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Landlords and Tenants Stuck in Litigious Limbo: Maphango and Others v Aengus Lifestyle Properties (Pty) Ltd 2012 (3) SA 531 (CC)

3rd October 2013

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Intro

The business of being a South African is fraught with uncertainty and it is ever more so if you are a South African businessperson. If I were to enumerate the risks that we face on a daily basis just traveling to and from work, you would hang up your out-door pants for a safely-secluded life of agoraphobic reclusion. For your sanity and mine, I will allow you your daily delusions of dangerlessness save but one. If you are in the business of residential realty I do hope you have had a double-dose of Valium for I now present to you the never-ending saga of Maphango and Others v Aengus Lifestyle Properties (Pty) Ltd 2012 (3) SA 531 (CC) (“Maphango”).

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Facts

The landlord, a property investment company, purchased a ten-storey block of flats in the Braamfontein area. A financial analysis revealed that the rent the landlord was charging was three times less than the market-related rent in that area and less than the overheads. Different leases applied to the fifteen tenants in this case, but all the leases contained a clause allowing either party to cancel with notice. The landlord delivered termination notices in compliance with the leases stating that the leases were cancelled. However, the termination notices also allowed the tenants the opportunity to enter into leases on identical terms but at rents double that which they were previously paying. The tenants neither accepted the new leases nor vacated the flats. This is a common occurrence, nothing to break into a sweat about. The same cannot be said about the timeline of events. Start sweating.

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On 17 September 2008, the tenants lodged a complaint with the Rental Housing Tribunal but withdrew same to “concentrate” on the eviction proceedings in the High Court. The High Court and the Supreme Court of Appeal found in the landlord’s favour. Finally, after near on four years from the time the termination notice was delivered, on 13 March 2012, the Constitutional Court found neither in the landlord’s favour nor in its disfavour, nor somewhere in between. Confused? Read on.

The Constitutional Court’s Finding

Three judgments were delivered by the Court with a majority minority split of 7:3. The Majority, written by Cameron JA, found that although the tenants had withdrawn their complaint lodged at the Rental Housing Tribunal, they had not waived their rights under the Rental Housing Act 50 of 1999 (“Rental Housing Act”) which the rule of law enjoined the Court to take cognisance of, even though the parties themselves had not placed much emphasis upon it.  This meant that the landlord’s right to terminate was subject to the statutory limitation that such termination must not constitute an “unfair practice” and must be provided for in the lease. An “unfair practice” is defined in the Rental Housing Act as any act or omission by the landlord or tenant in contravention of this Act; or a practice prescribed as a practice unreasonably prejudicing the rights or interests of a tenant or landlord. The relevant Rental Housing Tribunal has the power to make such a determination and make any fair and just order which will bring the unfair practice to an end (“Tribunal”).

On the issue of evictions, Section 26 of the Constitution provides that no person may be evicted from their home without a court order after having considered all relevant circumstances. The Majority held that the determination of whether an unfair practice was occurring, which the Rental Housing Tribunal had an obligation to make, was one such relevant circumstance. Consequently, it was held that the High Court erred in ordering the evictions and should have “postponed” the proceedings until such a determination had been made.

After near on four years of being stuck in litigious limbo through the High Court, Supreme Court of Appeal and the Constitutional Court, judgment was handed down on the 13th of March 2012. But it is too soon, far too soon to breathe a sigh of relief because in spite of the constitutional imperative to have a dispute resolved by a court of law, no such relief was to be found or held or otherwise pronounced. The Majority held that the appeal was to be postponed to allow the tenants or landlord an opportunity to lodge a complaint at the Tribunal by the beginning of May 2012, failing which the appeal would be dismissed. A complaint was lodged but as far as the writer is aware and at the time of writing, no ruling was made by the Tribunal and unofficial reports state that the parties are currently in the process of negotiating a settlement. The termination notice was delivered in September 2008, now five years on, in September 2013, the dispute continues.

For the legal academics, advocates and astute attorneys out there, the dissenting judgment of Zondo AJ is worth reading for the procedural points on the fundamental importance of pleadings as a means of ensuring that fairness and justice are done. 

Conclusion

To put you into the appropriate shoes of understanding so that you may stand were the landlord stood, let’s paint a simple picture. We have a building running at a loss. We have a cancellation clause followed without faulter. We have 15 tenants living in apartments, paying half the rent. We have litigation to effect relief (either way) for four plus years. We have the constitutional imperative to have disputes resolved by a Court of law. What we do not have is a resolution.

To put you into the appropriate shoes of understanding so that you may stand were the tenants stood, let’s paint another simple picture. The colours are the same as above but the half-rent shimmer is only superficial and temporary. Although, the balance of power has historically been with the landlord, this must, in the writer’s view, not swing over to the tenant. Should tenants abuse their constitutionally enshrined and legislatively enacted powers, the bigger picture as I see it is that landlords will be disinclined to go into the business of providing residential housing as the risks will outweigh the rewards. Should the market cease to attract property investors for lack of economic incentive, the market will deteriorate and the quality and quantity of available residential property will follow. And once all of this plays out, it will be the tenants who suffer.

Written by Patrick Wainwright

Please do not hesitate to contact us on +27 11 788-0083 should you have any further enquiries or email enquiries@bkm.co.za

“BKM Attorneys - Passionate about Law”

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