Monyetla Property Holdings (Pty) Limited v IMM Graduate School of Marketing (Pty) Limited

The appellant was the registered owner of property known as Richmond Forum. It leased office space and parking bays to the first respondent under a written lease agreement that was due to expire on 30 September 2010. The second respondent bound himself as surety and co-principal debtor for the first respondent's obligations. The first respondent initially complied with its obligations but fell into arrears by 1 March 2009, owing over R2 million in unpaid rental and charges. On 6 March 2009, the appellant cancelled the lease in terms of clause 26.1. The first respondent disputed the cancellation and refused to vacate. The appellant instituted motion proceedings on 6 October 2009 seeking eviction and payment of arrears. On 24 March 2010, the court granted the relief and rejected the respondents' defence. The first respondent eventually vacated in April 2010 after unsuccessful leave to appeal applications. The appellant instituted the present action on 16 March 2012, claiming damages of R1,192,493.81 for the period 16 April 2010 to 30 September 2010, representing rental and charges it would have received but for the breach. The respondents raised special pleas of prescription and the 'once and for all' principle. The court a quo upheld both special pleas and dismissed the claim.

• Whether the appellant's claim for damages arising from the cancellation of the lease had prescribed under section 11 of the Prescription Act 68 of 1969
• When did the debt sued upon become 'due' for purposes of prescription - at the date of cancellation on 6 March 2009, or only when the first respondent vacated the premises on 30 April 2010
• Whether clause 26.2 of the lease, which obliged the lessee to continue paying amounts due while remaining in occupation despite disputing cancellation, affected the accrual of the damages claim
• Whether the 'once and for all' principle precluded the appellant from claiming damages in separate proceedings (this issue was abandoned on appeal)

The appeal was dismissed with costs.

When a lease is cancelled by a lessor due to breach by the lessee, the lessor's claim for damages arises and becomes 'due' for purposes of prescription immediately upon cancellation of the lease, not at the later date when the lessee vacates the premises. A debt is 'due' when the entire set of facts which the creditor must prove to succeed with its claim is in place - when everything has happened which would entitle the creditor to institute action and obtain judgment. Once a lease is cancelled, the lessor becomes entitled to claim damages over the period from the date of breach to when the lease was due to expire, measured as the sum of rentals that would have been due during that period, less amounts received in mitigation of loss. Continued occupation by the lessee after cancellation is irrelevant to when a claim for damages arising from lease cancellation accrues, though it may preclude the lessee from alleging the lessor should have mitigated its loss before vacation. Contractual provisions requiring the lessee to continue paying amounts due under the lease while remaining in occupation and disputing cancellation do not postpone when the damages claim becomes due; such payments are simply taken into account in calculating the actual loss suffered.

The court noted that the respondents had abandoned their second special plea based on the 'once and for all' principle on appeal, conceding that the first and second applications had not involved claims for damages but enforcement of clause 26 of the lease, and that the 'once and for all' rule relating to claims for damages was therefore of no application. The court also observed that a lessor who cancels a lease is obliged to take reasonable steps, such as re-letting the premises, in order to mitigate its loss. The effect of the lessee remaining in occupation after cancellation is to preclude it from alleging that the lessor should have mitigated its loss before it vacated.

This case provides important clarification on the law of prescription as it applies to claims for damages arising from the cancellation of a lease due to breach. It establishes that such claims accrue and become 'due' for prescription purposes at the date of cancellation, regardless of whether the lessee remains in occupation thereafter. The judgment reinforces that continued occupation is irrelevant to when a damages claim arises from lease cancellation, though it may affect the calculation of damages and the lessor's duty to mitigate. The case demonstrates the importance of distinguishing between when a debt arises/becomes due and what is required to prove the quantum of that debt. It also confirms that contractual provisions requiring continued payment during occupation despite disputed cancellation do not postpone the accrual of the damages claim. This decision has practical significance for lessors who cancel leases, as it emphasizes the need to institute damages claims within the three-year prescription period from the date of cancellation, not from when the lessee eventually vacates.