Enrichment lien does not apply to lease of urban property!

In Business Aviation Corporation (Pty) Ltd and Another v Rand Airport Holdings (Pty) Ltd [2007] All SA 421 SCA the parties entered into an oral lease agreement.

The Respondent cancelled the lease and applied for the eviction of the Appellants. The Appellants contended that, as they had not been compensated for necessary and useful improvements made to the property, they could not be required to vacate the property.

The Appellants defense was dismissed by both the Magistrates Court and the High Court of South Africa. However, an appeal against the High Court decision was upheld and the matter was referred back to the Magistrates Court.

Brand JA said that in Roman Dutch Law, lessees were originally in the same position as bona fide possessors as far as claims for improvements to leased properties were concerned. It followed, therefore that, absent any governing provisions in the contract of lease, lessees, like bona fide possessors, had an enrichment lien for the recovery of expenses that were necessary for the protection or preservation of the property as well as for expenses incurred in effecting useful improvements to the property.

Furthermore, lessees, like bona fide posessors, who were still in possession of the leased property, also had an enrichment lien that allowed them to retain the property until their claims for compensation had been satisfied.

However, the provision of the placaeten, relied on by the Respondent and which formed part of the South African Law, never applied to urban leases. It followed therefore that as the lease in the instant case was an urban one, the Appellants did not have a claim for recovery of expenses incurred in effecting necessary and useful improvements to the property in question.

"De Rebus, June 2007"