Q & A

The tenant’s termination is permissible in terms of section 14 of the Consumer Protection Act 68 of 2008 (“CPA”). Giving notice as has been done is not a breach of the lease. In response to the tenant having given notice, the landlord is entitled to levy a reasonable cancellation penalty. What penalty is reasonable must be determined with reference to the CPA.

In terms of regulation 5(2) of the CPA the following factors will determine what is reasonable:

1. the amount which the consumer is still liable for to the supplier up to the date of cancellation;
2. the value of the transaction up to cancellation;
3. the value of the goods which will remain in the possession of the consumer after cancellation;
4. the value of the goods that are returned to the supplier;
5. the duration of the consumer agreement as initially agreed;
6. losses suffered or benefits accrued by consumer as a result of the consumer entering into the consumer agreement;
7. the nature of the goods or services that were reserved or booked;
8. the length of notice of cancellation provided by the consumer;
9. the reasonable potential for the service provider, acting diligently, to find an alternative consumer between the time of receiving the cancellation notice and the time of the cancelled reservation; and
10. the general practice of the relevant industry.

The penalty levied should also not be so large as to prevent a consumer from terminating where it would otherwise be entitled to do so, as this is inequitable.

In the real estate industry, the general practice is to levy a penalty equal to one- or two-months’ rental. The earlier in the lease the notice was given, the larger the penalty that may be charged.

These types of clauses may not be enforceable in light of the provisions of section 14 of the Consumer Protection Act 68 of 2008 (“CPA”). The question whether the landlord may insert a clause to cancel the lease early, or otherwise that in terms of the wording of section 14 of the CPA is not a straightforward one. Section 14(2)(b) states “despite any provision of the consumer agreement to the contrary…”. Section 14 of the CPA goes on to say that 1) the tenant may cancel on 20 business days’ notice to the landlord, and 2) the landlord may cancel if the tenant is in material failure/breach of the agreement and if upon being notified to rectify its breach it fails to do so within the 20 business days.

The Latin maxim expressio unius est exclusio alterius, meaning that that the expression of one thing implies the exclusion of others, may very well find application in interpreting section 14. The effect of this is may be that the right to cancel will only accrue subsequent to what is in fact a material failure by the tenant to comply with the terms of the lease and a failure to rectify that within 20 business days, as this is the only ground listed in the section. Any attempt by the landlord to cancel for a reason which a court will not find is a material failure will be a repudiation on the part of the landlord.

There is an argument to be made to the contrary, namely that the section only regulates the amount of time which a tenant must be afforded to rectify a breach. But that it does not prevent the parties from agreeing to different grounds on which a lease may be cancelled. Whether this is a sound argument will depend on the verdict of the court hearing such an argument.

In terms of section 14 of the Consumer Protection Act 68 of 2008 (“CPA”) a lease may only be cancelled after a material breach if the breaching party, in this case the consumer, has failed to rectify its breach within 20 business days of being requested in writing to do so.

This means that if the tenant pays late, he must be given notice in writing to rectify his breach. If he pays the outstanding amount before the expiry of 20 business days, the breach will have been rectified, and the lease may not be cancelled. If, however, the outstanding amount is not paid up before the passing of the 20 business days, then the landlord may cancel the lease and sue the tenant for damages.

In a situation like this, the tenants are clearly in breach of their obligations in terms of the lease. They have not remedied their breach. And therefore, the landlord is entitled to cancel the lease and claim damages from the tenants for any lost income and for unpaid rental. In addition, the landlord can bring an application for eviction.

When dealing with tenants like these, it is important to remember that they may be playing for time. Empty promises are often an indication of a trend, rather than an exception. If a tenant is in default and has been making empty promises, chances are that they will continue to do so. It is therefore often best to get the legal processes started as soon as possible. Letters of demand should be issued, and thereafter summons. And an eviction application should also be launched simultaneously.

At common law, the landlord is under an obligation to maintain the property in a proper condition. This is a residual term imported into leases by the common law, according to Bradfield & Lehmann in Principles of the Law of Sale & Lease at p144.

But since the aforesaid duty is a residual term, it can be changed by agreement between the parties. It should be borne in mind, as was said in Pete’s Warehousing and Sales CC v Bowsink Investments CC 200 (3) SA 833 (E), that:

“[22] A clause which seeks to limit, or might be seen as seeking to limit, residual implied or common-law obligations, should be restrictively interpreted. Shapiro v Yutar 1930 CPD 92. Part of the headnote in Sarkin v Koren 1949 (3) SA 545 (C) reads as follows:

‘Since the purpose of a covenant by a tenant to repair the leased premises is to relieve the lessor of his common-law duty (or part of  it), the covenant should be strictly construed, and the onus is on the landlord to satisfy the Court that the terms of the covenant relieve him of his common-law obligation.’”

On the other hand, it is a residual term of leases that the tenant to use the property only for the purpose for which it was let, and with the same amount of care as the proverbial “reasonable man”, or bonus paterfamilias. The tenant may not, according to Du Bois et al in Wille’s Principles of South African Law at 917, “not destroy, abandon, neglect, misuse, alter or appropriate the property, for on the termination of the lease it is his duty to restore the property to the lessor in the same condition in which it was delivered to him, reasonable wear and tear excepted” (footnotes omitted). Wear and tear is therefore also relevant to the duties of the landlord and tenant in respect of maintenance. In short, wear and tear is damage which occurs through ordinary day-to-day use.

The prevailing trend in leases commonly used today is that the common law position is altered to place the responsibility for some of the maintenance on the tenant. Often, the duty to maintain the interior is put on the tenant, and the duty to maintain the structure and the exterior of the property is then placed on the landlord.

In the absence of a clause which places the duty to maintain a portion of the property on the tenant, the landlord will be responsible for all maintenance. And if the cause if the damp is some portion of the property which, in terms of the lease is the responsibility of the landlord, then the landlord will be responsible for the repairs required to prevent the damp from continuing.

The cost of restoring the garden is for the tenant’s account, and may be deducted from the tenant’s deposit at the expiry of the lease, in accordance with the Rental Housing Act 50 of 1999. But the pot plants likely never, in absence of a specific clause in the lease, became the property of the landlord. The tenant may remove them without having to compensate the landlord, and the landlord may not prevent the tenant from doing so.