commodus usus
• The lessor is entitled to conduct an inspection of the premises, and to effect
certain repairs – provided the lessor exercises this right reasonably at a
reasonable time and at a reasonable time
• This is codified in the Rental Housing Act section 4 (RHA).
(ii) Disturbance by 3p with stronger title
• 3p interferes with use/enjoyment
• EG: eviction
• For the most part rules of eviction relating to lease are the same as those relating
to sale
• Two differences
• Can also take about eviction in context of lease contact, if lessors’
defect in title arises after contract conclusion
• Sale: S defect in title must exist at time of contract
conclusion
• Lease (continuous relation) -also, eviction if defect in title
arises later after contract conclusion
• EG: pay licensing fees to retain title, stop paying them –
have defective title and now lessee is affected (this is
sufficient)
• Only actual disturbance, not mere threat
• Sale: sufficient to found claim based on eviction to prove
there was a THREAT of eviction
• Lease agreement: lessee must be actually evicted or
eviction must be inevitable
• Garden City Motors
• Thus, threat is insufficient
• EG: threatened with eviction and lessee leaves –
doesn’t constitute evictions and can’t claim from
lessor

• Distinction lies in difference in content in the respective warranties

given by a seller vs a lessor
• Seller warrants undisturbed use and possession of the
merx
• Lessor: warrants undisturbed use and enjoyment of merx
(narrower)
• Thus, must be actual eviction
• Drawn by Pothier
• And confirmed in Doningur v Thorp? (1930)
• Nobody has thought whether distinction is still justifiable
 • If there is a threat of eviction in in case of lease
• Then lessee’s duties are the same as a buyer
a) Lessee must inform lessor so they can assist them,
b) if lessor washes his hands of matter/does nothing / cant be
found then lessee must conduct proper and competent
defence
c) Failing which he must prove that 3p does in fact have a
stronger title

(iii) Disturbance by superior force

• When the use and enjoyment of the lessee is disturbed as a result of vis
maior/casus fortuitus – events outside the lessor’s control – this is supervening
impossibility of performance with the effect that if performance is permanently
impossible, then all obligations are terminated.
o If the impossibility is merely temporary, performance is suspended until the
impossibility falls away and the performance duties continue.
o In the case of partial impossibility e.g. lightning only destroys a part of the
leased premises, the obligations are not terminated but the lessee will be
entitled to claim a remission in rental. If there is a reduction in use the
lessee can claim a reduction in rent

2.2 DUTIES OF THE LESSEE

è ex lege and can be varied in parties contract
1. Payment of rent
2. Duty to use res in a proper manner
3. Return of res (leased premises) in particular condition upon termination of lease

2.2.1 Pay rental (duty 1)

• Discussed in prescribed textbook àB & L 155-158
• Exposition: Parties can agree on rental amount, when it should be paid, and the
remedies in the event lessee does not comply with this duty
• Generally, where lessee has not paid rental
• Two most common forms of breach are
1. Mora (late payment)
2. Repudiation
• Remedies is always dependant on the fact. Remedies tailored according
to type of breach

Remedies: directed twds type of breach

1. BoC remedies (mora & repudiation)
+
2. Tacit hypothec of lessor

Lessor’s Tacit Hypothec

• Affords a real right of security to the leasor over moveables on the leased premise.
• Despite name “tacit” à it is NOT based on unexpressed agreement
• Not situation where parties tacitly agree that lessor has remedy
• Rather ex lege remedy
• Automatically available to lessor by operation of law, in event lessee is in arrears
with his rental
• Afforded to lessor as a matter of law.

WHEN is it available:
• ONLY in the case of the lease of immovable property
• Allows lessor to ATTACH movables on the leased premises iot cover the arrear rental
o In respect of all movables (invecta et illata) on the premises regardless of wether
lessor knows which moveables are on the leased property.
• It includes money
o Idea: lessor can sell movable property iot cover arrear rental
o Very powerful remedy

WHOSE movables can be attached?

1. Movable property of the LESSEE
2. Movable property of a SUBLESSEE, provided this person is in arrears with her own
rental to the main lessee
o How does a sublease work?
• Main lease: A (main lessor) and B (main lessee)
• Sublease: B (main lessee) concludes a further contract with C iro same
premises he is leasing from A
• Ito further contract B (is main lessee of A) but is ALSO the
LESSOR of C
• Thus, ito tacit hypothec - Main lessor (A) can attach goods of party who
he is not contractually bound to (sub-leesee C)
• Since C concluded contract with B and not A (thus no direct
contract)
• A can however attach C’s movable property on the leased
premises provided C is in arrears with his rental to B
3. Movable property of 3P, provided property is ON leased premises
o Provided requirements for vesting of tacit hypothec over 3p property has been
met
o Requirements set out in Bloemfontein Muncipality v Jackson

Main lease
Lessor Lessee/sub-
lessor

Sub-lesse
Bloemfontein Municipality v Jacksons Ltd – PRESCRIBED

Facts
• Jacksons sold some furniture to a party which in the case, is described as a higher
purchase agreement, but which in modern terminology would be called an
instalment sale.
• Jacksons was aware of where the buyer of these goods on the instalment sale, lived
initially (because they leased the premises), but that purchaser then subsequently
moved to another lease premises unbeknownst to Jackson’s.
o That person subsequently fell into arrears with their rental that was due to
Bloemfontein municipality.
• And so Bloemfontein municipality exercised the lessor’s tacit hypothec over the
movable property on the leased premises, which included the goods sold by
Jacksons to this particular lessee.
• Jacksons then argue that it is a third party’s property that you now want to sublet too
the tacit hypothec & you cannot do that.

Legal question
• Can Bloemfontein Municipality exercise the lessor’s tacit hypothec in this case?

Ratio & decision

• In response to that, the court sets out what the requirements are in order to vest a
tacit hypothec over a 3rd party’s goods.
o Background
§ Easier to understand the requirements if we understand what the
organising idea is informing this possibility of vesting a tacit hypothec
over a 3rd party’s movable property.
• Will see that the court mentions quite frequently this notion that
provided the requirements are met, it is as if the 3rd party
somehow consents to have their goods be subject to the tacit
hypothec. This is a bit of a stretch.
• A more modern explanation is that here we are dealing with a
kind of estoppel situation, that by in certain instances, the 3rd
party is creating the impression that those movables belong to
the lessee.
• These requirements are simply a more specific concrete
expression of what you would need to prove in order to show
that the lessor reasonably relied on that particular impression
that was created.

• 1. Owner expressly / tacitly consents that goods on premises

o Biggest problem here would be with the proof of tacit/implicit consent.
o But it seems like the general rule of thumb here, in order to determine
whether there has been such tacit consent is to ask yourself:
§ What are the reasonable steps that an ordinarily vigilant owner would
take in order to determine or find out where their property is?
 • If our particular 3rd party has not taken those reasonable steps,
then that 3rd party is deemed to have consented to the goods
being on the property.
o This first requirement of consenting & taking what would be the reasonable
steps that an ordinarily vigilant owner would take is linked to the 3rd
requirement, which is had you taken reasonable steps you would have
informed the lessor that those goods belong to you. This is part of taking the
reasonable steps.
§ On the facts of Jackson – Jackson’s knew where the goods (that were
the focus of the instalments) were originally & they had informed the
lessor of that property, that these goods belong to them. But then
when the lessee moved to another lease premises, Jackson never
bothered to find out where this lessee was and it seems on the facts
that at some point, they should have been aware that the goods that
were the subject of the instalment sale were no longer on the original
premises. According to the court, reasonable steps would have meant
that Jackson’s would have gone to find out where those good were, so
that they could inform that particular lessor, being the municipality,
that those goods belong to them. But they did not do this, and for quite
a long period.
§ That led the court to conclude that Jackson’s had passively
consented to those goods being on the new leased premises.

• 2. Intention that goods on premises indefinitely for use of lessee

o If the intention is that the goods are not on the premises indefinitely (ie they
are only temporary), then those goods will not be the subject of a tacit
hypothec.
§ In the example of visiting the friend & taking your laptop along. If there
is evidence to show that the idea was not that the laptop would be left
there indefinitely, that you did it by mistake or only for a week, then
that laptop will not be subject to the tacit hypothec.
o The intention must be that those goods are primarily for the use of the lessee.
Not for anybody else who happens to be on the premises.
§ Eg. we have a mother & her adult daughter living in the leased
premises. The mom is the lessee. Dealing with instalment sale, the
object of which is the sale of a piano, but the piano is intended
primarily for the use of the daughter, and not for the lessee (being the
mom), then that piano cannot form the subject of the tacit hypothec
over a 3rd’s goods.

• 3. Failed to give notice to lessor that property belonged to him/her

• 4. Lessor unaware that goods belong to 3rd party

o For what it’s worth, you can become aware that goods belong to a 3rd party,
even though that knowledge was provided to you by the 3rd party.
o E.g: can have a nameplate or something that is stuck on the goods. Provided
the lessor could have seen that nameplate, had he taken reasonable steps.
 That counts as being aware of the fact that the goods belong to a 3rd party,
even though that third party has not specifically informed that lessor. In that
type of situation you will not be able to vest the tacit hypothec over those
particular goods.

• Only perfected by attachment

o Fact that you have met these requirements, means that you have a tacit
hypothec.
§ But you first have to attach the goods in order to give that tacit
hypothec a bite, in order to perfect your limited real right of security.
o How do you do this?
§ There are certain procedures set out in the Magistrate’s Court Act.
o Once these requirements have been met, the tacit hypothec arises
automatically.
§ However, it does not have any teeth, until it is perfect by means of an
order of attachment.
§ This means that prior to the perfection of that tacit hypothec, the
goods can be removed from the property, in which case the hypothec
cannot vest in terms of those goods that have been removed.
o So, you can always remove the goods prior to an order of attachment.
§ Your one exception is where the lessor stops the removal of those
goods while they are in transit to their new destination.
• This is known as stoppage in transit/ doctrine of hot
pursuit
o Typical example is where the lessee & a 3rd party are colluding to avoid the
attachment of the goods by removing it from the property.
§ This doctrine of hot pursuit is where somebody is removing their
goods specifically to avoid their attachment.
§ It does not necessarily have to be fraud. It can simply be that
someone is removing the goods & the lessor stops them.
• But it seems to be the case, although this has never been
decided, but where it is specifically fraudulent, then the lessor
can claim the goods back even if the goods are already at
their new destination. Does not only have to be in transit. But
also at their new destination, but this has not been decided yet.
Only cases at the moment that are around, are those where a
party is removing the goods while they are in transit, the lessor
stops them but that fraudulent intent, is not necessarily
present.
o If we first have to attach the goods, then there are certain procedural steps
that you have to take.
• Clarification: You can ask for an interdict to stop the removal of
the goods. And an order of attachment in terms of the common
law.

• However, Magistrates’ Courts Act sets out a far simpler procedure to follow when it
comes to the operation of a tacit hypothec.
o S 31: summons with automatic rent interdict
§ In terms of section 31, together with your summons (which revolves
around the arrear rental), you can notify or include a notice to all
persons, that any movable property on the lease premises may not be
removed.
• This notice to all parties that the movable property may not be
removed is known as an “automatic rent interdict”
§ The bonus of this automatic rent interdict is that it kicks in as soon
as the summons has been issued, rather than at the time makes the
order.
• Do not have to wait for a court order to have effective
automatic rent interdict.
• Do not get confused. This is not attachment yet. All it does,
is to act as a threat in the event that somebody does remove
the goods.

o S 32: application for attachment

§ If you were smart, use both s31 & s32.
§ In terms of s32, you can apply for an order of attachment.
§ In your affidavit, you must state that the rent is in arrear AND that
you have given 7 days or more written notice that the rent is in
arrear, or alternatively (and this alternative ground is alternative to the
7 days or more written notice), that there are grounds to believe
that movable property will be removed from the lease premises in
order to avoid the attachment for the purpose of arrear rental.

o Preference upon insolvency: s 85(2) of the Insolvency Act

§ Over & above the fact that this tacit hypothec is in and of itself a
powerful remedy in the event of arrear rental, what it also grants a
lessor is a preference upon the lessee’s insolvency.
• I.e., what that means is that the lessor is a preferred
creditor/preferent creditor ito proceeds paid out of that
insolvent estate & in relation to arrear rental.
§ Less clumsy way of saying that (potentially): Lessor stands first in the
queue in relation to his claim for his arrear rental. How much that
lessor is entitled to, depends on how the rental is paid.
• This is also discussed in Bradfield & Lehmann – to see how
much lessor is entitled to in relation to how the rental is paid,
then look at textbook.
o Two NB things specifically in relation to the prescribed case, Bloemfontein
Municipality. There are certain transactions or certain categories of movable
goods that are excluded from a lessor’s hypothec.
§ These exclusions are created by the Security by Means of Movable
Property Act 1993: notarial bonds; instalment sale in terms of National
Credit Act.
1 Movable goods that are subject to a notarial bond.
 2 Goods that are the subject of an instalment sale (use to
be known as a higher purchase agreement) as defined
in terms of NCA.
§ One thing we have to realise is that if the facts of Bloemfontein
Municipality were to happen now, the goods which became subject
to a tacit hypothec in that case, would not be capable of falling within
the lessor’s tacit hypothec today.
• Because those goods were the subject of an instalment sale.
This does not mean that the legal doctrine set out in
Bloemfontein Municipality is not relevant. That remains
relevant, it is still the authority. It just means that those facts,
because the goods were subject to an instalment sale/higher
purchase agreement, would not today be able to fall within a
lessor’s tacit hypothec – because this Security by Means of
Movable Property Act excludes goods which are the subject of
an instalment sale ito the NCA.
• Legal rules/legal theory/doctrine set out in Bloemfontein
Municipality is still relevant, it is just that the facts of the case
would not have given rise to a tacit hypothec by virtue of
modern developments.

Second duty : of lessee

2.2.2 obligation on lessee to use res properly

• Must use leased property for
1. Purpose which it was leased (as agreed)
2. Otherwise for its ordinary purpose
• Standard: bonus paterfamilias
• Like a reasonable lessee
• Where you have not acted like a reasonable person then guilty of breach of
contract

Third duty

2.2.3 Return of termination of leased object (res)

• Lease is temporary
• Return + condition: salva rei substantia
o Must return res AND must be returned in the condition in which it was received
(fair wear and tear excluded)
• If don’t
o Return leased object OR
o Return it but it is not in the same condition as which lessee received it
o Then amounts to breach on part of lessee UNLESS
§ Lessee can show that the failure to return res at all OR to return it in
condition received
§ à is due to factors for which he is not to blame (thus outside lessee’s
control)
• NOTE: lessee is responsible for damages to res caused
 o NOT only by himself but ALSO
o By household members, as well as other individuals who stay on leased
premises with the lessee’s consent
§ In a more permanent capacity then just mere guests

REMEDIES
In the event that duty to return property in same condition is not complied with

Different between failure to return res at all VS not in condition received it

1) Specific Failure to return property at all

performance • Lessor will have a contractual claim arising out of lease for
Specific Performance
o Court has a discretion to refuse to award SP
• However, the lessor also has remedies to get back leased
premises ito Property Law
o EG: if the lessor is the owner of the property, then they will
have the rei vindicatio
o If you are relying on a claim based on the law of property
§ When dealing with a residential lease, the
provisions of PIE are relevant
• all kinds of hoops to evict a tenant
§ If you are dealing with commercial lease then
claim for eviction is based on the common law
• 1) owner of leased premises
• 2) lessee is unlawful possessor

Return of res in poorer condition

• Can rely on common law
o SP: obliges lessee to repair/reinstate the condition of the
property

2) Contractual Failure to return property at all

damages 1. Lessor can claim value of the use & enjoyment of the leased
premises from the time the lease terminated to the time where
the lessee vacates the premises
o Normal market rental
2. Lessor can claim any expenditure that she may have incurred
o Would for example: include compensation to a 3p who would
have been the new lessee but cannot move in OR
potentially a purchaser
3. Claim loss of profit
o Potential for special damages

VS return of property in poorer condition

 o Classic claim for damages as a general rule is a claim for
repair costs

NO • Don’t talk about cancellation because duty to return res in same

CANCELLATION condition, can only arise upon termination of lease contract
• Thus, cancellation is not even relevant

3) SUBLETTING, CESSION AND DELEGATION

Categories of situations where a 3p in some form or another becomes involved in the factual
scenario of a lease between a lessor and lessee
• Someone gets involved in personal relationships

Subletting
• Lessee subleases the leased premises to a 3p
o Main lease (between lessor and lessee)
o Second lease (between the original lessee (“sublessor”) and the 3p (“sublessee”)
• Two contracts
o Means the original lessor has no contractual relationship with the sublessee
§ Two contracts are not related to each other
o Ito ex lege rules relating to a lease contract, a lessee does not have to ask
lessors permission to sublease when dealing with an URBAN LEASE
§ Thus will have a clause in lease contract, stating that no sublease is
possible without lessor’s consent (which will not be unreasonably
withheld)
§ More often than not there will be a clause in the contract that prohibits this
without the consent of the lessor
• RURAL LESS
o POD is that you always need consent of lessor to cede a right of lessee

Must distinguish above from

1) Cession
o Where a lessee cedes / transfers her rights as a lessee to a 3p
o In this instance the 3p will be entitled to exercise rights against the lessor but the
actual lessee is still bound by the contractual duties created by the lease
o General rule: iro cession don’t need permission of creditor to cede rights
(lessor)

2) Delegation
o Transfer of duties to a 3p
o Lessee will keep entitlements but merely transferred their duties to a 3p
o Unlike with cession, delegation requires consent of all the parties involved in
the delegation (lessor, lessee and the 3p)

3) Assignment of rights and duties

 o If you want to replace one of the parties to the lease contract (transfer both rights
and duties) –
o Substituting new party for one of the original parties, à requires an
ASSIGNMENT of R&D
o Which is a combination of cession and delegation
o Need consent of all the parties involved

• Why do we need consent?

a) Identity of debtor esp in context of lease is important to the lessor and
b) General rule can’t impose duties on a 3p without their consent

4 HUUR GAAT VOOR KOOP

Background: common law rule

• Developed from RDL
• Lessee of immovable property – only has a personal right?
• Deals with situations where a 3p becomes the lessor’s successor in title (ie the owner of
the property)
• Dealing a 3p with a real right v lessee (who usually has a PR)
• This is where the doctrine kicks in
• Says in certain circumstances the lessee’s PR will outweigh the 3p’s RR
• With the effect that the lessee can remain in occupation for the full duration
of their lease
• Rule is not only applicable where 3p purchases the leased premises. Rather, it applies to
anyone who becomes the lessor’s successor in title
• Can be someone to whom the property was donated or 3p who has inherited the
property
• Thus not only in cases of sale
• Common law rule but also have statutory law
• Which one to rely on depends on whether dealing with a ST or LT lease

Short term lease:

• Any lease that is shorter than 10 yrs
• In the duration of that lease the premises is sold , the lessee’s personal right will be
protected if:
o 1. Occupation
§ If the lessee occupies the leased premises at the time that the third party
acquires the right, then the lessee can remain on the property for the full
duration of the lease. If no occupation, then the lessor can turn to the
doctrine of notice.
o 2. Doctrine of notice
§ This is where the third party knew of the personal right anytime from the
conclusion of the contract with the lessor until the third party acquires the
real right.
§ The effect is that the lessee is entitled to remain on the premises for the
full duration of the lease.
o 3. Gratuitous successor
 § This is someone who acquired the real right for free, in other words
gratuitously. In this instance the lessee is also entitled to remain on the
premises for the full duration of the lease.

Long term lease:

• A long-term lease is any lease that is longer than ten years OR Where there is an
option to renew which would take it to over ten years. (where initial period is less than
ten years but option to renew the lease for a further time period and the initial period
and renewal period are longer than 10 years) – option does not have to be exercised
can simply be offered to qualify.
• With a long-term lease, the common law rule huur gaat voor koop is not applicable in
general (there are exceptions – huur gaat voor koop will still apply if the long-term
lease is not registered and the doctrine of notice is not applicable).
• This is regulated by statute the Formalities in Respect of Leases of Land Act 18 of
1969.
o There is a formality requirement in terms of this legislation with regard to long-
term leases – they need to be registered in the title deed. Non-registration does
NOT invalidate the lease – it is still a valid lease – but its enforceability against
third parties can be an issue.
o NB: A long-term lease is valid as between lessor and lessee even if it has not
been reduced to writing and registered against the title deed
o These formalities are not a pre-requisite for validity of the lease contract.
However, you can acquire the benefit of protection against third parties in terms
of this Act if you:
§ 1. Have reduced the contract to writing
§ 2. Registered it against the title deed
• Protection:
o 1. Compliance with formalities – The right of the lessee enjoys protection
against the third party’s right for the full term of the long-term lease. (remember
registration is not a requirement for the validity of the lease contract, only
required if a lessee wants protection) -OR-
o 2. Doctrine of notice – if this is applicable then the lessee is entitled to remain
on the premises for the full term of the lease.
§ The Act provides for this but says that the doctrine of notice will be
applicable where the third party has:
• 1. Knowledge of the lease
• 2. At the time when they enter into the transaction
• 3. This sounds like a more limited operation of the doctrine of
notice – limited compared to common law – as this is only at the
time when they entered into the transaction.
• 4. It has been suggested, despite the unfortunate wording, that
it is sufficient if a third party acquires knowledge anytime
between entering the transaction and the acquisition of the real
right.
o Thus, the same as the common-law position.
• Common law rule – huur gaat voor koop - If you have not registered the long-
term lease and the doctrine of notice is NOT applicable
 o Then the common-law rule huur gaat voor koop kicks in
o The lessee in terms of a long-term lease contract acquires/has their right
protected if:
§ 1. Occupation – but then they only are entitled to occupy for a period of
ten years. Thus, the period for which the right is protected is limited.
§ 2. Gratuitous successor – then protected for the full duration of the long-
term lease.
• In the event that neither the scenario for a short- term lease and a long- term
lease contract is applicable; the lessee will be evicted from the property by the
third-party successor. However, the lessee still has CONTRACTUAL REMEDIES
against the lessor.

4.3 Relationship between successor and lessee

• TP successor will step into the shoes of the original lessor and he is bound to give
effect to the lessee’s rights unless those rights are collateral rights unconnected to the
lease.
o TP is the then the new lessor and is bound to give effect to the rights
o 1) Genna Wae – the lessee is also bound to give effect to the rights of the
lessor cannot cancel the contract because he does not like the TP. Same rule
applies to both – confirmed in this case
o 2) Ex lege assignment of the lessor’s rights and duties to the TP successor –
automatic assignment of the original lessor’s rights and duties to the TP
successor
o 3) Collateral right unconnected to the lease? The new lessor, is bound to give
effect to any rights that the lessee may have and which relate to that lessee’s
occupation of the property as lessee. So, the huur gaat voor koop rule is there
to protect the lessee’s rights in his capacity as lesee, it does not do anything
else. This explains why a TP is also bound to give effect to an option to renew
the lease because the rights granted to that lessee in that option have to do
with the lessee in his capacity as “lessee”.
§ It is different when for example when dealing with rights that have been
granted to the lessee but which have nothing to do with his or her
occupation of the property (confirmed in Spearhead). Example would
be an option to purchase or a right of pre-emption. These rights have
nothing to do with the lessee is capacity as lessee, they are personal to
that particular party. These rights are collateral and unconnected to the
lease and the TP is not bound to give effect to these rights UNLESS the
doctrine of notice is applicable.
• Why is possible for the successor in title to evict the lessee when huur gaat voor koop
or legislation applies?
 • What about privity of contract?
o According to the Roman law approach, the lessee could always be evicted
o Now our position affords the lessee protection against successors in title –
why? There is no contract between the successor in title and the lessee

Genna Wae Properties v Medio-tronics 1995 2 SA 926 (A) - PRESCRIBED

• Application of huur gaat voor koop rule and the Formalities in respect to Leases of Land Act
o There is an ex lege assignment – which means that the third-party successor steps
into the shoes of the original lessor
o Automatic transfer of rights and duties from the lessor to the third party.
o This means that the lessor is entitled to rental BUT is also bound to give effect to the
duties of the lessor.
o The implication of this is that the lessee cannot simply refuse to pay rental/escape the
contract – they are similarly bound to the third party as the new lessor.
• Facts
o This case involved a lease contract concluded with a closed corporation.
o The lease was for three years with the rental escalating each year.
§ When the lease was concluded, the CC was the owner of the leased property,
however this was sold to Genna Wae.
§ After being informed of the change in ownership, the lessee wanted to give
notice to vacate the premises – to elect to not continue with the lease.
§ However, the lessor wanted a declaratory order that the lease entered into
between the CC and the lessee was in full force – in other words that the lessee
did not have an election to no longer continue with the lease.

• Legal question
o The effect successors in title has on the lease agreement – does the lessee have an
election/right to no longer continue with the lease as a result of the change in ownership
of the property and identity of the lessor?

• Ratio decidendi
o 1. The court a quo found that:
§ When the property was sold, the lessee in terms of huur gaat voor koop had an
election to continue with the lease or not
§ The lessee exercised this right by notifying the successor that they no longer
wished to continue with the lease. The court refused the judgment.
o 2. Appeal court:
§ The court started by looking at the history of huur gaat voor koop:
§ Under Roman law, a lease contract only gave rise to a personal right, the lessee
had not real right in the res.
§ The lessee merely enjoyed contractual/personal rights against the lessor by
virtue of the lease agreement.
§ If there was a change in ownership e.g. the lessor alienated the leased property
(in terms of a sale for example) the purchaser/new owner was not bound to
recognise the lessee’s rights with regard to the res.
 § The lessee would have to use a claim in terms of breach of contract against
their lessor.
§ The lease was not binding on the successor AND the alienation did not bring
the lease to an end.
• This position is undesirable because it leaves tenants vulnerable.
o In Roman-Dutch law the huur gaat voor koop principle started to develop in order to
provide lessees some security of tenure.
§ Huur gaat voor koop means hire takes precedence over sale (but this can be
misleading as it is not only in the case of sale agreements where this principle
operates)
§ When this rule operates, if the res is alienated, the lessee acquires a right to
occupy the res, the successor in title was precluded from ejecting the lessee
and for the remainder of the lease the lessee needed to pay the rental due
under the lease.
§ The lessee in occupation of the res became vested with a limited real right.
§ This huur gaat voor koop rule has been adopted by our courts, it is a part of our
law and applies in respect of land and building leases.
o There is a lot of debate with regard to what regulates the relationship between the
lessee and new owner.
§ It is settled in law at this point that the new owner is ex lege substituted for AND
takes the place of the original lessor.
§ The latter lessor falls away.
§ The new owner, upon being substituted, acquire all the rights of the original
lessor under the lease.
§ The lessee acquires a limited real right in respect of the res.
o Does the lessee have an election/right to resile from the lease agreement within the
context of the huur gaat voor koop rule?
§ In terms of the modern law and huur gaat voor koop
§ When property (land or buildings) is alienated but there is a lease agreement
the huur gaat voor koop rule operates
§ The contract of sale does not bring the lease to an end the purchaser/new
owner substitutes the pervious lessor ex lege. The old lessor falls out of the
picture.
§ The new owner acquires all the rights in terms of the lease contract which the
original lessor had, and the new owner is obliged to recognise the lessee and
permit them to occupy the res in terms of the lease
• This is provided so that the lessee continues to pay the rental and
observe their obligations under the lease.
• The lessee is also bound by the lease and provided that the new owner
recognised their rights, the lessee does not have an automatic election
to cancel the contract because of the change in ownership
• Held
o The appeal was successful.
§ The court declared that the lease agreement was valid and enforceable and
that there is no automatic right/election of a lessee to resile from the lease when
there is a change in ownership of the property.
§ NB – this case refers to that idea that the lessee acquires a limited real right.
 § See the discussion bellow but basically property law academics do not like this,
and it seems that the lessee rather acquires a personal right which has real
right attributes.

• Huur gaat voor koop – ex lege transfer of rights and duties

o Question: in terms of the ex lege transfer of rights and duties, which rights and duties
are transferred?
o Is this TP successor obliged to give effect to collateral rights, rights which are not
necessarily inherent to the lease contract but run alongside it?
§ An option to renew (collateral right of the lessee), options to purchase, rights of
pre-emption
§ If a lease contract contains one of these, is the third party bound to give effect
to the right of renewal/option to purchase/right of preemption of the lessee?
o Answer:
§ The third-party successor is obliged to give effect to the option to renew BUT
the residual fall-back position is that the third-party successor is not obliged to
give effect to the right of pre-emption/option of purchase.
§ The option to renew is always regarded as being integral to the lease contract
and therefor the successor is title is bound to give effect to it.

• Option to purchase and rights of pre-emption?

o Previously: This became a matter of interpretation of the lease contract.
§ Academics argued that the position was that whether or not these collateral
rights bound the new owner depended on the contract.
§ Did the option to purchase induce the contract?
§ Or was the rental calculated with the option in mind? These types of situations
would render the successor in title bound.
o Currently: Spearhead Property Holdings Ltd v E&D Motors (Pty) Ltd 2010 (2) SA 1
(SCA) – PRESCRIIBED
§ In the absence of the parties agreeing differently, a successor in title is not
bound to give effect to a lessee's option to purchase or a lessee’s right of pre-
emption, because these options and rights and nothing to do with the
occupation of the lessee.
§ Therefore, these collateral rights cannot be governed by huur gaat voor koop.
§ The appropriate doctrine to look at to decide whether successors in title are
bound by options or pre-emption rights is the doctrine of notice.

5 Termination of the relationship or it’s continuation

5.1 Termination: B & L 185-192

• CL: when conclude Fixed term lease contract can’t cancel prematurely
• If periodic lease – can cancel with requisite notice
• Some terminate on death of parties
• NB: S14 of the CPA
• Effect of CPA on ability to terminate FTL
• Doesn’t apply to periodic lease
 • CL or Rental Housing Act
• Only FIXED TERM LEASE
• Only available where consumer is a NP
• NOT available where consumer is a JP REGARDLESS of their asset or
turnover value

• “a consumer may cancel a FTC at any time and for whatever reason provided the
consumer gives the supplier 20 BUSINESS DAY’S notice of the premature
cancellation”
• Supplier is allowed to claim cancellation / penalty for early termination, but
it may never operate in a way of robbing the consumer of the right to
cancel the FTC early
• A supplier by contrast
• may only terminate the FTC if
• a consumer has committed a material breach of contract
(serious breach) and
• the supplier has given consumer 20 business days’
notice of intended cancellation and
• consumer has failed to cure her breach within those 20
days
• Problem usually FTC calculate rental on basis it would endure for
a specific period of time
• CPA drives a line through this
• May have effect of making less likely to conclude lease
agreements as a lessor
• Espec residential leases
• Must comply with PIE and the CPA (potential pre-
mature cancellation)
• Reg 5 CPA factors
• Consider when charge cancellation penalty doesn’t
fit in well with a lease contract
• Suggests idea was the lease contracts should may
not have fallen within S14
• Possible to have a FTL contract
• Suggestion is either that
1. S14 should be amended so not applicable to
FTL contracts in particular
2. Application should be made to minister for an
exemption of lease contracts from the CPA

5.2 Renewal
• Can occur expressly or tacitly
• Prolonging of original lease contract
• MUST occur prior to renewal of original lease contract
o If already terminated – conclusion of a new lease contract
§ Not a continuation of the previous contract
 § Can include same terms in new lease contract, but it wouldn’t be a
renewal though
o Lease can be renewed expressly or tacitly

5.3 Compensation for improvements

• Upon termination of the lease
• When dealing with claim for improvements, they are ENRICHMENT claims and not
contractual
• Thus, court always has a discretion iro enrichment claim and how much is
awarded to a party
• Removal
• A lessee, if there is nothing in the contract to the contrary, is always entitled to
remove improvements unless they were necessary improvements and provided
that the removal does not leave the leased premises in a worse condition.
• The obligation to not leave the leased premises in a worse condition links in with
the duty of a lessee, to return the leased premises salva rei substantia (same
condition in which you received it fair wear and tear excluded)
• Why can you not remove necessary improvements? Because these are
improvements which are acquired for the preservation of the leased premises.
• These points about removal are equally true for both urban and rural leases.
Distinction based on the purpose and use of the lease not geographical area.
• Compensation
• Necessary improvements that could not be removed without leaving the premises
in a worse condition. Here there are different rules for urban vs rural leases
• Urban lease: enrichment claim + right of retention (lien)
• General rule – do not need the consent of the lessor but it is very common
for understandable reasons that the parties will include a clause in a
contract stating that if the lessee requires the lessor’s permission it won’t
be unreasonable withheld.
• If you would like to claim improvements under an urban lease it is an
enrichment claim and you are entitled to claim the cost of the
improvements or increase in the market value of the property – whichever
is the lesser amount.
• In addition to this enrichment claim you have a right to remain on that
property until you are compensated – lien (right of retention)
• Rural lease: 1658 Placaeten
• General rule – always require the lessors consent and in fact the lessor’s
consent is also required for example with subletting whereas not the case
with an urban lease.
• Compensation works differently to an urban lease, because it is governed
by the Placaetaen rules.
• Prior to this rule there was a tendency for lessee’s to make a huge
amount of improvements in hope that the lessor would not be able
to afford compensation so that they could then exercise their right
of retention and remain on the leased premises.
• Thus these placaeten were enacted and they say that where a
lessee wants to claim compensation for improvements:
 • 1) These improvements must have been made with the
lessor’s consent
• 2) The claim is capped to the value of the material used
• 3) Lessee’s ito rural leases do not have a right of retention
• This is the current position – although there is an argument to made that
the reasons for the placaeten originally are no longer viable because
improvements are expenses in modern leases. Argument that there is
unfair discrimination between the difference between rural and urban
lessees.

6 RENTAL HOUSING ACT 50 OF 1999

• Generally speaking, consumer protection of protecting lessee’s has a long history
• various acts dealing with attempts to control exploitative rental
• but given SA sad history ito providing housing to citizens
• there was a need for an overarching Act that would specifically govern residential
lease’s
• ONLY applicable to residential leases
• Not commercial lease’s
• Designed to do a number of things
1. Provision of housing and stimulating market
• Obligation on state to give effect to duty to provide housing
2. Govern relationship between the parties
3. Mechanisms for dispute resolution and redress, that is hopefully cheaper for parties
than having to access a court
4. Make provision for and governs the relationship surrounding - Provincial Rental
Housing tribunals

Has been an amendment to Rental Housing Act

• Has not been proclaimed in a GG thus not yet in force
• No longer refer to landlords
o Amendment Act refers to landowners
§ Not always the owner of the property and doesn’t have to be the
owner iof a valid lease to be concluded
• Thus, not neutral
§ Sublessor or agent?

6.1 RELATIONSHIP between tenants – landlords

• S 4 (S4A- amendment): no discrimination in any form: advertisements/negotiations
• Places a prohibition on discrimination when advertising, negotiating with the
lessee and it accounts for the entire duration of the lease

• S 5 (S4B - amendment): written contract - content and annexures

• Not a validity req for lease contract to be in writing
• BUT a lessor is obliged to reduce the contract to writing if the lessee requests a
written lease contract
• Where the lessee has made this request, the written contract is req to
have certain content (set out in the Act)
• And must contain annexures
 • 1) list of defects
• 2) must be the house rules, if there are any
• Amendment Act - changes position
• Obligatory for lease contract to be in writing, if it is not writing, it
constitutes an offence (crime) of the part of the lessor
• With the option of incarceration and/or a fine
• Whether means anything in practice is a different story
• Addressed by Rental Housing Tribunal
• Make an order that is just and fair

Rights and duties of the parties:

• S4: general provisions – confirmation of common law R&D of parties
• 1. The lessee has a right to privacy, but the lessor has a right to a
reasonable inspection (as in the common law).
• 2. The lessor is entitled to the timeous payment of rent.

• S5: invariable provisions

• Provisions that must be part of every lease agreement
• CANNOT be changed, rather they are mandatory Which won’t be found in the
common law
• Receipts
• A lessee has a right to receive receipts in respect of payment of the
rental or when upon termination of the lease the lessor has had to
make certain repairs, a lessee is entitled to receive a receipt setting
out the costs of those expenditures e.g. key replacement
• Invest deposit
• To the extent that the lessor has asked for a deposit, this deposit must be
invested in an interest-bearing account and that interest rate may not be less
that the interest charged for a savings account with the same bank
• Not paying interest back without a good reason is a crime under the
amendment
• Joint inspection for defects
• There must be a joint inspection of the premises before the lessee moves in
and the idea here is that the parties compile a list of defects.
• At least three days before the expiry of the lease there needs to be another
joint inspection of the premises
• If the lessee does not co-operate/respond, then the lessor has seven days
after the expiry of the lease to inspect the property for defects.
• This is NB as if the joint inspection (within the time frames) does not occur,
the lessor is deemed to have acknowledged that the lease premises is in a
reasonable condition.
• The lessor then cannot turn around and retain any deposit paid in order
to effect repairs.
• The lessor can only utilise the deposit if the joint inspection before moving
into the leased premises as well as the joint inspection towards the end of
the lease has occurred.
• The joint inspection is a pre-requisite before being able to use the deposit,
but it does not preclude a lessor from exercising their common law rights.
 • The lessor still retains the right to claim damages, the issue is that they will
need to prove a claim for damages.
• Common law rights are not taken away, it is just that being able to use the
deposit to affect repairs is easier than trying a claim in delict for damages
which is why the lessor should try and comply with the inspections.
6.2 Rental Housing tribunals
• Jurisdiction: disputes relating to potential unfair practices
• Procedure:
• lay a complaint of potential unfair practices with tribunal,
• each tribunal has a website. Go to website and download form
• submit form to turbinal
• tribunal conducts a preliminary investigation to determine whether there is a
unfair prac potentially
• if potentially dealing with unfair prac then matter is referred to 1) mediation and if
doesn’t resolve the issue then 2) will be a hearing
• POD: if COA is a unfair practice then it is the Tribunal first
• Ruling: tribunal will rule termination of practice or adjustment of rental
• Can make any other ruling it deems just and fair, including adjustment of the
rental
• Every province has a Rental Housing Tribunal
• Forms can fill in to lay compliant and get fall rolling
• Cheaper than court
• Emphasis à what must happen is a BALANCING of lessors and lessee’s rights
and duties
• Reflected in factors req to consider when adjusting rental
• Prevailing economic conditions
• For many lessors leasing a property is an investment and must
thus get a realist return on their investment in the form of an
appropriate rental

• What is an Unfair practice:

(a) Any act or omission by a landlord or tenant in contravention of the Act:
• exploitative rental
• unacceptable living conditions
• lack of maintenance of the leased premises
(b) a practice prescribed as a practice unreasonably prejudicing the rights or
interests of a tenant or a landlord
• in other words, practice prohibited in unfair practice regulations
o each province has issued its own regulations regarding what constitutes
an unfair practice within the leased context
§ there are some differences / they are not all the same
o in many instances what we refer to as breach of lease contract
§ is now defined as unfair lease practice

6.3 Position of courts?

• So what does ordinary court have jurisdiction over?
• When do the courts still has jurisdiction
• Party can still approach court directly (not tribunal)
 • Urgent relief – may approach
• Arrear rental – may approach give effect to his tacit hypothec
• Eviction
• MUST approach a court if seeking an order of eviction EXCEPT where
there is a claim that there has been an unfair practice
• Party who complains of a unfair practice must approach a Tribunal
• Does a court have jurisdiction to hear a dispute about an unfair practice? Pg 202-203
• One view – whenever the dispute of unfair practices the party that is
complaining must approach a rental housing tribunal
• The implication being that if this issue is raised in an ordinary court,
the court is obliged to refer the matter to a rental housing tribunal
• This is the opinion of the court in Maphango v Aengus Lifestyle
Properties (Pty) Ltd;
• Court defined and unfair practice but refused to decide on the
matter
• This line of argument presupposes that the rental housing tribunals
are in the best position to the decide the matter
• Not necessarily clear that the RHT are in the best position
• The alternative argument by Bradfield & Lehmann 202-203?
• Where the cause of action is an unfair practice and the defence in
response to allocation of unfair practice
• Then the parties must approach the rental housing tribunal
• Where by contrast the COA is eviction and the defence to that is an
unfair practice then the court should be allowed to consider the issue
of an unfair practice as part of its determination of whether the lessee
should be evicted

Maphango v Aengus Lifestyle Properties (Pty) Ltd - PRESCRIBED

Facts:
• The lessor buys run down blocks of flats and the refurbishes them with the intention of
recovering the expense. The lessor had done this with an existing block of flats which had
tenants. The existing lease contracts did not allow the lessor to unilaterally raise the rental the
lessor relied on a clause in the lease contracts allowing it to terminate the contract, with
reasonable notice.
• Together with this notice issued to the tenants, was an invitation to conclude new lease
contracts but for a higher rental amount.
o Relying on a contractual right to terminate leases, and motivation for the termination is
to be able to claim a higher rental.
• A number of lessees were living in a number of apartments which was still subject to old rent-
controlled legislation
• The lessor (ALFP) decided to upgrade the block of flats and because the lessor could not
increase the rental (subject to rent control), the lessor decided to terminate the lease contracts.
• Each lessee had a contract that ran for a specific period of time and would continue
automatically unless either the lessor or lessee terminated upon written notice
o The notices did provide the option to the lessees to conclude new lease contracts
provided they were prepared to pay a higher rental.
 • The lessor in this matter had purchased the building, improved it, cancelled the lease
agreements but offered them new leases with identical terms but significantly higher rental.
• Lessee’s argued:
o That this amounted to an unfair practice, because the lessor was terminating the lease
contracts solely to get a higher rental.
o They challenged the cancelation of their leases by the lessor (landlord).
o They initially lodged a complaint with the relevant Rental Housing Tribunal but withdrew
that complaint when the lessor instituted eviction proceedings in the high court –they
did not have the means to challenge both claims
o At no point did they abandon their allegation that the lessor’s conduct amounted to an
unfair practice.
o The lessees had to withdraw their allegation with the Rental Housing Tribunal because
they were faced with an eviction claim which they had to defend.
o The matter went through the high court which granted an eviction order.
• Their defence relied on three interrelated issues:
o firstly everyone agreed that this cancellation clause in the contract – that you can
terminate on reasonable notice – that it was not contrary to public policy. However the
tenants argue that, that right of termination is being exercised in an unreasonable
manner that is contrary to public policy. Why?
§ 1) the exercise of that right infringes the tenants rights to security of tenure ito
S26 of the Constitution
§ 2) the exercise of this right is contrary to public policy because being exercised
in an unreasonable manner
§ 3) regardless of what the position was in the common law, the exercise of this
contractual right of termination amounted to an unfair practice
§ Thus they are saying that exercising a right to cancel for the sole purpose of
being able to charge a higher rental – that motivation – makes the act of
cancellation an unfair practice
o Went to the HC which granted the eviction order and then the SCA which dismissed
the appeal and then CC

Legal question:
• Whether the conduct of the lessor amounted to an unfair practice?
• The critical question in the CC was whether the lessor was lawfully entitled to terminate the
leases solely to secure higher rental

SCA:
• Ground 1 – the argument presupposes that the lessee has permanent security of tenure. This
cannot of course be the case because a lessee’s right of tenure is governed by the terms of
the lease. Lessee’s only have a right of tenure, and it is only protected for as long as the lease
exists. When it is terminated this right of security disappears.
• Ground 2 – provided once is exercising a contractual right of cancellation, it is irrelevant what
your motive is for exercising that right. Unless you can point to some or other constitutional
implication for the exercise of the right, the fact that the exercise of that right may seem
unreasonable or unfair, is not in itself sufficient.
• Ground 3 – the exercise of this right to cancel cannot amount to an unfair practice because
the word practice implies a repetitive act, and thus cannot amount to a once off practice.
CC (majority judgment)
• The HC and SCA seem to have lost sight of is the fact that the provisions of the rental housing
act are superimposed on top of the common law. This is very clear from the provision in the
Act, where it refers to a lessor’s right to cancel – because it specifically states that a lessor’s
right to cancel a contract on the basis of a right to do so ito the contract itself, and on the basis
that the exercise of that contractual right does not constitute an unfair practice.
o Thus the SCA says as long as you have a contractual right to cancel that is definite
and cannot ever amount to an unfair practice – the CC is saying no there are two
requirements: the right must exist in terms of the contract, and the right must not
amount to an unfair practice.
o Also, insofar as the SCA’s impression regarding that in order to constitute a practice
we must have repetitive acts – the CC states that it is not how the word practice is
understood in SA law. In accordance with labour law, a single unfair dismissal can
constitute an unfair labour practice.
• Court states in these circumstances the lessor may have committed an unfair labour practice,
but at the same time there is also the possibility that what the lessor has done – was to invest
in property
o Thus the court will take into account the lessor’s right to a reasonable return on their
investment.
• The court did not however decide on the merits of the case, instead it referred the matter back
to the RHT so that the Tribunal can decide whether the cancellation was an unfair practice,
which is a factor which will need to be taken into account by an ordinary court in order to decide
if the eviction was legitimate.
• Matter was referred back and outcome unknown (?)

Dr Myburgh’s comments:
• Firstly, ito the SCA’s conclusion about where you exercise a contractual right to cancel, and
regardless of the reason for doing so, and that this can never amount to an unfair practice –
this is incorrect. The CC’s conclusion in this regard is correct, that the RHA is conjunctive.
• Secondly, whether the exercising of a contractual right to cancel in order to be able to claim a
higher rental will always amount to an unfair practice – disagrees, if the charging of the higher
rental is not exploitative and is market related , and the lessor has a good financial reason for
wanting to charge a higher rental = then cannot see how this would amount to an unfair practice
particularly the Act emphasizes that you need to take into account the interest of both parties.
• Thirdly, relating to the question as to whether a court has jurisdiction relating to an unfair
practice? The position seems to be that where the complaint of an unfair practice is the cause
of action and the attempt to evict is the reaction, then it seems to be that the understanding is
that the party must approach the RHT first.
o Where alternatively the cause of action is for example, a claim for eviction and the
defence/reaction is an allegation of an unfair practice - then it appears to be that the
understanding is that the party claiming eviction can approach a court first and then
when this defence of an unfair practice is heard, an ordinary court should be able to
hear the matter.
o The only way in which you could argue that the court must refer the matter back to the
RHT is if you stated that the persons who constitute the RHT have more experience to
 determine whether an unfair practice exists = Dr Myburgh states that she does not think
one can make that assumption.
• If we take this reasoning and look at the facts of this case, at first glance once would state the
CC should then have decided the matter or actually the HC as this is where the first claim for
eviction went –
o It could be that the CC’s decision to refer the matter back to the rental housing tribunal
is because the tenants never actually abandoned their argument that this cancellation
was an unfair practice. It was rather circumstance that forced them to choose a focus.
o Thus, because they had never abandoned that particular position, that might have
motivated the CC to refer the matter back to the RHT because if you look at the bigger
picture the actual cause of action had always been the unfair practice.
• On the facts of this particular case – Dr Myburgh does not think that the lessor’s exercise of
this right to cancel amounted to an unfair practice because the lessor had legitimate financial
reasons for it, and there is nothing to suggest besides here and there, that it was a necessarily
an exploitative rental.
o However, if that is the case, that it was exploitative rental then something else on the
facts may suggest an unfair practice = as soon as the RHT came to the conclusion that
the dispute could not be mediated and that it should be set down for hearing, the
lessor’s response was to go get an order for eviction ie retaliation and intimidation.
o In those set of facts, that might have amounted to an unfair practice.