An option to renew a lease at a rental to be agreed between landlord and tenant, failing which to be determined by a third party, was not validly renewed by the lessee offering an increased rent that was unacceptable to the landlord and then not invoking the process for third party determination.
The tenant gave notice of intention to renew the lease at a stated rent but that was insufficient to bring a new contract of lease into existence. The essentials of a contract of lease are that there must be an ascertained thing and a fixed rent at which the lessee is to have use and enjoyment of the thing.
Because agreement on the rent is an essential element of a lease, until such agreement has been reached no lease is concluded.
Unless all the essential terms are agreed upon, expressly or by implication, there is no contract at all.
Our law has long accepted that the parties to a contract can delegate the responsibility for fixing certain terms to a third party. Seeing there was no agreed nor determined rent, the lease terminated by effluxion of time and the clause relating to the renewal agreement did not survive and could no longer be used by the lessee.
The court declared that the lease was terminated and ordered that the tenant must vacate the property within two months of the date of the order.
As is so often the case, by reason of the slow litigation process through two courts, the tenant bought itself a further six years of occupation.
The case is Sontsele v 140 Main Street Properties CC.