Wilma Petru Kooij and Others (in their capacities as Trustees of the Daleen Kruger Trust) v Middleground Trading 251 CC and Another

The Daleen Kruger Trust entered into an agreement with Middleground Trading 251 CC in September 2005, described as a ‘rent and rental agreement’, granting Middleground exclusive rights to prospect, mine and harvest peat from a wetlands portion of the Trust’s farm. Middleground was to pay a minimum monthly amount of R15 000, described as rent, with reconciliation against the volume of peat extracted. The agreement ran until September 2014 after extensions. In November 2011, the Department of Environmental Affairs issued a Compliance Notice prohibiting peat extraction and requiring removal of equipment due to alleged environmental harm. Middleground ceased operations and stopped payments after February 2012. The Trust cancelled the agreement and sued for alleged arrear rental for the remainder of the contract period. Middleground defended the claim on the basis that the agreement was not a lease, that payments were prepayments for peat, and that the Compliance Notice caused permanent supervening impossibility of performance.

The appeal was dismissed with costs; the Trust’s claim for alleged arrear rental was rejected.

The case is significant for South African contract law as it reaffirms substance over form in contract classification, clarifies the distinction between leases and agreements granting limited real or personal rights, and confirms the role of tacit terms and supervening impossibility where regulatory intervention renders contractual performance unlawful.