Engen Petroleum Limited v Rissik Street One Stop CC and Another

Engen Petroleum Limited, as lessee of certain premises and sub-lessor to Rissik Street One Stop CC, entered into a fixed-term operating lease with the first respondent for the operation of a fuel service station. The lease expired by effluxion of time on 31 October 2018 after renewal negotiations failed, primarily due to Engen’s demand for a R3 million payment as a condition for renewal. Engen gave notice that it would not renew the lease. The respondents sought to sell the service station business and proposed purchasers to Engen, but Engen refused consent. Prior to expiry, the second respondent referred an alleged unfair or unreasonable contractual practice to the Controller of Petroleum Products under s 12B of the Petroleum Products Act 120 of 1977. After expiry of the lease, the respondents remained in occupation. Engen instituted eviction proceedings. The High Court stayed the eviction and interdicted Engen pending the outcome of the s 12B arbitration. Engen appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court’s order staying the eviction and granting an interdict was set aside. The respondents were ordered to vacate the premises within 30 days, failing which the Sheriff was authorised to effect eviction. Costs were awarded against the respondents on an attorney-and-client scale.

The judgment clarifies the scope and effect of s 12B of the Petroleum Products Act, confirming that a referral to arbitration does not create a right of continued occupation after expiry of a lease. It resolves uncertainty arising from conflicting High Court decisions and limits the application of Business Zone, reinforcing that statutory arbitration mechanisms do not override basic principles of contract and property law.