Hotel challenging eviction due to Covid-19 in Constitutional Court

A hotel is now challenging eviction by its landlord in the Constitutional Court, saying the eviction is due to the fact that Ma-Afrika Hotels could not pay rent as it was unable to operate during the strict lockdowns.

Ma-Afrika Hotels was one of many South African hospitality groups severely affected by the pandemic and government’s lockdown restrictions, and has launched an application for leave to appeal to the Constitutional Court against an eviction order brought by its landlord.

The application for leave to appeal has suspended the eviction order pending the outcome of the Constitutional Court hearing.

The landlord, Venezia Trust, took Ma-Afrika Hotels to court in February 2021, to seek an eviction order because Ma-Afrika could not pay rent for its guest house during the pandemic. 

According to a spokesperson for Ma-Afrika, it had a 10-year lease agreement with Venezia Trust for the guest house and scrupulously paid rent since it opened in April 2019 until lockdown started in March 2020.

The Supreme Court of Appeal handed down its judgment on 4 November 2022, referring the claim for arrear rental back to the Western Cape High Court for determination.

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Nobody contemplated disaster when signing the lease

Ma-Afrika argues that the parties did not contemplate a grand-scale disaster in the form of a pandemic when they signed the lease agreement and that the enforcement of the lease and the eviction notice were against public policy and unconstitutional, the spokesperson says.

Occupancy at the guest house was non-existent between April and August 2020, due to the pandemic and the lockdown. Under subsequent national disaster alert levels, it could only accommodate guests on a restricted basis from 18 August 2020. 

“The pandemic, government restrictions regarding travel and the negligible income it received from September to December 2020, made it objectively impossible for Ma-Afrika to meet the full cost of rental during this time,” the spokesperson says.

“Ma-Afrika is placing a novel legal question before the Constitutional Court: to allow a tenant to raise partial remission of rent as a defence in the interest of justice at the time when a landlord seeks to evict him for non-payment of full rent, as the common law currently does not allow this defence.”

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Ma-Afrika’s battle with Santam

Ma-Afrika also had a two-year legal battle against insurer Santam to honour its Covid-19 business interruption insurance claims. Santam finally paid these claims in February 2022, but Venezia Trust had already cancelled the lease by then.

The Eastern Cape High Court found in a precedent-setting judgment in October 2020 that Santam was liable to honour Ma-Afrika’s full 18-month business interruption insurance. The Supreme Court of Appeal confirmed this judgment in October 2021.

It was a crucial decision for thousands of desperate tourism and hospitality businesses whose Covid-19 business interruption insurance claims had been rejected by Santam and other insurers.

The pandemic and government’s response had a devastating impact on the tourism and hospitality industry, with the average occupancy rate for the industry at only 13.08% from June to December 2020.

The sector, which employs 1.5 million people and contributes 8.6% to South Africa’s economy, almost collapsed as the country buckled under the strain of the pandemic.

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Profound impact on the hospitality industry

According to the Ma-Afrika spokesperson it was crippled by the pandemic and the unprecedented lockdown restrictions like all hospitality businesses, with its doors shut for months. When allowed to open again, it was under severe restrictions, which had a profound impact on the business.

The State of Disaster and all related restrictions were only lifted in June this year after numerous hospitality businesses had to close and many had to retrench staff.

“Ma-Afrika was determined to save jobs and deployed all available resources to ensure that its employees could survive the pandemic.”

The spokesperson says Ma-Afrika’s current appeal to the Constitutional Court is part of this effort to avoid staff retrenchments, which may well have an industry-wide effect, similar to the precedent-setting judgment against Santam.

Ma-Afrika has instructed Adv Jeremy Gauntlett KC SC as leading silk, together with Adv G. Elliott SC and Adv G. Samkange, instructed by Thomson Wilks Attorneys, to represent it in this matter.