The Supreme Court of Appeal in South Africa (SCA) has ordered the 292-room Garden Court Hotel in Cape Town to vacate its premises from March, following two late rental payments.
The property is owned by Sandton-based Mohamed Rafik, under Mohamed's Leisure Holdings (Pty) Ltd. Rafik insists that the hotel’s failure to pay its monthly rental of R694‚585 in 2014 triggers the eviction clause in the lease. Claiming that, at the time, he made it clear that, although he was exercising leniency in this instance, another late payment would result in him invoking the ‘eviction clause’ in the contract without hesitation.
After a second late payment four months later, he followed up on his promise and on December 1, 2017 a full bench of five Supreme Court judges ruled in his favour, ordering Tsogo Sun to vacate. However, the case is not as cut and dried as it may seem.
Tsogo Sun’s first late payment was remedied 16 days after it was due, and was late as the result of an error on Nedbank’s part – not an error on the part of Tsogo Sun. At the time, the bank wrote to Rafik to accept responsibility for the issue. Unfortunately, four months later Nedbank erred again, transferring the funds to the wrong account and accepting that the mistake was their responsibility.
Furthermore, in the 13 years Tsogo Sun had rented the property prior to 2014 they had never once defaulted on a payment. Despite this the SCA still ruled against them. Judge Mathopa, presiding over Tsogo Sun’s legal challenge, told The South African why the bench would not uphold the values of ubuntu in this case.
“It was impermissible for the high court to develop the common law of contract by infusing the spirit of ubuntu and good faith so as to invalidate [the eviction clause]. It would be untenable to relax the maxim ‘pacta sunt servanda’ [agreements must be kept] in this case because that would be tantamount to the court making the agreement for the parties.”
Tourism Update spoke to Ravi Nadasen, Chief Operating Officer at Tsogo Sun Hotels, who confirmed that the hotel group would appeal the verdict through the Constitutional Court. “Tsogo Sun is appealing the matter between Mohamed's Leisure Holdings (Pty) Ltd vs Southern Sun Hotel Interests (Pty) Ltd (183/17)  ZASCA 176 (1 December 2017); as such the matter is sub judice. We await the outcome of the current legal proceedings.”