Can my Landlord Immediately Cancel my Lease Agreement?

Apr 9, 2019 | , , , | News

The Consumer Protection Act (the “CPA”) spells out the rights of consumers and the responsibilities of the suppliers of goods and services. It focuses on consumer protection by aiming to ‘promote fair accessible and sustainable marketplace for consumer products and services and for the purpose to establish national norms and standards relating to consumer protection’.

In the matters of Makah v Magic Vending (Pty) Ltd 2018 (3) SA 241 the Appellants concluded a month-to-month lease agreement with the Respondent in June 2013. The lease agreement included a clause which entitled the Respondent to immediately cancel the agreement in the event of breach on the part of the Appellants. The Appellants breached the lease agreement by failing to pay their monthly rental which ultimately led to the Respondent cancelling the lease agreements and successfully applying for the eviction of the Appellants.

The Appeal Court had the task to determine whether the eviction orders were valid taking into consideration the provisions of the Section 14(2) of the CPA.

Section 14(2)(b)(ii) of the CPA provides that an agreement may only be cancelled 20 business days after giving written notice to the consumer of a material failure by the consumer to comply with the agreement, and the consumer has failed to rectify such failure within that time. Section 14(2) is however preceded by the words ‘if a consumer agreement is for a fixed term’.

The Appellants argued that the provision in the lease allowing for the immediate cancellation in the event of breach is invalid, that the Court should find that the 20-business-day cancellation period had to be complied with by the Respondent and that the Respondent formulated the lease agreements as a monthly lease to circumvent the 20-day-termination requirement as prescribed in the CPA. The Appellants further argued that for this reason they were not unlawful occupiers, and that eviction could not be brought in terms of the Prevention of Illegal Eviction and Unlawful Occupation of Land Act 1998 (“the PIE Act”).

The Court held that cancellation in terms of s 14(2)(b)(ii) of the CPA is only applicable to fixed-term contracts and that it would be disproportionate to invoke a 20-business-day notice to cancel a monthly lease as the period of such notice amounts to a calendar month.

The Court further held that to read into the CPA that this 20-day notice requirement applies to a month-to-month or indefinite lease, would be to offer protection in circumstances not envisaged by the Act and concluded that the 20-day notice is not required for month-to-month or indefinite lease agreements.

The Court further concluded that the Respondent was entitled to claim that it was deprived of its property and that the Appellants had no lawful title to remain in occupation of the property and were unlawful occupiers as envisaged in the PIE Act. The appeal was accordingly dismissed with costs.

In light of the aforesaid case it is clear that the owner of a property is not required to conform to the 20-business-day notice provisions in s 14(2)(b)(ii) of the CPA for the purposes of terminating month-to-month or indefinite lease agreements. The 20-business-day notice will, however, prevail in all contracts of a fixed period.

Case File: Makah v Magic Vending (Pty) Ltd; Ngolo v Magic Vending (Pty) Ltd (A325/2016; A326/2016) [2017] ZAWCHC 142; 2018 (3) SA 241 (WCC) (16 May 2017)

Author: Philip van Greunen

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