This blog was co-authored with Yuveshen Naidoo, Candidate Attorney.
The primary issues in this judgment are:
- The eviction of the lessee from its premises for misrepresentation of their intention to use the premises as a cannabis club; and
- Whether that was a breach of the lease which was for use as a restaurant.
The lessor sought the eviction, claiming that the lessee had misrepresented the nature of its business operations
The lessor, a family-owned investment business managing a portfolio of properties, leased a commercial space to the lessee. The premises were transformed into a cannabis smoking room without disclosing this intention during lease negotiations. The lessee agreed in the lease to use the premises to conduct the business ordinarily undertaken by a restaurant.
The lessor argued that the lessee had misrepresented its business model, leading to a breach of the lease agreement. They contended that the club’s operations, which included the sale of cannabis products and on-site smoking, were not disclosed and were incompatible with the building’s other tenants and the community’s expectations.
The lessee claimed that their operations were within legal bounds and that they had not misled the lessor. They argued that the eviction was unjustified and sought to appeal the decision.
The court held that:
- The lessee had indeed misrepresented its business intentions during lease negotiations. Evidence showed that the club had not disclosed its plan to sell cannabis-infused products and permit on-site smoking.
- The almost daily complaints from other tenants and residents about the disturbances caused by the club’s operations, including smoke permeation and the presence of minors was evidence of a breach of the lease provision regarding disturbances emanating from the premises.
- The club’s activities were in violation of any laws or regulations, particularly those related to cannabis sales and smoking in public places.
- Alterations and branding to the premises was done without prior approval in breach of the lease.
The court ruled in favour of the lessor because the breaches could not be remedied after the fact.
The judgment included an eviction order. Additionally, the Court awarded costs on an attorney and client scale, because of the lessee’s manifestly unreasonable behaviour.
This case highlights the importance of transparency in lease negotiations, the consequences of misrepresentation, and the need for businesses to comply with community standards and legal regulations. It serves as a reminder of lessee’s responsibilities to accurately represent their operations and of lessor’s rights to enforce lease agreements by eviction when there is a material breach.
Camps Bay Investment Trust v Infusion Social Club [2024] ZAWCHC 211