Coega Development Corporation (Pty) Ltd v MM Engineering Services (Pty) Ltd

The applicant, Coega Development Corporation (Pty) Ltd, a public entity operating the Coega Special Economic Zone, leased industrial premises in Zone 3 of the SEZ to the respondent, MM Engineering Services (Pty) Ltd, for gas cylinder manufacturing. The lease commenced on 1 October 2019 and was to run until 2034. From December 2019 onwards, the respondent persistently failed to pay rental and to reinstate the required security deposit, despite repeated notices, indulgences, and proposed payment arrangements over an extended period. The applicant called up the security deposit, issued multiple breach notices, and ultimately cancelled the lease on 31 May 2021 (confirmed on 11 June 2021). The respondent remained in occupation without payment, relying on prospective funding, Covid-19 lockdown impacts, alleged billing disputes, and an asserted obligation to pursue alternative dispute resolution. The applicant then sought eviction.

The respondent and all persons occupying through it were ordered to vacate the premises in Zone 3 of the Coega SEZ by 15 June 2022, failing which the sheriff was authorised to evict them with assistance if necessary. The respondent was ordered to pay the costs of the application.

The case reinforces the strict enforcement of commercial lease agreements and the principle of pacta sunt servanda in South African contract law, particularly in the context of prolonged non-payment of rental. It confirms that repeated indulgences do not waive contractual rights, that speculative future funding and Covid-19 related hardship do not excuse non-performance absent compliance with force majeure provisions, and that alternative dispute resolution clauses must be properly invoked before being relied upon.