THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case No:  611/2010

In the matter between:

NTOMBIZODWA YVONNE MAPHANGO
(NOW MGIDLANA) AND 17 OTHERS

APPELLANTS

v

AENGUS LIFESTYLE PROPERTIES
(PTY) LTD

RESPONDENT

Neutral citation:
Maphango v Aengus Lifestyle Properties (611/2010) [2011]
ZASCA 100 (1 June 2011)

Coram:
Brand, Lewis, Cachalia, Shongwe JJA and Plasket AJA

Heard:
17 May 2011

Delivered:
01 JUNE 2011

Summary:
Termination of lease agreements ─ tacit term contended for that
landlord will not employ termination clause in order to renegotiate new leases at
higher rental ─ found not to have been established ─ reliance on s 26(1) of the
Constitution and other considerations of public policy ─ unsuccessful

________________________________________________________________

ORDER
________________________________________________________________

On appeal from:
South Gauteng High Court (Johannesburg) (Van der Riet AJ
sitting as court of first instance).
The appeal is dismissed.
________________________________________________________________

JUDGMENT
________________________________________________________________

BRAND JA (LEWIS, CACHALIA, SHONGWE JJA and PLASKET AJA):
[1] The 18 appellants are lessees of flats in a ten storey building known as
Lowliebenhof, in Braamfontein, Johannesburg. The respondent is the owner of
the building. Proceedings started when the respondent brought an application in
the South Gauteng High Court, Johannesburg, for the eviction of the appellants
and their families from the flats on the basis that their leases had been duly
terminated by notice on its behalf. The appellants opposed the application,
essentially on two grounds. First, that the respondent’s purported termination of
the leases was invalid. Second, that, even if the leases were validly terminated, it
would not be just and equitable to evict them from the flats. For the second
ground they relied on the provisions of s 4(6) of the Prevention of Illegal Eviction
from and Unlawful Occupation of Land Act 19 of 1998, that generally became
known as PIE.

[2] When the application came before Van der Riet AJ in the court a quo, the
respondent conceded that the leases of two of the appellants, Ms Siguca and Ms
Masemola had not been validly terminated. With regard to the sixteen other
leases involved, Van der Riet AJ upheld the respondent’s contention that the

termination was valid. He further held, in respect of nine of the appellants, that
there were no grounds of justice and equity, as contemplated in s 4(6) of PIE,
that would justify the refusal of their eviction. These nine appellants were
therefore evicted. As to the other seven appellants, he concluded that an eviction
order would render them homeless and would thus not be just and equitable as
contemplated by s 4(6) of PIE. At the behest of these appellants, he therefore
postponed the application for their eviction for three months so as to afford them
the opportunity to join the City of Johannesburg as a party to the proceedings
and to obtain a report from the latter, setting out what steps it could take to
provide them with alternative accommodation. As to the costs of the application,
Van der Riet AJ decided that since the matter involved constitutional issues, the
parties should pay their own costs.

[3] The appeal against the judgment of Van der Riet AJ is with his leave. In
essence it is aimed at two findings in the judgment. First, that the leases were
validly terminated. Second, that Ms Siguca and Ms Masemola should pay their
own costs.

Termination of the lease agreement
[4] I start with the issues surrounding the termination of the leases. The
respondent purchased the property in 2007, but only became the owner in May
2009, shortly before the eviction applications were launched. It was not a party to
any of the leases. They were concluded over the years between the different
appellants, as lessees, and whoever happened to be the respondent’s
predecessor as owner of the building at the time, as lessor. However, by
operation of the common law principle of huur gaat voor koop, the respondent
became the successor to all rights and obligations deriving from these lease
agreements, when it became the owner of the building.

[5] The appellants entered into four different pro forma lease agreements that
were identified with reference to the name of the lessor at the time, as the

Ithemba agreement, the Union agreement, the Artisan agreement and the Eagle
Creek agreement. For reasons that will soon become apparent, the appellants
emphasised those terms of the four agreements that deal with increases in the
stipulated rental while the respondent’s focus was directed at the period of the
lease for which the different agreements provide.

[6] As to increases in the stipulated rental, three of the agreements expressly
limit the increment at which the stipulated rent can be increased annually. The
Ithemba agreement permits an increase of 10 per cent, together with an amount
equal to any increase in rates, taxes and other stipulated expenses payable by
the lessor in respect of the building, distributed pro rata between the tenants
occupying the property. In the Union agreement, the annual escalation is 15 per
cent, while the Artisan agreement limits the increment to the lessee’s pro rata
share of any increase in rates and taxes payable by the lessor. The Eagle Creek
agreement is the exception. It does not specifically impose a limitation on the
increase of rental, but it is common cause that in this case any increase must be
reasonable (see s 5(6)(c) of the Rental Housing Act 50 of 1999). Finally, the
Ithemba agreements provide that in the event of some legislative provisions
affecting the rental, the respondent cannot increase the rent without first
approaching the competent authority for leave to do so.

[7] As to termination of the leases, each of the agreements provides for an
initial fixed period. In the Ithemba agreement, for example, it is 12 months. After
the initial period, each agreement is automatically renewed indefinitely. Three of
the agreements contain an express provision entitling both parties to terminate
the agreement on written notice to the other, though the periods of notice
required are of different duration. The Artisan agreement does not have an
express term providing for termination by notice. But it is not in issue that in
terms of the residual rules of the common law, this agreement is also terminable
by either party after the initial period, on reasonable notice to the other (see eg A
J Kerr The Law of Sale and Lease 3 ed (2004) at 488; Francois du Bois (ed)

Wille’s Principles of South African Law 9 ed (2007) at 918 para 9(1) and the
authorities there cited.) With regard to termination, the Ithemba agreement again
contains a provision which is not to be found in the other agreements. It is to the
effect that, if the lease is supported by a Department of Housing subsidy,
termination shall be at the discretion of the lessee. As it turned out, the only two
leases that were supported by a Departmental subsidy were those of Ms Siguca
and Ms Masemola. That is why the respondent conceded that their leases could
not be terminated on notice by the respondent.

[8] It is common cause that in respect of all the leases the initial fixed period
had lapsed prior to the notices of termination, to which I now turn. From about
September 2008, the respondent gave written notice of termination of the leases
to each of the appellants. The notices called upon them to vacate their flats on
different dates during the period from November 2008 to March 2009. The
notices also informed the appellants that if they wished to stay on in their flats
beyond the stipulated dates, they would have to enter into new lease agreements
at rentals which were between 100 per cent and 150 per cent more than what
they were paying at the time. The appellants refused to accept the termination of
their agreements. They also said that they could not afford to pay the increased
rent. They accordingly remained in occupation and continued to pay the rental
amounts that they were paying at the time.

[9] The respondent’s explanation as to why it gave these notices remained
mainly undisputed. According to this explanation, the respondent’s business
model is to acquire buildings in the Johannesburg CBD that are often derelict,
which it then renovates and rents out to tenants. This business model requires it
to be able to generate sufficient income from rental in order to service the
acquisition and renovation costs of the building. It acquired Lowliebenhof for
R11 628 000, which it obtained through bond finance.

[10] After acquisition of the building, the respondent spent an amount of over
R1 million on renovation and maintenance. It also employed fulltime guards and
cleaners. These expenses appear to have been advantageous to the tenants of
the building. In motivating why the appellants would not be able to afford
comparable accommodation in the same area, their attorney, inter alia, said
about other flats in the area that:
‘The buildings are not well maintained and major renovations would have to be done for
them to be a viable alternative to Lowliebenhof.’

[11] But the result of these expenses was that the rent paid by the appellants
(and presumably the occupants of other flats in the building) was insufficient to
cover the costs of bond finance, renovation and maintenance. As a result, the
respondent found that the project was running at a loss. At the same time, so the
respondent said, there were a number of potential tenants who were willing and
able to pay the increased rental it was constrained to impose in order to render
the project financially viable.

[12] The arguments advanced by the appellants against this background as to
why the leases were not validly terminated, were twofold:
(a)
First, they contended that each of the lease agreements contained a tacit
term which forbids the use of the termination clause to effect an increase in rental
beyond the increment provided for in the respective agreements;
(b)
Second, that to allow the respondent to terminate the agreements for the
sole purpose of allowing it to implement a rent increase would be contrary to
public policy. For their argument based on public policy, the appellants relied on
three grounds: (a) that the termination would be unreasonable and unfair; (b)
that it would constitute an infringement of their constitutional right to have access
to adequate housing in terms of s 26(1) of the Constitution; (c) that it constituted
an ‘unfair practice’ as contemplated in the Rental Housing Act 50 of 1999 read
with the Gauteng Unfair Practice Regulations 2001, promulgated under that Act.

Tacit term
[13] I propose to deal first with the argument based on a tacit term. As
explained by Corbett AJA in Alfred McAlpine & Son (Pty) Ltd v Transvaal
Provincial Administration 1974 (3) SA 506 (A) at 531-532, a tacit term is an
unexpressed provision of a contract, inferred by the court from the express terms
of the contract and the surrounding circumstances. Because a tacit term is
derived from an inference as to what both parties must have intended, if they had
applied their minds, the inference will be drawn only if the court is satisfied that it
is a necessary one. Once there is difficulty and doubt as to how the term should
be formulated or how far it should go, it can hardly be said that the parties clearly
intended the proposed term to be part of their agreement (see eg South African
Mutual Aid Society v Cape Town Chamber of Commerce 1962 (1) SA 598 (A) at
606B; Desai v Greyridge Investments (Pty) Ltd 1974 (1) SA 509 (A) at 522H-
523A).

[14] Over the years our courts have formulated the test to be applied in order
to decide whether the importation of a tacit term would be appropriate in various
ways. Another variation would hardly contribute to clarity. Suffice it therefore to
refer to the following summary by Nienaber JA in Wilkens NO v Voges 1994 (3)
SA 130 (A) at 137A-C:
‘The practical test for determining what the parties would necessarily have agreed on the
issue in dispute is the celebrated bystander test. Since one may assume that the parties
to a commercial contract are intent on concluding a contract which functions efficiently, a
term will readily be imported into a contract if it is necessary to ensure its business
efficacy; conversely, it is unlikely that the parties would have been unanimous on both
the need for and the content of a term, not expressed, when such a term is not
necessary to render the contract fully functional.’

[15] Relying on the test thus formulated, the appellants contended that a tacit
term, which prohibits the exercise of the right to terminate for the sole purpose of
effecting a rental increase which exceeds the increment agreed upon, is
necessary to ensure the efficacy of the agreements. Without this term, so the

argument went, the landlord could demand an increase in excess of that agreed
upon by simply threatening to terminate the contract. Moreover, so the argument
continued, absent the proposed tacit term, there would be no consensus on an
essential term of the contract. A definite or ascertainable rental is one of the
essentialia of a lease. Were the landlord permitted to use the termination clause
to effect a rental increase, the rent would not be definite or ascertainable.

[16] I find these arguments logically unsound. None of them pertain to the
position while the lease agreements are in place. During the currency of the
lease, the lessees are not at the landlord’s mercy insofar as rental increases are
concerned. Nor can there be any uncertainty about the permitted increases. Both
parties are bound by the terms controlling rental increases. However, once the
agreements are validly terminated, the landlord is no longer bound by the
express or implied provisions of the erstwhile lease. Whether or not a lease
agreement was validly terminated depends on the termination provisions. Thus,
for example, any purported termination during the initial fixed period would not be
valid. During that period the lessee therefore enjoys the benefits of the rental
increase provisions. The same goes for the required period of notice. In short,
during the currency of the lease, business efficacy does not require an
incorporation of the proposed tacit term. After termination of the lease, the
proposed tacit term would be of no consequence.

[17] For their further arguments in support of the tacit term they propose, the
appellants relied on what Nienaber JA referred to in the quotation from  Wilkens
NO as the celebrated bystander test. It will be remembered that according to this
test the enquiry is what the response of both parties would have been if, at the
time the contract was being negotiated, the officious bystander were to ask them
‘what would happen in such and such a case?’. Incorporation of the proposed
term requires the unanimous confirmation of the proposed term with the
comment ‘we did not trouble to say that; it is too clear’. (Per Scrutton LJ in

Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592 (CA) at
605).

[18] With reference to this test, the appellants argued that if the officious
bystander were to ask the parties whether they intended the owner to be able to
circumvent the rental increase provisions by making use of the termination
clause, the answer would have been no. They found support for their argument in
the provisions of the Ithemba agreement to the effect that if the lease is
supported by Departmental subsidy, termination would be at the discretion of the
lessee. This shows, so the argument went, that these leases were entered into
with security of tenure in mind.

[19] As I see it, the last-mentioned part of the argument goes against the
appellants. What it indicates is that, where the parties intended to qualify the
termination provisions so as to provide the lessees with additional security of
tenure ─ beyond the initial fixed period and the notice period ─ they knew exactly
how to do so. Of greater significance, however, is that in my view the question
put forward by the appellants as the one that the officious bystander would ask,
is wrongly formulated. In consequence, the answer to the officious bystander is
likely to be wrong. The question is not whether the landlord may circumvent the
rental escalation provisions by means of the termination clause. What the
officious bystander would ask is whether either party would be entitled to
terminate the agreement, after the initial fixed period and in accordance with the
termination clause, in order to negotiate a new lease with different contractual
terms. As I see it the answer would then be ─ why not?

[20] As formulated by the appellants, the question posed by the officious
bystander would introduce the consideration of motive in the exercise of a
contractual right, while that consideration is generally irrelevant (see eg
Bredenkamp v Standard Bank of South Africa Ltd 2010 (4) SA 468 (SCA) para
7). Introduction of motive through incorporation of a tacit term would in my view

elicit the question ─ what motive for termination by notice would be acceptable?
Would the landlord have to justify its motive for termination in every case? Is the
lessee also required to have a valid motive for terminating the agreement on
notice? If so, would the fact that the lessee can no longer afford the rental
constitute a valid reason? As I see it, all these difficulties stand in the way of the
incorporation of the tacit term for which the appellants contend.

[21] In addition, acceptance of the appellants’ argument would mean that the
landlord had entered into a lease of infinite duration without being entitled to
terminate the agreement, even when the enterprise seeks to be commercially
viable. Why this notion is inherently untenable is illustrated by the situation that
arose in this case. In my view, it stands to reason that this unlikely
intention on the part of the landlord can hardly be incorporated into the lease
agreements on the basis that it is self-evident.

Reasonableness and fairness
[22] I now turn to the appellants’ case based on public policy. Their first
contention in this regard was that termination of the leases was, in the
circumstances, unreasonable and unfair and should therefore not be enforced on
grounds of public policy. In support of this contention the appellants argued that it
had been decided by the Constitutional Court in Barkhuizen v Napier 2007 (5) SA
323 (CC) that, as a matter of public policy, our courts will not give effect to the
implementation of a contractual provision which is unreasonable and unfair.

[23] I believe that the argument is fundamentally flawed because the
proposition on which it relies is not supported by the decision of the
Constitutional Court in Barkhuizen, nor does it reflect the principles of our law of
contract as they stand. Reasonableness and fairness are not freestanding
requirements for the exercise of a contractual right. That much was pertinently
decided in Bredenkamp (para 53). As to the role of these abstract values in the

law of contract, this court expressed itself as follows in South African Forestry Co
Ltd v York Timbers Ltd 2005 (3) SA 323 (SCA) para 27:
‘. . . . [A]lthough abstract values such as good faith, reasonableness and fairness are
fundamental to our law of contract, they do not constitute independent substantive rules
that courts can employ to intervene in contractual relations. These abstract values
perform creative, informative and controlling functions through established rules of the
law of contract. They cannot be acted upon by the courts directly. Acceptance of the
notion that judges can refuse to enforce a contractual provision merely because it
offends their personal sense of fairness and equity will give rise to legal and commercial
uncertainty.’
(See also eg Brisley v Drotsky 2002 (4) SA 1 (SCA) paras 21-25 and 93-95)

[24] In Barkhuizen, Ngcobo J, writing for the majority, first explained (para 80)
what he meant by the notion of ‘good faith’, namely that it encompasses the
concepts of justice, reasonableness and fairness. He then proceeded to express
the principles of our law, as formulated by this court, inter alia in Brisley, in the
following terms (para 82):
‘As the law currently stands good faith is not a self-standing rule, but an underlying value
that is given expression through existing rules of law. In this instance good faith is given
effect to by the existing common-law rule that contractual clauses that are impossible to
comply with should not be enforced . . . .  Whether, under the Constitution, this limited
role of good faith is appropriate and whether the maxim lex non cogit ad impossibilia
alone is sufficient to give effect to the value of good faith are, fortunately, not questions
that need be answered on the facts of this case and I refrain from doing so.’

[25] Unless and until the Constitutional Court holds otherwise, the law is
therefore as stated by this court, for example, in South African Forestry Co,
Brisley and Bredenkamp. Accordingly, a court cannot refuse to give effect to the
implementation of a contract simply because that implementation is regarded by
the individual judge to be unreasonable and unfair. Strictly speaking the enquiry
into the reasonableness and fairness of the respondent’s termination of the
contract of the leases is therefore unnecessary. But in any event, I am not

persuaded that in the circumstance the termination of the leases can be
denounced as unreasonable and unfair. The respondent’s business venture, to
acquire and upgrade residential buildings in the inner city of Johannesburg, is
commendable. Amongst other things, it appears to be in line with the initiatives of
the Johannesburg City Council. However, since the respondent is not a
charitable organisation, it cannot be blamed for its unwillingness to pursue this
commendable business venture at a loss as would be the result if the current
leases were to be maintained at the agreed rentals. The respondent therefore
decided to terminate the leases, as it was contractually entitled to do, to save its
business from commercial demise. In doing so, it behaved transparently by
disclosing its motive, which it was not obliged to do. Had it not done so, the
present litigation would probably not have ensued. Objectively, I can find nothing
in the respondent’s conduct that can justifiably be described as unreasonable
and unfair.

The impact of s 26(1) of the Constitution
[26] The appellants’ further argument relied on the proposition that the
termination of the leases was contrary to public policy, because it constituted an
infringement of their right of access to adequate housing in terms of s 26(1) of
the Constitution. The logical progression of their argument proceeded as follows:
(a)
According to well-settled principles of our common law, a term of a
contract will not be enforced if either the term itself or its enforcement will be
contrary to public policy (see eg Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A) at
7I-J).
(b)
Public policy represents the legal convictions of the community. Since the
advent of our constitutional democracy, public policy is informed by our
Constitution and the values which underlie it (see eg Afrox Healthcare Bpk v
Strydom 2002 (6) SA 21 (SCA) para 18; Barkhuizen v Napier 2007 (5) SA 323
(CC) para 28).
(c)
Consequently, a term in a contract that is inimical to the values enshrined
in the Constitution is contrary to public policy and therefore, unenforceable (see

eg Barkhuizen para 29; Bredenkamp v Standard Bank of South Africa Ltd 2010
(4) SA 468 (SCA) para 43).
(d)
Even if a contractual provision is not in itself in conflict with any
constitutional value, its enforcement may be. In that event, the first question is
whether the rights so infringed ─ such as the right to practise a trade, occupation
or profession, or the right to freedom of expression ─ can in principle be limited in
terms of s 36 of the Constitution. If so, the second question is whether the
limitation brought about by the enforcement of the contractual provision is fair
and reasonable in the circumstances (see eg Bredenkamp paras 47-48).
(e)
Security of tenure is a constitutional element of the right of access to
housing in terms of s 26(1) of the Constitution (see Jaftha v Schoeman; Van
Rooyen v Stoltz 2005 (2) SA 140 (CC) para 29; Gundwana v Steko Development
CC (CCT 44/10) [2011] ZACC 14 (11 April 2011) para 40).
(f)
The rights enshrined by s 26(1), including the right to security of tenure to
one’s home, embodies both a positive and a negative element. Positively, it does
not bind private persons, but its provisions oblige the state to take reasonable
measures to achieve the realisation of the right. In its negative aspect it also
binds private persons. Apart from the obligations of the state, it thus forbids
private persons from interfering with the rights of any other person in terms of the
section (see eg Standard Bank of South Africa Ltd v Saunderson 2006 (2) SA
264 (SCA) para 12).

[27] In furtherance of their case, the appellants then sought to apply these
principles in the following way. The termination provisions, so they conceded, are
not in themselves inimical to the rights enshrined in s 26(1), since there is
nothing wrong with providing for the termination of a lease on notice. Yet the
implementation of these provision resulted in an infringement of their right to
security of tenure to the flats that are their homes. In consequence, the
respondent was bound to exercise its right under the termination provisions in a

manner that was reasonable and fair. Since the termination of their leases was in
the circumstance unreasonable and unfair, it was contrary to public policy.

[28] Though I agree with the general principles relied on by the appellants, my
difficulty lies with the way in which they sought to apply these principles in
furtherance of their case. What their argument appears to lose sight of is that a
lessee of property has no security of tenure in perpetuity. The duration of the
lessee’s tenure is governed by the terms of the lease.Generally speaking a lease
can be for a fixed period, say 10 years or six months or for an uncertain period,
eg until X dies. If the period of the lease is left undetermined, it can be terminated
on notice. If the period of notice is not specifically agreed upon, the residual rules
require that the notice must be reasonable. One thing a lease cannot be is ‘for
ever’. A purported lease in perpetuity is not a lease: it constitutes another
contract, namely emphyteusis or ‘erfpag’ (see eg A J Kerr The Law of Sale and
Lease 3 ed (2004) p 273-274; 14 Lawsa 2 ed para 4 sv ‘Lease’; De Wet & Van
Wyk SA Kontrakte en Handelsreg 5 ed (1992) p 356).

[29] Beyond the period of the lease, the lessee has no security of tenure. If the
lease is for say 10 years, it goes without saying that the lessee’s security of
tenure is for 10 years only. If after 10 years the lessor insists that the lease has
been terminated through effluxtion of time, no one will suggest that such
insistence amounts to an infringement of the lessee’s security of tenure under s
26(1) of the Constitution. Perhaps less obvious is the situation where the lease is
terminated on notice. But the principle remains the same. The parties agreed at
the outset that the lessee’s tenure can be terminated on notice. What this
amounts to, is an agreement that the lessee’s security of tenure will never endure
beyond the end of the notice period.

[30] The position of owners, on the other hand, is quite different. The right of
an owner to possession is of indefinite duration. That, I believe, is the main
distinction between cases like Jafta, Saunderson and Gundwana, on the one

hand and the present case on the other. Those cases dealt with interference with
the right of security of tenure of an owner to his or her home. The combined
effect of those cases is that a termination of that right may only follow upon
judgment in a court of law. In this case, as I have said, the appellants had no
security of tenure beyond the duration of the leases. Put in another way, this
security of tenure was circumscribed by the leases themselves. It therefore
cannot be said that termination in accordance with the leases, constituted an
infringement of their right to security of tenure.

Provisions of the Housing Act 50 of 1999 and the Gauteng Unfair Practice
Regulations, GN 4004 of 2001
[31] Finally, the appellants contended that the termination of the leases was
contrary to public policy because it constituted an unfair practice in contravention
of the Rental Housing Act 50 of 1999 and the relevant regulations promulgated
under that Act. From the appellants’ argument it never became clear why they
chose this circuitous route instead of simply relying on a contravention of the Act.
But be that as it may.

[32] With regard to the provisions of the Act, the appellants’ particular focus
was on s 4(5)(c). In terms of this section the landlord may ‘terminate the lease in
respect of rental housing property on grounds that do not constitute an unfair
practice and are specified in the lease’. ‘Unfair practice’ is defined in s 1 of the
Act to mean ‘(a) any act or omission by a landlord or tenant in contravention of
this Act; or (b) a practice prescribed as a practice unreasonably prejudicing the
rights or interests of a tenant or a landlord’.

[33] Since the appellants do not contend for any contravention of the Act by
the respondent, we are not concerned with part (a) of the definition. As to part
(b), ‘prescribed’, is defined in s 1 to mean ‘prescribed by regulation by the
Member of the Executive Council of a province responsible for housing matters,
by notice in the Gazette’. With reference to the regulations thus prescribed  by

the MEC for Housing in the Province of Gauteng (GN 4004 of 2 July 2001), the
appellants relied on two provisions, namely: (a) Regulation 41(d) which prohibits
a landlord from engaging in ‘oppressive or unreasonable conduct’, and (b)
Regulation 14(1)(f) which provides that ‘a landlord must not conduct any activity
which unreasonably interferes with or limits the rights of the tenant . . .’.

[34] I do not agree with the appellants’ contention that the termination of their
leases constituted a contravention of these statutory provisions. First, the
provisions of the Act and the regulations relied upon are directed against a
‘practice’. That does not contemplate, as I see it, unacceptable conduct by the
landlord on an isolated occasion (see eg The Concise Oxford English Dictionary
which defines ‘practice’ (in this context) as ‘the customary or expected procedure
or way of doing something’). It envisages incessant and systemic conduct by the
landlord which is oppressive or unfair. Termination of a lease would therefore not
qualify as a practice. Secondly, for reasons I have already stated, I do not believe
that the respondent’s terminations of the leases could in the circumstances be
denounced as unreasonable or unfair, let alone oppressive.

Costs of two appellants in the court a quo
[35] This brings me to the second part of the appeal which is directed at the
court a quo’s order to the effect that Ms Siguca and Ms Masemola, who were
successful on the merits, should pay their own costs. It will be remembered that
the respondent conceded in the court a quo that its eviction application against
these two appellants could not succeed. The reason for the concession was that
these two appellants had entered into the Ithemba agreement and that, because
their leases were supported by a Department of Housing subsidy, these leases
could, in terms of the specific provisions of the agreement, only be terminated at
the discretion of the lessee.

[36] Since the impugned costs orders were made in the exercise of its
discretion by the court a quo, this court can only interfere on the basis that the

discretion had not been properly exercised. I do not believe that the appellants
have made out that case. On the contrary, I think these costs orders were justly
made. All the appellants, including those who were successful and those who
were not, were represented by the same counsel. They all filed affidavits which
were identical in all material respects. Where the appellants were unsuccessful,
no costs orders were made in favour of the respondent and I can see no reason
why the position of the successful appellants should be any different. Moreover,
the defence on which the two appellants ultimately succeeded was only raised at
a late stage of the proceedings, when virtually all the papers had been filed.

Costs on appeal
[37] Following the guidance of the Constitutional  Court in Barkhuizen (para
90) and in Biowatch Trust v Registrar, Genetic Resources  2009 (6) SA 232
(CC), the court a quo held that, since the appellants raised important
constitutional issues, they should not be burdened with costs. It therefore made
no order as to costs. I believe this court should adopt the same approach with
regard to the costs of appeal.

Order
[38] In the result the appeal is dismissed.

____________________
F D J Brand
Judge of Appeal

APPEARANCES:
APPELLANTS:

D I Berger SC (with him S Wilson & I de Vos)

Instructed by Mdladlamba Attorneys, Johannesburg

Lovius Block Attorneys, Bloemfontein

RESPONDENTS:

G C Wright (with him N Mbelle)

Instructed by Knowles Husain Lindsay Inc

c/o John Broido, Johannesburg

McIntyre & Van der Post, Bloemfontein

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE
SUPREME COURT OF APPEAL
MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF
APPEAL
1 June 2011

STATUS: Immediate

MAPHANGO V AENGUS LIFESTYLE PROPERTIES (611/2010)

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal (the SCA) today dismissed the appeal.

The 18 appellants are lessees of flats in a ten storey building. The respondent is the
owner of the building. The respondent brought an application in the South Gauteng
High Court (the court a quo) for the eviction of the appellants and their families from
the flats on the basis that their leases had been duly terminated by notice on its
behalf. The appellants opposed the application, essentially on two grounds. First,
that the respondent’s purported termination of the leases was invalid. Second, that,
even if the leases were validly terminated, it would not be just and equitable to evict
them from the flats, for this ground they relied on the provisions of s 4(6) of the
Prevention of Illegal Eviction from Unlawful Occupation of Land Act 19 of 1998 (PIE).

When the application came before Van der Riet AJ in the court a quo, the
respondent conceded that the leases of two of the appellants, Ms Siguca and Ms
Masemola, had not been validly terminated. With regard to the sixteen other leases
involved, Van der Riet AJ upheld the respondent’s contention that the termination
was valid. He further held that, in respect of nine of the appellants, that there were
no grounds of justice and equity, as contemplated in s 4(6) of PIE, that would justify
the refusal of their eviction. These nine appellants were therefore evicted. As to the
other seven appellants, he concluded that an eviction order would render them
homeless and would thus not be just and equitable as contemplated in s 4(6). He
postponed the application for three months so as to afford them the opportunity to
join the City of Johannesburg as a party to the proceedings and to obtain a report
from the latter, setting out what steps it could take to provide them with alternative

accommodation. As to costs Van der Riet AJ decided that since the matter involved
constitutional issues, the parties should pay their own costs.

The issues before the SCA were whether the leases were validly terminated; and
whether Ms Siguca and Ms Masemola should pay their own costs. From about
September 2008, the respondent gave written notice of termination of the leases to
each of the appellants. The notices called upon them to vacate their flats on different
dates during the period from November 2008 to March 2009. The notices also
informed the appellants that if they wished to remain in their flats beyond the
stipulated dates, they would have to enter into new lease agreements at rentals
which were between 100 per cent and 150 per cent more than what they were
paying at the time. The appellants refused to accept the termination of their
agreements, could not afford to pay the increased rent, and accordingly remained in
occupation and continued to pay the rental amounts they were paying at the time.
The respondent’s explanation as to why it gave these notices was that its business
model is to acquire buildings in the Johannesburg CBD that are often derelict, which
it then renovates and rents out to tenants. This business model requires it to be able
to generate sufficient income from rental in order to service the acquisition and
renovation costs of the building. After acquisition of the building, the respondent
spent an amount of R1 million on renovation and maintenance, these expenses
were advantageous to the tenants. But the result of these expenses was that rent
paid by the appellants was insufficient to cover the costs of bond finance, renovation
and maintenance and the project was consequently running at a loss.

Against this background the appellants advanced the following reasons as to why
the leases were not validly terminated: first, they contended that each lease
agreement contained a tacit term which forbid the use of the termination clause to
effect an increase in rental beyond the increment provided for in the respective
agreements; second, they contended that to allow the respondent to terminate the
agreements for the sole purpose of allowing it to implement a rent increase would be
contrary to public policy. For the latter argument they relied on three grounds,
namely: that the termination would be unreasonable and unfair; that it would
constitute an infringement of their constitutional right to have access to adequate
housing in terms of s 26(1) of the Constitution; and that it constituted an ‘unfair
practice’ as contemplated in the Rental Housing Act 50 of 1999 read with the
Gauteng Unfair Practice Regulations 2001, promulgated under that Act (the Act and
its promulgations). Relying on the officious bystander test the appellants contended
that a tacit term is necessary to ensure the efficacy of the agreements, without which
the landlord could demand an increase in excess of that agreed upon by simply
threatening to terminate the contract. Moreover, they argued, there would be no
consensus on an essential term of the contract. The SCA found these arguments
logically unsound as during the currency of the lease, business efficacy does not
require an incorporation of the proposed tacit term and after termination of the lease,
the proposed tacit term would be of no consequence. The SCA stated that as
formulated by the appellants, the question posed by the officious bystander would
introduce the consideration of motive in the exercise of a contractual right, while that
consideration is generally irrelevant. In addition, the SCA stated, acceptance of the
appellants’ argument would mean that the landlord had entered into a lease of
infinite duration without being entitled to terminate the agreement, even when the
enterprise cease to be commercially viable. In support of the appellants contention

that the termination was unreasonable and unfair and should therefore not be
enforced on grounds of public policy, they argued that it had been decided by the
Constitutional Court in Barkhuizen v Napier 2007 (5) SA 323 (CC) that, as a matter
of public policy, our courts will not give effect to the implementation of a contractual
provision that is unreasonable and unfair. However, the SCA held this statement to
be fundamentally flawed since reasonableness and fairness are not freestanding
requirements for the exercise of a contractual right. Accordingly, a court cannot
refuse to give effect to the implementation of a contract simply because that
implementation is regarded by the individual judge to be unreasonable and unfair,
and strictly speaking the enquiry into the reasonableness and fairness of the
respondent’s termination of the contract of the leases is therefore unnecessary. As
to the impact of s 26(1) of the Constitution, the appellants contended that the
termination provisions are not in themselves inimical to the rights enshrined in s
26(1), but their implementation resulted in an infringement of their right to security of
tenure to the flats that are their homes, and in consequence the respondent was
bound to exercise its right under the termination provisions in a reasonable and fair
manner. The SCA stated that their argument lost sight of the fact that a lessee of
property has no security of tenure in perpetuity. The parties agreed at the outset that
the lessee’s tenure could be terminated on notice, which in effect amounted to an
agreement that the lessee’s security of tenure would never endure beyond the end
of the notice period. It therefore could not be said that termination in accordance with
the leases, constituted an infringement of their right to security of tenure. As to the
appellants’ contention that termination of the leases was contrary to public policy
because it constituted an unfair practice in contravention of the Act and its
promulgations, the SCA stated that the provisions of the Act and the regulations are
directed against a ‘practice’, which did not contemplate unacceptable conduct by the
landlord on an isolated occasion. It envisages incessant and systematic conduct by
the landlord that is oppressive or unfair and termination of the lease would therefore
not qualify as a practice, and the respondent’s terminations of the leases could not in
the circumstances be denounced as unreasonable and unfair, let alone oppressive.

As to the costs of Ms Siguca and Ms Masemola in the court below, the SCA stated
that since the impugned costs orders were made in the exercise of its discretion by
the court a quo, the SCA could only interfere on the basis that the discretion had not
been properly exercised. The SCA did not believe the appellants had made out that
case. The court a quo held that, since the appellants raised important constitutional
issues, they should not be burdened with costs and made no order as to costs. The
SCA believed it should adopt the same approach with regard to the costs of appeal.

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