Rul­ing reaf­firms ‘fair’ grounds

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - NICKI VAN’T RIET

SA’S trans­for­ma­tive con­sti­tu­tion makes a com­mit­ment to main­tain­ing a so­ci­ety based on demo­cratic val­ues, so­cial jus­tice and fun­da­men­tal hu­man rights. SA is, how­ever, also com­mit­ted to the prin­ci­ples of free mar­ket and cap­i­tal­ism.

When it comes to rental hous­ing, a bal­ance has to be struck be­tween the con­trac­tual and com­mer­cial rights of land­lords with the so­cio-eco­nomic rights of tenants, bear­ing in mind the deep pat­terns of poverty and in­equal­ity which still ex­ist in the coun­try.

In Maphango v Aen­gus Life­style Prop­er­ties (Pty) Ltd the Con­sti­tu­tional Court was faced with this bal­anc­ing act. In essence, the court found that the Rental Hous­ing Act, 1999 strikes the re­quired bal­ance by pro­hibit­ing un­fair rental prac­tices, as de­ter­mined by the pro­vin­cial Rental Hous­ing Tri­bunal.

The court was faced with the ques­tion of when a land­lord may can­cel a lease and evict tenants. A group of tenants, in­clud­ing Maphango, of an apart­ment block in Jo­han­nes­burg’s in­ner city, faced evic­tion fol­low­ing the ter­mi­na­tion of their leases by the land- lord which had dones so with the sole pur­pose of en­ter­ing new te­nan­cies at sub­stan­tially higher rentals. The ter­mi­na­tion no­tices made no ref­er­ence to rene­go­ti­at­ing of rental amounts.

The tenants lodged a com­plaint with the Gaut­eng Rental Hous­ing Tri­bunal es­tab­lished un­der the act. This act serves to give ef­fect to the con­sti­tu­tional right of ac­cess to ad­e­quate hous­ing, which in­cludes the right not to be sub­jected to un­fair rental prac­tices. The com­plaint was that the pur­pose of the lease ter­mi­na­tions ren­dered it un­fair. The com­plaint was re­ferred to ar­bi­tra­tion be­fore the tri­bunal.

Be­fore the ar­bi­tra­tion could take place, the land­lords ap­proached the high court for an evic­tion or­der.

The high court granted the evic­tion or­der, which was con­firmed by the Supreme Court of Ap­peal. The tenants took the mat­ter on ap­peal to the Con­sti­tu­tional Court.

The Con­sti­tu­tional Court con­sid­ered the Gaut­eng Un­fair Prac­tice Reg­u­la­tions, made un­der the act, which stip­u­late that all acts must be per­formed in good faith.

The act pre­scribes that un­fair prac­tice rul­ings may in­clude a de­ter­mi­na­tion re­gard­ing the amount of rental payable by a ten­ant. The ques­tion be- fore the court was there­fore not whether the land­lord was en­ti­tled to ter­mi­nate the lease in or­der to se­cure higher rental but whether the ter­mi­na­tion con­sti­tuted un­fair prac­tice.

The Con­sti­tu­tional Court ruled that the high court ought to have stayed the pro­ceed­ings be­fore it to en­able the tenants to re­sus­ci­tate their tri­bunal com­plaints against the land­lord, and to en­able the tri­bunal to de­ter­mine whether the ter­mi­na­tion of their leases was an un­fair prac­tice. The court found that the ap­pli­cants were en­ti­tled to ap­peal to the Con­sti­tu­tional Court but that the ap­peal would be held over to en­able the land­lord and ten­ant to bring suit­able

The ef­fect of the judg­ment is not that it pre­vents land­lords from ever ter­mi­nat­ing lease agree­ments or evict­ing tenants

lpro­ceed­ings be­fore the tri­bunal to de­ter­mine whether the ter­mi­na­tion of the lease con­sti­tuted an un­fair prac­tice.

The ef­fect of the judg­ment is not that it pre­vents land­lords from ever ter­mi­nat­ing lease agree­ments or evict­ing tenants. There are grounds on which to do so af­ter the ap­pro­pri­ate pro­ce­dure has been fol­lowed.

Land­lords will have to con­sider their mo­tive when ter­mi­nat­ing res­i­den­tial lease agree­ments; by mak­ing sure that their mo­tive is “fair” and that the ba­sis for can­cel­la­tion is spec­i­fied in the lease agree­ment.

An ex­am­ple of a fair mo­tive would be where there has been a ma­te­rial breach of the lease by the ten­ant.

In the light of the judg­ment, it is also im­per­a­tive that land­lords do not in­sti­tute evic­tion pro­ceed­ings against tenants un­til such time as any com­plaint lodged with the Rental Hous­ing Tri­bunal that the ter­mi­na­tion is an un­fair prac­tice has been fi­nalised.

This does not mean that the ten­ant is per­mit­ted to con­tinue oc­cu­pa­tion of the premises free of charge pend­ing pro­ceed­ings be­fore the tri­bunal.

Tenants would still be un­der an obli­ga­tion to ef­fect pay­ment of the rental amount as con­trac­tu­ally stip­u­lated be­fore the can­cel­la­tion.

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