Legal Talk- Renovating of Leased Property

Can a lessor eject a lessee pursuant to cancellation of the lease for purposes of renovating the leased property? This was the crisp question in Harlequin Duck Properties 204 (Pty) Ltd v Elizabeth All/le Fieldgate tla Second Hand Rose and others [2006] 4 All SA 573 division.

It was in dispute whether the lessor had given proper notice of cancellation to the lessee. In purporting to cancel the lease, the lessor placed reliance on a clause in the contract which allowed for cancellation in the event of intended renovation of the building. The lessee argued that the agreement envisaged separate concepts of repairs/alterations, destructions and renovations, each of which gave rise to a different set of legal consequences. According to the lessee, the clause relied on by the lessor came into operation only where the lessor decided to renovate the building, and not in the case of the demolition of a part of the building, or where structural alterations or construction not amounting to renovations were done. The lessee therefore sought to draw a distinction between renovation, on the one hand, and more serious structural alterations, on the other hand.

Davies J held that the dispute between the parties turned on the meaning to be attached to the word 'renovate'. The court followed an' interesting approach in interpreting the word 'renovate' by looking at tax law for guidance. It concluded that a renovation is a form of renewal, at least the making new of the old, and was at the most a reconstruction of the old. The nature of the work contemplated by the lessor in the present case was more than a mere repair and less than a total destruction of the building.

It was also contended on behalf of the lessee that the contractual clause that allowed the architect to determine whether a renovation was contemplated was invalid, as it did not afford the lessee a hearing before the decision was made. The court disagreed, finding the clause to be valid, and that the architect had applied himself properly to the determination as to the nature of the work to be undertaken.

Suffice it to mention here that the court further rejected the lessee's argument that the lessor had known at the time that it had bought the property that it intended to renovate it but that it had not informed the lessee of it. Although the court acknowledged the principles of good faith, reasonableness and fairness, it warned against elevating these principles so that they intervene in contractual relationships and reconfigure the contractual relationship outside of that which was agreed by the parties.

The court accordin'gly ordered the lessee's ejectment from the premises.


First published by: De Rebus - The SA Attorneys Journal


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