Mighty Solutions CC t/a Orlando Service Station v Engen Petroleum Ltd (CCT211/14) [2015] ZACC 34 (19 November 2015) per Van der Westhuizen J [Mogoeng CJ, Moseneke DCJ, Cameron J, Jafta J Khampepe J, Madlanga J, Matojane AJ, Nkabinde J, Wallis AJ and Zondo J concurring]
The Constitutional Court refused leave to appeal because 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’.
Excerpts (footnotes omitted)
[17] Mighty Solutions argues that this matter raises important constitutional issues of public interest, including the right to freedom of trade, occupation and profession, property rights and the principle of legality. It further submits that it raises this Court’s obligation to “develop the common law to give effect to the rights of persons and entities that hold retailers’ licences”.
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[28] So, what is the common law position? As noted in Boompret, it is an established rule that when being sued for eviction at the termination of a lease, a lessee cannot raise as a defence that the lessor has no right to occupy the property. This flows naturally from the rule that a valid lease does not rest on the lessor having any title. In Frye’s – for example – it was stated that there “can be no doubt that neither a sale nor a lease is void merely because the seller or lessor is not the owner of the property sold or leased”.
Unless expressly agreed, a lessor does not warrant that it is entitled to let.
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[33] Mighty Solutions’ submission that the common law rule “falls away”, because its rationale does not apply in this case, is untenable. The rule is clear: a lessee or sub lessee cannot rely on a defence that its lessor or sub-lessor lacks title in order to resist eviction upon termination of the lease. Mighty Solutions is a sub-lessee trying to do exactly that. Under the common law Engen had standing to evict Mighty Solutions. Questioning the rationale for the rule takes us rather to a separate question, namely whether the law ought to be developed.
Does the common law have to be developed?
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[35] Section 39(2) of the Constitution states that “when developing the common law or customary law, every court, tribunal or forum must promote the spirit, purport and objects of the Bill of Rights”.
When is a court allowed or obliged to develop the common law in this way?
[36] Our common law evolved from an ancient society in which slavery was lawful, through centuries of feudalism, colonialism, discrimination, sexism and exploitation. Furthermore, apartheid laws and practices permeated and to some extent delegitimised much of the pre-1994 South African legal system. Courts have a duty to develop the common law – like customary law – to accord with the Bill of Rights.
[37] Caution is called for though. It is tempting to regard precedents from the pre democratic era with suspicion. This may be more so when language is used, which some may regard as archaic and reminiscent of a patriarchal feudal era, as when the Court in Kala Singh said that “it does not lie in the mouth of a lessee to question the title of his landlord”. However, the mere fact that common law principles are sourced from pre-constitutional case law is not always relevant. Age is not necessarily a reason to change. Some of the lessons gained from human experience over the ages are timeless and have passed the logical and moral tests of time. The Constitution indeed recognises the existing common law and customary law. In Zuma Kentridge AJ said that it is not the case that under our constitutional dispensation “all the principles of law which have hitherto governed our courts are to be ignored. Those principles obviously contain much of lasting value.” Furthermore, legal certainty is essential for the rule of law – a constitutional value. It is also understandable that litigants who find themselves on the wrong side of the common law or customary law will – often at a late stage in proceedings – seek what they would call its “development”.
[38] Before a court proceeds to develop the common law, it must
(a) determine exactly what the common law position is;
(b) then consider the underlying reasons for it; and
(c) enquire whether the rule offends the spirit, purport and object of the Bill of Rights and thus requires development. Furthermore, it must
(d) consider precisely how the common law could be amended; and
(e) take into account the wider consequences of the proposed change on that area of law.
. . . .
[46] This Court is sensitive to the fact that to summarily change an implied term affects countless existing contracts concluded on the basis of the existing principle. The parties to those contracts would not have thought it necessary to provide expressly for the specific eventualities covered by the implied term. To alter the implied term changes the contractual relationship retrospectively and converts it to one on terms that the parties might never have agreed to.
. . . . .
[56] There is no apparent reason to develop the common law in this case. The rule does not offend the spirit, purport and objects of the Bill of Rights, or the values of our constitutional democracy. Fuel retailers like Mighty Solutions and the numerous applicants preceding it in cases like Gundu Service Station may have justified grievances about the structure of the fuel industry and the conduct of large oil companies in their dealings with retailers. However, Mighty Solutions chose the wrong avenue to prosecute these grievances. The High Court suggested approaching the Competition Tribunal if anti-competitive practices were alleged. To relax the common law rule so as to allow Mighty Solutions to remain in occupation until Engen proved valid title would be unjust and commercially reckless and might well have far reaching and unnecessary implications for the law of lease and of contract in general.
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[64] Even if the enrichment point were to be entertained, the prospects of success are slim. Mighty Solutions relies on the British Columbia Court of Appeal case of Haigh v Kent as authority that goodwill is a form of enrichment. The import of Mighty Solutions’ reliance on this case was not altogether clear. Engen correctly argues that the submission regarding goodwill is novel in South African law and it would require the ears and attention of lower courts to ventilate this issue. A glance at the unjustified enrichment landscape indicates that this area has yet to be developed.