Mlungisi Ndodana Sontsele v 140 Main Street Properties CC and Another

The appellant, the lessor and owner of Erf 83, Flagstaff, concluded a notarial lease with the first respondent on 29 June 2004 for a fixed term ending on 31 May 2014. The lease granted the lessee an option to renew for two further periods of nine years and eleven months, provided the option was exercised timeously and the rental for the renewal period was agreed, failing which it would be determined by a third party appointed by the President of the Cape of Good Hope Estate Agents Board. The lessee gave written notice timeously exercising the option to renew but did not agree with the lessor on the rental, nor did it invoke the third-party determination mechanism before expiry of the lease. Despite this, the lessee remained in occupation after 31 May 2014 and paid increased rentals unilaterally. Negotiations failed, and the lessor contended that the lease expired by effluxion of time and that the continued occupation was on a month-to-month basis, which he terminated.

The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order declaring that the lease terminated by effluxion of time on 31 May 2014 and directing the first respondent to vacate the property within two months.

The case clarifies South African law on options to renew leases, confirming that timeous notice alone does not create a renewed lease unless all essential elements, particularly rental, are agreed or properly determined before expiry. It reinforces that renewal mechanisms must be strictly complied with and that clauses providing for third-party determination do not survive the termination of the lease.