Airports Company South Africa SOC Limited v Airports Bookshops (Pty) Limited t/a Exclusive Books

ACSA entered into a five-year lease with Exclusive Books for premises at OR Tambo International Airport from 1 September 2008 to 31 August 2013. In August 2013, ACSA had not commenced a tender process for renewal. On 15 August 2013, the parties signed an extension agreement extending the lease on a "month on month" basis at a monthly rental of R585,761.70 excluding VAT, stating that the extension did not change any other terms of the original lease. ACSA issued a request for bids in December 2013. Exclusive submitted a bid in January 2014 but was informed in June 2014 that its bid was unsuccessful and that the tender was awarded to Amger Retailing (Pty) Ltd. On 18 June 2014, ACSA gave Exclusive notice to vacate by 31 July 2014. Exclusive applied to review and set aside the tender award on 11 July 2014, alleging PAJA violations. ACSA then brought an urgent eviction application on 27 August 2015, which was struck for lack of urgency and later heard in the ordinary course.

• What is the proper interpretation of the phrase 'month on month' in the lease extension agreement?
• Whether the lease was a monthly tenancy terminable on one month's notice or a lease of indefinite duration terminable on reasonable notice?
• What constitutes 'reasonable notice' in the circumstances of this case?
• Whether there was a tacit term that the lease could not be terminated until a valid and lawful tender process was completed?
• Whether ACSA was required to prove that the termination of the lease was lawful?
• Whether the tender award to Amger was unlawful and affected ACSA's right to terminate the lease?
• Whether the extension agreement was invalid for non-compliance with section 217 of the Constitution?
• The application of the Plascon-Evans test in determining disputed facts in motion proceedings

The appeal was dismissed with costs, including costs of two counsel. The order of Dodson AJ in the High Court dismissing the eviction application was upheld.

Where a lease is extended on a "month on month" basis without specifying a definite duration, it creates a periodic lease of indefinite duration terminable on reasonable notice, not necessarily a monthly tenancy terminable on one month's notice. What constitutes reasonable notice depends on the interpretation of the lease agreement having regard to the factual matrix and commercial realities known to both parties at the time of contracting. A commercial contract must be interpreted to favor a commercially sensible construction. When a lessor admits parting with possession by virtue of a lease and seeks eviction on the basis of termination, the lessor bears the onus of proving lawful termination of the lease. In application proceedings, where there is a factual dispute, the court must accept the respondent's version unless it is far-fetched, not credible, or implausible.

Lewis JA made observations regarding potential concerns raised in argument: (1) That it was unlikely the parties would not have made provision for rental increases during an extended period, as the original lease terms (which likely included rental escalation provisions) would remain applicable per the extension agreement. (2) That the judgment does not give license to every disappointed tenderer to delay vacation by claiming tender invalidity - a lessor can prove valid termination by showing the review challenge is fanciful, without warrant, or merely dilatory. Willis JA in dissent observed that: (1) There is no need for a lessor to allege ownership when relying on lease terms for eviction where there is no dispute about the lessor-lessee relationship. (2) The system of tender review was established primarily to safeguard against corruption and prevent wasteful use of public resources, not for disappointed tenderers to participate in commercial "blood sports." (3) The maxim omnia praesumuntur rite esse acta (all things are presumed to have been done correctly until proven otherwise) would shift the onus regarding validity of administrative action.

This case is significant for establishing important principles in South African contract law, particularly in the landlord and tenant context: (1) It clarifies the distinction between a monthly tenancy terminable on one month's notice and a lease of indefinite duration terminable on reasonable notice. (2) It confirms that "reasonable notice" is context-dependent and must be interpreted with regard to the factual matrix and commercial realities known to the parties. (3) It reinforces that when an owner/lessor admits parting with possession and alleges termination, they bear the onus of proving lawful termination. (4) It demonstrates the application of the Plascon-Evans test in eviction proceedings, emphasizing that an applicant must disprove the respondent's version if it is plausible. (5) It illustrates how commercial sensibility must inform contractual interpretation, particularly in contexts involving state procurement processes. (6) The case also touches on the intersection between contract law and administrative law in the context of state entities awarding tenders.