Camps Bay Investment Trust Proprietary Limited v Infusion Social Club Camps Bay Proprietary Limited

The applicant, Camps Bay Investment Trust Proprietary Limited, is a family investment business that owns a commercial property situated at Central Parade, Victoria Road, Camps Bay. The property is a two-story building occupied by various tenants, including doctors and estate agents. The premises in question were previously operated as a health-focused café, which fell into rental arrears. The respondent, Infusion Social Club Camps Bay Proprietary Limited, approached the applicant and proposed taking over the café business. The respondent provided a business presentation representing that it would conduct the same type of café business. The respondent concluded a written commercial lease agreement with the applicant, which specified that the premises would be used as a restaurant. A material term required the respondent's business to be symbiotically compatible with other tenants and not cause any nuisance. The applicant later discovered that the respondent intended to sell cannabis and cannabis-infused products from the premises, and operate a cannabis 'smoking lounge'. This had not been disclosed prior to the conclusion of the lease. Other tenants complained and threatened to terminate their leases, and the applicant's insurer cancelled the building's insurance due to the change in risk occupancy.

• Whether the respondent materially misrepresented the nature of its business, entitling the applicant to terminate the lease agreement
• Whether the respondent's non-disclosure of cannabis-related trading activities constituted a material breach of the lease agreement
• Whether the respondent's belated undertaking to refrain from cannabis trading remedied the breach after termination of the lease
• Whether the settlement agreement concluded between the parties constituted a valid termination of the lease
• Whether the applicant was entitled to urgent eviction of the respondent from the commercial premises

The court ordered the respondent to vacate the premises and ordered the respondent to pay the applicant's costs on the attorney and client scale.

Where a commercial lease agreement is conditional upon complete and accurate disclosure of the nature of the tenant's business, a material non-disclosure or misrepresentation as to the nature of that business entitles the landlord to terminate the lease. Such a material misrepresentation cannot be remedied after termination by a subsequent undertaking to refrain from the undisclosed activities, particularly where those activities are integral to the tenant's core business model and inconsistent with the agreed symbiotic requirements of the lease.

The court observed that the respondent appeared to have structured its business in an attempt to exploit a perceived loophole in the law which prohibits the sale of cannabis but permits the growing thereof by individuals for personal consumption. The court also noted that it was difficult, if not impossible, to understand on what legal basis the respondent contended it was in lawful possession and occupation of the premises.

This case highlights the importance of full and accurate disclosure in the context of commercial lease negotiations in South Africa, particularly where the lease contains express provisions regarding the nature of permitted trading activities and the requirement for symbiotic compatibility with other tenants. It reinforces the principle that a material misrepresentation inducing a contract cannot be cured by a subsequent undertaking after breach and termination. The case also touches on the intersection between commercial leasing and cannabis-related business activities in the evolving South African regulatory landscape.