Mighty Solutions CC t/a Orlando Service Station v Engen Petroleum Limited and Another

Mighty Solutions CC, a licensed petroleum retailer, operated a service station in Soweto under an operating lease with Engen Petroleum Limited (a wholesaler). The lease commenced in September 2005 and was valid until March 2008, cancellable at one month's notice by either party. After expiry, it continued month-to-month until validly cancelled by Engen in July 2009. Mighty Solutions continued to occupy the site, using Engen's equipment, signage and trademarks without paying rent. Engen leased the property from its registered owner and had invested capital in developing it into a branded service station. In 2013, Engen applied to the Gauteng Local Division of the High Court for an order to evict Mighty Solutions. Mighty Solutions argued that Engen lacked standing because Engen's head lease had terminated before eviction proceedings commenced, and that its retail licence under the Petroleum Products Act gave it statutory possessory rights. It was common cause that Mighty Solutions had no common law right to remain after termination of the lease.

• Whether a sub-lessee may challenge a sub-lessor's lack of title as a defence to eviction proceedings after termination of the lease
• Whether the Petroleum Products Act conferred statutory possessory rights on a retail licence-holder that could only be terminated by the Controller of Petroleum Products
• Whether the common law rule preventing a lessee from questioning a lessor's title should be developed under section 39(2) of the Constitution
• Whether an enrichment lien constitutes an independent right to remain in occupation
• Whether new legal arguments not raised in the High Court can be entertained on appeal to the Constitutional Court

The application for condonation for late filing of the statement of facts and record was granted. Leave to appeal was refused. Mighty Solutions was ordered to pay costs, including costs of two counsel.

A lessee or sub-lessee cannot raise as a defence that the lessor or sub-lessor lacks title to property when being sued for ejectment upon termination of a lease. This rule is a natural incident of contracts of lease unless parties expressly agree otherwise. A lessor has a contractual right to demand ejectment of a lessee at the end of a contract, irrespective of whether the lessor has real or personal rights entitling it to occupation. This common law rule does not offend the spirit, purport and objects of the Bill of Rights and does not require development under section 39(2) of the Constitution. The rule serves legitimate purposes including preventing bad faith conduct by lessees who have received the benefit of their bargain, and reflects commercial reality. Where parties agree to a joint practice note defining the issues for determination by a court, an appellate court should not entertain new legal arguments not covered by that note, particularly where doing so would make the appellate court a court of first and last instance on that issue and would prejudice the other party.

The Court left open the question, raised but not decided in Boompret, of whether the rule that a lessee cannot dispute a lessor's title applies where the lessee has obtained independent title to the property and the lessor no longer has title. The Court observed that there may be other scenarios where the rule should not apply. The Court noted that fuel retailers may have justified grievances about the structure of the fuel industry and the conduct of oil companies, but that this case was not the appropriate avenue to prosecute those grievances, suggesting approaches to the Competition Tribunal or the Department of Energy might be more appropriate. The Court emphasized that before developing the common law, courts must: (a) determine exactly what the common law position is; (b) consider the underlying reasons for it; (c) enquire whether the rule offends the Bill of Rights; (d) consider precisely how the common law could be amended; and (e) take into account wider consequences of the proposed change. The Court reiterated that judges should be mindful that the major engine for law reform should be the Legislature and not the Judiciary. The Court distinguished the situation of residential evictions covered by the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, noting that fundamental rights considerations in that context are not implicated in commercial settings.

This case affirms the longstanding common law principle that a lessee or sub-lessee cannot challenge a lessor or sub-lessor's title to property as a defence in eviction proceedings following termination of a lease. It clarifies that this rule remains valid in post-constitutional South Africa and does not require development under section 39(2) of the Constitution to align with the Bill of Rights. The judgment provides important guidance on when courts should develop the common law, emphasizing that age alone is not a reason to change settled principles, and that fundamental changes to the common law fabric are often more appropriately made by legislation. The case also reinforces procedural limitations on raising new arguments for the first time on appeal, particularly where parties have agreed to a joint practice note defining the issues for determination. It demonstrates the Court's reluctance to retrospectively alter contractual terms by developing implied terms of contracts. The judgment has significant implications for commercial leasing arrangements and the stability of contractual relationships in South Africa.