Everfresh Market Virginia (Pty) Limited v Shoprite Checkers (Pty) Limited

Everfresh Market Virginia (Pty) Limited (Everfresh) leased premises from Shoprite Checkers (Pty) Limited's (Shoprite's) predecessor in title from 1 April 2004 to 31 March 2009. Shoprite acquired the property during the currency of the lease and became bound by it. Clause 3 of the lease provided that Everfresh had the right to renew for a further period of four years and eleven months, provided it had fulfilled all its obligations. The clause stated that "the rentals for the renewal period shall be agreed upon between the Lessor and the Lessee at the time," and required written notice at least six months prior to termination. If agreement on rentals was not reached at least three months before termination, the right of renewal would be null and void. On 14 July 2008, Everfresh gave written notice exercising the option to renew and proposed a rental. On 3 September 2008, Shoprite responded that the clause did not constitute a legally binding and enforceable right of renewal, and that it did not wish to negotiate an extension because it wanted to redevelop the shopping centre. Everfresh remained in occupation after 31 March 2009, and Shoprite instituted ejectment proceedings.

• Whether clause 3 of the lease created a valid and enforceable right of renewal
• Whether the agreement imposed an obligation on Shoprite to negotiate in good faith regarding the renewal rental
• Whether the common law of contract should be developed in terms of section 39(2) of the Constitution to require parties who undertake to negotiate to do so reasonably and in good faith
• Whether it is in the interests of justice to grant leave to appeal where a constitutional issue is raised for the first time in the Constitutional Court
• Whether the matter should be remitted to the High Court for reconsideration in light of constitutional values

The application for leave to appeal was dismissed with costs. The eviction order granted by the High Court stood.

When a party seeks to invoke section 39(2) of the Constitution to develop the common law, it must ordinarily plead this in the court of first instance to give the opposing party notice of the case it must meet and to allow the High Court and Supreme Court of Appeal the opportunity to consider the issue. A party that fails to raise constitutional arguments in lower courts and only does so for the first time in the Constitutional Court must establish special circumstances to justify the Constitutional Court acting as a court of first and last instance. Absent such special circumstances, it will not be in the interests of justice to grant leave to appeal. Factors relevant to this determination include: whether the case has changed over time to the prejudice of the opposing party; the importance of the issue raised; whether there are elements of vulnerability, unequal bargaining power, or unfairness; and the practical consequences of granting or refusing leave to appeal.

The minority judgment made several important obiter observations about the development of contract law in light of constitutional values. Yacoob J observed that the values of ubuntu are relevant in determining the spirit, purport and objects of the Constitution in the context of contract law. He noted that contract law in South Africa has been predominantly shaped by colonial legal traditions (English, Roman, and Roman Dutch law) and should now take cognizance of the values of the majority of people who can participate in trade and commerce. The minority suggested that the majority of people in South Africa may place a higher value on negotiating in good faith than would otherwise have been the case under colonial legal traditions. Yacoob J also observed that the issue of good faith in contract affects many ordinary people who enter into contracts daily, and that contractual terms requiring negotiation are not only entered into between companies but often between individuals and between vulnerable people and powerful companies. The idea that parties can undertake to negotiate and then refuse to do so for commercial convenience implicates ubuntu. Moseneke DCJ, writing for the majority, acknowledged in obiter that if the case had been properly pleaded, constitutional values including ubuntu would inform development of the common law. He noted that it is "highly desirable and in fact necessary to infuse the law of contract with constitutional values, including values of ubuntu." He observed that ubuntu emphasizes the communal nature of society and carries ideas of humaneness, social justice and fairness. Moseneke DCJ also stated that where there is a contractual obligation to negotiate, "it would be hardly imaginable that our constitutional values would not require that the negotiation must be done reasonably, with a view to reaching an agreement and in good faith." Both judgments also made observations about when courts are obliged to raise section 39(2) issues of their own motion. The minority emphasized that courts should always be alert to the possibility of developing the common law and that where development is implicit in a case, courts must embark on that inquiry. The majority, while accepting courts have a general obligation to develop the common law under section 39(2), held that courts need not conduct this exercise in every case and that this was not a case requiring the court to raise the issue of its own volition.

This case is significant for establishing important principles regarding when constitutional challenges may be raised for the first time in the Constitutional Court. It reinforces that litigants must ordinarily raise constitutional arguments, including those relating to the development of the common law under section 39(2), at the earliest opportunity in the court of first instance. The case demonstrates the Constitutional Court's reluctance to act as a court of first and last instance on important constitutional issues affecting the common law without the benefit of the views of lower courts, absent special circumstances. The case also highlights ongoing tensions in South African contract law regarding the role of good faith and the extent to which constitutional values, including ubuntu, should inform contractual obligations. While the majority declined to decide the substantive issue, the minority's judgment signals support for developing the common law to require good faith in contractual negotiations, particularly where parties have agreed to negotiate. The case is also important for illustrating the limits of when courts will develop the common law of their own motion, even where constitutional values may be implicated. It shows that proper pleading and the raising of constitutional issues in lower courts remains crucial, even though section 39(2) imposes an obligation on all courts to promote constitutional values in developing the common law.