Disaster no reason to withhold rent
The Butcher Shop and Grill in Mouille Point has lost its SCA bid to overturn a High Court order that mandated it to pay withheld rent of more than R2m owed to the landlord, the Bymyam Trust.
A Cape Argus report says the restaurant – which withheld the rent, claiming to have been adversely affected by the Covid-19 pandemic hard lockdown restrictions on trade – had approached the SCA after failing to get its way in the Western Cape High Court.
The original case centred on the question whether a commercial tenant was entitled to withhold payment of rental to a landlord payable in terms of a lease agreement during the period of national lockdown.
It also looked at whether such a tenant is entitled to claim a rental remission as a result of the legislative restrictions caused by the imposition of the regulations.
Granting the application for leave to appeal, Acting Judge Mas-Udah Pangarker said: ‘I am satisfied that reasonable prospects of success exist on appeal. I must add that I am of the view that the outcome of this matter on appeal would hold great significance not only to these parties but also to other commercial tenants and landlords in SA.’
The SCA heard that a lease agreement was concluded between the trust and the Butcher Shop in February 2014 and the Butcher Shop immediately sub-let the premises to Apoldo Trading (Pty) Ltd.
Apoldo then occupied the premises and conducted the business of the Butcher Shop & Grill restaurant. The trust only became aware of the sub-tenancy in August 2019 when it gave its consent to the sub-letting arrangement.
Following the declaration of the State of Disaster in March 2020, the Butcher Shop withheld payment of the rent due to the trust, arguing that the lockdown restrictions were an act of God which severely affected its business, thus entitling it to remission of rent.
According to the Cape Argus, the Butcher Shop asserted a right to claim remission of rent, notwithstanding that the loss suffered was that of its sub-tenant, Apoldo.
The SCA found that the lease agreement did not prevent the tenant from asserting a common law claim for remission of rental due to an act of God.
The Butcher Shop’s application to appeal the judgment said the High Court erred in saying the it had failed to make out a case to disregard the separate juristic personalities of itself and Apoldo.
The SCA rejected this argument as both are 100% owned by the same person, a director of both companies.
The SCA found the High Court correctly dismissed the counter application and correctly ordered the Butcher Shop to pay the rent, as claimed in the main application.
The SCA therefore dismissed the appeal with costs.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
