Summary
This application for leave to appeal raises queries on the content of the law of lease. It concerns an attempt by a petrol wholesaler to evict a licensed petroleum retailer from premises in Soweto where the retailer operated a business under the wholesaler’s brand.
The Applicant, is a licenced petroleum retailer in terms of the Petroleum Products Act “the Act”. The First Respondent, is a wholesaler and distributor of petroleum products to a nationwide network of independently operated and owned dealers.
During September 2005, for the purposes of operating an Engen franchise, Engen and Mighty Solutions concluded an operating lease in terms of which Engen leased a property on the corner of Soweto Highway and Mooki Street, Orlando East, Soweto. Engen subsequently developed the property into a branded service station, investing its capital in installing the necessary equipment. As Engen itself was a lessee under the main lease, the operating lease was a sub-lease and was capable of being cancelled at a month’s notice by either party. Such operating lease expired at the end of March 2008, it then continued to run for on a month-to-month basis until it was validly cancelled by Engen in July 2009. Following the cancellation, Mighty Solutions continued to occupy the site.
Engen applied for an eviction order against Mighty Solutions, who had continued to operate a petroleum retail business from the premises using Engen’s equipment, signage and trademarks without paying rent to Engen or the registered property owner. The High Court when determining “[w]hether [Engen] has locus standi at common law to move for an eviction order”; and “[w]hether [Mighty Solutions] may rely on possessory rights arising from its fuel retail licence as read with the Petroleum Products Act as amended”, found in favour of Engen based on the fact that a lessor or sub-lessor has a common law right to evict a lessee or sub-lessee upon the valid termination of a lease. In addition, it was held that the Act did not affect this fundamental common law position. After the Supreme Court of Appeal refused leave to appeal against this decision, Mighty Solutions referred this matter to the Constitutional Court.
Before the Constitutional Court, Mighty Solutions claimed that Engen had failed to prove that it was leasing the premises in terms of a valid agreement with the registered owner, and thus had no legal standing to bring an eviction claim at common law. It furthermore argued that upon the cancellation of the sub-lease, Engen became unjustifiably enriched at Mighty Solutions’ expense, which consequently gives rise to an enrichment lien and a right on the part of Mighty Solutions to maintain possession. However, Engen, alternatively, claimed that the High Court correctly found that a sub-lessee may not challenge a sub-lessor’s right to occupy the property upon the termination of the lease. It contended that the alleged lien was raised after Mighty Solutions had been evicted from the premises, and therefore it no longer had any possession on which to base a lien.
Held
The Constitutional Court held that the common law rule enforced by the High Court gives Engen the authority to evict Mighty Solutions. Under the common law of lease, Mighty Solutions may not question Engen’s title as a defence in eviction proceedings after the valid termination of the lease agreement between it and Engen. The common law position does not call for development on the facts of this case. The enrichment argument cannot be entertained. Engen has standing to evict Mighty Solutions. This rule is consistent with the spirit, purport and object of the Bill of Rights, thus being valuable.
Accordingly, the application for leave to appeal was dismissed, and Mighty Solutions was ordered to pay costs.
Value
As a result of this case and upon valid termination of a lease, a lessee or sub-lessee cannot resist eviction on the basis that a lessor or sub-lessor has not proved a right to occupy the property.
