Hotel group goes to Concourt to appeal Covid-19 eviction order

Ma-Afrika Hotels has brought forward an application for leave to appeal to the Constitutional Court against an eviction order brought by its landlord, Venezia Trust.

The hotel group is one of many South African hospitality groups severely impacted by Covid-19 related the governmental restrictions and has argued that the pandemic, the governmental restrictions and lockdown made it impossible for it to pay rent during this period.

According to Prolog Consulting Director, Dani Cohen, the application for leave to appeal has suspended the eviction order pending the outcome of the Concourt hearing. Ma-Afrika has instructed Adv Jeremy Gauntlett KC SC as leading silk, with Adv G Elliott SC and Adv G Samkange, instructed by Thomson Wilks Attorneys to represent it in this matter.

“Ma-Afrika’sappeal applicationfollows its landlord, Venezia Trust, taking it to court in February 2021 to seek an eviction order over Ma-Afrika’s inability to pay rent for its guest house during the pandemic. Ma-Afrika had a 10-year lease agreement with Venezia Trust in respect of the guest house, for which it had scrupulously paid rent from when the lease commenced in April 2019 up to lockdown in March 2020,” Cohen said .

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

More“Ma-Afrika contends that a grand-scale disaster in the form of a pandemic was not in the contemplation of the parties when the lease agreement was signed, and that the enforcement of the lease, and the eviction notice, were against public policy and unconstitutional,” Cohen said.

The hotel group has argued that occupancy at the guest house from April to August 2020 was zero; and then, under subsequent National Disaster Alert Levels, it could only accommodate guests on a restricted basis from August 18, 2020 as a result of the pandemic and the government's lockdown.

It also said that the pandemic, the government restrictions regarding travel, and the negligible income it received from September to December 2020, made it objectively impossible for it to meet the full cost of rental during this period.

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

Cohen said the current matter follows Ma-Afrika’s two-year legal battle against insurer Santam to honour its Covid-19 business interruption insurance claims, Santam finally paid out these claims in February, by which time Venezia Trust had cancelled the lease.

He said that Ma-Afrika won a precedent-setting judgment in October 2020, when the Western Cape High Court found that Santam was liable to honour Ma-Afrika’s full 18-month business interruption insurance and this judgment was confirmed by the Supreme Court of Appeal in October last year.

“The Court’s landmark decision was crucial for thousands of desperate tourism and hospitality businesses whose Covid-19 business interruption insurance claims had been rejected by Santam and other insurers,” Cohen said.

The Covid-19 pandemic and the government’s response had a devastating impact on the tourism and hospitality industry, and according to statistics, average occupancy rate for the industry stood at 13.08% for the period June to December 2020.

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

Ma-Afrika group said that its appeal to the Concourt is part of an effort to avoid staff retrenchments, which may well have industry-wide effect, similar to the precedent-setting judgment against Santam.