Co-authored by Ngarothe Netshipale

The Supreme Court of Appeal upheld an eviction order against a lessee who argued that the lessor had repudiated the lease agreement and had no right to unilaterally cancel it.  The court found no repudiation and confirmed that the lessor could rely on a termination clause within the agreement.  The court found that there was no contractual duty to negotiate renewal instead of termination.  Any reliance on a general duty to negotiate in good faith by the lessee was misplaced.

The case involved a dispute over whether a new lease agreement for a commercial property was entered into for an additional lease period following negotiations between the parties.  The original lease agreement was for a three-year lease period, with the lessor retaining the right to cancel the lease with one month’s notice.

The lessor issued a notice to the lessee to cancel the agreement, relying on the termination clause of the “alleged lease agreement.”

The lessee argued that the lessor’s use of the term “alleged” constituted repudiation of the agreement.  The court found that the lessee could not demonstrate a clear and unequivocal intention by the lessor to repudiate the lease agreement.  The court held that the notice clearly, unambiguously and validly exercised the right to terminate the lease.

The court reiterated that public policy demands that contracts freely and consciously entered into must be honoured.  The court emphasised that the lessor could unilaterally cancel the agreement and that a court cannot refuse to enforce a contractual provision merely because it might be perceived as unfair, unreasonable or unduly harsh.

The lessee’s argument that unilateral cancellation must be conducted in good faith was rejected.  The court noted evidence of the lessee’s willingness to relocate and found the dispute to be purely commercial with no fundamental rights implicated.  Consequently, the court rejected the lessee’s contention to develop the common law on this basis.

Recognising that the lessee was a tenant of the lessor for many years and required some time to relocate, the court used its discretion to extend the eviction date by three months. The court’s decision reaffirms the principle that agreements must be upheld.  Binding a party to an agreement it has lawfully terminated would be contrary to public policy.