Remission of rent and sub-lessees

19 May 2022 482
The Covid-pandemic caused a major disruption to many commercial rental properties, with lessees claiming remission of rent because of their inability to use and enjoy the rental properties. Although subject to many factors, it is common cause that lessees have been able to claim remission of rent due to Covid-19. But what is the position when it comes to a sub-lessee? Can a lessee claim for remission of rent if the sub-lessee was deprived of occupation?

With our courts still dealing with the aftermath of the Covid-pandemic, the Western Cape High Court was recently confronted with this question. In the matter of Trustees, Bymam Trust v Butcher Shop & Grill CC 2022 (2) SA 99 (WCC) the sub-lessee was deprived of beneficial occupation because of the pandemic and the court had to consider whether the lessee was entitled to remission of rent where the main lease agreement between lessor and lessee provided for remission of rent due to vis major.

After considering the facts, the court found that two distinct agreements had been entered into, namely one between landlord and lessee, and second between lessee and sub-lessee. There was no agreement between the landlord and sub-lessee. The court also found that because the lessee claiming the remission of rent was not occupying the premises, nor was in physical possession or control there was no grounds for the lessee to claim remission of rent. It was the sub-lessee that was deprived of beneficial occupation who had no agreement with the landlord and therefore no right to claim any rental remission directly from the landlord. As the lessee could not show any deprivation, the court held that the lessee could not claim for remission of rent or use the deprivation of the sub-lessee to justify remission of rent under the main lease agreement.

This judgment could therefore cause a situation where a lessee is required to allow remission of rent in a sub-lease but not be allowed remission of rent under the main lease. The judgment is currently on appeal to the Supreme Court of Appeal and it will be interesting to see whether our Supreme Court of Appeal shares the same view as the High Court. We will provide an update when the matter has been heard.

The above illustrates again how important it is for lessors and lessees to carefully assess their lease agreements and ensure sub-leases are properly drafted and made back-to-back with the main lease where necessary.

Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy has been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s).
Related Sectors: Retail