Ntombizodwa Yvonne Maphango (now Mgidlana) and 17 Others v Aengus Lifestyle Properties (Pty) Ltd

The respondent purchased a ten-storey building called Lowliebenhof in Braamfontein, Johannesburg, and became owner in May 2009. The 18 appellants were lessees of flats in the building under four different types of lease agreements (Ithemba, Union, Artisan, and Eagle Creek agreements) concluded with the respondent's predecessors. Each agreement provided for an initial fixed period and automatic indefinite renewal thereafter, with express or implied termination provisions on notice. The agreements also contained rental escalation clauses limiting annual increases. The respondent purchased the building for over R11 million through bond finance and spent over R1 million on renovations and maintenance. Finding the rental income insufficient to cover acquisition, renovation and maintenance costs, the respondent gave termination notices to the appellants between September 2008 and March 2009, offering new leases at rentals 100-150% higher than current rates. The appellants refused, continued paying the original rental, and opposed eviction proceedings brought by the respondent. Two appellants (Ms Siguca and Ms Masemola) had leases supported by Department of Housing subsidies with terms preventing termination without the lessee's discretion.

• Whether the lease agreements contained a tacit term prohibiting termination for the purpose of renegotiating new leases at higher rental
• Whether the termination of the leases was contrary to public policy on grounds of unreasonableness and unfairness
• Whether the termination infringed the appellants' constitutional right to security of tenure under section 26(1) of the Constitution
• Whether the termination constituted an 'unfair practice' under the Rental Housing Act 50 of 1999 and the Gauteng Unfair Practice Regulations
• Whether it would be just and equitable to evict the appellants under section 4(6) of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE)
• Whether costs should be awarded against successful appellants in constitutional litigation

The appeal was dismissed. The court a quo's findings were upheld: (1) the leases (except those of Ms Siguca and Ms Masemola) were validly terminated; (2) Ms Siguca and Ms Masemola should pay their own costs despite succeeding on the merits; (3) no order as to costs on appeal.

The binding legal principles established are: (1) A tacit term will only be implied into a contract where it is necessary for business efficacy and the inference is clear that both parties intended it - difficulty or doubt in formulation precludes implication (applying Alfred McAlpine & Son v Transvaal Provincial Administration and Wilkens NO v Voges). A tacit term prohibiting termination of a lease for the purpose of renegotiating rental is not necessary for business efficacy because during the lease period parties are bound by rental escalation clauses, and after valid termination the lease no longer operates. (2) Reasonableness and fairness are not freestanding requirements for the exercise of contractual rights and do not constitute independent substantive rules that courts can employ to intervene in contractual relations - they perform functions through established rules of contract law (South African Forestry Co Ltd v York Timbers; Brisley v Drotsky; Bredenkamp v Standard Bank). (3) Motive is generally irrelevant to the exercise of a contractual right (Bredenkamp). (4) A lessee's security of tenure under s 26(1) of the Constitution is limited to the duration of the lease as agreed by the parties, including any termination provisions - lessees have no security of tenure beyond the lease period, and termination in accordance with the lease terms does not infringe constitutional security of tenure. This distinguishes lessees from owners who have indefinite security of tenure (distinguishing Jaftha v Schoeman, Saunderson v Standard Bank, and Gundwana v Steko Development). (5) 'Practice' under the Rental Housing Act and regulations connotes systemic conduct, not isolated acts of termination. (6) Public policy, informed by constitutional values, may render contractual terms unenforceable, but this requires more than mere assertion of unfairness - the term itself or its enforcement must be truly inimical to constitutional values (Barkhuizen v Napier).

The Court made several non-binding observations: (1) The respondent's business model of acquiring and renovating buildings in the Johannesburg CBD is commendable and appears aligned with Johannesburg City Council initiatives, though the respondent is not a charitable organization and cannot be expected to operate at a loss. (2) The respondent behaved transparently by disclosing its motive for termination, which it was not obliged to do, and had it not done so, the litigation might not have arisen. (3) A lease cannot be 'for ever' - a purported lease in perpetuity constitutes a different contract, namely emphyteusis or 'erfpag', not a lease (citing Kerr, LAWSA, and De Wet & Van Wyk). (4) Following the Constitutional Court's guidance in Barkhuizen and Biowatch Trust v Registrar, Genetic Resources, where important constitutional issues are raised, parties should not be burdened with costs regardless of the outcome. (5) The Court noted Ngcobo J's caution in Barkhuizen (para 82) that whether the limited role of good faith is appropriate under the Constitution and whether existing maxims are sufficient to give effect to good faith are questions fortunately not needing to be answered on those facts, thereby leaving open the possibility of future development. (6) The appellants' attorney's statement about other buildings in the area not being well-maintained implicitly acknowledged the benefits of the respondent's renovation work at Lowliebenhof.

This case is significant for establishing important principles regarding the interplay between contractual rights, constitutional values, and security of tenure in the context of residential leases in South Africa. It clarifies that: (1) lessees have no security of tenure beyond the agreed lease period and termination provisions; (2) the constitutional right to security of tenure under s 26(1) does not prevent valid termination of leases in accordance with their terms; (3) fairness and reasonableness are not freestanding grounds for refusing to enforce contractual provisions absent established rules that give effect to those values; (4) landlords are entitled to terminate leases in accordance with termination clauses regardless of motive, including for commercial viability; (5) the distinction between owners' indefinite security of tenure (protected constitutionally) and lessees' limited tenure governed by contract terms. The case demonstrates the limits of constitutional rights in private contractual relationships and confirms that courts will not readily imply terms that would fundamentally alter the nature of lease agreements or impose perpetual obligations on landlords. It is an important authority on the application of the tacit term doctrine, the role of public policy in contract enforcement post-Constitution, and the scope of housing rights in the landlord-tenant context.